Exhibit 10.35

LEASE AGREEMENT
(CAC [_________])

between

WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION,
not in its individual capacity but solely as
Owner Trustee, as Lessor

and

SOUTH AFRICAN AIRWAYS (PTY) LTD., as Lessee

Dated as of December 16, 2009
Relating to One New Airbus Model A330-200 Aircraft

To the extent, if any, that this Lease Agreement hereunder constitutes tangible chattel paper (as such term is defined in the Uniform Commercial Code as in effect in any applicable jurisdiction), no security interest in this Lease Agreement may be created through the transfer or possession of any counterpart other than the original executed counterpart, which shall be identified as the counterpart attached to a receipt therefor executed by Lessor.

LEASE AGREEMENT
(CAC [__________])

TABLE OF CONTENTS

1.		Definitions; Construction and Interpretation
2.		Lease of Aircraft
3.		Rent; Payments
4.		Security Deposit; Letter Of Credit
5.		Representations and Warranties
6.		General Covenants
7.		Title; Registration and Filings; Etc
8.		Possession
9.		Indemnities
10.		Risk of Loss, Destruction and Requisition, Etc.
11.		Insurance
12.		Events of Default
13.		Remedies
14.		Transfer of Lease
15.		No Setoff, Counterclaim, Etc.
16.		Further Assurances, Etc.
17.		Confidentiality
18.		Governing Law and Jurisdiction
19.		Miscellaneous

Schedules and Exhibits
Schedule 1 — Definitions
Schedule 2 — Operational Matters
Schedule 3 — Delivery Conditions and Delivery Procedures
Schedule 4 — Return Conditions and Return Procedures
Schedule 5 — Notice and Account Information
Schedule 6 — Tax Matters
Schedule 7 — Lessor’s Conditions Precedent
Schedule 8 — Lessee’s Conditions Precedent
Schedule 9 — Cape Town Convention
Exhibit A — Form of Acceptance Certificate
Exhibit B — Form of Certificate of Insurance
Exhibit C — Form of Insurance Broker’s Letter
Exhibit D — Form of Aircraft Status Report
Exhibit E — Form of Letter of Credit
Exhibit F — Form of Guarantee
Exhibit G — Confidential Information

LEASE AGREEMENT (CAC [__________]), dated as of December 16, 2009 (this “Lease Agreement”), between WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity but solely as Owner Trustee (“Lessor”), and SOUTH AFRICAN AIRWAYS (PTY) LTD., a private limited liability company (“Lessee”).

RECITAL:

Lessee desires, upon the terms and conditions hereof, to lease the Aircraft from Lessor, and Lessor desires, upon the terms and conditions hereof and the other Operative Documents, to lease the Aircraft to Lessee.

AGREEMENT:

In consideration of the foregoing premise, and for other good and valuable consideration the adequacy and receipt of which are hereby acknowledged, the parties hereto agree as follows:

1.		DEFINITIONS; CONSTRUCTION AND INTERPRETATION
		The capitalized terms used in this Lease Agreement shall have the respective meanings ascribed thereto in Part I of Schedule 1. The rules of construction and interpretation for this Lease Agreement and each other Operative Document are set forth in Part II of Schedule 1. The Schedules and Exhibits to this Lease Agreement are incorporated herein as if set forth herein in full.
2.		LEASE OF AIRCRAFT
2.1		Delivery
		Lessor hereby agrees to deliver the Aircraft to Lessee at the Delivery Location and to lease the Aircraft to Lessee, and Lessee hereby agrees to accept the Aircraft at the Delivery Location and to lease the Aircraft from Lessor, in each case, on the Scheduled Delivery Date and in the Delivery Condition, subject to the satisfaction or waiver of the conditions precedent set out in Schedule 7 and Schedule 8 and otherwise subject to the terms and conditions of the Operative Documents. Lessor and Lessee shall consult regularly regarding the expected Scheduled Delivery Date. Lessee shall execute and deliver the Acceptance Certificate to Lessor on the Delivery Date. The delivery requirements and delivery procedures are more fully set out in Schedule 3.
2.2		Lease Term
		Lessee shall lease the Aircraft pursuant hereto for the Lease Term.
2.3		Return
		Lessee shall return the Aircraft to Lessor at the Return Location, and Lessor hereby agrees to accept the Aircraft at the Return Location from Lessee, in each case, on the last day of the Lease Term and in the Return Condition, subject to the terms and conditions of the Operative Documents. Lessor shall execute and deliver the Return Acceptance Certificate to Lessee at the Return. The return requirements and return procedures are more fully set out in Schedule 4.

3.		RENT; PAYMENTS
3.1		Rent—Periodic
		Lessee shall pay periodic rent for the Aircraft on each Rent Payment Date in an amount equal to the Rent—Periodic Amount.
3.2		Rent—Supplemental
		Lessee shall pay promptly to Lessor, or to whosoever shall be entitled thereto, any and all Rent—Supplemental when and as the same shall become due and owing.
3.3		Payments in General
3.3.1		Timing and Place of Payment
		All payments of Rent due to Lessor shall be made directly by Lessee in Dollars by wire transfer of immediately available funds on the required date of payment, for receipt on such date and with value on such date, to the account for Lessor specified in Schedule 5, or to such other account as Lessor shall otherwise direct by not less than five days’ prior written notice to Lessee. Any amounts owing by Lessor to Lessee under any Operative Document shall be paid by wire transfer of immediately available Dollars to Lessee’s account specified in Schedule 5, or to such other account as Lessee shall otherwise direct by not less than five days’ prior written notice to Lessor.
3.3.2		Business Day Convention
		If the due date for any payment or obligation is not a Business Day, then, unless otherwise provided herein, such payment or the performance of such obligation shall be due on the Business Day immediately succeeding such due date with the same force and effect as if made or performed on such original due date and, in the case of payment, without adjustment in the amount due.
3.3.3		Past Due Rate
		Lessee also shall pay to Lessor, or to whosoever shall be entitled thereto, on demand, as Rent—Supplemental, interest at the Past Due Rate on any Rent not paid when due for any period for which the same shall remain unpaid.
4.		SECURITY DEPOSIT; LETTER OF CREDIT
4.1		Payment of the Security Deposit
		Lessor acknowledges receipt of Security Deposit Installment—1 and Security Deposit Installment—2. Lessee shall pay to Lessor, on or prior to the final Scheduled Delivery Date, Security Deposit Installment—3.
		On each anniversary of the Delivery Date, if Lessor is then holding a Security Deposit and provided that no Payment/Bankruptcy Default shall have occurred and then be continuing, Lessor shall credit to the Security Deposit, and the Security Deposit shall be deemed to be increased by, an amount equal to notional interest accrued thereon for the period held by Lessor (and for which

		interest has not previously been credited) at one-year Dollar LIBOR (as determined at monthly intervals during such period by Lessor by reference to Bloomberg BBAM page (or, if such page is unavailable, to a replacement market-standard screen agreed by Lessor or Lessee)) and calculated using monthly compounding.
4.2		Lessor’s Interest in Security Deposit
		The Security Deposit shall secure the timely payment and performance by Lessee of the Secured Obligations. Lessee hereby assigns to Lessor absolutely, by way of security, the Security Deposit to secure such payment and such performance and Lessee agrees not to grant, assign, transfer or pledge to any other Person any right, title or interest in or to the Security Deposit. Except as expressly permitted under this Lease Agreement, Lessee shall not be entitled to payment or repayment of the Security Deposit. Subject to Lessor’s obligations to return or repay the Security Deposit, the Security Deposit may be assigned, charged or pledged by Lessor to another Person in connection with an Absolute Transfer or Security Transfer permitted under Section 14.1. The Security Deposit may be commingled by Lessor or such other Person with its own general other funds during the Lease Term. If an Event of Default shall occur and be continuing, then, in addition to any other rights Lessor or such other Person may have under applicable law or under any Operative Document or any Other Lease Agreement, Lessor or such other Person may at any time as an agreed remedy apply, in such order as Lessor or such other Person thinks fit, all or any portion of the Security Deposit in full or partial payment for amounts constituting or corresponding to any Secured Obligation then due and payable. If Lessor, or such other Person, applies all or a portion of the Security Deposit, Lessee shall within 10 days upon demand from Lessor pay to Lessor or such other Person an amount sufficient to restore the Security Deposit to its required total sum.
4.3		Return of Security Deposit
		That portion of the Security Deposit that has not previously been applied as provided for in any Operative Document, shall be returned to Lessee, with any unpaid accrued interest as provided in Section 4.1, on the day on which the Aircraft is returned to Lessor in accordance with this Lease Agreement and all of the Secured Obligations which are then due and payable have been satisfied in full.
4.4		Substitution of Letter of Credit for Security Deposit

(1)

On or at any time prior to the Delivery Date or from time to time during the Lease Term, so long as no Payment/Bankruptcy Default is then continuing, if Lessor is holding a Security Deposit provided pursuant to Section 4.2, Lessee shall have the option to substitute for the Security Deposit a letter of credit (the “Letter of Credit”), as security for all of the Secured Obligations, with a stated amount equal to the sum of the Security Deposit Installment—1, the Security Deposit Installment—2 and Security Deposit Installment—3 plus all interest accrued thereon pursuant to Section 4.2 and to be paid to Lessee pursuant to the last paragraph of this Clause (1). The Letter of Credit:

	(a)		shall be in the form of Exhibit E;
	(b)		shall be issued or confirmed by a first class international bank (or branch thereof) in New York or London reasonably acceptable to Lessor and having at least the Letter of Credit Bank Minimum Rating; and

(c)

shall remain in full force and effect until the Letter of Credit Validity Date (or, if the Letter of Credit is at any time due to expire prior to such date, then Lessee shall cause a valid renewal or replacement letter of credit to be issued in accordance with this Section 4.2 not later than 30 days prior to such expiry date, the original Letter of Credit and each such renewal or replacement to be valid for a period of not less than one year or, if less, until the Letter of Credit Validity Date).

			Upon valid substitution by Lessee of a Letter of Credit for the Security Deposit in accordance with the provisions of this Section 4.4, Lessor shall simultaneously (if it has received reasonable advance notice thereof) or promptly (and in any event within five Business Days) refund to Lessee the amount of the cash Security Deposit which has not previously been applied as provided for in any Operative Document, together with interest accrued as provided in Section 4.2.
	(2)		In the event that at any time prior to the Letter of Credit Validity Date the bank issuing or confirming the Letter of Credit no longer has at least the Letter of Credit Bank Minimum Rating, Lessee shall within thirty days of demand by Lessor provide Lessor with a replacement “Letter of Credit” issued or confirmed by a first class international bank in New York or London having at least the Letter of Credit Bank Minimum Rating and otherwise meeting the requirements of this Lease Agreement.
	(3)		Lessor shall be entitled to make multiple demands under the Letter of Credit following the occurrence of an Event of Default. If for any reason Lessor is paid under the Letter of Credit, then (a) Lessor may at any time as an agreed remedy, apply or retain all or any portion of the amounts so paid in full or partial payment for amounts constituting or corresponding to the Secured Obligations and/or may retain all or any portion of the amounts so paid as security for the performance of the Secured Obligations, and any amounts so retained shall be treated as a “Security Deposit” hereunder, and (b) Lessee shall within 10 days cause an additional “Letter of Credit” to be issued, or shall pay Lessor such amount in cash, so that the Lessor shall at all times have the benefit of cash and/or a Letter of Credit for the full Security Deposit which would otherwise be required under Section 4.1.
	(4)		Unless the Letter of Credit is fully drawn, Lessor shall return the Letter of Credit to Lessee (a) not later than five Business Days after the date upon which the Aircraft is returned to Lessor in accordance with this Lease Agreement and all of the Secured Obligations which are then due and payable have been satisfied in full (and shall send Lessee a confirmation of cancellation of the Letter of Credit on the date upon which the Aircraft is returned to Lessor in accordance with this Lease Agreement and all of the Secured Obligations which are then due and payable have been satisfied in full), (b) as provided in Section 10.3, upon payment in full of all amounts due and payable as a result of an Event of Loss or (c) upon replacement with a substitute letter of credit as provided in Section 4.4(2).

4.5		Substitution of Security Deposit for Letter of Credit
		From time to time during the Lease Term, so long as no Payment/Bankruptcy Default is then continuing, if Lessor is holding a Letter of Credit provided pursuant to Section 4.4, Lessee shall have the option to substitute for the Letter of Credit an amount of Dollars equal to the stated

		amount of the Letter of Credit provided that (1) under the Laws of Lessee Jurisdiction (including any insolvency laws) neither Lessee nor any representative (howsoever denominated) for Lessee or its creditors may reclaim, revoke or otherwise clawback such payment of the Security Deposit (under circumstances where the proceeds of a letter of credit could not have been so reclaimed, revoked or otherwise clawed back) in the event that Lessee is involved in any of the proceedings listed in Sections 12.3 and 12.4 or otherwise and (2) Lessee has provided Lessor with a recent legal opinion from Lessee Jurisdiction legal counsel reasonably satisfactory to Lessor stating that Lessor’s rights are not materially prejudiced by such substitution and otherwise in form and substance reasonably satisfactory to Lessor. Unless the Letter of Credit is fully drawn, upon valid substitution by Lessee of a Security Deposit for the Letter of Credit in accordance with the provisions of this Section 4.5, Lessor shall promptly (and in any event within five Business Days) return to Lessee the Letter of Credit.
4.6		Limitation on Substitution
		Notwithstanding any other provision of this Section 4, if Lessee exercises its substitution rights under Section 4.4 or 4.5, then Lessee may not exercise its substitution rights under Section 4.5 or 4.4, respectively, for at least 12 months.
5.		REPRESENTATIONS AND WARRANTIES
		A DISCLAIMER BY LESSOR IS CONTAINED IN PART II OF SCHEDULE 3. LESSEE CONFIRMS THAT IT HAS CAREFULLY REVIEWED SUCH DISCLAIMER AND THAT LESSEE ACCEPTS AND AGREES TO SUCH DISCLAIMER.
5.1		Lessor’s Representations and Warranties
		Lessor hereby represents and warrants to Lessee that:

	(1)		Lessor (a) is a national banking association duly organized under the Laws of the Lessor Jurisdiction and (b) has the corporate power and authority to own its assets wherever located or used and to carry on its business as it is now being conducted and to enter into and perform its obligations under each Operative Document to which it is a party; the execution and delivery by Lessor of the Operative Documents to which it is a party, and the performance of its obligations thereunder, have been (as and when delivered by Lessor) duly authorized by all necessary corporate action on its part. Such Operative Documents each have been duly executed and delivered by it and each constitutes legal, valid and binding obligations, enforceable against Lessor in accordance with its terms.
	(2)		Lessor holds all authorizations necessary to permit its execution and delivery of each Operative Document to which it is a party and the performance of its obligations thereunder.
	(3)		Neither the execution and delivery of any Operative Document by Lessor, nor the performance by Lessor of its obligations thereunder, contravenes any of the provisions of its constitutional documents or any Law applicable to it or any of its assets or conflicts with or results in a default under any document which is binding on Lessor or any of its assets.

	(4)		Lessor is subject to civil and commercial Law with respect to its obligations under each Operative Document to which it is a party and neither it nor any of its assets is entitled to any right of immunity and the entry into and performance of each such Operative Document constitute its private and commercial acts.
	(5)		The obligations of Lessor under the Operative Documents to which it is party rank at least pari passu with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of Lessor, with the exception of such obligations as are mandatorily preferred by Law and not by virtue of any contract.
	(6)		There are no pending or, to Lessor’s knowledge, threatened actions or proceedings before any court, arbitration or administrative agency in respect of this Lease Agreement or any other Operative Document or the Aircraft or the performance by Lessor of its obligations hereunder or under any other Operative Document to which it is a party.

		The representations and warranties above will survive execution of this Lease Agreement and those contained in clauses (1) through (5) of this Section 5.1 are continuing representations and warranties and shall be deemed made and given on and as of the date hereof and each Rent Payment Date.
5.2		Lessee’s Representations and Warranties
		Lessee hereby represents and warrants to Lessor that:

	(1)		Lessee (a) is a private limited liability company duly organized under the Laws of the Lessee Jurisdiction and (b) has the corporate power and authority to own its assets wherever located or used and to carry on its business as it is now being conducted and to enter into and perform its obligations under each Operative Document to which it is a party; the execution and delivery by Lessee of the Operative Documents to which it is a party, and the performance of its obligations thereunder, have been (as and when delivered by Lessee) duly authorized by all necessary corporate action on its part. Such Operative Documents each have been duly executed and delivered by it and each constitutes legal, valid and binding obligations, enforceable against it in accordance with its terms.
	(2)		Lessee will on the Delivery Date and throughout the Lease Term hold all Authorizations necessary to (a) permit it to engage in air transport and to carry on passenger and cargo service in each case as presently conducted, (b) permit its execution and delivery of each Operative Document to which it is a party and the performance of its obligations thereunder and (c) permit it to operate the Aircraft in compliance with all Laws applicable to Lessee.
	(3)		Lessee is in compliance with all Laws applicable to Lessee, including in respect of aircraft maintenance, training and operation and neither the execution and delivery of any Operative Document by Lessee, nor the performance by Lessee of its obligations thereunder, contravenes any of the provisions of its constitutional documents or any Law applicable to it or any of its assets or conflicts with or results in a default under any document which is binding on Lessee or any of its assets.

	(4)		Lessee is subject to civil and commercial Law with respect to its obligations under each Operative Document to which it is a party and neither it nor any of its assets is entitled to any right of immunity and the entry into and performance of each such Operative Document constitute its private and commercial acts.
	(5)		The obligations of Lessee under the Operative Documents to which it is party 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 virtue of any contract.
	(6)		Except for the registrations, recordations and filings described in Section 7, each of which will be duly made and effected by Lessee as and when required, no further action, including the registration, recordation or filing of any instrument or document, is necessary under the Laws of the Lessee Jurisdiction, the State of Registration or any jurisdiction in which the Aircraft shall be operated (a) in order for this Lease Agreement to constitute a valid and enforceable lease of record relating to the Aircraft, (b) to authorize or permit Lessee to perform its obligations under each Operative Document to which it is a party, (c) to fully protect, establish, perfect and preserve Owner’s and Lessor’s and Security Trustee’s rights and interests in the Aircraft and the Operative Documents as against Lessee and otherwise or (d) to make each Operative Document admissible in evidence in the Lessee Jurisdiction or the State of Registration.
	(7)		There are no pending or, to Lessee’s knowledge, threatened actions or proceedings before any court, arbitration or administrative agency (a) in respect of this Lease Agreement or any other Operative Document or the Aircraft or the performance by Lessee of its obligations hereunder or under any other Operative Document to which it is a party or (b) which might, if adversely determined, have a Material Adverse Effect.
	(8)		Each Operative Document and the financial and other information furnished by Lessee in connection with this Lease Agreement or any other Operative Document do not contain any untrue statement or omit to state facts, the omission of which makes the statements therein, in the light of the circumstances under which they were made, misleading in any material respect, nor omit to disclose any material matter to Lessor, and all expressions of expectation, impression, belief and opinion contained therein were honestly made on reasonable grounds after due and careful inquiry by Lessee.

		The representations and warranties above will survive execution of this Lease Agreement and those contained in clauses (1) through (5) of this Section 5.2 are continuing representations and warranties and shall be deemed made and given on and as of the date hereof and each Rent Payment Date.
6.		GENERAL COVENANTS
6.1		Lessor’s Covenants
		Lessor covenants and agrees with Lessee that during the Lease Term:

6.1.1		Quiet Enjoyment
		So long as no Event of Default shall have occurred and be continuing, none of Owner, Lessor or any Person validly claiming by or through Owner or Lessor shall violate Lessee’s quiet enjoyment of the use, operation and possession of the Aircraft and rights thereto under this Lease Agreement.
6.1.2		No Claims by Lessor
		For the benefit of each lessor of an airframe or engine leased to Lessee and each holder of a security interest in an airframe or engine owned by Lessee under a security agreement, neither Lessor nor Owner shall acquire or claim, as against such lessor or security interest holder, any right, title or interest in any engine covered by any such lease or security agreement as a consequence of such engine being attached to the Airframe.
6.2		Lessee’s Covenants
		Lessee covenants and agrees with Lessor that during the Lease Term:
6.2.1		Reporting Requirements
		Lessee shall furnish to Lessor:

	(1)		On the 10th day of each calendar month during the Lease Term, a completed and duly executed Aircraft Status Report in respect of the previous month and substantially in the form of Exhibit D (or such other form as Lessor may reasonably require).
	(2)		Reasonable prior notice of and an ability to participate in any “roadshow” (howsoever denominated) given by Lessee for the purpose of informing creditors of the business and properties, operations and or condition (financial or otherwise) of Lessee.
	(3)		Within 180 days after the close of each financial year of Lessee, copies of audited consolidated and consolidating financial statements (including a balance sheet and a profit and loss statement) of Lessee prepared in South African Rand in accordance with Applicable Accounting Principles, all in reasonable detail and setting forth in comparative form the respective figures as of the end of and for the preceding financial year as certified by Lessee’s independent certified (or equivalent) accountants, including their certificate and accompanying comments; provided Lessee shall be deemed to have satisfied the requirements set forth in this Section 6.2.1(3) so long as such documents are accessible to Lessor from Lessee’s website. If any such materials are not in English, a complete and accurate translation of such materials will be provided by Lessee together with such materials.
	(4)		[Intentionally Omitted]
	(5)		Within a reasonable period of time (but in any event within 15 days of request), such other information respecting the business and properties, operations or condition (financial or otherwise) of Lessee, or the location, condition, use and operation of the Aircraft, as Owner or Lessor may from time to time reasonably request, including copies of all regular, periodic and special reports, that Lessee makes available for review by the

			public or other creditors and including copies of all statements of account of any Government Entity or other Person in respect of any Flight Charges or CO2 emissions charges for which Lessee may be liable. In addition, Lessee shall, within a reasonable period of time (but in any event within 15 days of request), on request furnish or cause to be furnished to Lessor such information as may be required to enable an Indemnified Party to file on a timely basis any reports, returns or filings which it may provide to any Government Entity because of its rights, title and interests in and to the Aircraft or under any Operative Document.
	(6)		Advance notice of any off-aircraft maintenance on either Engine, with Lessee to provide such notice, to the extent reasonably practical, at least 30 days prior to removal.

