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EXHIBIT 10.85
Exhibit A
FIRST AMENDMENT TO LEASE AGREEMENT
FIRST AMENDMENT TO LEASE AGREEMENT (this "Amendment"), dated as of
September __, 1997, among Atlas Freighter Leasing, Inc., as Lessor (the
"Lessor"), Atlas Air, Inc., as Lessee (the "Lessee") and Bankers Trust Company,
as Agent (the "Agent"). All capitalized terms defined in the Lease Agreement
shall have the same meaning when used herein unless otherwise defined herein.
W I T N E S S E T H:
WHEREAS, the Lessee and Lessor have entered into six Lease Agreements
each dated as of May 29, 1997 for the aircraft described in Schedule I attached
hereto (individually a "Lease Agreement" and collectively, the "Lease
Agreements");
WHEREAS, the Lessee has issued $150 million in aggregate principal
amount of 10-3/4% unsecured Senior Notes due 2005;
WHEREAS, Atlas Freighter Leasing II, Inc. a subsidiary of Lessee
("AFL II") has entered into a Credit Agreement, dated as of September 5, 1997,
among AFL II, Agent, as administrative agent and Xxxxxxx Xxxxx Credit Partners
L.P., as syndication agent (the "AFL II Credit Agreement");
WHEREAS, in connection with the AFL II Credit Agreement, AFL II, as
lessor, has entered into four leases, dated the date hereof, with Atlas Air,
Inc. as lessee (the "AFL II Leases", together with the AFL II Credit Agreement
the "Transaction"); and
WHEREAS, in order to effect the Transaction, the parties hereto wish
to amend the Lease Agreements as set forth below;
NOW, THEREFORE, it is agreed:
1. The Lease Agreements shall be amended by inserting the following
new definitions in alphabetical order:
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"AFL II" means Atlas Freighter Leasing II, Inc., a Delaware
corporation.
"AFL II Aircraft" means (i) four Boeing 747-200 aircraft (including
the engines attached thereto) and (ii) nine General Electric CF6-50E2
engines.
"AFL II Credit Agreement" shall mean the Credit Agreement, dated as of
September 5, 1997, by and among AFL II, as Borrower, the Lenders listed
therein from time to time, Xxxxxxx Sachs Credit Partners L.P., as
Syndication Agent and Bankers Trust Company, as Administrative Agent as
such agreement may be amended, modified, waived, or supplemented from time
to time.
"AFL II Leases" shall mean the Leases as such term is defined in the
AFL II Credit Agreement.
"AFL II Restructuring" means the following transactions which shall
occur on September 5, 1997: (i) the contribution of the AFL II Aircraft to
AFL II as a capital contribution, (ii) the incurrence of indebtedness
pursuant to the AFL II Credit Agreement and the simultaneous repayment of
amounts outstanding under the Amended Aircraft Credit Facility which are
secured by the AFL II Aircraft and (iii) the entering into of the AFL II
Leases.
"Senior Notes Documents" means the Indenture, dated as of August 13,
1997 between Atlas Air, Inc. and State Street Bank and Trust Company
relating to the 10 3/4% $150 million Senior Notes due 2005 of Lessee (the
"Senior Notes") and any and all related agreements, as the same may be
amended, restated, supplemented or otherwise modified from time to time in
accordance with this Lease.
2. The Lease Agreements shall be amended by replacing the definition
of "Consolidated Adjusted EBITDA" with the following:
"Consolidated Adjusted EBITDA" means, for any period, (I) the sum of
the amounts for such period of (i) Consolidated Net Income, (ii)
Consolidated Interest Expense, (iii) provisions for taxes based on income,
(iv) total depreciation expense, (v) total amortization expense, (vi) other
non-cash items reducing Consolidated Net Income less other non-cash items
increasing Consolidated Net Income Less (II) all cash expenditures reducing
reserves appearing on the June 30, 1997 balance sheet of Atlas, all of the
foregoing as determined on a consolidated basis for Lessee and its
Subsidiaries in conformity with GAAP.
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3. The definition of "Consolidated Interest Expense" shall be amended
in the Lease Agreements by inserting after the words "Interest Rate Agreements"
and immediately prior to the period the following phrase:
and Currency Agreements, but excluding, however, any amounts referred to in
subsection 2.3 of the Amended Aircraft Credit Facility on or before the
Third Amended and Restated Closing Date (as such term is defined in the
Amended Aircraft Credit Facility)
4. The definition of "Consolidated Rental Payments" shall be amended
in the Lease Agreement by inserting, at the end of the definition, the
following new sentence:
For the avoidance of doubt, all rental payments to AFL II and Lessor
shall not be included in Consolidated Rental Payments.
