Canada Jetlines Operations Ltd. - Capital/Financing Update 2022

EXECUTION VERSION [REDACTED]

DATED 15 DECEMBER 2021

BANK OF UTAH,

not in its individual capacity but solely as Owner Trustee ,

as Lessor

CANADA JETLINES OPERATIONS, LTD. ,

as Lessee

and –

GLOBAL CROSSING AIRLINES, GROUP, INC. , as Guarantor

AIRCRAFT LEASE AGREEMENT

Relating to one Airbus A320-200 Aircraft

Manufacturer’s serial number 4175

Equipped with two CFM56-5B4/3 Engines

PAGE


CLAUSE PAGE
1.	Definitions and interpretation ............................................................................................... - 1 -
2.	Lessee’s representations and warranties ............................................................................. - 22 -
3.	Lessor’s representations and warranties ............................................................................. - 25 -
4.	Conditions ........................................................................................................................... - 27 -
5.	Lease ................................................................................................................................... - 28 -
6.	Acceptance and Delivery .................................................................................................... - 28 -
7.	Lessor’s liability .................................................................................................................. - 29 -
8.	Quiet enjoyment .................................................................................................................. - 30 -
9.	Basic Rent and other payments ........................................................................................... - 31 -
10.	Expenses and indemnities ................................................................................................... - 32 -
11.	Taxation............................................................................................................................... - 35 -
12.	Payment mechanics ............................................................................................................. - 37 -
13.	General undertakings .......................................................................................................... - 40 -
14.	Operational undertakings .................................................................................................... - 44 -
15.	Maintenance and repair ....................................................................................................... - 51 -
16.	Title and registration ........................................................................................................... - 57 -
17.	Manufacturer Warranties ..................................................................................................... - 58 -
18.	Insurances ........................................................................................................................... - 59 -
19.	Total Loss ............................................................................................................................ - 63 -
20.	Requisition for hire ............................................................................................................. - 65 -
21.	Redelivery ........................................................................................................................... - 66 -
22.	Early termination ................................................................................................................ - 68 -
23.	Events of Default ................................................................................................................ - 69 -
24.	Consequences of an Event of Default ................................................................................. - 73 -
25.	Transferability ..................................................................................................................... - 77 -
26.	Further provisions ............................................................................................................... - 78 -
27.	Notices ................................................................................................................................ - 81 -
28. Governing Law, Jurisdiction and Waiver of Jury Trial .............................................................. - 83 -
SCHEDULE 1 DESCRIPTION OF AIRCRAFT ............................................................................ - 86 -
SCHEDULE 2 RELEVANT DOCUMENTS .................................................................................. - 89 -
SCHEDULE 3 CONDITIONS ........................................................................................................ - 90 -
Part I Lessee's Conditions Precedent ........................................................................................ - 90 -
Part II Lessee's Conditions Subsequent .................................................................................... - 95 -
Part III Lessor's Conditions Precedent ...................................................................................... - 96 -

Part IV Lessor's Conditions Subsequent ................................................................................... - 97 - SCHEDULE 4 BASIC RENT AMOUNTS ..................................................................................... - 98 - SCHEDULE 5 NOTICES AND CERTIFICATES .......................................................................... - 99 - Part I Form of Acceptance Certificate ...................................................................................... - 99 - Part II Form of Technical Acceptance Certificate .................................................................. - 102 - Part II Form of Return Acceptance Certificate ........................................................................ - 111 - Part III Form of Eurocontrol Letter ............................................................................................. 113 Part III Form of Aviation Authority Letter ................................................................................... 114 SCHEDULE 6 INSURANCES ....................................................................................................... - 117 - SCHEDULE 7 .................................................................................................................................- 121 - Part I Delivery Condition ........................................................................................................ - 121 - Part II Redelivery Condition ................................................................................................... - 125 - Part II Redelivery .................................................................................................................... - 125 - Part IV Aircraft Documents Required at Redelivery .............................................................. - 132 - Part V Supplemental Rent and Lessor Contributions ............................................................. - 139 - SCHEDULE 8 FORM OF MONTHLY REPORT ..........................................................................- 140 - SCHEDULE 9 FORM OF IDERA ..................................................................................................... 141 SCHEDULE 10 FORM OF LEASE TERMINATION AGREEMENT .........................................- 143 -