6.2.2		Liens
		Lessee shall not directly or indirectly create, incur, assume or suffer to exist, or agree to create or assume, any Lien on or with respect to the Aircraft, any Engine or any Part or any Operative Document, or in any right, title or interest in any of the foregoing, except (a) the rights of Lessor, Owner and Lessee provided in the Operative Documents, (b) Lessor Liens, including Liens incurred in connection with any back-leverage or similar transaction permitted under Section 14.1.1(2) or any Financing Security Documents, (c) the rights of others under agreements or arrangements to the extent permitted by the terms of Sections 6.1.2 and 8 and Section 1.3.6 of Schedule 2, (d) Liens for Taxes of Lessee (or any Permitted Sublessee) arising in the ordinary course of business either not yet overdue or being contested in good faith by appropriate proceedings, (e) materialmen’s, mechanics’, workmen’s, repairmen’s, employees’ or other like Liens arising by operation of law in the ordinary course of Lessee’s (or, if a Permitted Sublease is then in effect, Permitted Sublessee’s) business, securing obligations that are not yet overdue, (f) Liens arising out of any judgment or award against Lessee (or any Permitted Sublessee), unless the judgment shall remain undischarged for a period of 10 days or more, during which time execution of such judgment or judgments shall not be effectively stayed nor adequate bonding fully covering such judgment or judgments exist, (g) any other Lien with respect to which Lessee (or any Permitted Sublessee) shall have provided a bond, cash collateral or other security adequate in the reasonable opinion of Lessor, and (h) Liens approved in writing by Lessor, so long as in the case of clauses (d), (e) and (f), (y) adequate reserves have been set aside by Lessee for payment of such obligations and (z) the continued existence of any such Lien does not give rise to any likelihood of the sale or forfeiture of any portion of the Aircraft or any interest therein or of any criminal or material civil liability of any Indemnified Party or other liens. Lessee will promptly, at its own expense, take (or cause to be taken) such actions as may be necessary to discharge duly any such Lien not excepted above if the same shall arise at any time during the Lease Term or in connection with any act or omission by Lessee (the Liens described in clauses (a) through (h), collectively, “Permitted Liens”). Without limiting the foregoing or any other provision of any Operative Document, Lessee will not do or permit to be done anything which may expose the Aircraft or any part thereof to penalty, forfeiture, seizure, arrest, impoundment, detention, confiscation, taking in execution, attachment, appropriation or destruction, or which may jeopardize the rights of Owner, Lessor or any Financing Party in the Aircraft or the validity, enforceability or priority of the Financing Security Documents or any security expressed to be created thereunder or which may expose any Indemnified Party to any criminal or material civil liability, nor abandon the Aircraft or any material part of the Aircraft.

6.2.3		Corporate Existence; Authorizations
		Lessee shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and to obtain and hold all Authorizations necessary to (1) permit it to engage in air transport and to carry on passenger and cargo service in each case as presently conducted, (2) permit its execution and delivery of each Operative Document to which it is a party and the performance of its obligations thereunder and (3) permit it to operate the Aircraft in compliance with all Laws applicable to Lessee.
6.2.4		Merger of Lessee

	(1)		Lessee shall not reorganize or consolidate with or merge into any other Person, or sell, lease, exchange, transfer or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all its property, assets or revenues, whether now owned or hereafter acquired, or any substantial portion thereof, or liquidate or dissolve, unless Lessee is the surviving entity of a reorganization, consolidation or merger or (a) the entity formed by such reorganization, consolidation or merger or the Person that so acquires such assets by purchase, lease, exchange, transfer or other disposition (i) is a private limited liability company or a corporation duly organized and validly existing under the laws of the Lessee Jurisdiction or a political subdivision thereof and (ii) is permitted it to engage in air transport and to carry on passenger and cargo service in each case substantially as presently conducted, (b) immediately after giving effect to such reorganization, consolidation, merger or disposition, no Event of Default shall have occurred and be continuing, (c) Lessee shall have delivered to the Lessor a compliance certificate from an authorized officer of Lessee stating that such reorganization, consolidation, merger or disposition complies with this Section 6.2.4 and that all conditions precedent provided for herein relating to such transaction have been complied with or satisfied, (d) such entity 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; (e) if the Aircraft is, at the time, registered with the Aviation Authority, such entity makes such filings and recordings with the Aviation Authority as shall be necessary to evidence such reorganization, consolidation, merger or disposition or, if the Aircraft is, at the time, not registered with the Aviation Authority, such person makes such filings and recordings with the Aviation Authority as shall be necessary to evidence such reorganization, consolidation, merger or disposition; and (f) such entity makes such filings with the international registry (as defined in Schedule 9) as shall be necessary to evidence such reorganization, consolidation, merger or disposition.
	(2)		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 Section 6.2.4, unless Lessee is the surviving entity of a consolidation or merger, such Person will succeed to, and be substituted for, and may exercise every right and power of, Lessee under the Operative Documents to which Lessee is a party with the same effect as if such person had been named as “Lessee” therein.

7.		TITLE; REGISTRATION AND FILINGS; ETC.
7.1		Title to the Aircraft
		Lessee acknowledges that the Operative Documents constitute for all purposes, including tax purposes, an agreement by the Lessor to lease the Aircraft to Lessee and, accordingly, Lessee shall have no right, title or interest in the Aircraft except the right to possess and use the Aircraft during the Lease Term as provided herein.
		Lessee will not at any time represent or hold out Lessor, Owner or any Financing Party as carrying goods or passengers on the Aircraft or as being in any way connected or associated with any operation of the Aircraft or pledge the credit of Lessor, Owner or any Financing Party or, except as expressly provided herein, attempt, or hold itself out as having any power, to sell, charge, lease or otherwise dispose of or encumber the Aircraft, the Engines or any Part and shall at all times make clear that title to the Aircraft is held by Owner.
7.2		Registration, Recordation, Filings, Etc.
		Lessee shall procure that on the Delivery Date the Aircraft is duly registered with the Aviation Authority in the name of Lessee as operator (“registered owner” in the nomenclature of the Aviation Authority) and, to the extent permitted by applicable Law, with the interests of Owner and Lessor and (if requested by Lessor) one or more of the Financing Parties noted on the register. During the Lease Term, Lessee shall take, or cause to be taken, such action with respect to the registration, recording, filing, reregistering, rerecording and refiling of any Operative Document, any Financing Security Document or other documents or instruments and take such other actions (including amending the Operative Documents and/or entering into new agreements and other documents reflecting the commercial agreements of Lessor and Lessee under the Operative Documents), in each case as necessary or advisable under the Laws of the State of Registration, the Lessee Jurisdiction or any jurisdiction in which the Aircraft will be operated or under any international treaty, convention or protocol (including, if applicable, the Cape Town Agreements), fully to protect, establish, perfect and preserve Owner’s, Lessor’s and each Financing Party’s rights and interests in the Aircraft, the Operative Documents and the Financing Security Documents as against Lessee and any other Person. Lessee shall not take any action or omit to take any action that may invalidate any such registration, recording, filing, reregistering, rerecording and refiling or otherwise prejudice Owner’s, Lessor’s or any Financing Party’s rights and interests in the Aircraft, the Operative Documents or the Financing Security Documents as against Lessee and any other Person. Lessee shall provide Lessor with evidence of such registration, recording, filing, reregistering, rerecording and refiling as soon as it becomes available. Lessee shall ensure that the original certificate of registration for the Aircraft is kept in the Aircraft or, if Lessor permits it to be removed, at a location designated by Lessor.
7.3		Cape Town Convention
		Lessor and Lessee agree to comply with the requirements of Schedule 9 in respect of the delivery of the Aircraft hereunder and during the Lease Term.

8.		POSSESSION
8.1		No Transfer of Possession
		Lessee shall not, without the prior written consent of Lessor, for the duration of the Lease Term in any manner deliver, transfer or relinquish possession of the Aircraft, Airframe or an Engine or any Part, or install an Engine, or permit any such Engine to be installed, on an airframe other than the Airframe covered hereby, provided that so long as (1) except in the case of testing, service, repair, maintenance or overhaul work under Section 8.1.2, no Event of Default shall have occurred and be continuing and (2) the action to be taken shall not adversely affect, or be of a nature that could reasonably be expected to adversely affect, Owner’s, Lessor’s or any Financing Party’s right, title and interest in and to the Aircraft or Airframe, or any Engine or Part, or under any Operative Document, then:
8.1.1		Wet Lease; Subleasing

	(1)		Lessee may (or may permit any Permitted Sublessee to) operate the Aircraft for the benefit of a third party under a “wet lease” arrangement pursuant to which the Aircraft shall at all times (a) remain in the sole and direct possession, dominion and control of Lessee, (b) maintain its registration in the State of Registration without any amendment or modification as a consequence of such arrangement, (c) be operated solely and directly by regular employees of Lessee, and (d) be maintained, insured and otherwise operated by Lessee in accordance with all Laws applicable to Lessee and the requirements of each Operative Document (and pursuant to which no possessory rights whatsoever are granted to the wet lessee) (a “Wet Lease”).
	(2)		Lessee may sublease the Aircraft to a Permitted Air Carrier for a period not extending beyond the end of the Lease Term and in any event not exceeding three years (not counting renewals), provided that:

	(a)		Such Permitted Air Carrier (i) expressly acknowledges directly to Lessor, Owner and the Financing Parties their respective interest in the Aircraft and under the Operative Documents, (ii) covenants directly to Lessor, Owner and the Financing Parties not to do anything which would prejudice their respective interests, rights and benefits in the Aircraft or the Insurances or under the Operative Documents and (iii) agrees directly with Lessor that such Permitted Air Carrier’s rights under such lease shall be subject and subordinate to the rights of Lessor under this Agreement and that the leasing of the Aircraft to such Permitted Air Carrier and the right of the Permitted Air Carrier to the use, possession and enjoyment of the Aircraft shall terminate simultaneously with the giving by Lessor of any notice of termination pursuant to Section 13 or any other termination of the Lease Term.
	(b)		The relevant sublease agreement shall contain such terms and provisions as shall ensure that the Permitted Air Carrier thereunder, if complying with the said terms and conditions, will comply with, and will not do anything which would contravene, the provisions of the Operative Documents, and shall not permit any further subleasing without the prior consent of Lessor, which consent may be withheld in Lessor’s sole discretion.

	(c)		At the request of Lessor, Lessee shall assign the sublease agreement and any related documents to Lessor as security for Lessee’s obligations under the Operative Documents, such assignment to be in form and substance reasonably satisfactory to Lessor and to be consented to by the Permitted Air Carrier (for the avoidance of doubt, such assignment shall provide that Lessee shall be entitled to receive the rent payable under the assigned sublease agreement until such time as an Event of Default shall have occurred).
	(d)		Lessee shall provide to Lessor evidence reasonably satisfactory to Lessor confirming that Insurances are and will remain in full force and effect in accordance with the terms of Section 11 during the term of the sublease or, if the Permitted Air Carrier is to maintain insurance coverage during the term of such sublease, Lessee or such Permitted Air Carrier shall have furnished to Lessor all such documents, evidence and information relating to insurance coverage as are reasonably required to satisfy Lessor that the proposed insurance coverage is on terms equivalent to the required Insurances (including, without limitation, the currencies of payment required under the Insurances) and is in all respects reasonably satisfactory.
	(e)		Lessee shall obtain, at Lessee’s cost, a legal opinion from counsel reasonably acceptable to Lessor, addressed to Lessor, Owner and the Financing Parties and which is satisfactory in form and substance to Lessor, acting reasonably, confirming (i) that the priority, validity and enforceability of any existing ownership, leasehold, security and/or other interest held by Lessor, Owner or the Financing Parties on or in respect of the Aircraft under the Financing Security Documents will not be adversely affected by the relevant subleasing, (ii) if the Aircraft is to be registered on a register other than that of the initial State of Registration, that all necessary steps have been taken to ensure the continued priority, validity and enforceability of each such ownership, leasehold, security and/or other interest notwithstanding the transfer of the registration of the Aircraft to a register other than that of the initial State of Registration, (iii) the authority of the Permitted Air Carrier to enter the agreements described in this Section 8.1.1(2), the due execution and delivery of such agreements by the Permitted Air Carrier, the enforceability of such agreements and the priority and perfection of the sublease assignment described in Section 8.1.1(2)(c), and (iv) such other matters as may be requested by Lessor, acting reasonably.
	(f)		Notwithstanding any other provision of this Section 8.1.1(2), no sublease permitted under this Section 8.1.1(2) shall involve any transfer of title to or ownership interest in the Aircraft or any Engine or Part thereof.
	(g)		Lessee shall give Lessor at least 30 days’ prior written notice of any agreement to enter into the proposed subleasing, specifying the name of the proposed Permitted Air Carrier and the term of the proposed sublease and in the case of a sublease pursuant to which the Aircraft is to be registered outside the initial State of Registration, the name of the proposed State of Registration, provided that the State of Registration may be changed only if Lessor is satisfied, acting reasonably, that the interests of Lessor and Owner and of the Financing Parties shall not be adversely affected by such change.

	(h)		Lessee shall give to Lessor, no later than 15 days prior to the proposed date of execution of any sublease agreement, a copy of the agreed form of such sublease agreement and Lessee shall deliver to Lessor no later than seven days after the date of execution of any sublease agreement a copy certified by an officer of Lessee of such sublease agreement.
	(i)		Lessee will be responsible for and shall pay to Lessor on demand all reasonable costs and expenses (including reasonable attorneys fees and expenses and out-of-pocket expenses incurred in connection with any registrations required under Section 7.3.5 and other costs) payable or incurred by Lessor in connection with the subleasing and any reregistration (including any termination of such subleasing and any related reregistration) of the Aircraft.

8.1.2		Maintenance, Etc.
		Lessee may (or may permit any Permitted Sublessee to) deliver or cause to be delivered possession of the Airframe or an Engine or any Part to the manufacturer thereof or to any Agreed Maintenance Performer for testing, service, repair, maintenance or overhaul work or for alterations, modifications or additions to the extent required or permitted by the terms hereof.
8.1.3		Installation of Engines on Other Airframes
		Lessee may (or may permit any Permitted Sublessee to) install an Engine on any Airframe Manufacturer model A330-200 airframe (other than the Airframe) owned, leased or hire-purchased by Lessee if (1) such airframe is free and clear of all Liens except (A) Permitted Liens and those Liens which apply only to the engines (other than Engines and Parts installed on the Engines), appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment installed on such airframe (but not the airframe as an entirety), and (B) the rights of the parties to any security agreement, mortgage, lease or hire-purchase agreement covering such airframe, (2) such security agreement, mortgage, lease or hire-purchase agreement effectively provides that such Engine shall not become subject to the interest of the Lien, ownership or leasehold interest of any party to such security agreement, mortgage, lease or hire-purchase agreement, notwithstanding the installation thereof on such airframe at any time while such Engine is owned by Owner, (3) neither (a) the provisions of any applicable Law or (b) the terms of any lease or other agreement or security interests to which such aircraft or engine is subject prohibit such installation or will have the effect at any time of divesting, prejudicing or impairing the title and interests of Owner, Lessor or the Financing Parties in respect of that Engine or under any Operative Document or Financing Security Document, and (4) the interests of the Indemnified Parties are protected in the same manner as if the Engine were installed upon the Airframe and (5) such Engine is not operated above 71,100 pounds thrust.
8.2		General
		The rights of any Person (other than a mechanic or materialman to the extent of any mechanic’s or materialmen’s Lien) who receives possession of the Aircraft, Airframe, any Engine or any Part on or after the Delivery Date shall be subject and subordinate to all the terms of each Operative Document, including the covenants contained in this Section 8 and in Section 11 and the rights of Lessor to repossession pursuant to Section 13 and to avoid any transfer of possession by Lessee. No relinquishment or transfer of possession of the Aircraft, Airframe, any Engine or any Part on or after the Delivery Date shall in any way release, discharge or otherwise limit or diminish any

		of Lessee’s obligations to Lessor (it being agreed that notwithstanding any such transfer or relinquishment of possession, Lessee shall continue to be primarily liable and responsible for performance of all of its obligations under each Operative Document), or constitute a waiver of Lessor’s rights or remedies hereunder or affect the registration of the Aircraft or the interests of the Financing Parties in the Aircraft or under the Operative Documents or Financing Security Documents.
		Lessor acknowledges that any consolidation or merger of Lessee or conveyance, transfer or lease of all or substantially all of Lessee’s assets otherwise permitted by the Operative Documents shall not be prohibited by this Section 8. In addition, Lessor acknowledges that the restrictions on assignment set forth in Section 14 shall not prohibit the exercise by Lessee of its rights under this Section 8.
9.		INDEMNITIES
9.1		General Indemnity
		Subject only to the exceptions set forth in Section 9.2, Lessee hereby assumes liability for and hereby agrees on demand to indemnify and keep indemnified each Indemnified Party against, and agrees to protect, save and keep harmless each Indemnified Party from (whether or not the transactions contemplated in the Operative Documents are consummated), any and all Expenses from time to time imposed on, incurred by or asserted against any Indemnified Party in any way relating to or arising out of:

	(1)		The Aircraft, the Airframe, any Engine or engine installed on the Aircraft, any Part, any Aircraft Documentation or any other thing delivered under any Operative Document;
	(2)		The acceptance, delivery, lease, sublease, registration, deregistration, ownership, re-registration, possession, repossession, presence, operation, location, condition, use or non-use, control, management, airworthiness, overhaul, replacement, existence, insurance, storage, preparation, installation, testing, manufacture, design, modification, alteration, maintenance, repair, re-lease or sale or any other transfer or disposition (in the case of each such re-lease, sale or other transfer or disposition, after the occurrence of an Event of Default), return, transfer, exportation, importation, abandonment or other disposition of, or the imposition of any Lien (or the incurrence of any liability to refund or pay over any amount as the result of any such Lien) on, the Aircraft, the Airframe, any Engine or engine, any Part or any other thing delivered under any Operative Document (whether on the ground or in the air) or any interest therein regardless of when the same arises or whether it arises out of or is attributable to any act or omission, neglect (actual, implied or imputed) or otherwise, of any Indemnified Party; and
	(3)		Any Operative Document, any of the transactions contemplated thereby (other than pursuant to any financing arrangements) or the enforcement of any of the terms thereof, including any breach or noncompliance by Lessee of any provision of any Operative Document or the enforcement of this Section 9, including any Expenses incurred, assumed or suffered by Lessor as a consequence of Lessee’s failure to accept the Aircraft in accordance with the Operative Documents.

9.2

Exceptions to General Indemnity

The indemnity provided for in Section 9.1 will not extend to any of the following Expenses of a particular Indemnified Party (but without limiting any rights of Lessor under Section 13):

	(1)		Expenses to the extent caused by the gross negligence or willful misconduct of any Indemnified Party (other than willful misconduct imputed to such person by reason of its interest in the Aircraft or any Operative Document);
	(2)		Taxes, it being agreed that Sections 9.3 and 9.6 and Schedule 6 set forth the agreements of Lessor and Lessee in relation to Taxes;
	(3)		Expenses to the extent attributable to acts of an Indemnified Party or the Follow-On Operator, or events which occur after this Lease Agreement has terminated or expired and Lessee has returned the Aircraft to Lessor in the condition and manner required by this Lease Agreement (except in the case of an Event of Loss, in which case no return of the Aircraft shall be required), and which are not fairly attributable to acts, events or circumstances occurring prior to such termination or expiration and, if applicable, such return;
	(4)		Expenses that Lessor has expressly agreed to pay under this Lease Agreement;
	(5)		Expenses attributable to Lessor Liens;
	(6)		Expenses to the extent caused by a breach by such Indemnified Party of any covenant, or by the inaccuracy or falsity of a representation or warranty made by such Indemnified Party, in this Lease Agreement or the documents and agreements delivered by such party to Lessee;
	(7)		Expenses constituting amounts payable under any documents related to the debt or equity financing or refinancing of the Aircraft for the payment of principal, interest, break funding, make-whole fees or other similar fees;
	(8)		Expenses constituting amounts payable to any Financing Party pursuant to any Financing Security Document (other than operational indemnities of the type and within the scope of operational indemnities contained in Section 9.1);
	(9)		Expenses associated with the financing or structuring of any entity directly or indirectly holding an interest in Lessor (other than operational indemnities of the type and within the scope of operational indemnities contained in Section 9.1);
	(10)		Expenses associated with claims attributable to the negotiation, execution and delivery of the Operative Documents;
	(11)		Expenses attributable to any Lien which an Indemnified Party is required to remove pursuant to the terms of the Operative Documents;
	(12)		Expenses that are internal or external costs related to the administration of normal course VAT compliance by Lessor or Owner in Lessee Jurisdiction (e.g., for services provided KPMG in connection with such VAT compliance);

	(13)		Expenses to the extent attributable to events which occur prior to the Delivery Date and not attributable to any act or omission by Lessee in breach of the Operative Documents; and
	(14)		Expenses directly or indirectly attributable to satisfying the requirements of the Department of Trade and Industry of Lessee Jurisdiction under the National Industrial Participation Programme.

9.3		Taxes
		Lessee’s tax indemnity and other related agreements are contained in Schedule 6, which schedule is hereby incorporated in this Section 9.3 by reference.

9.4

Currency Indemnity

	(1)		If any Indemnified Party or Tax Indemnitee receives an amount from Lessee in respect of Lessee’s liability under any Operative Document, or if such a liability is converted into a claim, proof, judgment or order, in a currency other than the currency (the “contractual currency”) in which the amount is expressed to be payable under any Operative Document, and if the amount received by such Indemnified Party or Tax Indemnitee, when converted into the contractual currency (at the market rate at which such Indemnified Party or Tax Indemnitee is able on the relevant date to purchase the contractual currency in New York or, at such Indemnified Party’s or Tax Indemnitee’s option, London with such other currency), is less than the amount owed by Lessee in the contractual currency, then Lessee shall on demand pay the amount of such deficit to such Indemnified Party or Tax Indemnitee, in the contractual currency, along with any costs or Taxes it shall have incurred or will incur in connection therewith.
	(2)		Lessee waives any right it may have in any jurisdiction to pay any amount under any Operative Document in a currency other than that in which it is expressed to be payable.

9.5

Scope, Survival, Etc.

	(1)		Lessee shall be obligated under this Section 9 and Schedule 6 as a primary obligor irrespective of whether an Indemnified Party or Tax Indemnitee shall also be indemnified, guaranteed or insured with respect to the same matter under any of the Operative Documents or otherwise by any other Person, and such Indemnified Party or Tax Indemnitee may proceed directly against Lessee under this Section 9 and/or Schedule 6 without first resorting to any such other rights of indemnification, guarantee or insurance and without declaring this Lease Agreement to be in default or taking other action under any Operative Document.
	(2)		All indemnities provided for in this Section 9 (except as provided in in Section 9.2(3)) and Schedule 6 (except as provided in Section 2(3) of Schedule 6) shall survive and remain in full force and effect, notwithstanding the expiration or termination of the Lease Term or of any Operative Documents (other than as provided in Section 2 of Part II of Schedule 3), the return of the Aircraft and the payment in full of all sums payable under the Operative Documents.