5. The definition of "Designated Indebtedness" shall be amended in the
Lease Agreements by inserting after the phrase "the Nationsbank Agreement," the
phrase "the AFL II Credit Agreement, the Senior Notes Documents".
6. The definition of "Material Agreement" shall be amended in the
Lease Agreements by inserting after the phrase "the Nationsbank Agreement", the
phrase "the AFL II Credit Agreement, the AFL II Leases, the Senior Notes
Documents".
7. The definition of "Permitted Encumbrances" shall be amended in the
Lease Agreements by: (I) renumbering "(xii)" to "(xiv)" and (II) inserting new
clauses (viii), (xii) and (xiii) as follows:
(viii) the rights of others under agreements or arrangements to the
extent expressly permitted by the terms of: (I) Sections 4(d) and 4(e) of
the Aircraft Chattel Mortgages, (II) Sections 4(d) and 4(e) of the aircraft
chattel mortgages entered into in connection with the AFL II Credit
Agreement and (III) Sections 4(d) and 4(e) of the aircraft chattel
mortgages entered into in connection with the Amended Aircraft Credit
Facility;
(xii) Liens arising pursuant to the AFL II Credit Agreement; provided
that such Liens do not encumber any assets other than the AFL II Aircraft
and other assets of AFL II;
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(xiii) Liens securing Indebtedness incurred in accordance with Section
7(a)(8); and
8. The definition of "Permitted Extension Indebtedness" shall be
amended in the Lease Agreements by inserting in clause "(ii)" the word
"reasonably" after the word "Lessee" and immediately prior to the word
"incurred".
9. The definition of "Person" shall be amended in the Lease
Agreements by inserting the words "limited liability companies," after the
words "general partnerships" and immediately prior to the words "joint stock
companies".
10. The Lease Agreements shall be amended by replacing the definition
of "Second Amended and Restated Credit Agreement" with the following in
appropriate alphabetical order:
"Amended Aircraft Credit Facility" means the Third Amended and
Restated Credit Agreement, dated as of September 5, 1997, among Atlas Air,
Inc., as Borrower, the Lenders listed therein, Xxxxxxx Xxxxx Credit
Partners L.P., as Syndication Agent, and Bankers Trust Company, as
Administrative Agent without giving effect to any amendments,
modifications, supplements or waivers thereof.
11. The Lease Agreements shall be amended by replacing the second
sentence of subsection 6(d) with the following sentence:
Lessee will maintain or cause to be maintained, with insurers of
recognized responsibility and reputation, insurance with respect to its
properties and business and the properties and business of its Subsidiaries
against loss or damage (including, without limitation, flood insurance, if
necessary or advisable) of the kinds customarily carried or maintained
under similar circumstances by corporations engaged in similar businesses.
12. The Lease Agreements shall be amended by inserting in the first
sentence of subsection 6(e) the phrase ", with the permission of Lessee which
shall not be unreasonably withheld," immediately prior to the phrase "to make
copies and take extracts therefrom,".
13. The Lease Agreements shall be amended by inserting the following
new subsection 7(a)(6):
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(6) so long as no Default or Lease Event of Default shall have
occurred and be continuing or would result therefrom and Lessee delivers an
Officers' Certificate to Lessor, Agent and Lenders, in form and substance
reasonably satisfactory to Lessor and Agent, confirming that, on a Pro
Forma Basis after giving effect to such incurrence of Indebtedness, (i) the
ratio of Consolidated Total Debt (less Cash and Cash Equivalents held by
Lessee in excess of $25 million) as of the last day of the most recently
ended fiscal quarter (the "Determination Date") plus seven times
Consolidated Rental Payments for the four fiscal quarter period ending on
such Determination Date to Consolidated Adjusted EBITDA plus Consolidated
Rental Payments for the four fiscal quarter period ending on such
Determination Date does not exceed the ratio set forth in subsection
7(f)(ii) for the fiscal quarter in which such Indebtedness is to be
incurred, (ii) the ratio of Consolidated Adjusted EBITDA for such four
fiscal quarter period to Consolidated Interest Expense for such four fiscal
quarter period is not less than the ratio set forth in subsection 7(f)(i)
for the fiscal quarter in which such Indebtedness is to be incurred; and
(iii) Lessee will be in compliance with all covenants set forth in
subsection 7(f) hereof, Lessee and its Subsidiaries may incur Other
Permitted Indebtedness;
14. The Lease Agreements shall be amended by inserting in the
beginning of subsection 7(a)(8) the phrase "and its Subsidiaries" immediately
following the word "Lessee".