THIS AGREEMENT is dated __ December 2021 and made between:

(1) BANK OF UTAH , not in its individual capacity but solely as Owner Trustee pursuant to the Trust Agreement (as defined below), a corporation organized and existing under the laws of the State of Utah (the “ Lessor ”);
(2) CANADA JETLINES OPERATIONS, LTD., a company incorporated in Ontario, Canada whose registered office is at 6299 Airport Road, Suite 300, Mississauga, Ontario L4V 1N3 Canada (the “ Lessee ”); and
(3) GLOBAL CROSSING AIRLINES, GROUP, INC. , a company incorporated in the State of Delaware whose registered address is 4200 N.W. 36th Street, Bldg. 5A Miami (the “ Guarantor ”).

BACKGROUND

(A) The subject matter of this Agreement is one used Airbus A320-200 aircraft which, at the time of the delivery to Lessee, will be owned by Lessor.
(B) The Guarantor has agreed to guarantee the obligations of the Lessee under this Agreement and the Relevant Documents.
(C) In consideration of and subject to the mutual covenants, terms and conditions contained in this Agreement, Lessor hereby agrees to lease to Lessee and Lessee hereby agrees to lease from Lessor the Aircraft and the parties further agree as follows.

IT IS AGREED as follows:

1. DEFINITIONS AND INTERPRETATION

1.1 Definitions

In this Agreement:

“ 6 Year Check ” means the intermediate airframe structural, CPCP, and zonal inspection of the Aircraft (and resulting repairs), including a C Check, all MPD tasks having an interval of six years, and performed concurrently therewith such additional Flight Hour or Cycle controlled MPD structural and zonal.

“ 12 Year Check ” means the heavy airframe structural and zonal inspection of the Aircraft (and resulting repairs) including a C-Check, all MPD tasks having an interval of twelve years, and performed concurrently therewith such additional Flight Hour or Cycle controlled MPD structural and zonal.

“ Acceptance Certificate ” means an acceptance certificate substantially in the form set out in Part 1 of Schedule 5 ( Notices and certificates ).

“ Adjustment Date ” has the meaning given to it in Part IV ( Supplemental Rent ) of Schedule 7.

“ Affiliate ” means, in relation to any person, a Subsidiary of that person or a holding company of that person or any other Subsidiary of that holding company and in relation to the Lessor, the Owner Participant and any trust of which the beneficiary is the Lessor or an Affiliate of the Lessor or its beneficiary.

“ Agency ” means any agency, authority, central bank, department, government, legislature, minister, ministry, official, or public or statutory person (whether autonomous or not) of, or of the government of, a state, province or territory, or any political sub-division in or of that state, province or territory.

“ Agreed Value ” means on the Delivery Date, an amount equal to US$24,000,000, which amount shall reduce annually by 3% on each anniversary of the Delivery Date beginning on the first anniversary of the Delivery Date.

“ Aircraft ” means the aircraft described in Schedule 1 ( Description of Aircraft ) (including the Airframe, each Engine, each Part and the Aircraft Documents) or, if applicable, any part of it.

“ Aircraft Assets ” means the Aircraft, the Aircraft Proceeds or any interest in them or in the Relevant Documents.

“ Aircraft Documents ” means the documents identified as Aircraft Documents in Schedule 1 ( Description of Aircraft ), together with the Technical Records and all additions to, renewals of, revisions to and replacements of them from time to time.

“ Aircraft Proceeds ” means any Insurance Proceeds, Requisition Proceeds, Total Loss Proceeds and any other amount that is due by way of compensation, damages or similar payment in respect of any loss of, or damage to, the Aircraft.