	(3)		Lessee acknowledges that the Indemnified Parties and Tax Indemnitees, or any of them, may authorize Lessor, by notice in writing to Lessor and Lessee, to make claims and demands under any indemnity under any Operative Document on behalf of such Indemnified Parties and Tax Indemnitees, and Lessee shall be obligated to make all payments pursuant to any such indemnity to Lessor, to the extent claimed by Lessor on behalf of such Indemnified Parties and Tax Indemnitees (it being understood that Lessee is entitled to, and shall, conclusively rely upon the instructions of Lessor with respect to the payment of amounts owing to any Indemnified Party or Tax Indemnitee under the indemnities); provided that before any Indemnified Party or Tax Indemnitee authorizes Lessor to make such claims or demands, such indemnified person must agree in writing to be bound by Section 9.5 and 19.6 and Section 6 of Schedule 6.
	(4)		Each Indemnified Party and Tax Indemnitee will give prompt written notice to Lessee of any liability of which such party has knowledge for which Lessee is, or may be, liable under Section 9.1 or Schedule 6 provided that failure to give such notice will not prejudice or otherwise affect any of the rights of the Indemnified Parties or Tax Indemnitees under Section 9.1 or Schedule 6 except to the extent Lessee’s rights to contest are prejudiced or any penalties or interest is incurred as a result of such failure.
	(5)		Lessee shall provide the relevant Indemnified Party or Tax Indemnitee with such information not within the control of such Person, as is in Lessee’s control or is reasonably available to Lessee, which such Person may reasonably request and Lessee shall otherwise cooperate with and consult with such Person so as to enable such Person to defend any action, suit or proceeding brought against such Person for which Lessee is responsible under this Section 9 or Schedule 6.
	(6)		Provided no Default shall have occurred and be continuing, Lessee shall, following such cooperation and consultation, have the right to assume and conduct, at its own expense, promptly and diligently, the defense of the relevant Indemnified Party with respect to a claim under Section 9.1, provided that the following shall have occurred (each to the satisfaction of Lessor):

	(a)		Lessee shall have consulted, and shall continue to consult, with Lessor as to the appropriate defense and conduct thereof and shall only instruct and retain counsel reasonably acceptable to Lessor;
	(b)		Lessee shall have confirmed in writing that any such amounts payable in relation to such claim, in the event Lessee’s defense is unsuccessful, are covered by the terms of this Section 9;
	(c)		such defense shall not adversely affect the ability of the Insured Parties to claim under any Insurances;
	(d)		Lessor shall be entitled, upon consultation with and prior written notice to Lessee, to terminate Lessee’s participation in the defense of any claim where an act, delay or omission of Lessee, or the conduct of such defense by Lessee, indicates (in any case, in the reasonable view of Lessor) that the interests of any Indemnified Party may be materially adversely prejudiced by Lessee’s continued defense of such claim;

	(e)		such defense or any related proceedings do not involve any material risk of the sale, forfeiture or seizure of, or the creation of a material Lien on, the Aircraft; and
	(f)		Lessee shall not enter into a settlement or other compromise on Lessor’s behalf with respect to any Expense without the relevant Indemnified Party’s prior written consent.

The relevant Indemnified Party may participate at its own expense and with its own counsel in any judicial proceeding controlled by Lessee pursuant to this Section 9.5(6).

9.6		Indemnities Payable on an After-Tax Basis
		Lessee agrees that, with respect to any payment or indemnity to an Indemnified Party or Tax Indemnitee under this Section 9 or Schedule 6, Lessee’s payment or indemnity obligations shall be increased by an amount, if any, which after taking into account any Tax benefits generated by such payment or liability and actually utilized by such Tax Indemnitee currently in reducing its liability for Taxes shall be necessary to hold such Indemnified Party or Tax Indemnitee harmless from all Taxes required to be paid by such Indemnified Party or Tax Indemnitee in respect of the receipt or accrual of such payment or indemnity (including any payment by such Indemnified Party or Tax Indemnitee of any Taxes in respect to any indemnity payments received or receivable (including any indemnity payments received by a Person other than an Indemnified Party but treated as taxable in the hands of such Indemnified Party) under this Section 9 or Schedule 6).

10.

RISK OF LOSS, DESTRUCTION AND REQUISITION, ETC.

10.1		Risk of Loss
		Throughout the Lease Term and until the Return, Lessee shall bear all risk of loss, damage, theft or destruction of, or any other Event of Loss with respect to, the Aircraft, the Airframe, each Engine and each Part and the following provision of this Section 10 shall apply during such period (but not before).

10.2

Notice of Damage or Event of Loss

(1)

Lessee shall notify (with then available details) Lessor promptly (and in any case within five Business Days) of any loss or damage (whether or not constituting an Event of Loss) of or to the Aircraft, the Airframe or any Engine for which the cost of correction or repairs may exceed the Damage Notice Threshold and, if not constituting an Event of Loss, shall provide Lessor promptly with a proposal for carrying out the correction or repair, which repair shall minimize any diminution in marketability or residual value of the Aircraft resulting from such loss or damage. Lessee and Lessor agree that if any dispute arises about the scope or nature of such correction or repair, they shall consult with Airframe Manufacturer, Engine Manufacturer or other relevant manufacturer, as appropriate, and Lessee and Lessor agree to accept as conclusive, and be bound by, such manufacturer’s directions or recommendations as to the manner in which to carry out such correction or repair.

(2)

Upon the occurrence of (a) an event or circumstance which may (given the passage of time or otherwise) result in an Event of Loss of the Aircraft or any Engine, Lessee shall promptly notify Lessor of such event or circumstance and of the steps being taken (or proposed to be taken) with respect thereto and (b) an Event of Loss with respect to the Aircraft or any Engine, Lessee shall forthwith (and in any case within two Business Days after such occurrence) give Lessor written notice of such Event of Loss and Lessee shall take all reasonable steps in order to preserve the Aircraft or Engine, as applicable, including the Aircraft Documentation, for purposes of investigation.

10.3

Event of Loss With Respect to the Aircraft

	(1)		By the earlier of (a) 180 days after the occurrence of an Event of Loss with respect to the Aircraft or (b) the date on which the applicable insurance or requisition proceeds are paid, Lessee shall pay or cause to be paid to Lessor the Stipulated Loss Value after taking into account any amounts already paid against Lessee’s obligation to pay the Stipulated Loss Value, unless (i) an amount equal to the Stipulated Loss Value was actually received by Lessor from the insurers or, in the case of a requisition, from the relevant Government Entity and (ii) Lessor was able, under applicable Law, to apply such amount against Lessee’s obligation to pay the Stipulated Loss Value.
	(2)		Until the date on which the Stipulated Loss Value is paid in full, Lessee shall continue to pay all Rent—Periodic as scheduled and shall continue to perform all of its other obligations under the Operative Documents, except to the extent rendered impossible by the occurrence of such Event of Loss or rendered, in the reasonable opinion of Lessor, unnecessary. If the Stipulated Loss Value is paid in full on a date other than a Rent Payment Date, Lessor shall, so long as all other Secured Obligations then due and owing have been paid in full, refund or cause to be refunded to Lessee any paid but unaccrued Rent—Periodic.
	(3)		Upon receipt by Lessor of the full amount of the Stipulated Loss Value pursuant to this Section 10.3, and if all Secured Obligations then due and owing have been paid or performed, then Lessor shall, (a) upon the joint written request of Lessee and each relevant insurance underwriter, convey or cause to be conveyed to the Person designated in such request title to the Aircraft (including the Engines and all Parts) without recourse or warranty (except as to absence of all rights of Owner and Lessor and all Lessor Liens) and subject to the disclaimer set forth in Section 4 of Part II of Schedule 3 and (b) return to Lessee (i) the Security Deposit or Letter of Credit, as applicable, and any Letter of Credit provided in lieu of paying Reserves in respect of life-limited Parts for each Engine and (ii) an amount equal to the then notional account balance of the Reserves and (c) any insurance proceeds from the Insurances required under this Section 11 paid to Lessor in excess of the Stipulated Loss Value due under clause (1) of this Section 10.3. Upon request by Lessee and assuming no Payment/Bankruptcy Default has occurred and is continuing, Lessor and Lessee shall discuss using a netting mechanism in respect of the payment of the amounts due to Lessee under this clause (3) and the payment of the Stipulated Loss Value due to Lessor under clause (1) of this Section 10.3.

10.4		Event of Loss With Respect to an Engine
		If an Event of Loss occurs with respect to an Engine, under circumstances not constituting an Event of Loss with respect to the Aircraft, then:

	(1)		Lessee shall promptly and, in any event, within 18 months after the occurrence of such Event of Loss (or, if earlier, the date of expiration or termination of the Lease Term), convey or cause to be conveyed to Owner with full title guarantee, as replacement for the Engine with respect to which such Event of Loss occurred, title to a Replacement Engine, free and clear of all Liens (other than Permitted Liens), provided that if Lessee has not so conveyed or caused to be so conveyed to Owner a Replacement Engine with six months after the occurrence of such Event of Loss, then Lessee shall pay, or cause the relevant insurers to pay or provide a letter of credit (substantially in the form attached to this Lease Agreement, mutatis mutandis) for, the replacement value of the Engine to Lessor, which amount or letter of credit shall deemed a part of the Security Deposit and which amount or letter of credit shall be returned to Lessee once Lessee has so conveyed or caused to be so conveyed to Owner a Replacement Engine (or otherwise when the Security Deposit is required to be returned under the Lease), provided further that in the event that Lessee satisfies the preceding proviso, Lessor agrees that in the event Lessor receives any insurance proceeds with respect to such Engine Event of Loss, such proceeds shall be paid over to Lessee.
	(2)		Prior to or at the time of any conveyance of a Replacement Engine, Lessee shall comply with each of the following requirements:

	(a)		Furnish Owner with a full warranty bill of sale, in form and substance reasonably satisfactory to Owner, conveying legal and beneficial title to Owner of such Replacement Engine, free of Liens (other than Permitted Liens), execute a supplement subjecting such Replacement Engine to this Lease Agreement and furnish such evidence and opinions relating to the transfer of title to such Replacement Engine and the effectiveness of such supplement as Owner or Lessor shall request.
	(b)		File such instruments as are necessary or advisable in Owner’s or Lessor’s reasonable opinion to establish and protect the interests of Owner, Lessor and each Financing Party in any such Replacement Engine (whether under the Cape Town Agreements or otherwise).
	(c)		Assign to Owner the benefit of all manufacturers’ and vendors’ warranties with respect to such Replacement Engine, if any.

	(3)		Upon compliance by Lessee with the requirements of this Section 10.4, Lessor shall, upon the joint written request of Lessee and each insurer which contributed to the payment of any insurance proceeds with respect to the lost Engine, convey or cause to be conveyed to the Person designated in such request title to such Engine without recourse or warranty (except as to absence of all rights of Owner and Lessor and all Lessor Liens) and subject to the disclaimer set forth in Section 4 of Part II of Schedule 3, and such Engine shall thereupon cease to be an Engine leased hereunder and, for all purposes of the Operative Documents, the conveyed Replacement Engine shall be deemed part of the property leased hereunder, and shall be deemed an “Engine.”
	(4)		No Event of Loss with respect to an Engine shall result in any reduction in or abatement of Rent.

(5)

Forthwith upon title to a Replacement Engine passing to Owner pursuant to this Section 10.4, Lessor and Lessee shall reasonably determine whether the life-limited Part Reserves then held by Lessor (in cash or in the form of a letter of credit) for the Engine replaced are at an appropriate level (based primarily on Engine Manufacturer’s list price for such parts), and within 14 days of such agreement (a) where the Reserves are held in cash, Lessor shall refund to Lessee any agreed excess or Lessee shall pay Lessor any agreed deficiency and (b) where the Reserves are held in the form of a letter of credit, Lessor shall agree an adjustment to the stated amount of such Letter of credit and Lessee shall arrange for an amendment to such letter of credit to reflect such new stated amount.

Other than as provided in this Section 10.4 and Section 1.5(7) of Schedule 2 and Section 1.1 of Part II of Schedule 4, Lessee shall not have the right to substitute any engine for an Engine.

11.

INSURANCE

11.1		Scope of Insurances
		At all times during the Lease Term, and until the Aircraft is returned to Lessor in the condition and manner required by each Operative Document, Lessee shall maintain or cause to be maintained with respect to the Aircraft, at its own expense, the following described insurances with reputable insurers in the international aviation market:

11.1.1		Liability Coverage
		Aviation legal liability and comprehensive general liability, including products, bodily injury (including passengers), property damage, personal injury, cargo, mail, baggage liability insurance (including War and Allied Risks), for a combined single limit of not less than the Stipulated Liability Coverage.

11.1.2		Hull and Spares Coverage
		Hull all-risk ground and flight aircraft hull insurance covering the Aircraft, and all-risk spares insurance covering Engines and Parts while not treated as part of Aircraft for insurance purposes (including while in transit), (1) for an agreed value not less than the Stipulated Loss Value in respect of all-risk hull insurance and (2) for the full replacement value in respect of spares insurance.

11.1.3		War Hull and Spares Coverage
		War-risk, hijacking and allied perils insurance, on form LSW555D or such other comparable form as is standard cover provided by the aviation insurance market, covering each of the perils specified in paragraphs (a) and (c) through (g), inclusive, of AVN.48B, including requisition by the government of registry of the Aircraft, in an amount at least equal to (1) the Stipulated Loss Value, in respect of hull coverage (and with an overall policy limit, any one loss and in all during the policy period, in an amount reasonably satisfactory to Lessor from time to time) and (2) full replacement value in respect of spares coverage.

11.1.4		General Requirements
		The insurances required under Sections 11.1.1 through 11.1.3 shall (1) apply worldwide, subject to standard insurance market geographical limits, provided that such geographical limits do not exclude any area where the Aircraft is operated and that overflying of such excluded areas is covered, (2) be of the type and covering the same risks usually carried by comparable international airlines operating similar aircraft and engines on similar routes, and, in any case, covering risks of the kind customarily insured against by such air carriers with respect to aircraft operating on such routes, and shall be reasonably satisfactory in form and substance to Lessor, (3) be placed with insurers in the London markets (and if placed through brokers, through brokers) of recognized reputation, responsibility and substantial financial capacity, specializing in and normally participating in aviation insurance markets and otherwise satisfactory to Lessor, (4) in the case of hull and spares coverage, provide for deductibles (except in connection with a total loss) in such amounts as are customary with respect to aircraft and engines of the same type and used in the same manner as the Aircraft or Engines, as the case may be, by other similar air carriers, but in no event in an amount greater than the Stipulated Deductible Amount per aircraft or engine per occurrence and in no event shall any other form of self insurance be permitted with respect to the risks covered by any insurance required under this Section 11, and (5) otherwise comply with the requirements set forth in, and be consistent with the issuance of a valid Certificate of Insurance in the form of Exhibit B. For the avoidance of doubt, it is a specific requirement of this Lease Agreement that the insurances comply and be consistent with the provisions set out herein and in the form of Certificate of Insurance attached as Exhibit B.

11.2

Application of Proceeds of Hull Insurance

11.2.1		Aircraft Event of Loss
		All proceeds of hull and hull war insurance up to the Stipulated Loss Value maintained in compliance with this Section 11 and received by Lessor as the result of the occurrence of an Event of Loss with respect to the Aircraft shall be paid in accordance this Lease Agreement and with Exhibit B.

11.2.2		Damage Not Constituting an Aircraft Event of Loss
		All proceeds of casualty insurance maintained in compliance with this Section 11 and received with respect to damage to or loss of any part of the Aircraft (including an Engine) in circumstances not constituting an Event of Loss with respect to the Aircraft shall be paid in accordance with this Lease Agreement and Exhibit B.

11.3		Liability Insurance
		After the last day of the Lease Term, provided such insurance is available to Lessee at no additional cost or at de minimis additional cost (or Lessor agrees to pay such additional cost), Lessee shall purchase and maintain, or cause to be purchased and maintained, at its own expense, liability insurance of the types (or the equivalent, which may include products liability cover) and in the amounts required under Section 11.1.1 and each Insured Party shall be named as an additional insured thereunder, for a period ending two years from the last day of the Lease Term, or until the next heavy check following the date of the Return of the Aircraft. This obligation shall survive and remain in full force and effect, notwithstanding the expiration or termination of the Lease Term or of any Operative Documents.

11.4		Reports, Etc.
		Lessee shall furnish, or cause to be furnished, to Lessor on or before the Delivery Date and not later than the renewal date of any insurance, and otherwise upon reasonable request a Certificate of Insurance substantially in the form of Exhibit B and a broker’s letter in the form of Exhibit C.

11.5

Special Undertakings

	(1)		Lessee shall comply with the terms and conditions of each policy of the insurances required by this Section 11 and shall not do, consent or agree to, or permit, any act or omission which (a) invalidates or may invalidate such insurances, (b) renders or may render void, voidable, unenforceable or otherwise not in full force in effect the whole or any part of any such insurances or (c) brings any particular liability within the scope of an exclusion or exception to such insurances.
	(2)		Lessee will:

	(a)		ensure that all legal requirements as to insurance of the Aircraft, any Engine or any Part which may from time to time be imposed by the Laws of the State of Registration or any state to, from or over which the Aircraft may be flown, in so far as they affect or concern the operation of the Aircraft, are complied with and, in particular, those requirements compliance with which is necessary to ensure that (i) the Aircraft is not in danger of detention or forfeiture, (ii) the Insurances remain valid and in full force and effect and (iii) the interests of the Indemnified Parties in the Insurances and the Aircraft, any Engine or any Part are not thereby prejudiced; and
	(b)		not use, cause or permit the Aircraft, any Engine or any Part to be used for any purpose or in any manner not covered by the Insurances or outside any geographical limit imposed by the Insurances.

(3)

If at any time Lessee fails to maintain insurance in compliance with this Section 11, Lessor shall be entitled but not bound to do any of the following, without prejudice to any other rights which it may have under this Lease Agreement or any other Operative Document by reason of such failure, (a) to pay any premiums due or effect or maintain such insurance or otherwise remedy such failure in such manner as Lessor considers appropriate, and Lessee shall upon demand reimburse Lessor in full for any amount so expended together with interest at the Past Due Rate, from the date of expenditure by Lessor to the date of reimbursement by Lessee, and/or (b) at any time while such failure is continuing, require the Aircraft to remain at any airport or proceed to and remain at any airport designated by Lessor until such failure is remedied to Lessor’s satisfaction.

11.6		Change of Circumstance and Industry Practice
		In the event that there is a material change in the generally accepted industry-wide practice with regard to the insurance of similar aircraft or any material change with respect to the insurance of similar aircraft based or operated in any jurisdiction in which the Aircraft may then be based or operated (whether relating to all or any of the types of insurance required to be effected under this Section 11), such that Lessor, on the basis of advice received from an independent insurance advisor of international reputation, shall be of the reasonable opinion that the insurance required

pursuant to this Section 11 is insufficient to protect the respective interests of Lessor and/or any other Insured Parties, the insurance requirements set forth in this Section 11 shall, following consultation with Lessee and its insurance advisors, be amended so as to include such additional or varied requirements as Lessor (upon the advice of such independent insurance advisor) may reasonably consider appropriate.

11.7		Additional Insurance
		Lessee acknowledges that each of Lessor and Owner has an insurable interest in the Aircraft. Each of Lessor and Owner shall have the right to obtain insurance in its own name and at its own expense with respect to such insurable interest to the extent that obtaining such insurance does not have the effect of raising the cost of the Insurances required hereunder. Lessee shall render each of Lessor and Owner all reasonable assistance requested by it in order that it may adequately protect such insurable interest. Lessee agrees that the maximum amounts payable to it or to others for its account or to be applied in discharge of its obligations by any underwriter or carrier of insurance maintained by Lessee upon the occurrence of an Event of Loss with respect to the Aircraft shall be limited to the Stipulated Loss Value unless the maintenance of any such insurance in an amount in excess of such Stipulated Loss Value does not prejudice Lessor’s or Owner’s interests under the insurances otherwise required by this Section 11 or prevent Lessor or Owner from obtaining such insurances as it requires. At Lessor’s request, Lessee shall have Lessee’s policies for the Aircraft amended so as to cover, in addition to the insurance required under this Section 11, Lessor’s or Owner’s insurable interest therein, provided that the agreement and cooperation of the primary insurer has been obtained and that Lessor, in such case, reimburses Lessee in the amount of the additional premium required to provide such additional coverage.

12.		EVENTS OF DEFAULT
		A fundamental term and condition of this Lease Agreement is that none of the following events shall occur and that the occurrence of any of the following events shall constitute a repudiatory breach of this Lease Agreement (but not a termination) and an “Event of Default” (whether any such event shall be voluntary or involuntary or come about or be effected by operation of Law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any Government Entity):

12.1

Payments

	(1)		Lessee shall have failed to make any periodic or scheduled payment in accordance with any Operative Document (including any payment of Rent—Periodic, Reserves, Return Compensation Payments or Stipulated Loss Value) within three Business Days after the date the same shall have become due; or
	(2)		Lessee shall have failed to make any other payment in accordance with the Operative Documents when the same shall have become due and such failure shall continue for seven Business Days after Lessee’s receipt of written demand therefor by the party entitled thereto; or

12.2

Covenants; Representations and Warranties

	(1)		Lessee shall have failed to carry and maintain any insurance required to be maintained under Section 11 (or a notice of cancellation in relation to such insurance is issued), the Aircraft shall be operated in contravention of the requirements of the conditions of any such insurance, or Lessee shall breach any warranty or condition of any such insurance that would invalidate in whole or material part or result in the cancellation of such insurance; or
	(2)		Lessee shall have failed to accept delivery of the Aircraft when obliged to do so under Section 2 or have otherwise failed to perform its obligations under the Operative Documents with the effect that the delivery of the Aircraft is delayed, provided that Lessee and Lessor shall work together to coordinate the delivery scheduling to the extent of any flexibility permitted by the Airframe Manufacturer Purchase Agreement (for the avoidance of doubt, this Section 12.2(2) shall have no force or effect after the Delivery Date); or
	(3)		Lessee shall have failed to return the Aircraft at the end of the Lease Term as and in the condition required by Schedule 4, except as provided in Exhibit G; or
	(4)		Lessee suspends or ceases or threatens to suspend or cease to carry on all or a substantial part of its business or operations; or
	(5)		Lessee disposes or threatens to dispose of all or a substantial part of its assets, whether by one or a series of transactions, related or not, except as permitted in Section 6.2.4; or
	(6)		Lessee shall have failed in any material respect to comply with, observe or perform, or shall fail to cause to be complied with, observed and performed, any of its covenants, agreements or obligations under any Operative Document (except as set forth in clause (2) or (3) above) and, except to the extent provided above in this Section 12, if such failure is capable of remedy, such failure shall continue for 30 days (five days in the case of Sections 4, 6.2.2, 6.2.5, 8 and 14.2 of the Lease Agreement) after the earlier of written notice thereof to Lessee; or
	(7)		Any representation or warranty made by Lessee in any Operative Document shall have proven to have been incorrect, inaccurate or untrue in any material respect as of the time made or repeated and, only if the same is capable of cure, such incorrectness, inaccuracy or untruth shall have (a) continued for a period of 30 days after written notice thereof to Lessee and (b) is material at the end of such period; or
	(8)		During the Lease Term Eurocontrol (or any authority on its behalf), the relevant body of the European Union (or any authority on its behalf) responsible for charges relating to the European Union Emission Trading Scheme or any other authority notifies Lessor that there are material navigation, landing, airport, emission or similar charges due from Lessee, and such material charges remain outstanding for a period of 30 days from the date of such notice, provided that (1) no Event of Default shall arise under this Section 12.2(8) for so long as 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 material danger of the detention, interference with use or operation or sale, forfeiture or loss of the Aircraft; and (2) such 30-day period shall not apply if there

is any material risk of detention, interference with use or operation or sale, forfeiture or loss of the Aircraft; or

12.3		Voluntary Bankruptcy, Etc.
		Lessee shall have (1) commenced any proceeding or filed any petition seeking relief under any applicable bankruptcy, insolvency, liquidation, administration, receivership or other similar Law, including in terms of the Insolvency Act 1936 or any business rescue proceedings, (2) consented to or acquiesced in the institution of, or failed to contravene in a timely and appropriate manner, any such proceeding or the filing of any such petition, (3) applied for or consented to the appointment of a conciliator, receiver, trustee, custodian, administrator, sequestrator or similar official for itself or for substantially all of its property or assets, (4) filed an answer admitting the material allegations of a petition filed against it in any such proceeding, (5) proposed or entered into any composition or other arrangement, or made a general assignment, for the benefit of creditors or declared a moratorium on the payment of indebtedness, (6) become insolvent or suspended payments on, become unable to, admitted in writing its inability to or failed generally to pay, substantially all of its debts as they become due, or (7) sought its own liquidation, reorganization, dissolution, administration or winding up; or
12.4		Involuntary Bankruptcy, Etc.
		A proceeding shall have been commenced or a petition shall have been filed, in either case, without the consent or application of Lessee, seeking (1) relief in respect of Lessee or of substantially all of its property or assets under any applicable bankruptcy, insolvency, liquidation, administration, receivership or similar Law, including in terms of the Insolvency Act 1936 or any business rescue proceedings, (2) the appointment of a conciliator, receiver, trustee, custodian, administrator, sequestrator or similar official for Lessee or for substantially all of its property or assets, or (3) the liquidation, reorganization, dissolution, administration or winding up of Lessee; and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be issued and shall not immediately be stayed; or
12.5		Existence, Validity, Etc.