15. The Lease Agreements shall be amended by inserting the following
new subsections 7(a)(10) - (12):
(10) Lessee may become and remain liable with respect to Indebtedness
under the Nationsbank Agreement;
(11) AFL II may become and remain liable with respect to all the
obligations under AFL II Credit Agreement and Lessee may become and remain
liable with respect to the AFL II Leases; and
(12) Lessee may become and remain liable with respect to the Senior
Notes.
16. The Lease Agreements shall be amended in subsection 7(B)(b) by:
(I) inserting the phrase "and (iv) pursuant to the AFL II Credit Agreement"
after the words "Special Purpose Subsidiaries" and (II) replacing the word
"and" immediately following the word "hereto" and immediately prior to the
"(iii)" with a comma.
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17. The Lease Agreements shall be amended by replacing subsection
7(c)(vi) with the following new subsection 7(c)(vi):
(vi) Lessee and its Subsidiaries may make and own other Investments in
an aggregate amount not to exceed $15 million at any time outstanding.
18. The Lease Agreements shall be amended by inserting the following
new subsection 7(d)(6):
(6) Lessee and its Subsidiaries may become and remain liable with
respect to Contingent Obligations to the extent such Contingent Obligations
are permitted pursuant to subsections 7(i) and 7(j).
19. The Lease Agreements shall be amended by inserting the following
amended subsection 7(e)(2) and new subsection 7(e)(4):
(2) Lessee may make Restricted Junior Payments with respect to its
Common Stock in an amount not to exceed in any fiscal year, the lesser of
25% of Consolidated Net Income for such fiscal year and $10 million;
(4) Lessee may repurchase its Common Stock in an amount not to exceed
in any fiscal year $15 million for purposes of establishing or contributing
to an employee benefit plan; provided that any such repurchased Common
Stock resold to employees of Lessee shall, to the extent of the price paid
for such Common Stock by such employee, be excluded from the calculation of
the $15 million limit set forth above.
20. The Lease Agreements shall be amended by inserting the following
new subsection 7(f):
(f) Financial Covenants.
(i) Minimum Interest Coverage Ratio. Lessee shall not permit the ratio of
(i) Consolidated Adjusted EBITDA to (ii) Consolidated Interest Expense for any
four fiscal quarter period ending as of the last day of any fiscal quarter of
Lessee set forth below to be less than the correlative ratio indicated:
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Fiscal Quarter Minimum Interest
Ending Coverage Ratio
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June 30, 1997 1.90:1.00
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September 30, 1997 1.90:1.00
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December 31, 1997 1.90:1.00
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March 31, 1998 1.90:1.00
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June 30, 1998 1.90:1.00
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September 30, 1998 1.90:1.00
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December 31, 1998 1.90:1.00
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March 31, 1999 1.90:1.00
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June 30, 1999 1.90:1.00
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September 30, 1999 2.00:1.00
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December 31, 1999 2.00:1.00
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March 31, 2000 2.10:1.00
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June 30, 2000 2.10:1.00
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September 30, 2000 2.20:1.00
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December 31, 2000 2.20:1.00
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March 31, 2001 2.20:1.00
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June 30, 2001 2.20:1.00
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September 30, 2001 2.30:1.00
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December 31, 2001 2.30:1.00
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March 31, 2002 2.40:1.00
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June 30, 2002 2.40:1.00
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September 30, 2002 2.50:1.00
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December 31, 2002 2.50:1.00
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March 31, 2003 2.60:1.00
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Thereafter 2.70:1.00
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(ii) Maximum Leverage Ratio. Lessee shall not permit the ratio of (i)
Consolidated Total Debt at the end of any four fiscal quarter period ending
during one of the periods set forth below (less Cash and Cash Equivalents held
by Lessee in excess of $25 million as of such date) plus seven times
Consolidated Rental Payments for such four fiscal quarter period to (ii)
Consolidated Adjusted EBITDA plus Consolidated Rental Payments for such four
fiscal quarter period to exceed the correlative ratio indicated below:
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Fiscal Quarter Maximum
Ending Leverage Ratio
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June 30, 1997 5.75:1.00
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September 30, 1997 6.25:1.00
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December 31, 1997 6.75:1.00
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March 31, 1998 6.75:1.00
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June 30, 1998 7.00:1.00
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September 30, 1998 7.00:1.00
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December 31, 1998 6.75:1.00
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March 31, 1999 6.50:1.00
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June 30, 1999 6.25:1.00
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September 30, 1999 5.75:1.00
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December 31, 1999 5.75:1.00
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March 31, 2000 5.75:1.00
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June 30, 2000 5.50:1.00
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September 30, 2000 5.50:1.00
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December 31, 2000 5.25:1.00