“ Aircraft Protocol ” means the English-language version of the Protocol to the Convention on International Interests in Mobile Equipment on matters specific to Aircraft Equipment adopted in Cape Town, South Africa on 16 November 2001, as set out in the schedule to the International Interests in Mobile Equipment (aircraft equipment) Act (Canada) and, as applicable, the provincial and territorial implementing legislation relating thereto in Canada as the same may be amended from time to time.

“ Airframe ” means the Aircraft together with all Parts relating to it, but excluding the Engines (or any engines from time to time installed thereon) and the Aircraft Documents.

“ Airworthiness Directive ” or “ AD ” means any airworthiness directive or other mandatory requirement of the Aviation Authority, EASA or the FAA that is applicable to the Aircraft.

“ AMM ” means the Aircraft Maintenance Manual.

“ Anticipated Delivery Date ” means February 28, 2022.

“ Approved Maintenance Performer ” means:

(a) for all major checks, repairs and maintenance (including any C Check, any shop visit for an Engine or the APU, any Landing Gear Overhaul or the Overhaul of any serialized components) and all Major Modifications, any maintenance facility approved by (i) the Aviation Authority and (ii) either EASA or the FAA; and
(b) for all lower level checks, repairs and maintenance, any maintenance facility approved by the Aviation Authority which, provided Lessee has the requisite licenses and approvals, may be Lessee.
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“ APU ” means:

(a) the auxiliary power unit of the Aircraft of the make and model identified in Schedule 1 ( Description of Aircraft ) and having the manufacturer’s serial number set out in the Acceptance Certificate; or
(b) any auxiliary power unit substituted for that auxiliary power unit in accordance with this Agreement, title to which has transferred to the Lessor.

“ APU Heavy Repair ” means, with respect to the APU, a level of work where, at a minimum, complete disassembly of the power section and load compressor so as to achieve “zero-time” status on power section and load compressor, all in accordance to the Manufacturer’s then current heavy repair criteria.

“ APU Hour ” means each hour or part of an hour (measured in minutes) during which the APU is operated.

“ Associated Aircraft ” means each aircraft subject to an Associated Lease, provided that an aircraft shall cease to be an Associated Aircraft if the owner of the aircraft shall cease to be the Lessor or an Affiliate of the Lessor.

“ Associated Engine ” means an “Engine” as defined in an Associated Lease.

“ Associated Lease ” means, if applicable, any aircraft lease agreement between the Lessor or an Affiliate of the Lessor and the Lessee or an Affiliate of the Lessee.

“ Associated Part ” means a “Part” as defined in an Associated Lease.

“ Aviation Authority ” means the person which, under the laws of the State of Registration and/or the Lessee’s Home Jurisdiction, has at any time:

(a) control or supervision of civil aviation in that state; or
(b) jurisdiction over the registration, airworthiness or operation of, or other matters relating to, the Aircraft,

being, at the Delivery Date, TCCA.

“ Aviation Authority Letter ” means a letter from Lessee addressed to NAV Canada and any airport authority designated by Lessor substantially in the form set out in Schedule 5 Part IV, pursuant to which such relevant entity authorizes such authorities to issue to Lessor, upon Lessor's request from time to time, a statement of account of all sums due by it to such authority in respect of all Relevant Aircraft (including the Aircraft).

“ AVN67B ” means the Airline Finance/Lease Contract Endorsement AVN67B (as applicable), or any successor contract endorsement published by the Aviation Insurance Clauses Group from time to time approved by the Lessor in writing as an alternative to AVN67B.

“ AVN99 ” means the Aircraft Finance/Lease Contract - Continuing Liability Endorsement AVN99, or any successor contract endorsement published by the Aviation Insurance Clauses Group from time to time approved by the Lessor in writing as an alternative to AVN99.