(1) It is or becomes unlawful for Lessee to perform any of its obligations under any Operative Document to which it is a party, or (2) any Operative Document to which it is a party is or becomes wholly or partly illegal, invalid or unenforceable or (3) the existence, validity, enforceability or priority of the rights of Owner or Lessor of the Aircraft or under any Operative Document or otherwise, are or become illegal, invalid or unenforceable or are challenged by Lessee or any other Person claiming by or through Lessee, or (4) the existence, validity, enforceability or priority of the rights of the Financing Parties under the Financing Security Documents are challenged by Lessee or any other Person claiming by or through Lessee, other than, in the cases of each of clauses (1) through (4) of this Section 12.5, as provided in the legal opinions provided to Lessor under Schedule 7 ; or

12.6

Indebtedness or Lease Default

(1)

Lessee shall have failed to pay any amount in respect of any Indebtedness, when and howsoever due, or Lessee shall breach any other provision contained in any agreement or instrument relating to any indebtedness, and (a) such failure to pay or such breach shall continue after the applicable grace period, if any, specified in the agreement or

instrument relating to such indebtedness, (b) the maturity of such indebtedness has been accelerated and (c) the aggregate outstanding amount of all indebtedness under any such agreements or instruments which has been accelerated exceeds, in the aggregate, US$20,000,000 (or the equivalent thereof); or

	(2)		Lessee shall breach any provision of any aircraft lease agreement (other than an Other Lease Agreement), and such breach shall continue after the applicable grace period, if any, specified in such agreement, if, as a result of such breach, the relevant lessor has terminated the leasing of the relevant aircraft and attempted to repossess such aircraft on an involuntary basis; or
	(3)		any “Event of Default” shall have occurred and be continuing under any Other Lease Agreement; or

12.7		Judgments
		One or more judgments are rendered against Lessee that either (1) impose on it an obligation for the payment of money in excess of US$20,000,000 (or the equivalent thereof) in the aggregate or (2) grant to any Person equitable relief of any nature that would, if enforced, be reasonably expected to have a Material Adverse Effect and, in the case of any such judgments, the same shall remain undischarged for a period of 10 days or more, during which time execution of such judgment or judgments shall not be effectively stayed nor adequate bonding fully covering such judgment or judgments exist; or

12.8		Adverse Change
		A Material Adverse Effect shall occur; or
12.9		Change in Ownership
		Any single Person or group of Persons acquire control, directly or indirectly, of Lessee without the Lessor’s prior written consent.

13.		REMEDIES
13.1		Event of Default
		Upon the occurrence of any Event of Default and so long as the same shall be continuing, Lessor shall have the right to, in each case exercisable in Lessor’s sole discretion, (1) accept such Event of Default as a repudiation of this Lease Agreement and terminate the Lease Term and/or terminate this Lease Agreement and each other Operative Document and (2) whether or not Lessor exercises its rights under clause (1), do all or any of the following, at its option and in its sole discretion whereupon all rights of Lessee under this Lease Agreement and the Operative Documents shall cease forthwith (but without prejudice to the continuing obligations of Lessee thereunder), in addition to such other rights and remedies which Lessor may have under Law:

13.1.1		Retake Possession
		Upon the written demand of Lessor and at Lessee’s expense, cause Lessee to return promptly, and Lessee shall return promptly, the Aircraft and any part thereof (including the Aircraft

Documentation) as Lessor may so demand to Lessor or its order in the manner and condition required by, and otherwise in accordance with all the provisions of, this Lease Agreement as if such were being returned at the expiration of the Lease Term, or Lessor at its option, may enter upon the premises where the Aircraft or any part thereof is located and take immediate possession of and remove the same by summary proceedings or otherwise, and Lessee waives any right it may have under Law to a hearing prior to repossession of the Aircraft or any part thereof (and/or, at Lessor’s option, store the same at Lessee’s premises until disposal thereof by Lessor), all without liability accruing to Lessor for or by reason of such entry or taking of possession or removing whether for the restoration of damage to property caused by such action or otherwise, and Lessor is hereby irrevocably by way of security for Lessee’s obligations under this Lease Agreement appointed attorney for Lessee in causing the redelivery and will have all the powers and authorizations necessary for taking that action.

13.1.2		Termination or Enforcement
		Terminate this Lease Agreement and any other Operative Document, terminate the leasing of the Aircraft hereunder by Lessee (whereupon all of Lessee’s rights in relation to the Aircraft shall cease forthwith) and/or exercise any other right or remedy which may be available to it under Law or proceed by appropriate court action to enforce the terms hereof and/or exercise any other power, right or remedy which may be available to Lessor hereunder or under Law. Without limiting the generality of the foregoing Lessor shall have the right:

	(1)		to require Lessee to move the Aircraft to a location designated by Lessor and cease operating the Aircraft except as expressly authorized or directed by Lessor (and, to the extent not inconsistent therewith, with Lessee to comply with all of its obligations hereunder and under each other Operative Document);
	(2)		to require Lessee, and Lessee will, at request of Lessor, take all steps necessary to effect (if applicable) deregistration of the Aircraft and its export from the country where the Aircraft is for the time being situated and the Lessee Jurisdiction and any other steps necessary to enable the Aircraft to be redelivered to Lessor in accordance with this Lease Agreement;
	(2)		to require Lessee and Lessee will, at request of Lessor and at Lessee’s expense, take all steps necessary to ensure all rights under any warranty from any manufacturer, vendor, sub-contractor or supplier with respect to the Aircraft are assigned, including the obtaining of any such party’s consent to such assignment, to Owner and/or Lessor to the extent such warranties have not expired otherwise than through the assignment itself; and
	(3)		without need of any consent, authorization or action of Lessee, to cause the Aircraft to be deregistered by the Aviation Authority, and to be made ready for export and to be exported out of the country where the Aircraft is for the time being situated and the Lessee Jurisdiction, and to cause all rights of Lessee in respect of the Aircraft and this Lease Agreement and each other Operative Document under or in connection with or resulting from the registration of the Aircraft or the recordation of the Operative Documents with the Aviation Authority or otherwise, to be terminated and extinguished. In furtherance of the foregoing, Lessor shall be entitled and empowered to act in the name and in the place of Lessee as may be necessary or desirable, in Lessor’s sole discretion, including with respect to the execution of documents and instruments, to effect such deregistration, derecordation, exportation, termination and extinguishment.

			Lessee hereby irrevocably and by way of security for its obligations under this Lease Agreement appoints Lessor as its attorney to execute and deliver any documentation and to do any act or thing required in connection with the foregoing.
	(4)		to refuse to perform an obligation, or take any other action required, under any Operative Document, and such refusal shall not alter or reduce Lessee’s obligations under the Operative Documents.

13.1.3

Application of Funds, Etc.

	(1)		Without limiting any other provision of this Lease Agreement or of any other Operative Document, Lessor shall have the right to continue to hold any amounts (including the Security Deposit) received or held in respect of any Secured Obligations, and to withhold or set off against all amounts otherwise payable to Lessee hereunder or under any other Operative Document, and to use and apply in whole or in part any or all of such amounts, withholdings and setoffs to and against the Secured Obligations (in whatever order and according to whatever priority Lessor may choose), and any such use, application or setoff shall be absolute, final and irrevocable.
	(2)		If any sum paid or recovered in respect of the liabilities of Lessee under this Lease Agreement or any other Operative Document is less than the amount then due, Lessor may apply that sum to amounts due from Lessee under this Lease Agreement or any other Operative Document in such proportions and order and generally in such manner as Lessor may determine.
	(3)		Lessor may set off any Secured Obligation against any obligation owed by Lessor (or an Affiliate of Lessor) to Lessee, regardless of the place of payment or currency. If the obligations are in different currencies, Lessor may convert either obligation at the market rate of exchange available in London or, at its option, New York, for the purpose of the set-off. Amounts which would otherwise be due to Lessee from Lessor will fall due only if and when Lessee has paid all Secured Obligations, except only to the extent Lessor otherwise agrees or sets off such amounts against payments owing to it pursuant to the foregoing provisions of this clause (3).
	(4)		Notwithstanding the above, Lessor confirms its obligations under Section 4 with respect to the return of the Security Deposit and any Letter of Credit.

13.1.4		Damages
		In addition to (but not in duplication of) Lessor’s rights under Section 9.1, recover from Lessee, and Lessee shall on demand indemnify Lessor and/or Owner for, all damages (other than consequential damages except to the extent set forth in clause (2) below) suffered by Lessor and/or Owner in connection with such Event of Default or the exercise of Lessor’s and/or Owner’s remedies with respect to such Event of Default, including each of the following:

(1)

All accrued and unpaid Rent—Periodic payable hereunder in respect of any period prior to Return of the Aircraft to Lessor in the condition and otherwise in the manner required under this Lease Agreement.

	(2)		All Expenses incurred by Owner and/or Lessor and/or each Participant in connection with such Event of Default or the exercise of Lessor’s and/or Owner’s remedies with respect to such Event of Default, including (a) all reasonable costs and expenses incurred in connection with recovering possession, deregistration, exportation of the Airframe or any Engine and/or all reasonable costs and expenses in placing such Airframe or Engine in the configuration, condition and repair required by Schedule 4 and the other provisions of this Lease Agreement and all lost Rent—Periodic payments during such recovery and reconditioning, and in addition (to the extent not duplicative of any reasonable costs and expenses incurred to place such Aircraft in the configuration, condition and repair required by Schedule 4) all unpaid Reserves and Return Compensation Payments, and (b) all damages incurred by Lessor and/or Owner in connection with such Event of Default, including all losses suffered by Lessor and/or Owner because of its inability to place the Aircraft on lease with another lessee on terms as favorable to it as this Lease Agreement or because whatever use, if any, to which Lessor and/or Owner is able to put the Aircraft upon its return to Lessor, or the amount received by Lessor and/or Owner upon a sale or other disposal of the Aircraft, is not as profitable to Lessor and/or Owner as leasing the Aircraft for the remainder of the scheduled Lease Term in accordance with the terms of this Lease Agreement would have been, including in each case, amounts corresponding to the payments of Rent—Periodic which would have been due from the Return of the Aircraft to Lessor until the Aircraft is placed on lease or otherwise disposed of by Lessor and/or Owner, provided that in the case where the only Event of Default is a Event of Default under Section 12.2(3) then Lessor’s damages under this clause (b) shall be capped at an amount equal to 15 months of Fair Market Rent.
	(3)		Any break funding cost which is incurred in repaying funds raised to finance the Aircraft or in unwinding any interest rate swap or forward interest rate agreement.

		Lessor will use commercially reasonable endeavors to mitigate any such amounts for which Lessee is responsible under clause (2)(b) above, but Lessor shall not be obliged to consult with Lessee concerning any proposed course of action or to notify Lessee in advance of the taking of any particular action. Lessor shall provide a statement, with reasonable details, of any amount claimed under this Section 13.1.4.
		For the avoidance of doubt and without limiting Lessor’s other rights under this Section 13 or under Section 9, in connection with the occurrence of any Event of Default, Lessor shall have the right to demand, and Lessee shall on demand pay to Lessor, damages to equal all Expenses incurred by Owner and/or Lessor in connection with such Event of Default.
		For the purposes of this Section 13.1.4, “Fair Market Rental” shall mean the monthly rental (excluding reserves) contained in any lease to a Follow-On Operator, provided that if no such lease exists “Fair Market Rental” shall be the monthly rental value (excluding reserves) which would be obtained for the Aircraft in an arm’s-length transaction between an informed and willing lessee under no compulsion to lease and an informed and willing lessor in possession under no compulsion to lease and assuming that the condition of the Aircraft was in compliance with the terms of the Operative Documents (including being in the Return Condition), which value shall be determined by mutual agreement of Lessor and Lessee within five Business Days of request by either Lessor or Lessee. In the absence of mutual written agreement within such period, each of Lessor and Lessee shall appoint within five Business Days an internationally recognized firm of independent aircraft appraisers to determine and agree the Fair Market Rental. If either Lessor or Lessee fails to appoint such an appraisal firm within such period, the Fair

Market Rental Value shall be determined by the one appointed appraisal firm. If the two appraisal firms are so appointed and fail to determine and agree a Fair Market Rental within 15 Business Days, then each appraisal firm shall submit its determination of the Fair Market Rental before the end of such 15 Business Day period and Lessor shall request the American Arbitration Association (or any successor organization thereto) in New York, New York to appoint a third internationally recognized firm of independent aircraft appraisers, which third appraisal firm shall select within 10 Business Days the determination of one of the two initially appointed appraisal firms as being closest to the Fair Market Rental Value, and such determination shall be the Fair Market Rental for purposes of this Section 13.1.4. The cost of all appraisal firms shall be borne by Lessee.

13.1.5		Sale or Re-lease of Aircraft
		If an Event of Default occurs, Lessor and/or Owner shall have the right to sell or re-lease or otherwise deal with the Aircraft at such time and in such manner and on such terms as Lessor considers appropriate in its absolute discretion, free and clear of any interest of Lessee, as if this Lease Agreement had never been entered into, subject to Lessor’s obligation to mitigate as provided in the penultimate paragraph of Section 13.1.4.

13.2		General
		Any amount referred to in any Operative Document which is payable to or retainable by Lessee thereunder shall not be paid to or retained by Lessee while a Payment/Bankruptcy Default shall have occurred and be continuing, but instead such amount shall be held by or paid over to Lessor, as security for the Secured Obligations, to be held and applied against the Secured Obligations as and when due. At such time as there shall not be continuing any Payment/Bankruptcy Default, such amount shall be paid to Lessee to the extent not so applied.
14.		TRANSFER OF LEASE
14.1		Transfer by Lessor
14.1.1		Right to Transfer
		Lessor may, without the consent of Lessee, at any time:

	(1)		sell, transfer, assign absolutely or otherwise dispose of its right, title and interest in and to this Lease Agreement, any other Operative Document and the Aircraft, to any Person, including pursuant to a sale and leaseback or a novation of this Lease Agreement together with a sale of the Aircraft (any such transaction, an “Absolute Transfer”); or
	(2)		mortgage, assign or otherwise grant an interest or transfer as security all or any portion of its right, title and interest in and to this Lease Agreement, any Operative Document and/or the Aircraft, to any Person, including pursuant to a secured loan financing (any such transaction, a “Security Transfer”); or

Participant may, without the consent of Lessee, at any time sell, transfer, assign absolutely or otherwise dispose of Participant’s right, title and interest in and to Owner (any such transaction, a “Participant Transfer”).

In the case of any Absolute Transfer, Security Transfer or Participant Transfer, Lessor will notify Lessee no later than 10 days prior to any transfer and Lessee agrees to promptly execute and deliver in connection with any transfer such documents and assurances (including executing a consent to the assignment, transfer or a novation agreement, as applicable, and procuring the reissuance of insurance certificate(s) to reflect such transaction and the taking of all necessary steps to obtain consequential amendments to the Financial Approval, if so required) and to take such further action as Lessor may reasonably request to establish or protect the rights and remedies created or intended to be created in favor of the transferees in connection with any transfer, provided that any such transfer shall comply with the conditions specified in Section 14.1.2.

14.1.2		Conditions
		As conditions precedent to any Absolute Transfer, Security Transfer or Participant Transfer becoming effective:

	(1)		Lessor will procure that the transferee shall have executed and delivered to Lessee a letter of quiet enjoyment in respect of Lessee’s use and possession of the Aircraft which shall contain a covenant substantially in the form of Section 6.1.1.
	(2)		Lessor shall have reimbursed to Lessee (or following such transfer shall promptly reimburse to Lessee) its reasonable out-of-pocket expenses actually incurred in connection with co-operating with Lessor in relation to any such transfer referred to in this Section 14.1, provided that such expenses are substantiated to Lessor’s reasonable satisfaction and provided further that no Event of Default has occurred and is continuing.
	(3)		Lessee’s obligations under the Operative Documents shall not, as measured at the time of the completion of such transfer, increase as a consequence of such transfer (other than in respect of Taxes, which are addressed in Schedule 6) and Lessee’s rights and benefits under the Operative Documents shall not, as measured at the time of the completion of such transfer, be diminished as a consequence of such transfer. Neither a change in the Person or Persons to whom, or for whose benefit, Lessee performs its obligations under the Operative Documents, nor an increase in the number of, or change in the nature of, beneficiaries under any indemnification, insurance or other obligation shall, in each case, constitute by itself or in the aggregate an increase in the obligations of Lessee under the Operative Documents.
	(4)		In the case of an Absolute Transfer only, all obligations of Lessor under the Operative Documents which arise from and after such transfer shall have been assumed by the transferee of Lessor pursuant to an agreement enforceable by Lessee; thereupon, without the necessity of any further action by any Party the assigning Lessor shall be released from all of the obligations so assumed.
	(5)		In the case of an Absolute Transfer, Lessor shall ensure that such transferee shall at the time of transfer shall have a combined capital and surplus or tangible net worth not less than US$30,000,000 or the obligations of such transferee under the Operative Documents be guaranteed (pursuant to a guarantee reasonably acceptable to Lessee, with Lessee confirming that the form of guarantee attached to this Lease Agreement is acceptable to Lessee) by an entity with at the time of transfer a net worth of not less than

			US$30,000,000. Lessor will procure that Lessee shall have received a certified balance sheet from either the transferee or the guarantor, as applicable.
	(6)		In the case of a Participant Transfer, Lessor shall ensure that such transferee shall provide a guarantee reasonably acceptable to Lessee (with Lessee confirming that the form of guarantee attached to this Lease Agreement is acceptable to Lessee) and guaranteeing the obligations of Lessor under the Operative Documents issued by an entity with at the time of transfer a net worth of not less than US$30,000,000. Lessor will procure that Lessee shall have received a certified balance sheet from either the transferee or the guarantor, as applicable.

		Without prejudice to any rights of any Indemnified Party under any Operative Document in effect on or after the occurrence of an Absolute Transfer or Participant Transfer, after such transfer and Lessee shall comply with the terms and conditions of Section 11.3 with respect to “Lessor” or Participant, as the case may be and each other Indemnified Party (as determined immediately prior to such Absolute Transfer) as if the effective date of such transfer were the last day of the Lease Term.
14.2		Assignment or Transfer by Lessee
		Lessee may not, without the prior written consent of Lessor, assign or transfer (including by merger or consolidation other than as permitted by Section 6.2.4) any of its right, title or interest in, or delegate any of its obligations under, any Operative Document, and any such assignment, transfer or delegation without the prior written consent of Lessor shall be null and void. This Section 14.2 is not intended to be a restriction on Lessee’s rights under Section 8.1.1(2).
14.3		Successors and Assigns
		Subject to the foregoing, the terms and provisions of each Operative Document shall be binding upon and inure to the benefit of Lessor and Lessee and their respective successors and permitted assigns and permitted transferees.
15.		NO SETOFF, COUNTERCLAIM, ETC.
		This Lease Agreement is a net lease and Lessee’s obligation to pay Rent is and shall be absolute and unconditional and shall not be abated, suspended, diminished, reduced, delayed, discontinued, terminated or otherwise affected by any condition, circumstance, act or event of any kind whatsoever, including any of the following: (1) the unavailability, interruption or cessation in use of the Aircraft for any reason, (2) any defect in the title, airworthiness, merchantability, fitness for any purpose, condition, design, specification or operation of any kind or nature of the Aircraft, or the ineligibility of the Aircraft for any particular use or trade or for registration or certification, or (3) any other circumstance, happening or event whatsoever, whether or not similar to the foregoing, which but for this provision would or might have the effect of terminating or in any other way affecting any obligation of Lessee hereunder, it being the express intention of Lessor and Lessee that all Rent and other amounts payable by Lessee under any Operative Document shall be payable in all events, unless the obligation to pay the same shall be terminated pursuant to the express provisions of this Lease Agreement. Lessee hereby waives, to the extent permitted by Law, any and all rights which it may have or which at any time hereafter may be conferred upon Lessee, by Law or otherwise, to terminate, cancel, quit or surrender any Operative Document, or to abate, suspend, defer, reduce or otherwise fail to comply in full with

		any obligation imposed upon Lessee thereunder or in relation hereto, except termination of this Lease Agreement in accordance with the express provisions hereof.
		Nothing in this Section 15 shall be construed to limit any right Lessee may have to independently pursue any claim for damages that it may have against Lessor or any other Indemnified Party under this Lease Agreement, Law or otherwise.
16.		FURTHER ASSURANCES, ETC.
16.1		Further Assurances
		Without limiting the other obligations and liabilities of Lessee under the Operative Documents, Lessee agrees to promptly and duly execute and deliver to Lessor such further documents and assurances and take such further action as Lessor may from time to time reasonably request in order to effectively carry out the intent and purpose of the Operative Documents and to establish, perfect and protect the rights and remedies created or intended to be created in favor of Owner, Lessor and each Financing Party thereunder and in the Aircraft or any part thereof or any permanent replacement of any Engine or Part installed in accordance with this Lease Agreement, including any filing, registration, documentation or other action which Lessor may request under or in relation to the Cape Town Agreements.
16.2		Lessor’s Performance of Lessee’s Obligations
		If Lessee fails to make any payment of Rent or fails to perform or comply with any agreement, covenant or obligation contained in any Operative Document, Lessor shall have the right, but not the obligation, at its election and without waiver of any of its rights or remedies against Lessee, to perform or comply with such covenant, agreement or obligation and/or pay such amount, and the amount of such payment and any Expenses incurred by Lessor in connection with such payment or the performance of or compliance with such agreement, covenant or obligation, as the case may be, together with interest at the Past Due Rate, shall be payable by Lessee to Lessor upon demand as Rent—Supplemental. The taking of any action by Lessor pursuant to this Section 16.2 shall not constitute a waiver or release of any obligation of Lessee under any Operative Document nor a waiver of any Default which may arise out of Lessee’s nonperformance of such obligation, nor an election or waiver by Lessor of any right or remedy available to Lessor under or in relation to any Operative Document.
16.3		No Implied Waivers; Rights Cumulative

(1)

No failure on the part of any Person to exercise and no delay in exercising any right, power, remedy or privilege under any Operative Document or provided by statute or at law or in equity or otherwise shall impose any liability upon such Person or shall impair, prejudice or constitute a waiver of any such right, power, remedy or privilege or be construed as a waiver of any breach or as an acquiescence thereto, nor shall any single or partial exercise of any such right, power, remedy or privilege impair, prejudice or preclude any other or further exercise thereof or the exercise of any other right, power, remedy or privilege. No acceptance of partial payment or performance shall, whether or not expressly stated, be or be deemed to be a waiver of any breach then existing or a waiver or release of full payment and performance. No notice to or demand on any Person shall in any case entitle such Person to any other or further notice or demand in

other or similar circumstances or constitute a waiver of the right of any other Person to any other or further action in any circumstances without notice or demand.