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March 31, 2001 5.25:1.00
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June 30, 2001 5.25:1.00
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September 30, 2001 5.00:1.00
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December 31, 2001 5.00:1.00
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March 31, 2002 4.75:1.00
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June 30, 2002 4.75:1.00
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September 30, 2002 4.50:1.00
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December 31, 2002 4.50:1.00
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March 31, 2003 4.50:1.00
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Thereafter 4.25:1.00
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(iii) Minimum Consolidated Net Worth. Lessee shall not permit Consolidated
Net Worth at any time during any of the periods set forth below to be less than
the correlative amount indicated:
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Minimum
Period Consolidated
Net Worth
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fiscal year 1997 $215 million
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fiscal year 1998 $225 million
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fiscal year 1999 $250 million
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fiscal year 2000 $275 million
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fiscal year 2001 $300 million
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fiscal year 2002 $350 million
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fiscal year 2003 $400 million
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fiscal year 2004 $450 million
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21. The Lease Agreements shall be amended in subsection 7(g)(5) by
replacing the initial phrase immediately prior to the proviso with "Lessee may
make acquisitions of the capital stock of another Person or all or substantially
all of the assets of a division or line of business of another Person"
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22. The Lease Agreements shall be amended by inserting the following
new subsection 7(g)(9):
(9) Lessee shall be permitted to dispose of or acquire assets pursuant
to the consolidation and relocation of its offices and operations to
Colorado; provided that the aggregate consideration paid with respect to
the acquisition of assets shall be in an amount not to exceed $20 million.
23. The Lease Agreements shall be amended in subsection 7(i) by
inserting after the phrase "the Consolidated Rental Payments at the time in
effect during the then current fiscal year do not exceed $60 million plus" the
following new phrase:
, the amount of Consolidated Rental Payments made during such fiscal year
in respect of up to four 747-400F aircraft, subject to the agreement dated
June 9, 1997 between Lessee and The Boeing Company regarding the purchase
of 10 new 747-400F aircraft, leased by the Lessee within twelve months
following the September 5, 1997 plus
24. The Lease Agreements shall be amended by adding at the end of
subsection 7(l) the following new paragraph:
Notwithstanding the foregoing, each of the Lessor and AFL II shall be
permitted to issue preferred stock in an amount not to exceed $100,000 each
to a third party.
25. In order to induce the Lenders to enter into this Amendment, the
Borrower hereby represents and warrants that each of the representations and
warranties contained in the Lease Agreements are true and correct in all
material respects on the Amendment Effective Date both before and after giving
effect to this Amendment.
26. This Amendment shall become effective on the date (the "Amendment
Effective Date") on which each of the following shall have occurred:
(a) the Lessee and the Lessor shall have executed a counterpart
hereof and shall have delivered same to the Agent by telecopier; and
(b) the Lessor and the Agent shall have received an executed
opinion of counsel satisfactory to Lessor and Agent stating that in
the opinion of such counsel, such amendment to the Lease Agreements
has been properly recorded or filed for record in all public offices
in which
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such recording or filing is necessary to protect the right, title and
interest of Lessor and Agent.
27. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK.
28. The Amendment set forth herein is limited precisely as written and
shall not be deemed to be an amendment, consent, waiver or modification of any
other term or condition of the Lease Agreements or any of the instruments or
agreements referred to therein, or prejudice any right or rights which the Agent
may now have or may have in the future under or in connection with the Lease
Agreements, or any of the instruments or agreements referred to therein. Except
as expressly modified hereby, the terms and provisions of the Lease Agreements
shall continue in full force and effect.
29. This Amendment may be executed in two or more counterparts which
shall be deemed an original but all of which together shall constitute one and
the same instrument.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective duly authorized officers as
of the date first above written.
ATLAS AIR, INC.,
as Lessee
By
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Name:
Title:
ATLAS FREIGHTER LEASING, INC.,
as Lessor
By
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Name:
Title:
BANKERS TRUST COMPANY,
as Agent
By
-------------------------------
Name:
Title:
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SCHEDULE I
to First Amendment
to Lease Agreement
SCHEDULE OF AIRCRAFT
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Aircraft U.S. Lease FAA
Registry No. Agreement Date Recording Date Conveyance No.
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N507MC May 29, 1997 June 10, 1997 II008487
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N508MC May 29, 1997 June 10, 1997 II008485
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N509MC May 29, 1997 June 10, 1997 II008489
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N516MC May 29, 1997 June 10, 1997 II008491
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N505MC May 29, 1997 June 10, 1997 II008483
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N808MC May 29, 1997 June 10, 1997 II008493
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