(2)

Nothing contained in any Operative Document shall be construed to limit in any way any right, power, remedy or privilege of any Person under any Operative Document or now or hereafter existing at law or in equity. Each and every right, power, remedy and privilege of any Person under the Operative Documents (a) shall be in addition to and not in limitation of, or in substitution for, any other right, power, remedy or privilege under any Operative Document or at law or in equity, (b) may be exercised from time to time or simultaneously and as often and in such order as may be deemed expedient by Lessor and such Person and (c) 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. Lessor may decline to exercise any rights or remedies herein without incurring any liability to any Person.

17.		CONFIDENTIALITY
		Each of Lessee and Lessor shall keep each Operative Document (and all terms and provisions hereof and thereof) confidential and shall not disclose, or cause to be disclosed, the same (except to the extent that the same is already in the public domain other than by breach of this Section 17) to any Person, without the prior written consent of the other, except (1) to prospective and permitted transferees of Lessor or any Financing Party or to any prospective Financing Party or to any prospective sublessee, and their respective legal counsel, accountants, insurance brokers and other advisers, (2) in connection with any enforcement of any Operative Document, (3) to its Affiliates or prospective Affiliates or the Affiliates of any Financing Party or prospective Financing Party, (4) to the professional advisers of the foregoing or (5) as may be required by Law, provided that any and all disclosures of all or any part of such documents and/or information which are permitted by this Section 17 shall be made only to the extent necessary to meet the specific requirements or needs of the Persons to whom such disclosures are hereby permitted and the disclosing party shall inform such Persons of the confidential nature of such documents and/or information.
18.		GOVERNING LAW AND JURISDICTION
18.1		English Law
		THIS LEASE AGREEMENT AND EACH OTHER OPERATIVE DOCUMENT, UNLESS OTHERWISE EXPRESSLY PROVIDED THEREIN, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF ENGLAND AND WALES.
18.2		Jurisdiction
		Each of Lessor and Lessee hereby agrees that the English courts are to have non-exclusive jurisdiction to settle any disputes between them which may arise in connection with this Lease Agreement or any other Operative Document, and by execution and delivery of this Lease Agreement each of Lessor and Lessee hereby irrevocably submits to and accepts with regard to any such action or proceeding, for itself and in respect of its assets, generally and unconditionally, the jurisdiction of the aforesaid courts. Each of Lessor and Lessee waives objection to the English courts on grounds of inconvenient forum or otherwise as regards proceedings between them in connection with the Operative Documents and agrees that a judgment or order of an English court in connection with an Operative Document is conclusive and binding on it and may

be enforced against it in the courts of any other jurisdiction. Nothing herein shall limit the right of either Lessor or Lessee to bring any legal action or proceeding or obtaining execution of judgment against the other in any other appropriate jurisdiction or concurrently in more than one jurisdiction. Each of Lessor and Lessee further agrees that, subject to applicable Law, a final judgment in any action or proceeding arising out of or relating to this Lease Agreement or any other Operative Document shall be conclusive and may be enforced in any other jurisdiction outside England by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of the fact and the amount of the indebtedness or liability therein described, or in any other manner provided by Law.

18.3

Process Agent

	(1)		Lessee hereby irrevocably designates, appoints and empowers Lessee’s United Kingdom Office at Fifth Floor, Elsinore House, 77 Fulham Palace Road, London W6 8AD, as its authorized agent to receive on its behalf and on behalf of its property service of copies of the summons and complaint and any other process which may be served in any action or proceeding between Lessor and Lessee arising out of or relating to any Operative Document. Such service may be made by mailing or delivering a copy of such process in care of the appropriate process agent described in this Section 18.3 and Lessee hereby irrevocably authorizes and directs its designated process agent to accept such service on its behalf. Lessee further agrees that failure by a process agent appointed in accordance with the foregoing terms to notify Lessee of the process shall not invalidate the proceeding concerned. Notwithstanding the foregoing, nothing herein shall affect the rights of either party to serve process in any other manner permitted by applicable Law. Lessee shall maintain such process agent, or such other Person located within England as may be acceptable to Lessor, as its agent for service of process in England during the Lease Term and six months thereafter, at Lessee’s sole cost and expense. Lessor will send to Lessee a copy of any documents delivered to the process agent promptly after delivering such documents to the process agent.
	(2)		Lessor hereby irrevocably designates, appoints and empowers Law Debenture Corporate Services Limited (company number 3388362) at Fifth Floor, 100 Wood Street, London EC2V 7EX, as its authorized agent to receive on its behalf and on behalf of its property service of copies of the summons and complaint and any other process which may be served in any action or proceeding between Lessor and Lessee arising out of or relating to any Operative Document. Such service may be made by mailing or delivering a copy of such process in care of the appropriate process agent described in this Section 18.3 and Lessor hereby irrevocably authorizes and directs its designated process agent to accept such service on its behalf. Lessor further agrees that failure by a process agent appointed in accordance with the foregoing terms to notify Lessor of the process shall not invalidate the proceeding concerned. Notwithstanding the foregoing, nothing herein shall affect the rights of either party to serve process in any other manner permitted by applicable Law. Lessor shall maintain such process agent, or such other Person located within England as may be acceptable to Lessee, as its agent for service of process in England during the Lease Term and six months thereafter, at Lessor’s sole cost and expense. Lessee will send to Lessor a copy of any documents delivered to the process agent promptly after delivering such documents to the process agent.

18.4		Waiver of Immunity
		Lessee irrevocably and unconditionally agrees that if Lessor brings legal proceedings against it or its assets in relation to this Lease Agreement or any other Operative Document no immunity from such legal proceedings (which will be deemed to include suit, attachment prior to judgment, other attachment, the obtaining of judgment, execution or other enforcement) will be claimed by or on behalf of Lessee or with respect to its assets. Lessee further irrevocably and unconditionally (1) waives any such right of immunity which it or its assets now have or may in the future acquire and (2) consents generally in respect of any such proceedings to the giving of any relief or the issue of any process in connection with such proceedings, including the making, enforcement or execution against any property whatsoever (irrespective of its use or intended use) of any order or judgment which may be made or given in such proceedings.
19.		MISCELLANEOUS
19.1		Amendments
		No provision of any Operative Document may be amended, changed, waived or discharged orally, but only by an instrument in writing specifying the provision intended to be amended, changed, waived or discharged and signed by each party hereto or thereto; and no provision of any Operative Document shall be varied, contradicted or explained by any oral agreement, course of dealing or performance or other matter not specifically set forth in an agreement in writing and signed by each party hereto or thereto.
19.2		Severability
		If any provision of any Operative Document should be held invalid, illegal or unenforceable in any respect in any jurisdiction, then, to the extent permitted by Law (1) all other provisions thereof shall remain in full force and effect in such jurisdiction and (2) such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of such provision in any other jurisdiction.
19.3		Counterparts
		Any Operative Document and any amendments, waivers, consents or supplements hereto or thereto may be executed in any number of counterparts, each 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.
19.4		Chattel Paper
		To the extent, if any, that this Lease Agreement constitutes chattel paper (as defined in the Uniform Commercial Code in effect from time to time in any applicable jurisdiction) no security interest in this Lease Agreement may be created through the transfer or possession of any counterpart other than as provided on the cover page of this Lease Agreement.

19.5		Time of the Essence
		Subject only to the periods of grace referred to in Section 12, time shall be of the essence as regards the performance by each of Lessee and Lessor of its respective obligations under each Operative Document.
19.6		Notices
		All notices, requests and other communications to Lessee or Lessor under any Operative Document shall be in writing (for this purpose, “writing” includes fax or email), shall refer specifically to such Operative Document and shall be personally delivered or sent by fax or email, or sent by overnight courier service (e.g., Federal Express), in each case to the respective address specified in Schedule 5 hereto or such other address as such Person may hereafter specify by notice to the other parties hereto. Each such notice, request or other communication shall be effective when received or, if by fax or email, when “confirmed” by the sending fax machine or email software, provided that any such notice by fax or email so “confirmed” after 6:00 p.m., for the recipient, shall be effective on the next succeeding local Business Day.
19.7		Language
		All notices to be given under each Operative Document shall be in English. All documents delivered to Lessor pursuant to each Operative Document will be in English, or if not in English, will be accompanied by a certified English translation. The language of each Operative Document, and the language of its interpretation, is English. If there is any inconsistency between the English version of any Operative Document and any version in any other language, whether or not such other version is executed by Lessor or Lessee, the English version will prevail for all purposes.
19.8		Entire Agreement
		Save for the Officer’s Certificate dated 10 December 2009 furnished by Lessee to Lessor’s Affiliate, this Lease Agreement and the other Operative Documents constitute the entire agreement between the parties concerning the subject matter hereof, and supersede all previous proposals, agreements, understandings, negotiations 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 or in the other Operative Documents.
19.9		Logo Usage
		Lessee agrees that Lessor’s affiliates Aircastle Limited and/or Aircastle Advisor LLC may use the name, logos, trademarks, and service marks of Lessee on and in connection with its internet website and other marketing materials to identify the Lessee as a customer, provided that this Section 19.9 is not intended to create any code share or marketing affiliation or partnership between Lessor and Lessee.
19.10		Relationship of the Parties
		Nothing in this Lease Agreement or the other Operative Documents shall create (or be deemed or construed to create) a partnership, joint venture, agency, fiduciary relationship, and/or any other

affiliation, relationship or association between the parties hereto of any kind other than the relationship of lessor and lessee as explicitly and specifically stated in this Lease Agreement and the other Operative Documents. The relationship between the Lessor and the Lessee is limited to that of lessor and lessee as set forth in this Lease Agreement and the other Operative Documents. Nothing contained in this Lease Agreement or any other Operative Documents shall permit or obligate (or be construed as permitting or obligating) the Lessor to act as a financial or business advisor or consultant to the Lessee and/or to control the Lessee or conduct the Lessee’s operations. Each party acknowledges that it is experienced with respect to the subject matter of this Lease Agreement and the other Operative Documents and has made its own independent decisions regarding such subject matter. Each party further acknowledges that it has had the opportunity to obtain the advice of experienced and sophisticated counsel of its own choosing in connection with the negotiation and execution of this Lease Agreement and the other Operative Documents and to obtain the advice of such counsel with respect to all matters contained herein and therein.

19.11

Rights of Third Parties

	(1)		Each Financing Party, Indemnified Party, Tax Indemnitee and Insured Party may rely on and enforce the rights expressed to be conferred on it under this Lease Agreement together with any ancillary rights against the Lessee under the Contracts (Rights of Third Parties) Act 1999.
	(2)		The consent of any Indemnified Party, Tax Indemnitee or Insured Party, as the case may be (in each case, other than the Lessor), is not necessary for any variation (including any release or compromise in whole or in part of any liability) or termination of this Lease Agreement, or any provision of any thereof or provisions ancillary thereto.
	(3)		Except as expressly stated in Section 19.7(1), the terms of this Lease Agreement may be enforced only by a party to it or a party’s successors and permitted transferees and assigns.

20.		EXPENSES
		Whether or not the transactions contemplated herein shall be consummated and except as expressly provided in any Operative Document (other than Section 9.1), each party shall be responsible for its own costs and expenses (including legal fees and expenses) in connection with the preparation, negotiation, execution and delivery of the Operative Documents on the date hereof and on the Delivery Date and the consummation of the transactions contemplated herein; provided, however, that Lessee shall pay all filing and registration fees, as well as any stamp duty with respect to the execution, filing and registration of the Operative Documents and any other documents required to be executed thereunder by any applicable authority in order to register or perfect the Aircraft or Lessor’s or Owner’s interest, or any Financing Party’s interest, if such Financing Party’s interest has been created as of the Delivery Date, in the Aircraft or the Lease Agreement.

[Intentionally Left Blank]

IN WITNESS whereof this Deed has been duly executed as a deed and delivered the day and year first above written.

EXECUTED as a DEED			)
By			)
its duly authorized attorney-in-fact			)
for and on behalf of			)
WELLS FARGO BANK NORTHWEST,			)
NATIONAL ASSOCIATION,			)
not in its individual capacity			)
but solely as Owner Trustee			)
in the presence of:			)
						Attorney-in-Fact

Witness:

Name:

Address:

Occupation:

[Signatures continued on next page]

EXECUTED as a DEED			)
By			)
its duly authorized attorney-in-fact			)
for and on behalf of			)
SOUTH AFRICAN AIRWAYS (PTY) LTD.			)
			)
						Attorney-in-Fact

in the presence of:

Witness:

Name:

Address:

Occupation:

By			)
its duly authorized attorney-in-fact			)
for and on behalf of			)
SOUTH AFRICAN AIRWAYS (PTY) LTD.			)
			)
						Attorney-in-Fact

in the presence of:

Witness:

Name:

Address:

Occupation:

SCHEDULE 1

DEFINITIONS

PART I

Defined Terms

The following terms shall have the following meanings:

“Absolute Transfer” is defined in Section 14.1.1(1) of the Lease Agreement.

“Acceptance Certificate” means the Acceptance Certificate, dated the Delivery Date, signed by Lessee and confirmed by Lessor, substantially in the form of Exhibit A.

“AD” means any airworthiness directive of the Aviation Authority or the relevant aviation authority in the state of design for any of the Airframe, the Engines and any Part (which for the avoidance of doubt shall include EASA with respect to the Airframe, the Engines and any Part) and applicable to the Airframe, either Engine or any Part and any modification thereto or to the Aircraft Documentation.

“Administrative Agent” means the Person designated by Lessor as Administrative Agent from time to time by notice to Lessee. The initial Administrative Agent shall be Aircastle Advisor LLC.

“Affiliate” means (1) in relation to a Person other than Lessee, any other Person directly or indirectly controlling, controlled by or under common control with that Person and (2) in relation to Lessee, any other Person directly or indirectly controlled by that Person. For the avoidance of doubt, where Wells Fargo Bank Northwest, N.A., as owner trustee, is the Lessor, an Affiliate of Lessor shall mean an Affiliate of the relevant trust itself, as a separate legal entity and not of Wells Fargo Bank Northwest, N.A. (in its individual capacity or as a trustee of another trust).

“Agreed Maintenance Performer” means, during the Lease Term, any EASA approved maintenance performer having a valid repair station license for the relevant work and as agreed in advance by Lessor and Lessee.

“Airbus Warranties Agreement” means the warranty agreement to be entered into on or prior to the Delivery Date by, inter alia, the Airframe Manufacturer, the Owner, the Lessor, the Lessee and the Security Trustee in relation to warranties in respect of the Airframe.

“Aircraft” means, collectively, the Airframe and the Engines and, unless the context does not permit, the Aircraft Documentation.

“Aircraft Documentation” means the documentation described in Section 1.4 of Schedule 2 to the Lease Agreement.

“Aircraft Status Report” means a report substantially in the form of Exhibit D.

“Airframe” means, collectively, (1) the Airframe Manufacturer Model A330-200 airframe (except only Engines or engines from time to time installed thereon), with Airframe Manufacturer production number [                    ] and (2) any and all Parts so long as the same shall be incorporated or installed in or attached to such airframe, and any and all Parts removed therefrom so long as title to such removed Parts shall

remain vested in Owner in accordance with the terms of Section 1.2 of Schedule 2 to the Lease Agreement.

“Airframe Check—6Y” means a “6-year Structural Check,” as defined in the MPD, including all lower level inspections , systems and functional checks, typical component overhauls, and all repairs and overhauls and inspections scheduled at the six-year interval, flight deck and cabin interior refurbishment and typical cleaning and cosmetic repairs. If Airframe Manufacturer amends the MPD to extend or reduce the interval between checks then, upon request of Lessor or Lessee, Lessor and Lessee shall agree an amendment to this Lease to put Lessor and Lessee in the same substantive position as on the date hereof, especially with respect to Section 2 of Schedule 2 and to Schedule 4.

“Airframe Check—12Y” means a “12-year Structural Check,” as defined in the MPD, including all lower level inspections, systems and functional checks, typical component overhauls, and all repairs and overhauls and inspections scheduled at the 12-year interval, flight deck and cabin interior refurbishment and typical cleaning and cosmetic repairs. If Airframe Manufacturer amends the MPD to extend or reduce the interval between checks then, upon request of Lessor or Lessee, Lessor and Lessee shall agree an amendment to this Lease to put Lessor and Lessee in the same substantive position as on the date hereof, especially with respect to Section 2 of Schedule 2 and to Schedule 4.

“Airframe Flight Cycle” means one takeoff and landing of the Airframe, provided that for purposes of determining cycles of utilization of a Part (e.g., the Landing Gear or the APU), the relevant “Airframe” for purposes of the preceding clause shall be the airframe or airframes on which such Part has been used during the period of such use.

“Airframe Flight Hour” means each hour or part thereof elapsing from the moment the wheels of the Airframe leave the ground on takeoff until the wheels of the Airframe touch the ground on landing following such flight, provided that for purposes of determining hours of utilization of a Part (e.g., the Landing Gear or the APU), the relevant “Airframe” for purposes of the preceding clause shall be the airframe or airframes on which such Part has been used during the period of such use.

“Airframe Manufacturer” means Airbus S.A.S.

“Applicable Accounting Principles” generally accepted accounting principles in the Lessee Jurisdiction, as such principles may at any time or from time to time be varied by any applicable financial accounting rules, but otherwise applied on a basis consistent with prior periods.

“APU” means (1) the auxiliary power unit identified by manufacturer’s serial number in the Acceptance Certificate and (2) any auxiliary power unit substituted for such auxiliary power unit in accordance with the Lease Agreement.

“APU Basic Shop Visit” means, with respect to the APU, the full restoration of the core sections(compressor and power ) in accordance with the APU manufacturer’s recommendations.

“APU Hour” means each hour or part thereof from the moment the APU is started until the APU is turned off.

“Assignment of Insurances” means the assignment of the benefits and proceeds of the insurances to be entered into, on or about the Delivery Date, between the Lessee and the Lessor in relation to the Insurances (other than any liability insurances).

“Authorizations” means each and every approval, waiver, authorization, consent, license, certificate or order of, or registration with, or requirement for the giving of prior notice to, or the taking of any action in respect of, the Aviation Authority, any other Government Entity in the Lessee Jurisdiction or any other Government Entity having jurisdiction over Lessee, the operation of the Aircraft or any action or transaction contemplated by any Operative Document, including the Financial Approval.

“Aviation Authority” means the civil aviation authority of the Lessee Jurisdiction and any person, governmental department, bureau, commission or agency succeeding to all or any of its functions.

“Baseline Specification” means the Airframe Manufacturer A330-200 standard specification document number reference G 000 02000 issue 4.5, dated April 30, 2008.

“BFE” means buyer furnished equipment as described in Schedule 3.

“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for business in Johannesburg and New York.

“Cape Town Agreements” means the Cape Town Convention as supplemented by the Cape Town Aircraft Protocol (in each case, utilizing the English-language version thereof).

“Cape Town Aircraft Protocol” means The Protocol to the Cape Town Convention, opened for signature in Cape Town, South Africa, on November 16, 2001 (utilizing the English-language version thereof).

“Cape Town Convention” means The Convention on International Interests in Mobile Equipment, opened for signature in Cape Town, South Africa, on November 16, 2001 (utilizing the English-language version thereof).

“contractual currency” is defined in Section 9.4 of the Lease Agreement.

“Damage Notice Threshold” means US$500,000.

“Default” means any Event of Default or any condition, circumstance, act or event which, upon the giving of notice, the lapse of time and/or the fulfillment of any other condition would constitute or give rise to an Event of Default.

“Delivery Condition” means the condition of the Aircraft as required in Schedule 3 of the Lease Agreement.

“Delivery Date” means the date, local time at the Delivery Location, on which the Aircraft is delivered by Lessor in accordance with the Lease Agreement.

“Delivery Documentation” means, collectively, any and all log books, records, manuals and other data or documents delivered with the Aircraft, including such data and documents as described in Annex 2 to Schedule 3 of the Lease Agreement.

“Delivery Location” means the Airframe Manufacturer’s delivery center for the Aircraft or such other location as Lessor and Lessee shall mutually agree.

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

“EASA” means the European Aviation Safety Agency or any other organization or authority that, under the laws of the European Union, shall from time to time have jurisdiction over, amongst other things, aircraft airworthiness and safety standards for the European Union and references to “EASA” shall, where the context so allows, include a reference to the JAA.

“EASA Condition” means, in respect of the Aircraft, being in a condition suitable for (upon due application) immediate issuance, without waiver, by any EASA member country of a Standard Certificate of Airworthiness for Transport Category Aircraft and operation under EU-OPS 1 (or successor regulations).

“Engine” means (1)(a) each of the Engine Manufacturer Model Trent 772B engines listed by Engine Manufacturer’s serial numbers in the Acceptance Certificate and originally installed on the Airframe at the time of delivery to Lessee hereunder whether or not from time to time thereafter installed on the Airframe or installed on any other airframe and (b) any Replacement Engine which may from time to time be substituted, pursuant to the terms hereof, for either of such Engines, and (2) in each case, any and all Parts incorporated or installed in or attached thereto or any and all Parts removed therefrom so long as title thereto shall remain vested in Owner in accordance with the terms of Section 1.2 of Schedule 2 to the Lease Agreement after removal from such Engine, provided that at such time as an engine shall be deemed part of the property leased hereunder in substitution for an “Engine,” pursuant to the applicable provisions hereof, the replaced Engine shall cease to be an “Engine” hereunder. The term “Engines” means, as of any date of determination, all Engines then leased hereunder.

“Engine Basic Shop Visit” means, with respect to each Engine, any shop visit that:

	(1)		is performed on such Engine in accordance with the Engine Manufacturer’s Engine Management Programme and the Engine Manufacturer’s Engine Manual and results from such Engine’s performance deterioration detected by condition and trend monitoring,
	(2)		includes the Overhaul (Level 3 or higher refurbishment), as defined in the Engine Manufacturer’s, Engine Management Programme, of any of the following engine modules: Module 1 LP Fan Shaft & Rotor, Module 2 Intermediate Pressure Compressor, Module 3 Intermediate Case, Module 4 High Pressure System, Module 5 Intermediate Pressure Turbine, Module 6 External Gear Box, Module 7 Low Pressure Compressor Case, Module 8 Low Pressure Turbine, and
	(3)		fully restores each such module’s performance and service life using the workscope defined in the Engine Manufacturer’s Engine Maintenance Manual and the Engine Manufacturer’s Engine Maintenance Planning Guide and so that such module can reasonably be expected (as determined by the Engine Manufacturer if Lessor and Lessee fail to agree) to run for the average meantime between performance restorations (based on Engine Manufacturer data) for engines of the same model as the Engine.

“Engine Flight Cycle” means, with respect to any Engine, one takeoff and landing of the airframe (including the Airframe) on which such Engine is then installed, provided that for purposes of determining cycles of utilization of a Part, the relevant “Engine” for purposes of the preceding clause shall be the engine on which such Part has been used during the period of such use.

“Engine Flight Hour” means each hour or part thereof (rounded to the nearest one-tenth of an hour) elapsing from the moment the wheels of the airframe (including the Airframe) on which such Engine is then installed leave the ground on takeoff until the wheels of such airframe touch the ground on landing

following such flight, provided that for purposes of determining hours of utilization of a Part, the relevant “Engine” for purposes of the preceding clause shall be the engine on which such Part has been used during the period of such use.

“Engine Manufacturer” means Rolls-Royce plc.

“Event of Default” is defined in Section 12 of the Lease Agreement.

“Event of Loss” means, with respect to the Aircraft, the Airframe or any Engine, any of the following events, conditions or circumstances with respect to such property:

	(1)		[Intentionally Omitted]
	(2)		The destruction of or damage of such property which renders (a) repair of such property uneconomical or (b) such property permanently unfit for normal use by Lessee or Lessor.
	(3)		Any loss of or damage to such property or other occurrence which the insurers determine or agree to be a total loss.
	(4)		The confiscation, condemnation, seizure, forfeiture, requisition or similar taking of the title to such property (for any reason whatsoever and whether de jure or de facto).
	(5)		The confiscation, condemnation, seizure, requisition or similar taking by any Government Entity or purported Government Entity of use or hire of such property which shall have resulted in the loss of possession or use of such property by Lessee for a period that continues until the earlier of (a) the date that is 180 days following the commencement of such loss of possession or use (or, if earlier, the last day of the Lease Term) and (b) the date upon which the Aircraft is modified in such a manner as would render conversion of such property for use in normal commercial passenger service impractical or uneconomical.
	(6)		The disappearance, hijacking or theft (including a confiscation, condemnation, seizure, forfeiture, requisition or similar taking of title or use not otherwise included in this definition) of such property which shall have resulted in the loss of possession or use of such property by Lessee for a period that continues until the earlier of (a) the date that is 30 days following the commencement of such loss of possession or use (or, if less, the remaining Lease Term) and (b) the date upon which the Aircraft is modified in such a manner as would render conversion of such property for use in normal commercial passenger service impractical or uneconomical.
	(7)		In the case of an Engine only, any divestiture or impairment of any right, title or interest of Owner or Lessor in or to an Engine as a result of the installation of such Engine on any other airframe in violation of Section 8 of the Lease Agreement.

An Event of Loss with respect to the Aircraft shall be deemed to have occurred if an Event of Loss occurs with respect to the Airframe. An Event of Loss with respect to one or more Engines without loss of the Airframe shall not be deemed an Event of Loss with respect to the Aircraft.

“Expense” means any and all costs, expenses (including any and all reasonable legal fees and expenses and the fees and expenses of other professional advisers and investigators), claims, losses, liabilities,

obligations, damages, judgments, fees, penalties or fines (whether criminal or civil) of any kind or nature whatsoever, whether direct or indirect, whether passive or active or under the doctrine of strict liability.

“FAA” means the US Federal Aviation Administration and any Person succeeding to all or any of its functions.

“Final Inspection” means the inspection of the Aircraft by Lessor, and any other Inspecting Parties (as observers only), during any part of the inspections, checks, and demonstration flights required pursuant to Schedule 4 to the Lease Agreement or otherwise performed in connection with the Return.

“Final Maintenance” means the work to be performed by Lessee in order to cause the Aircraft to meet the requirements of Schedule 4 to the Lease Agreement.

“Financial Approval” means the approvals that are required to be obtained from the SARB from time to time in respect of the transactions contemplated by the Operative Documents.

“Financing Party” means (1) each Person, if any, providing or arranging debt or equity financing or refinancing related to the Aircraft, or providing any guarantee or insurance in relation to any such financing or refinancing and (2) the Security Trustee, if any in each case provided that reasonable notice of such party’s identity and role shall have been provided to Lessee. For the avoidance of doubt, Participant shall be deemed a Financing Party.

“Financing Security Documents” means all documents related to the debt or equity financing or refinancing of the Aircraft and providing for a security, mortgage or other interest in the Aircraft or any Operative Document, as such documents are identified with reasonable notice by Lessor to Lessee from time to time.

“Flight Charges” means all flight charges, route navigation charges, navigation service charges and all other fees, charges or Taxes payable for the use of or for services provided at any airport or otherwise payable to any airport, airport authority, navigation or flight authority or other similar entity or for any services provided in connection with the operation, landing or navigation of aircraft.

“Follow-On Operator” means any Person acquiring title to or the right to use the Aircraft after the end of the Lease Term (whether or not such Person is an airline or other operator).

“Government Entity” means (1) any national, state or local government of any country or any international authority (including in each case, any central bank or fiscal, tax or monetary authority), (2) any board, commission, department, division, instrumentality, court, agency, territory, possession or political subdivision of any entity described in clause (1) above, however constituted; (3) any association, organization or institution of which any entity described in clause (1) or (2) above or any state is a member or to whose jurisdiction any thereof is subject or in whose activities any thereof is a participant; and (4) any taxing authority of any entity described in any of clauses (1), (2) or (3) above.

“Headlease” shall mean that certain Lease Agreement (CAC [                    ]), dated on or about the Delivery Date, between Lessor and Owner (provided that if Owner is Lessor, there will be no Headlease).

“Indebtedness” of any Person means, on any date, all indebtedness of such Person as of such date, and shall include the following: (i) all indebtedness of such Person for monies borrowed or raised; (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (iii) all obligations of such Person to pay the deferred purchase price of property or services (other than trade

liabilities due within 30 days); (iv) all obligations to pay rent or liquidated damages of such Person under leases; (v) all indebtedness secured by security interest or right of possession on any asset of such Person, whether or not such Person has assumed or is otherwise liable for such indebtedness; (vi) all indebtedness of others guaranteed in any manner, directly or indirectly, by such Person (or in effect guaranteed indirectly, by such Person through an agreement intended to have the effect of indebtedness or to assure the holder of indebtedness of such obligor against loss, whether through an obligation of such Person to purchase property or services or to maintain such obligor’s financial condition or otherwise); (vii) all reimbursement obligations of such Person in respect of letters of credit, foreign currency sale agreements and bankers’ acceptances, except such as are obtained by such person to secure performance of obligations (other than for monies borrowed or raised or similar obligations) incurred in the ordinary course of such Person’s business; and (vii) all obligations of such Person under interest rate, currency, commodity or other swap or hedging transactions, marked to market as if termination had occurred.

“Indemnified Party” means Lessor, Owner, Wells Fargo Bank Northwest, National Association, in its individual capacity, Remarketing Servicers, Administrative Agent, any backup remarketing servicer, each Financing Party, Manufacturing Inspector and the successors and permitted transferees and assigns of each of the foregoing, and the directors, officers, corporate stockholders, partners, employees, contractors, servants and agents of each of the foregoing.

“Inspecting Party” is defined in Section 1.3.1 of Part II of Schedule 4 to the Lease Agreement.

“Insurances” means insurances in respect of the Aircraft and includes, without limitation, any insurances required by Section 11 of the Lease Agreement.

“Insured Party” means each Indemnified Party.

“Insurers” means the insurers under the Insurances.

“Landing Gear” means (1) the landing gear assemblies (Left Main, Right Main and nose) of the Aircraft identified by the respective serial numbers in the Acceptance Certificate and (2) any landing gear assembly substituted for any such identified landing gear assembly in accordance with the Lease Agreement.

“Landing Gear Overhaul” means any full overhaul of the Landing Gear, carried out in accordance with the Landing Gear manufacturer’s overhaul manual and the MPD.

“Lease Agreement” means the Lease Agreement (CAC [                    ]), between Lessor and Lessee, to which this Schedule 1 is attached.

“Lease Term” means the period commencing on the Delivery Date and, unless earlier terminated pursuant to the provisions of any Operative Document, ending on the Lease Term—Expiry Date.

“Lease Term Expiry Date” means:

	(1)		the date corresponding to the Delivery Date in the 120th month after the Delivery Date or if there is no such date in such month, the last day of such month or
	(2)		at Lessee’s option, the date designated by Lessee in an irrevocable notice not less than 24 months before the last day of the then scheduled Lease Term, provided that (a) Lessee’s right to designate such date is conditioned upon no Event of Default having occurred and

being continuing on the date such notice is given and (b) the date designated shall not be less than 120 months or more than 144 months after the Delivery Date and shall be between February 1 and May 15,

and in either case , and if such date is not a Business Day then the Lease Term—Expiry Date shall be the next succeeding Business Day.

“Lessee Jurisdiction” means the Republic of South Africa.

“Lessee’s Maintenance Program” means Lessee’s Aviation Authority-approved, written maintenance, inspection and repair program and schedule for Airframe Manufacturer A330-200 aircraft as designed in accordance with the airframe, engine and parts manufacturer’s respective planning documents and recommendations, as in effect on the Delivery Date and thereafter as amended with the consent of the Lessor, not to be unreasonably withheld.

“Lessor Jurisdiction” means the United States.

“Lessor Lien” means any Lien in respect of the Aircraft, either Engine or any Part which results from acts or omissions of Lessor or Owner.

“Letter of Credit” is defined in Section 4.4 of the Lease Agreement.

“Letter of Credit Bank Minimum Rating” means a senior, unsecured and unguaranteed long-term debt rating of A (Standard & Poor’s) and A2 (Moody’s).

“Letter of Credit Validity Date” means the date that is 30 days after the Lease Term Expiry Date.

“Lien” means any mortgage, pledge, lien, charge, encumbrance, hypothecation, lease, sublease, seizure, right of detention, exercise of rights, security interest, judgment, writ, order or other claim or right of possession of any kind or nature whatsoever, however and wherever created or arising and whether or not consensual (including any agreement or arrangement to give or effect any of the foregoing and any conditional sale or other title retention agreement).

“Major Modifications” shall include any Modification that (1) a material Modification that cannot be reversed and the Aircraft restored to its original condition and as if such Modification had not been made, (2) materially changes the interior layout of the Aircraft (e.g., involves the removal or relocation or any galley or lavatory), (3) effects changes to the Aircraft structure or electrical systems or affects performance of the Aircraft, (4) adversely affects interchangeability or replaceability of Parts, (5) invalidates or impairs any warranty with respect to the Aircraft or any Engine or Part or (6) adversely affects the eligibility of the Aircraft to obtain an airworthiness certificate from the Aviation Authority or any EASA member country aviation authority or to be operated under EU-OPS 1, but in all cases shall exclude any Modification to the extent that it is part of a Required Action.

“Manufacturing Inspector” means a company(ies) to be designated from time to time by Lessor, which will inspect the Aircraft during the manufacturing process prior to the Delivery Date.

“Material Adverse Effect” means (1) as of any date, a change between the date hereof and such date, in the business, assets, financial condition or prospects of Lessee, or (2) the occurrence of any other event or the existence of any circumstance that in each case of clauses (1) and (2) has or will have a material adverse effect on (a) the ability of Lessee to perform its obligations under any Operative Document to

which it is or will be a party or (b) the rights or interests of Owner or Lessor in the Aircraft or under any Operative Document to which it is or will be a party.

“Modification” means any modification, addition, alteration, removal or other change (including performance of ADs and SBs) to the Airframe, any Engine or any Part.

“Modification Parts” means those Parts installed on the Aircraft in connection with a Modification.

“MPD” means the then latest revision of the Airframe Manufacturer’s maintenance planning document for A330-200 aircraft.

“Obsolete Parts” means Parts that Lessee has determined in its reasonable judgment to be no longer suitable or appropriate for use on the Airframe or such Engine (and which are not replaced).

“Operative Documents” means the Lease Agreement, the Acceptance Certificate, the Headlease, the Assignment of Insurances, the Airbus Warranties Agreement and the Rolls-Royce Warranties Agreement and any acknowledgment or other document to which Lessee is a party relating to the Financing Security Documents and any other document which Lessor and Lessee agree is an “Operative Document.”

“Other A330 Aircraft” means the other five A330-200 aircraft (CAC [                    ], CAC [                    ], CAC [                    ], CAC [                    ], CAC [                    ]) subject to lease agreements, dated as of the date hereof, between Wells Fargo Bank Northwest, N.A., as owner trustee, and Lessee.

“Other Lease Agreement” means any other aircraft lease agreement between (1) Lessor or any Affiliate of Lessor and (2) Lessee or any Affiliate of Lessee.

“Owner” means a Person to be designated by Lessor prior to the Delivery Date or any subsequent Person(s) to which the original Owner transfers its interest in Owner.

“Participant” means a Person to be designated by Lessor prior to the Delivery Date or any subsequent Person(s) to which the original Participant transfers its interest in Owner in accordance with the Lease Agreement.

“Parts” means any and all appliances, parts, components, modules, navigation, avionics and communications equipment, computers, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (including the APU and the Landing Gear but excluding complete Engines or engines) which may from time to time be incorporated or installed in or attached to the Airframe or any Engine, so long as title thereto shall remain vested in Owner, in accordance with the terms of Section 1.2 of Schedule 2 to the Lease Agreement, and any loose equipment identified in the Acceptance Certificate.

“Past Due Rate” means a rate equal to a fluctuating rate per annum equal to 250 basis points above the Prime Rate of Citibank, New York and in effect from time to time, provided that such rate as determined from time to time shall not in any event be higher than the highest rate per annum permitted from time to time under any applicable Law.

“Payment/Bankruptcy Default” means any Event of Default or any condition, circumstance, act or event described in Section 12.1, 12.3 or 12.4, which, upon the giving of notice, the lapse of time and/or the fulfillment of any other condition would constitute or give rise to an Event of Default.

“Permitted Air Carrier” means (1) any Affiliate of Lessee and (2) any carrier that Lessor may from time to time approve in writing, such approval not to be unreasonably withheld or delayed.

“Permitted Jurisdiction” means any country (1) which is not the subject of United States, Lessor Jurisdiction, Lessee Jurisdiction, European Union, France, Germany, the United Kingdom or United Nations sanctions or United Nations Security Council directives or (2) to or in which the operation of the Aircraft is not prohibited by the laws of the United States, Lessor Jurisdiction, Lessee Jurisdiction European Union, France, Germany or the United Kingdom or by the Lease Agreement or any other Operative Document.

“Permitted Lien” means any Lien referred to in clauses (a) through (e), inclusive, of Section 6.2.2 of the Lease Agreement.

“Permitted Sublease” means a sublease permitted under Section 8.1.1(2) of the Lease Agreement.

“Permitted Sublessee” means any Permitted Air Carrier under a sublease permitted by Section 8.1.1 of the Lease Agreement.

“Person” means any individual, corporation, trust, partnership, unincorporated association, joint venture, association, joint-stock company, government or Government Entity.

“Remarketing Servicer” means one or more Persons designated by Lessor as Remarketing Servicer from time to time by notice to Lessee. The initial Remarketing Servicers shall be Aircastle Advisor LLC and Aircastle Advisor (Ireland) Limited acting individually or jointly.

“Rent” means, collectively, Rent—Periodic and Rent—Supplemental.

“Rent Payment Date” means (i) the Delivery Date and (ii) the day which corresponds to the Delivery Date in each month during the Lease Term after the month in which the Delivery Date occurs (or if there is no such corresponding day in any such month, the last day of such month); provided that the last day of the Lease Term shall not be a “Rent Payment Date.”

“Rent—Periodic” means the rent payable in respect of the Lease Term with respect to the Aircraft pursuant to Section 3.1 of the Lease Agreement.

“Rent—Periodic Amount” is defined in Exhibit G to the Lease Agreement.

“Rent—Supplemental” means all amounts, liabilities and obligations (other than Rent—Periodic) which Lessee assumes, agrees or otherwise becomes liable to pay to Lessor, any Indemnified Party or Tax Indemnitee or any other Person under any of the Operative Documents, including payments of or in respect of the Security Deposit, Reserves, Return Compensation Payments, Stipulated Loss Value, Expenses, Taxes, interest accrued pursuant to Section 3.3.3 of the Lease Agreement or other amounts payable under any indemnities.

“Replacement Engine” means an Engine Manufacturer Model Trent 772B engine or an improved model having a modification status, value, thrust rating and utility at least equal to such engine, including all warranty rights with respect to any such engine, which (1) is suitable for installation and use on the Airframe without impairing the value or utility of the Aircraft and (2), in the case of accumulated Engine Flight Hours and Engine Flight Cycles since new, be substantially equivalent to the Engine it is replacing.

“Required Actions” is defined in Section 1.3.1 of Schedule 2 to the Lease Agreement.

“Reserves” means all amounts payable under Section 2 of Schedule 2 to the Lease Agreement.

“Return” means the return of the Aircraft by Lessee to Lessor at the Return Location (or such other location as may be agreed by Lessor and Lessee) in the condition and manner required by Schedule 4 to the Lease Agreement and the other provisions of the Operative Documents, as evidenced by the execution by Lessor, and the delivery to Lessee, of the Return Acceptance Certificate.

“Return Acceptance Certificate” means the acceptance certificate to be delivered by Lessor to Lessee pursuant to Section 1.4 of Part II to Schedule 4 to the Lease Agreement in substantially the same form as the Acceptance Certificate (mutatis mutandis).

“Return Compensation Payments” means all amounts payable under Section 2 of Part II of Schedule 4 to the Lease Agreement.

“Return Condition” means the condition of the Aircraft as described in Schedule 4 of the Lease Agreement.

“Return Location” means the location of the Final Maintenance or such other location as may be agreed by Lessor and Lessee.

“Rolls-Royce Warranties Agreement” means the engine warranty agreement to be entered into on or prior to the Delivery Date by, inter alia, the Engine Manufacturer, the Owner, the Lessor, the Lessee and the Security Trustee in relation to warranties in respect of the Engines.

“SARB” means the South African Reserve Bank.

“SCN” shall mean an Airframe Manufacturer Specification Change Notice (howsoever denominated) that reflects any change from the Baseline Specification, and shall include any Manufacturer Specification Change Notice (MSCN).

“SB” means any service bulletin as, where not expressly specified in any Operative Document, issued by Airframe Manufacturer, Engine Manufacturer or the manufacturer of any Part.

“Scheduled Delivery Date” means the date the Aircraft is delivered by the Airframe Manufacturer, such date currently scheduled for a date in [______].

“Security Deposit” means all of the amounts held by Lessor from time to time under Sections 4.1 and 4.2 of the Lease Agreement.

“Security Deposit Installment—1” is defined in Exhibit G to the Lease Agreement.

“Security Deposit Installment—2” is defined in Exhibit G to the Lease Agreement.

“Security Deposit Installment—3” is defined in Exhibit G to the Lease Agreement.

“Secured Obligations” means Lessee’s (or any Affiliate of Lessee’s) obligations under the Lease Agreement and each other Operative Document and under each Other Lease Agreement and each other

document designated as an operative document (howsoever denominated) under each such Other Lease Agreement.

“Security Transfer” is defined in Section 14.1.1(2) of the Lease Agreement.

“Security Trustee” means the designated representative, howsoever denominated, of one or more of the Financing Parties, as such representative is identified by Lessor to Lessee from time to time.

“State of Registration” means the Lessee Jurisdiction.

“Stipulated Deductible Amount” is defined in Exhibit G to the Lease Agreement.

“Stipulated Liability Coverage” is defined in Exhibit G to the Lease Agreement.

“Stipulated Loss Value” is defined in Exhibit G to the Lease Agreement.

“Taxes” includes any and all present or future fees (including license, documentation and registration fees), taxes (including income, gross receipts, sales, rental, use, turnover, value-added, goods and services, property (tangible or intangible), excise, franchise, capital, user, transfer, doing business and stamp taxes or duties), licenses, levies, imposts, duties, recording charges or fees, or other charges, assessments, deductions or withholdings of any nature whatsoever, together with any assessments, penalties, late payment charges, notary charges, fines, additions to tax or other similar liabilities with respect to any of the foregoing and interest on any of the foregoing.

“Tax Indemnitee” means Lessor, Owner and Participant, and any successor, transferee or assign of any of the foregoing and any Person that is a member of a group that files a consolidated or combined tax return that includes Lessor or Participant.

“Tax Savings” means, with respect to any Person, any actual current reduction in the Taxes payable by that Person (other than any reduction in Taxes in respect of which that Person is indemnified against by Lessee).

“United States” and “US” mean the United States of America.

PART II

Construction

1.

In each Operative Document, unless expressly provided otherwise therein, a reference to:

	(a)		Each of “Lessor” or “Lessee” or any other Person includes, without prejudice to the provisions of such Operative Document, any successor in title to it and any permitted assignee or permitted transferee and, in the case of any Government Entity, any Government Entity succeeding to all or any of its functions.
	(b)		The word “including” shall be construed as “including, without limitation.”
	(c)		Words importing the plural include the singular and vice versa.
	(d)		Any document includes that document as amended, from time to time in accordance with its terms, and any document entered into in substitution or replacement therefor.
	(e)		The words “this Agreement,” “this Lease Agreement,” “hereby,” “herein,” “hereto,” “hereof” and “hereunder” and words of similar import when used in such Operative Document refer to such Operative Document as a whole including the Schedules and Exhibits, and all Annexes, Attachments and Supplements thereto, and not to any particular provisions of such Operative Document.
	(f)		A Section or an Exhibit or a Schedule or an Annex is a reference to a section of, or an exhibit or a schedule or an annex to, such Operative Document.
	(g)		An amendment includes a supplement, novation or re-enactment and “amended” is to be construed accordingly.
	(h)		A “Law” (1) includes any statute, decree, constitution, any kind of regulation, order and circular order, judgment or directive of any Government Entity (including the Financial Approval and the National Industrial Participation Programme of the Department of Trade and Industry); (2) includes any treaty, pact, compact or other agreement to which any Government Entity is a signatory or party; (3) includes any judicial or administrative or fiscal interpretation or official statement or application thereof and (4) is a reference to that provision as amended.
	(i)		A “month” is a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month except that if there is no numerically corresponding day in the calendar month in which that period ends, that period shall end on the last Business Day in that calendar month.
	(j)		A “quarter” is a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the third succeeding calendar month except that if there is no numerically corresponding day in the calendar month in which that period ends, that period shall end on the last Business Day in that calendar month.

(k)

The Cape Town Convention and the Cape Town Aircraft Protocol shall be read and interpreted together as a single instrument as required by Article 6(1) of the Cape Town Convention.

2.

Headings used in each Operative Document are for convenience only and shall not in any way affect the construction of, or be taken into consideration in interpreting, such Operative Document.

SCHEDULE 2

OPERATIONAL MATTERS

1.		MAINTENANCE; OPERATION; ETC.
		As between Lessor and Lessee and except as expressly provided herein, during the Lease Term Lessee shall have sole responsibility for the operation, maintenance, servicing, repair, inspection and testing of the Aircraft and shall bear all costs in connection therewith.
1.1		Maintenance and Repairs
1.1.1		General Maintenance
		Lessee, at its own expense, shall, at all times during the Lease Term and until the Aircraft is returned pursuant to the requirements of the Lease Agreement, maintain, service, repair, test, inspect and overhaul the Aircraft, or cause the Aircraft (subject to Section 8 of the Lease Agreement) to be maintained, serviced, repaired, tested, inspected and overhauled in accordance with:

	(1)		Lessee’s Maintenance Program;
	(2)		the rules and regulations of the Aviation Authority; and
	(3)		Lessee’s general maintenance practices and without discrimination.

		The workscope, to the extent practically available, for any maintenance that constitutes Final Maintenance or that will affect the amount of Reserves reimbursable under the Lease Agreement or Return Compensation Payments payable under the Lease Agreement shall be provided to Lessor for review (but not approval) prior to the commencement of such maintenance (or as soon as practical thereafter). Lessor shall have the right to increase such workscope above the workscope required by this Lease Agreement subject to Lessee’s consent (such consent not to be unreasonably withheld (for example, if such increase in workscope will result in material additional downtime for the Aircraft, Engine or Part, as applicable, Lessee may not consent)), provided that Lessor shall reimburse Lessee for any incremental labor and material costs associated with such increase.
		For the avoidance of doubt, Lessee may not perform any maintenance that will materially affect the amount of Reserves reimbursable under the Lease Agreement or Return Compensation Payments payable hereunder prior to the required date for such maintenance, unless required by the Lease Agreement or any other Operative Document, without the consent of Lessor (not to be unreasonably withheld).
1.1.2		Repairs
		Lessee shall procure that all repairs to the Aircraft shall be (1) accomplished in accordance with the applicable manufacturer’s repair manual, (2) otherwise accomplished in accordance with the rules and regulations of the Aviation Authority and EASA and (3) in respect of repairs to the exterior of the Aircraft, flush repairs. All temporary repairs shall be performed in accordance with the Airframe Manufacturer’s structural repair manual and shall be replaced with permanent

		repairs in accordance with the Airframe Manufacturer’s structural repair manual or accompanied with an EASA approved RAS issued by the Airframe Manufacturer prior to the end of the Lease Term. Without limiting the foregoing, all repairs shall be properly documented and Lessee shall ensure that the aircraft records will include repair details, bill of materials used, dirty finger print records and any associated paperwork / correspondence.
1.1.3		Agreed Maintenance Performer
		Lessee shall ensure that only an Agreed Maintenance Performer services, maintains, overhauls, repairs or performs any Modifications on or to the Aircraft or any installed engine or part.
1.2		Replacement of Parts
1.2.1		Replacement of Parts Required
		Lessee shall replace, at its own expense, all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason whatsoever with replacement parts as set forth in this Section 1.2, and Lessee may not remove any Part (other than Obsolete Parts) for any other reason, provided that (x) Lessee may remove Modification Parts pursuant to Section 1.3.3 of this Schedule 2 and (y) Lessee (or any Permitted Sublessee or any Agreed Maintenance Performer) may temporarily remove in the ordinary course of maintenance, service, repair, overhaul or testing of the Aircraft, any Part, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use provided that Lessee shall reinstall or replace with a replacement part such Part as promptly as practicable (or the end of such maintenance, service, repair, overhaul or testing, whichever is earlier) and (z) Lessee (or any Agreed Maintenance Performer) may temporarily remove any Part if reasonably necessary for use on other Aircraft operated by Lessee, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use provided that Lessee shall reinstall or replace such Part with a replacement part within 60 days (or the end of the Lease Term, whichever is earlier). Each such replacement part incorporated or installed in or attached or added to the Airframe or any Engine shall:

	(1)		Be free and clear of all Liens except for Permitted Liens.
	(2)		Be in as good operating condition, and have the same interchangeable modification status as, be no more than 110% older (in age, cycles or hours) than, and have a value and utility at least equal to, the Part replaced (assuming it was in the condition and repair required under this Lease Agreement) and be OEM parts and not parts manufactured with PMA approval unless previously approved by Lessor in writing.
	(3)		Be of the same make and the same or more advanced model.
	(4)		Have a current, legal and valid release certificate/airworthiness approval tag identified as FAA Form 8130-3 or EASA Form 1.

Other than in connection with Clause (y) or (z) above, Lessee may use a replacement part that does not comply with the requirements of this Section 1.2.1 if a complying part cannot be procured or installed within the available ground time of the Aircraft, provided that the original Part is reinstalled or the non-complying part is removed and replaced by a complying part, in

		each case as promptly as practicable (and in any event on or before the last day of the Lease Term).
1.2.2		Ownership of Parts
		Except as provided in the final paragraph of this Section 1.2.1, immediately upon any part (including Modification Parts) becoming incorporated in, installed on or attached to the Airframe or any Engine, without further act:

	(1)		title to such part vest, with full title guarantee, in Owner, free and clear of all Liens other than Permitted Liens and such part shall become subject to the Lease Agreement and any Financing Security Documents and be deemed a “Part” of such Airframe or such Engine for all purposes hereof; and
	(2)		title to any replaced Part shall thereupon vest in Lessee, free and clear of all rights of Owner and Lessor and all Lessor Liens and shall no longer be deemed a Part.

		Lessee will, at its own expense, take all such steps and execute, and procure the execution of, all such instruments as Lessor may reasonably require and which are necessary to ensure that title so passes to Owner according to all applicable laws. At any time when requested by Lessor, Lessee will provide evidence to Lessor’s reasonable satisfaction that title has so passed to Owner.
		All Parts (other than Modification Parts removed in accordance with Section 1.3 of this Schedule 2 and Obsolete Parts) at any time removed from the Aircraft shall remain the property of Owner, no matter where located, until such time as such Parts shall be replaced by Parts which have been incorporated or installed in or attached to the Airframe or any Engine and which meet the requirements set forth in Sections 1.2.1(1)-(4) of this Schedule 2. Obsolete Parts with a value equal to or more than US$50,000 shall either be retained by Lessee and returned with the Aircraft or shall be shipped to Lessor as a location to be designated by Lessor for such part at such time. Obsolete Parts with a value less than US$50,000 may be retained by Lessee.
		If any part which does not comply with the requirements of Sections 1.2.1(1)-(4) of this Schedule 2 is incorporated in, installed in or attached to the Aircraft, title to such part shall not vest in Owner and title to the replaced part shall not vest in Lessee until a part complying with such Section 1.2.1(1)-(4) is incorporated, installed in or attached to the Aircraft.
1.3		Modifications and Inspections
1.3.1		Required Modifications and Inspections
		Without limiting Lessee’s obligations under Section 1.1 of this Schedule 2, Lessee shall, at its own expense (subject to Section 1.3.8 of this Schedule) procure that (1) all AD Modifications and all alert SB Modifications applicable to the Aircraft and due or recommended during the Lease Term are completed on a timely basis and (2) all AD inspections and all alert SB inspections due or recommended during the Lease Term are completed on a timely basis (clauses (1) and (2), collectively, “Required Actions”).

1.3.2		Lessee Modifications
		Lessee, at its own expense, may from time to time add further parts or accessories and make such Modifications to the Airframe or any Engine as Lessee may deem desirable in the proper conduct of its business, provided that:

	(1)		Lessee shall not, without Lessor’s prior written consent, not to be unreasonably withheld, make any Major Modifications to the Aircraft (other than any Modification to the extent that it is part of a Required Action), and, in connection with obtaining such consent, Lessee shall provide Lessor with advance copies of all designs, plans, diagrams, drawings and data to be used by Lessee in accomplishing such Major Modifications. Upon completion of such modification, Lessee shall obtain an EASA supplemental type certificate for such Major Modification or, in lieu thereof, reverse such Modification and return the Aircraft to the condition it was in prior to such Modification so that the Aircraft is in EASA Condition;
	(2)		No such Modification (other than any Modification to the extent that it is part of a Required Action) shall (a) diminish the value, marketability or utility of the Airframe or such Engine, (b) damage the Aircraft or (c) impair the condition or airworthiness thereof, assuming in each case the Airframe or such Engine is in the condition and repair required to be maintained by the terms of each Operative Document, provided that with respect to any Modification that only diminishes the marketability of the Aircraft and/or results in minor repairable damage to the Aircraft, then Lessee shall be permitted to perform such Modification provided that prior to the last day of the Lease Term Lessee reverses such Modification and restores the Aircraft to a condition as if such Modification had not been made; and
	(3)		Subject to Section 1.3.8 of this Schedule 2, Lessor shall not be required under any circumstances to pay directly or indirectly for any Modifications.

1.3.3		Reversal of Modification at Lessee’s Option
		Notwithstanding the foregoing, Lessee may, at any time during the Lease Term and at its own expense, reverse any Modification, provided that (1) such Modification is not required to have been made pursuant to the terms hereof and (2) Lessee restores the Aircraft to a condition as if such Modification had not been made.
1.3.4		[Intentionally Omitted]
1.3.5		Title to Removed Modification Part
		Upon the removal by Lessee of any Modification Part and reversal of the related Modification as provided in Sections 1.3.3 or 1.3.4 of this Schedule 2, title in such Modification Part shall, without further act, vest in Lessee free and clear of all rights of Owner and Lessor and all Lessor Liens, and such Modification Part shall no longer be deemed a Part of the Airframe or Engine from which it was removed. Any Modification Part not removed by Lessee as above provided prior to the return of the Airframe or Engine to Lessor hereunder shall remain the property of Owner.

1.3.6		Passenger Communication/Entertainment Equipment
		Notwithstanding Section 1.2 of this Schedule 2, Lessee may from time to time install on the Aircraft equipment that is leased or conditionally sold to Lessee (and title to such equipment shall remain vested in the lessor or conditional vendor thereof) if (1) such equipment is passenger communications and entertainment equipment and (2) it can be removed without causing material damage to the Aircraft and any damage caused by such removal is, prior to Return, repaired so that the Aircraft is restored to a condition as if such installation had not been made.
1.3.7		Service Bulletin Kits
		During the Lease Term, Lessee shall from time to time request, and shall install or retain in storage, all SB kits relating to the Aircraft, any Engine or any Part which are available to Lessee at no cost other than shipping and handling costs. If any “no cost” period lapses without Lessee acquiring such kit, Lessee shall be obligated to acquire such kit at the manufacturer’s then cost for such kit.
1.3.8		AD Modification Cost Sharing
		With respect to each Modification required during the Lease Term by an EASA AD (excluding, for the avoidance of doubt, any Modification required by an Aviation Authority AD which is not also required by an EASA AD) issued during the last two years of the scheduled Lease Term, complied with on a terminating basis during the Lease Term and having a cost of compliance (determined as provided below) in excess of US$100,000, Lessor shall reimburse Lessee, subject to the following provisions, for a portion of the cost of compliance with such modification as follows:
		R = (60 - M)/60) x (C - US$100,000)
		where
		“R” means the portion of the cost of compliance with such modification to be reimbursed to Lessee.
		“M” means the number of months (including parts thereof counted based on number of days elapsed) between (1) the earlier of (a) the date of actual completion of such modification and (b) the originally required date of mandatory compliance and (2) the scheduled end of the Lease Term.
		“C” means the cost of compliance with such modification at the normal commercial labor charge rates (but without mark-up for profit if Lessee or any Affiliate of Lessee performs the work) of the Agreed Maintenance Performer(s) performing such modification, plus reasonable cost of materials, less any subsidy, warranty payment or other benefit provided to Lessee (but in any case not including loss or expenses incurred because of inability to operate the Aircraft).
		Lessee shall submit to Lessor detailed and substantiated labor and material invoices for all such costs for which reimbursement is sought under this Section 1.3.8. Lessor shall pay to Lessee all amounts reimbursable hereunder on the last day of the Lease Term, or if later, promptly following Lessor’s receipt of such detailed and substantiated labor and material invoices.

		Nothing in this Section 1.3.8 shall be construed an obligation of Lessor to do anything other than to reimburse Lessee for the portion of the cost of certain ADs.
1.4		Documentation
		During the Lease Term, Lessee shall maintain:

	(1)		the Delivery Documentation and all other documentation delivered to Lessee with respect to the Aircraft, either Engine or any Part by Lessor, Airframe Manufacturer, Engine Manufacturer or other vendor or maintenance or repair facility;
	(2)		all other logbooks, records, manuals, data, drawings or other documents that are required to be maintained during the Lease Term under the terms of any Operative Document, by the Aviation Authority, EASA, the MPD, Airframe Manufacturer, Engine Manufacturer or the manufacturer of any Part and those that are provided to Lessee or otherwise maintained during the Lease Term with respect to the Aircraft including, in the case of each life-limited Part, accurate back-to-birth records; and
	(3)		updates or additions to any of the foregoing and renewals, revisions and replacements to any of the foregoing from time to time created or obtained, including all revisions and updates to any of the foregoing, and any new manuals and documents created, following the completion of modifications or alterations to the Aircraft;

		all of which shall be maintained in the English language, current and up-to-date (through subscription by Lessee to Airframe Manufacturer and Engine Manufacturer update services and with all documents and records unique to the Aircraft to be maintained unique to the Aircraft) and be kept by the Lessee in its possession at a location approved by the Aviation Authority in fire proof storage containers in an area free from any risk of flooding and not, without the Lessor’s prior written consent, be in the possession or control of any person other than the Lessee. Any Modifications accomplished to the Aircraft during the Lease Term, and not reversed before the end of the Lease Term, which result in a P/N, wiring diagram or operational change shall be incorporated into the applicable manufacturer’s manuals on a permanent basis. Records with respect to each Airframe Check—6Y, Airframe Check—12Y, Engine Basic Shop Visit, Engine repair, Landing Gear Overhaul and APU Basic Shop Visit performed during the Lease Term shall be sent to Lessor in electronic form promptly upon completion of each such event.
		Any Aircraft Documentation which Lessee is no longer required to retain under the provisions of Lessee’s Maintenance Program and the requirements of EASA and/or the Aviation Authority shall be returned to Lessor at Return (with the exception of technical log pages and daily, weekly and smaller check work packs).
1.5		Operation

(1)

Lessee shall not operate the Aircraft (or permit the operation of the Aircraft) in violation of any Law of any Government Entity having jurisdiction over Lessee or the Aircraft, in violation of the MPD, any manufacturer’s operating manuals, recommendations or instructions, in violation of any airworthiness certificate, license or registration relating to the Aircraft issued by any such Government Entity, or in violation of U.N. sanctions or restrictions. In addition, Lessee shall not operate the Aircraft (or permit the operation of the Aircraft) in violation of any export Laws (howsoever denominated) applicable to

Lessor or Owner. Lessee shall at all times during the Lease Term maintain a valid transport category airworthiness certificate for the Aircraft in full force and effect.

	(2)		Lessee shall not operate or locate the Aircraft or permit the Aircraft to be operated or located (1) outside of the Permitted Jurisdictions, (2) in any area excluded from coverage by, or in any manner or for any purpose excepted from coverage under, any insurance policy in effect or required by the terms of the Lease Agreement or (3) in any war zone or in any recognized or threatened area of hostilities unless covered to the satisfaction of Lessor by appropriate insurance (including war-risk and allied perils).
	(3)		Lessee shall not use, or permit the use of, the Aircraft for testing or for training, qualifying or reconfirming the status of flight crew members other than employees of Lessee, and then only if the use of the Aircraft for such purpose is not disproportionate to the use for such purpose of other Airframe Manufacturer Model A330-200 aircraft owned or operated by Lessee.
	(4)		Lessee shall ensure that the crew and engineers, if any, employed by it in connection with the operation and maintenance of the Aircraft have the qualifications and hold the licenses required by the Aviation Authority and Laws applicable to Lessee.
	(5)		Lessee shall use the Aircraft solely in commercial or other operations for which Lessee is duly authorized by the Aviation Authority and Laws applicable to Lessee.
	(6)		Lessee shall not use the Aircraft for the carriage of:

	(a)		whole animals living or dead (other than living humans) except in the cargo compartments according to I.A.T.A. regulations, and except domestic pet animals carried in a suitable container to prevent the escape of any liquid and to ensure the welfare of the animal;
	(b)		acids, toxic chemicals, other corrosive materials, explosives, nuclear fuels, nuclear wastes, or any nuclear assemblies or components, except as permitted for passenger aircraft under the “Restriction of Goods” schedule issued by I.A.T.A. from time to time and provided that all the requirements for packaging or otherwise contained therein are fulfilled;
	(c)		any other goods, materials or items of cargo which could reasonably be expected to cause damage to the Aircraft and which would not be adequately covered by the Insurances; or
	(d)		with Lessee’s knowledge, any illegal item or substance.

	(7)		Provided that no Event of Default shall have occurred and be continuing, Lessee may install, and allow to remain installed, an Engine Manufacturer Trent 772B engine on the Airframe other than an Engine so long as such engine is airworthy and otherwise complies with the requirements of the Aviation Authority and all Laws applicable to Lessee.
	(8)		In connection with Owner’s tax planning and structuring, Lessee has agreed not to, and Lessee shall not, use or permit the use of the Aircraft on any route that both originates

			and terminates in the United States. Promptly following the end of each calendar quarter Lessee shall provide Lessor with sufficient information in written form so that Lessor can determine (a) the total number of landings for the Aircraft during the calendar quarter and (b) the total number of landings and the total number of takeoffs, in each case for the Aircraft in the United States during the calendar quarter, identifying the airport(s) for such United States takeoffs and landings (e.g., copies of Pegasus printouts or the equivalent).
	(9)		Neither Engine shall be operated above 71,100 pounds thrust

1.6		Identification Plates, Etc.
		On or before the Delivery Date, Lessor shall affix, and thereafter Lessee shall at all times maintain in respect of the Airframe and each Engine a fireproof and legible identification plate of a reasonable size, in the location specified below, that contains the following legends or any other legend requested from time to time by Lessor in writing:

	(1)		In the case of the Airframe, in the upper sill of the left-hand forward entry door, adjacent to Airframe Manufacturer’s plate, “THIS AIRCRAFT IS OWNED BY WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, AS OWNER TRUSTEE, AND IS HELD UNDER LEASE BY SOUTH AFRICAN AIRWAYS (PTY) LTD.”
	(2)		In the case of each Engine, in a clearly visible place in close proximity to the manufacturer’s plate, “THIS ENGINE IS OWNED BY WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, AS OWNER TRUSTEE AND IS HELD UNDER LEASE BY SOUTH AFRICAN AIRWAYS (PTY) LTD.”

1.7		Inspection
		At all reasonable times and upon at least 10 days prior written notice to Lessee, Lessor’s or Security Trustee’s personnel and/or its authorized representatives may (at Lessor’s or Security Trustee’s risk and expense or, if such inspection is made in connection with or following an Event of Default, with no notice and at Lessee’s expense) inspect the Airframe and Engines and inspect and make copies of the Aircraft Documentation and Lessee’s Maintenance Program, and if such inspection is made at the time of any maintenance operation, such Persons may inspect behind any panels, bays or other apertures that have already been opened in the course of such maintenance operation, provided that no exercise of such inspection right shall unreasonably interfere with the normal operation or maintenance of the Aircraft by Lessee or any Permitted Sublessee. Neither Lessor nor Security Trustee shall have a duty to make any such inspection nor shall it incur any liability or obligation by reason of making or not making any such inspection. Lessee shall take such action as may reasonably be required by Lessor or Security Trustee to facilitate its inspection, including without limitation facilitating access to any premises where the Aircraft is located. Except during the final 24 months of the Lease Term or during the continuance of an Event of Default, all inspections by Lessor or Security Trustee and their authorized representatives provided for under this Section 1.7 shall, in regard to Lessor or Security Trustee be limited to one inspection of any kind contemplated by this Section 1.7 during any calendar year. During the period commencing 730 days prior to the scheduled expiry date and ending on such scheduled expiry date, there shall be no limit on the number of inspections by Lessor or Security Trustee and their authorized representatives provided for under this Section 1.7.

2.		MAINTENANCE RESERVES
2.1		Maintenance Reserves and Adjustments
2.1.1		Amounts

	(1)		The contents of this section are in Exhibit G to the Lease Agreement.
	(2)		Lessee shall pay the following amounts to Lessor:

	(a)		On the 15th day of each calendar month following the Delivery Date, the aggregate amount accrued in accordance with Section 2.1.1(1) of this Schedule 2 during the preceding calendar month.
	(b)		On the last day of the Lease Term, the aggregate amount accrued in accordance with Section 2.1.1(1) of this Schedule 2 during the Lease Term and not theretofore paid.

2.1.2		[Intentionally Omitted]
2.1.3		[Intentionally Omitted]
2.1.4		Letter of Credit in Lieu of Engine Life-Limited Parts Reserves
		Lessee may elect, by notice to Lessor on or before the Delivery Date, to provide a letter of credit to Lessor in lieu of paying Reserves in respect of life-limited Parts for each Engine (as provided in Section 2.1.1(1)(d) of this Schedule 2). The letter of credit shall comply with the requirements of Section 4.4 of the Lease Agreement except that the initial stated amount of the letter of credit will be in an amount equal to the product of (1) 2 (being the number of Engines), (2) 500 (being the agreed expected cycle utilization of the Engines for one year) and (3) the Reserve Rate set forth in Section 2.1.1(1)(d) of this Schedule 2 as escalated through the Delivery Date. Lessee shall cause the stated amount of the letter of credit to be increased on or before each anniversary of the Delivery Date by an amount equal to the product of (1) 2 (being the number of Engines), (2) the expected cycle utilization of the Engines for the next year of the Lease Term as agreed by Lessor and Lessee (but in no case less than 500 cycles) and (3) the Reserve Rate set forth in Section 2.1.1(1)(d) of this Schedule 2 as escalated through such anniversary. At Return Lessee shall pay Lessor for each Engine an amount equal to the Reserves that Lessor would be holding at Return had Lessee paid reserves for life-limited Parts for each Engine through the Return in accordance with this Section 2 (without regard to this Section 2.1.4) and upon such payment and satisfaction of all the Secured Obligations due at Return Lessor shall return such letter of credit to Lessee. Lessor agrees that it shall not draw such letter of credit for an amount greater than the Reserves that Lessor would be holding at Return had Lessee paid reserves for life-limited Parts for each Engine.
2.2		Reimbursement
		Lessor shall, subject to the other provisions of this Section 2 and provided that no Payment/Bankruptcy Default has occurred and is then continuing, reimburse Lessee for the actual costs incurred by Lessee in respect of labor and materials consumed during, and following completion of, the following maintenance during the Lease Term:

	(1)		Any Airframe Check—6Y, Airframe Check—12Y, excluding APU and Landing Gear and excluding components (unless such components are scheduled to be overhauled at that check in accordance with the MPD and their lives are fully restored).
	(2)		[Intentionally Omitted]
	(3)		The replacement of any Engine life-limited Part with a new Part, provided that (a) the reimbursement for any such part shall be reduced by an amount equal to the product of (i) the Dollar amount listed in Section 2.1.1(2)(c) of this Schedule 2, as adjusted by this Section 2, and (ii) the percentage for such part contained in Annex 1 to this Schedule 2 and (iii) (A) the approved cycle-life of such removed Engine life-limited Part less (B) the total cycles then accumulated on such removed Engine life-limited Part and (b) such reimbursement shall be for the cost of the part only and not for its installation.
	(4)		An APU Basic Shop Visit.
	(5)		A scheduled Landing Gear Overhaul.

		excluding, in each case, (i) any maintenance resulting from design faults or damage covered by warranty or caused by accidental damage, foreign objects, faulty maintenance or operational mishandling; (ii) any cost items which are the costs of transportation or are exchange, handling or similar costs or charges, (iii) any cost which is in excess of the relevant manufacturer’s list price for the relevant parts or maintenance work; and (iv) any maintenance, overhaul, renewal, replacement or repair cost which is reimbursable out of any insurance claim (assuming, for these purposes, that no deductibles applied to the relevant insurances).
2.3		Account Balances
		Lessor shall keep a notional running account in respect of the Airframe, each Engine (life-limited Parts subaccounts), the Landing Gear and the APU to which shall be credited all amounts in respect thereof received under the above Section 2.1 hereof, and debited all sums paid in respect thereof by Lessor to, or on behalf of, Lessee under the above Section 2.2. The life-limited Part subaccount for each Engine to be maintained using a further subaccount for each part using the percentage allocation contained in Annex 1 to this Schedule 2, such life-limited Part allocation to be adjusted on the Delivery Date and each anniversary of the Delivery Date based on the Engine Manufacturer’s then current list price for such Parts and their respective intervals.
		For the avoidance of doubt, it is agreed and acknowledged that the Reserves are additional Rent based on Lessee’s utilization of or the time elapsed on the Aircraft during the Lease Term and are the sole and exclusive property of Lessor. The purpose of the notional accounts and sub-accounts referred to in this Section 2.3 is solely to determine the amount of Lessor maintenance reimbursement obligation under this Section 2 and Lessee has no right or interest whatsoever in such accounts or the Reserves. Similarly, Lessor shall have no obligation to perform the relevant maintenance or to assure that it has been performed correctly.
2.4		No Negative Balances
		Lessor shall not be obliged to pay any sum under Section 2.2 of this Schedule 2 to the extent the amount requested would exceed the lesser of (1) the balance in the relevant notional account (or sub-account, as the case may be) at and as of the time the relevant maintenance event was

		completed and (2) the balance of such notional account (or sub-account, as the case may be) at the time Lessor is required pursuant to this Section 2 to make a payment to Lessee in respect of such request. In any case in which the amount reimbursed to Lessee under Section 2.2 is not sufficient to pay the cost of the relevant work, Lessee shall be obligated to meet all excess costs from its own resources. No shortfall may be carried forward or made the subject of any further claim for reimbursement.
2.5		Payments
		Lessee shall promptly submit to Lessor detailed and substantiated labor and material invoices (including the final statement showing a zero balance due) for all maintenance for which reimbursement is sought under this Section 2 and, in any event, not later than the 90th day following receipt by Lessee of such invoices from the Agreed Maintenance Performer (or, if such maintenance is performed by Lessee, not later than the 90th day following completion of such maintenance). Lessor shall pay to Lessee all amounts reimbursable hereunder promptly upon its receipt of such invoices and any other substantiating documentation reasonably requested by Lessor.

ANNEX 1 TO
SCHEDULE 2

LLP ALLOCATION

Fan
LP Rotor Fan Disk			5.48	%
LP Rotor Shaft			0.97	%
Fan Blades			17.61	%
Annulus Fillers			5.27	%
Intermediate Pressure Compressor
IP Rotor Compressor Shaft			16.28	%
IP Rotor Rear Shaft			0.88	%
High Pressure Compressor
HP Compressor Rotor			26.75	%
High Pressure Turbine
HP Turbine Rotor Disc			10.93	%
Intermediate Pressure Turbine
IP Turbine Rotor Disc			1.11	%
IP Turbine Rotor Shaft			5.01	%
Low Pressure Turbine
LP Turbine Stage 1 Disc			1.95	%
LP Turbine Stage 2 Disc			1.95	%
LP Turbine Stage 3 Disc			2.37	%
LP Turbine Stage 4 Disc			1.36	%
LP Turbine Rotor Shaft			2.09	%
			100	%

SCHEDULE 3

DELIVERY CONDITIONS AND DELIVERY PROCEDURES

PART I
Delivery Condition

1.		CONDITION OF AIRFRAME AND ENGINES
		On the Delivery Date, the Aircraft shall be delivered new from the Airframe Manufacturer in compliance with the Baseline Specification and otherwise, subject to availability, as follows:
1.1		SCNs
		With the following SCN selections and any MSCNs applicable to the Aircraft:

				Price
EPAC/TDU		TITLE		USD 01/08
		ATA 02 Certification
CL02.10.134/37		Compliance status report — EU OPS equivalent of JAR OPS 1, subparts K and L			5,000
CL02.10.133/01		Full compliance with FAR Amendment 121-306 new assist space requirements			6,900
CL02.40.100/01		Rudder leading edge painting according to vertical stabilizer dominant color		No Charge
CL02.40.101/01		External livery			116,500
		ATA 03 General Aircraft Design Criteria
CL03.20.321.57		A330-2xx dual weight variant — MTOW to 236 t, MLW to 182 t, MZFW to 170 t / MTOW to 238 t, MLW to 182 t, MZFW to 168 t		No Charge
		ATA 11 Placards and markings
CL11.00.124/01		Installation of leasing plate on engines		No Charge
CL11.00.124/02		Installation of leasing plate on forward LH passenger door		No Charge
CL11.00.124/03		Installation of leasing plate on cockpit rear partition		No Charge
CL11.00.124/04		Installation of leasing plate on APU		No Charge
CL11.30.110/04		Passenger placards and signs alternate marking — English only		No Charge
		ATA 21 Air Conditioning
CL21.20.110/06		Particle filter element — LE BOZEC, PN 430B100-3		No Charge
CL21.28.105/08		Installation of lower deck fwd cargo compartment ventilation system and temp control (A330/A340-300)			404,100
CL21.70.102/03		Combined VOC/ozone catalytic converters alternate equipment — ENGELHARDT, PN 44142002			6,500

				Price
EPAC/TDU		TITLE		USD 01/08
		ATA 23 Communications
		GLOBAL IFE			546,400
		GLOBAL CIDS			40,000
CL23.00.100/12		Installation of an automatic ELT with remote control panel in the cockpit — ELTA ADT 406 AF			15,900
CL23.11.110/06		Activation of HF datalink function for HFDR1 on Fans A and Fans A+ configuration			42,500
CL23.11.135/02		Dual HF system alternate equipment — HONEYWELL		No Charge
CL23.11.157/09		Dual HFDR system — HONEYWELL			36,600
CL23.12.130/02		VDR — HONEYWELL, PN 064-50000-0505		No Charge
CL23.12.130/18		VDR transceivers capable mode 2 — HONEYWELL, RTA-50D, PN 965-1696-051		No Charge
CL23.28.110/16		High rate SATCOM avionics MCS 7000 (7 channels — AERO H+) with RFUIA — HONEYWELL		No Charge
CL23.36.334/07		IFE Media content loading at Final Assembly Line			6,200
CL23.50.126/36		Boomsets alternate equipment — SENNHEISER type HME46-C, PN 046-55-999-0231		No Charge
CL23.50.144/13		Installation of headset for fourth occupant — SENNHEISER type HD 46-K1, PN 046-69-999-0931			850
CL23.70.110/02		Installation of Cockpit Door Surveillance System (CDSS)			25,500
CL23.71.175/06		CVR — HONEYWELL, PN 980-6022-001		No Charge
		Additional i5000 data wiring — cabin redundancy at FDB-FDB level		Incl. In Global IFE
		Cable raceway relocation in B/C		TBD
		ATA 24
CL24.56.134/03		Additional 15 kVA galley power supply in door n° 4 area			32,900
		ATA 25 Cabin & Cockpit
CL25.23.500/01		INTERIOR COLOR SCHEME DEFINITION		Incl. In Cabin
		GLOBAL EMERGENCY EQUIPMENT			10,000
		GLOBAL CABIN LAYOUT			1,390,000
		GALLEY COOLING			25,100
		GLOBAL ISPSS			10,400
CL25.24.164/07		Deletion of lateral OHSC at door 3 level		Incl. in Cabin
CL25.35.050/01		Installation of galley catering equipment (BFE)		Incl. in Cabin
CL25.45.100/01		Lavatory equipment selection (SFE)		Incl. in Cabin
CL25.26.205/40		Installation of curtains according to curtain definition checklist		Incl. in Cabin
CL25.74.200/01		Structural and system provisions for a main deck FCRC		Incl. In FCRC install
CL25.74.210/06		Inst. Of main deck FCRC based on prov.— dual pilot compmnt (temp. Ctrl in AAP) (SFE)			446,200
CL25.75.231/02		Installation of a large staircase housing/stowage at door 3 for LDMCR (large entrance cutout) (BFE)		Incl. In LDMCR install
CL25.75.235/02		Structural and system provision for LDMCR at door 3 with large entrance cut-out		Incl. In LDMCR install

				Price
EPAC/TDU		TITLE		USD 01/08
CL25.75.240/01		Installation of an LDMCR in the aft lower deck cargo compartment (BFE)			605,000
CL25.11.140 / 11		Captain and first officer seat covering with grey sheepskin			9,200
CL25.50.160/02		Installation of sidewall lining protections in lower deck cargo compartments			16,900
CL25.65.100/06		Installation of one pair of fireproof gloves (BFE) — BENNETT SAFETYWEAR LTD, PN FKK8-35KL		Incl. in EE
CL25.40.245/08		Provision for installation of lavatory at position L74 (TYPE Z)		Incl in Cabin
CL25.52.100/01		Installation of additional tie-down points in lower deck forward cargo compartment			20,800
CL25.30.359/51		Structural and system provisions for installation of galley at location 31.100		Incl in Cabin
CL25.34.750/01		Floor Thermal insulation		Incl. in Galley cooling
		ATA 26 Fire protection
CL26.13.101/02		APU fire extinguisher — KIDDE AEROSPACE, PN 472 412-1		No Charge
CL26.21.107/std		Engine fire extinguishers — PACIFIC SCIENTIFIC		STD
CL26.23.106/std		Cargo fire extinguishers — KIDDE		STD
CL26.24.110 / 12		Cockpit portable fire extinguisher (SFE) — TOTAL FEUERSCHUTZ, PN 74-20			900
CL26.24.600 / 22		Installation of halon fire extinguisher in cabin (SFE) — TOTAL FEUERSCHUTZ, PN 74-20		Incl. in Global EE
		ATA 27 Flight controls
CL27.50.103/01		Flap track ‘sealed for life’ roller bearings — KAMATICS, PN 27F5757306X.20X			19,300
		ATA 29 Hydraulic power
CL29.10.113/05		Electro Motor Pumps (EMP) — EATON AEROSPACE, PN 974540		No Charge
		ATA 31 Indicating/Recording systems
CL31.33.114/14		Flight Data Recorder (FDR) (256 w/s) — HONEYWELL, PN 980-4700-042		No Charge
		ATA 32 Landing Gear
CL32.40.100/24		A330 — Wheels and brakes HONEYWELL (2 500 LPO)		No Charge
CL32.41.140/32		A330 — Radial tires (MLG) — BRIDGESTONE, PN APR06911		No Charge
CL32.41.141/04		A330-200/300 & A340-300 — Radial tires (NLG) — BRIDGESTONE, PN APR06500		No Charge
		ATA 33 Lights
		Global lighting			54,200
CL33.24.150 / 02		B/C Lavatory lighting — Reduced dimmed illumination		No Charge

				Price
EPAC/TDU		TITLE		USD 01/08
CL33.24.150 / 03		Y/C Lavatory lighting — Reduced dimmed illumination		No Charge
CL33.25.200 / 02		Installation of in-seat reading light in B/C		No Charge
CL33.26.115 / 01		Self dimmed Lavatory Occupied Signs			3,700

				Price
EPAC/TDU		TITLE		USD 01/08
		ATA 34 Navigation
CL34.15.112/01		Angle of attack sensor — BF GOODRICH AEROSPACE, PN 0861ED		No Charge
CL34.20.203/02		ISIS — baro setting in inches Hg			3,900
CL34.20.203/04		ISIS — display of metric altitude			3,900
CL34.41.125/26		Dual weather radar HONEYWELL with PWS and autotilt activation, new dual antenna mount			56,000
CL34.42.100/17		Radio altitude automatic call-outs			4,000
CL34.42.113/13		Radio altimeter — HONEYWELL Quantum line		No Charge
CL34.51.108/09		DME — HONEYWELL, PN 066-50013-1212		No Charge
CL34.52.102/01		Compliance with ADS-B OUT regulation for NRA			3,600
CL34.00.300/01		RNP AR/SAAAR capability (Step 1)			70,000
CL34.55.102/09		VOR/MARKER receivers alternate equipment — HONEYWELL, PN 066-50012-1212		No Charge
CL34.58.310/34		MMR alternate equipment providing ILS and GPS functions with FLS/GLS capability — ROCKWELL COLLINS		No Charge
		ATA 35 Oxygen
CL35.11.110/02		In-situ replenishment facility for cockpit oxygen cylinder (A330/A340) — EROS, PN DKR142			32,500
CL35.11.112/01		Flight crew oxygen cylinder 115 cu ft (steel) — EROS, PN 891511-14			1,900
CL35.22.021/11		Installation of one additional mask in each oxygen box (chemical system)			6,700
CL35.30.106 / 03		One PBE in cockpit — DAe SYSTEMS GmbH, PN E28180-10 (SFE)			300
CL35.32.490 / 01		Portable oxygen device — General information and typical installation		Incl. in Global EE
CL35.32.505 / 21		Installation of PBE in cabin (SFE) — DAe SYSTEMS GmbH, PN E28180-10		Incl. in Global EE
CL35.32.601 / 01		Instal. of portable oxygen cylinder — AVOX SYSTEMS INC 4.25 cuft outlet code A, PN 9700-A1A-BF23A		Incl. in Global EE
CL35.32.640 / 02		Installation of demo oxygen mask — AVOX SYSTEMS INC, PN 289-1002		Incl. in Global EE
CL35.32.650 / 01		Installation of manual release tool for passenger oxygen system — B/E AEROSPACE ISG, LENEXA		Incl. in Global EE
		ATA 38 Water/Waste
CL38.00.222/02		Certificate of sanitary construction for water and waste system compliance with USPHSS		No Charge
CL38.00.222/03		Disinfections result certificate for potable water system		No Charge
CL38.11.112/01		Installation of a third potable water tank (total capacity 1 050 liters)			42,800
CL38.11.116/01		Water quantity preselection of potable water at service panel (A330 and A340-300)			12,800
CL38.12.102/04		Installation of potable water filter housing and cartridge 1 micrometer dechlorinating			900

				Price
EPAC/TDU		TITLE		USD 01/08
		ATA 46 Information Systems
CL46.21.100/10		Airbus AOC software for ATSU (Fans A+) (weights in kg) — HONEYWELL		No Charge
CL46.21.105/01		Activation of ARINC 623 in the ATSU			7,200
CL46.21.111/01		Activation of VDL mode 2 function in the ATSU			37,600
		ATA 47
CL47.10.100 / 01		Installation of system provision for Fuel Tank Inerting System (FTIS)			107,000
		ATA 51 Structure
CL51.22.230/04		Intermediate coat paint system (LOW VOC/CF primer) fuselage and vertical stabilizer			41,100
		ATA 52 Doors
CL52.51.103/02		Installation of deadbolt for manual locking of cockpit door		No Charge
CL52.51.104/01		Install damping devices to reduce noise by door slam			14,500
		ATA 55 Stabilizer
CL55.30.101/01		Metal sheet cover on vertical stabilizer			15,700
		ATA 56 Windows
CL56.10.104/10		PPG INDUSTRIES front and side windows (chemically tempered)		No Charge
		ATA 72 Engines
CL72.00.117/03		Engines selection — RR TRENT 772B		No Charge
		ATA 79 Oil
CL79.20.100/13		Engine, engine accessories and APU lubricating oil — BP 2197		No Charge

Note: CL03.20.321.57 (Dual weight variant) is subject to successful certification by the relevant aviation authorities. For information only, such certification is currently scheduled for September 2010.

Lessee shall have the right to select the following SCN, provided that Lessee gives Lessor notice of such selection at least 30 days prior to any Airframe Manufacturer deadline for making such selection:

				Price
EPAC/TDU		TITLE		USD 01/08
		ATA 02 Certification
CL02.12.122/04		ETOPS up to 240 minutes		TBD

1.2		BFE
		With the following BFE selections:

				Price
EPAC/TDU		TITLE		USD 01/09				COMMENTS
CL23.00.100/12		Installation of an automatic ELT with remote control panel in the cockpit — ELTA ADT 406 AF		$	10,000
CL23.28.110/16		High rate SATCOM avionics MCS 7000 (7 channels — AERO H+) with RFUIA — HONEYWELL		$	318,164
CL23.30.017/33		Thales Avionics TopSeries (i5000) — IFE		$	2,824,912			Recurring Cost per aircraft
CL23.30.017/34		Thales Avionics TopSeries (i5000) — IFE		$	0			Non Recurring Cost per fleet
CL25.21.20.00		Seat Cover Fabric/Leather — Lantal		$	90,000
CL25.21.460/60		Sicma Majesty — Business Class Seats		$	1,693,613			Recurring Cost per aircraft
CL25.21.460/61		Sicma Majesty — Business Class Seats		$	371,250			Non Recurring Cost per fleet
CL25.21.470/80		Webber 5750 — Economy Class Seats		$	781,129			Recurring Cost per aircraft
CL25.21.470/81		Webber 5750 — Economy Class Seats		$	451,862			Non Recurring Cost per fleet
CL25.21.710/02		Installation of 110 VAC / 60 Hz PED power outlets in B/C seat — KID-SYSTEME GMBH		(Incl in IFE cost)
CL25.22.300/03		Installation of high comfort floor-mounted cabin attendant seat (Goodrich Interiors) forward door 2, LH, at location 53		$	23,000
CL25.22.300/04		Installation of high comfort floor-mounted cabin attendant seat (Goodrich Interiors) forward door 2, RH, at location 55		$	23,000
CL25.26.205/40		INSTALLATION OF CURTAINS ACCORDING TO CURTAIN DEFINITION CHECKLIST		$	10,000
		INSTALLATION OF CARPETS		$	30,000
CL25.27.313/01		Installation of wall-mounted baby bassinet based on provisions — INNOVINT		$	1,000
CL25.30.005/01		AIM Aviation Henshalls — Galleys		$	1,149,222			Recurring Cost per aircraft
CL25.30.005/02		AIM Aviation Henshalls — Galleys		$	309,959			Non Recurring Cost per fleet
CL25.34.410/31		Installation of 4500 BTU/h air chiller unit — B/E AEROSPACE, PN 236-8		Incl in Galley
CL25.34.410/51		Installation of 7000 BTU/h air chiller unit — B/E AEROSPACE, PN 267-100		Incl in Galley Equipment

				Price
EPAC/TDU		TITLE		USD 01/09				COMMENTS
CL25.35.050/01		Installation of galley catering equipment		See Table below
CL25.65.00.00		Seat Belts		$	10,000
CL25.65.100/06		Installation of one pair of fireproof gloves — BENNETT SAFETYWEAR LTD, PN FKK8-35KL		$	30
CL25.66.00.00		Life Vests		$	10,000
CL25.75.231/02		Installation of a large staircase housing/stowage at door 3 for LDMCR (large entrance cutout)		$	670,605			Recurring Cost per aircraft
CL25.75.231/03		Installation of a large staircase housing/stowage at door 3 for LDMCR (large entrance cutout)		$	0			Non Recurring Cost per fleet
CL25.75.240/01		Installation of an LDMCR in the aft lower deck cargo compartment		$	97,575			Recurring Cost per aircraft
CL25.75.240/02		Installation of an LDMCR in the aft lower deck cargo compartment		$	0			Non Recurring Cost per fleet
CL33.25.200 / 02		Installation of in-seat reading light in B/C		Incl in Business Class Seats
CL46.21.100/10		Airbus AOC software for ATSU (Fans A+) (weights in kg) — HONEYWELL		$	11,587

     Table. Galley Catering Equipment

																																																																						S/S Price
Item		Equipment				Supplier				P/N				Price				Status				G1A				G1R				G2F				G2A				G4F				G4L				G4R				S3R				S2R				S2L				Total				S/S Price				(01/ 09 USD)
1		WATER BOILER				B/E Aerospace				4360004-85-00-18				€	4,998.00			BFE					0				0				0				0				0				1				0				0				0				0				1			€	4,998			$	7,997
2		HOT CUP				DRIESSEN				JA028003				$	300			BFE					1				0				1				0				0				1				0				0				0				0				3			$	900			$	900
6		ESPRESSO MAKER				IACOBUCCI				HFE-2005-01				€	10,500			BFE					1				0				1				0				0				0				0				0				0				0				2			€	21,000			$	33,600
6		MOUNTING RAIL				IACOBUCCI				CA2-01				€	1,000			BFE					1				0				1				0				0				0				0				0				0				0				2			€	2,000			$	3,200
7		STEAM OVEN				B/E Aerospace				4323100-01-6622				€	10,298			BFE					2				0				2				1				0				3				4				0				0				0				12			€	123,576			$	197,722
8		TRASH COMPACTOR				MONOGRAM				3210005WB106				$	47,000			BFE					0				0				0				1				0				1				0				0				0				0				2			$	94,000			$	94,00
9		COFFEE MAKER				B/E Aerospace				4510-42LG-00				$	7,174			BFE					2				0				2				3				0				2				2				0				0				0				11			$	78,914			$	78,914
		COFFEE MAKER RAIL				B/E Aerospace				64759-151				$	1,002			BFE					2				0				2				3				0				2				2				0				0				0				11			$	11,022			$	11,022
		INSULATED SERVER				B/E Aerospace				3520-0603-01				$	0								2				0				2				3				0				2				2				0				0				0				11			$	0			$	0
10		Air Chiller 4500BTU				B/E Aerospace				236-8				$	22,849			BFE					1				0				0				0				0				0				0				0				0				0				1			$	22,849			$	22,849
11		Air Chiller				B/E Aerospace				267-100				$	23,951			BFE					0				0				1				1				0				1				1				0				0				0				4			$	95,804			$	95,804