“ Basic Rent ” means the amounts designated as Basic Rent in Clause 9.1 ( Basic Rent ) and any other amounts designated as Basic Rent under this Agreement.

“ Basic Rent Collection Account ” means such account of the Lessor as is notified from time to time by the Lessor to the Lessee to be the Basic Rent Collection Account.

“ Basic Rent Payment Date ” means the Basic Rent Start Date and the corresponding date in each subsequent month during the Lease Period.

“ Basic Rent Period ” means:

(a) in relation to the first Basic Rent Period, a period from (and including) the Basic Rent Start Date to (but excluding) the next Basic Rent Payment Date; and
(b) for each subsequent Basic Rent Period, a period from (and including) the Basic Rent Payment Date falling at the end of the previous Basic Rent Period to (but excluding) the next Basic Rent Payment Date; and
(c) in relation to the final Basic Rent Period, the period from (and including) the Basic Rent Payment Date falling at the end of the previous Basic Rent Period to (and including) the Expiry Date.

“ Basic Rent Start Date ” means the later of (i) the Delivery Date and (ii) February 28, 2022.

“ Business Day ” means a day (other than a Saturday or Sunday) on which:

(a) banks are open for general business in the Lessor’s Home Jurisdiction and the Lessee’s Home Jurisdiction; and
(b) (in addition to paragraph (a), in relation to any payment under this Agreement denominated in Dollars) banks are open for general business in New York and California; or
(c) (in addition to paragraph (a), in relation to any payment under this Agreement denominated in a currency other than Dollars), banks are open for business in the place in which that payment is to be made.

“ C Check ” means a maintenance block check on the airframe under the Maintenance Program consisting of full and complete zonal, systems, and structural check and all other lower level maintenance checks (“A” checks and lesser checks) that are a part of such checks, all in accordance with the Maintenance Program, or if the Maintenance Program permits such structural check to be performed in phases, the performance of such phases shall constitute a complete zonal, systems, and structural block “C” check.

“ Cape Town Convention ” means the Convention and the Aircraft Protocol taken together.

“ CFM56-5B Engine Performance Restoration ” means in respect of an Engine, the performance of off wing engine maintenance and repair accomplished for that Engine in accordance with the Performance or higher workscope sections of the Engine Manufacturer’s Workscope Planning Guide (WPG) which results in such Engine having, at a minimum, a Performance or higher level of work performed on the Core Major Modules and the other Engine Modules as applicable per the WPG. Lessee will

perform, at a minimum, a workscope enough to allow such Engine to achieve at least 8,000 cycles of operation following such shop visit.

A qualifying performance level workscope seeks to obtain the maximum time between shop visits with resultant lower cost per Engine Flight Hour and the greatest potential for regaining EGT margin.

“ Claims Limit ” means $250,000 or its equivalent in any other currency.

“ Commitment Fee ” means the balance from time to time of the amounts paid by the Lessee to the Lessor pursuant to Clause 9.3 ( Commitment Fee ).

“ Commitment Fee Amount ” means an amount equal to three (3) month’s Basic Rent (as calculated in accordance with Schedule 4 (Basic Rent amounts ).

“ Conditions Precedent ” means the conditions to delivery of the Aircraft identified in Clause 4.1 ( Lessee’s Conditions Precedent) and Clause 4.4 (Lessor’s Conditions Precedent) ).

“ Conditions Subsequent ” means the conditions identified in Clause 4.2 ( Lessee’s Conditions Subsequent ).

“ Confidential Information ” has the meaning given to it in paragraph (a) of Clause 26.6 ( Confidentiality ).

“ Consolidated Text ” means the consolidated text of the Convention and the Aircraft Protocol as attached to Resolution No.1 of the Final Act of the Diplomatic Conference to adopt the Convention and the Aircraft Protocol held under the auspices of ICAO and UNIDROIT at Cape Town from 29 October to 16 November 2001.

“ Consultation Period ” has the meaning given to it in paragraph (a) of Clause 22.3 ( Consultation ).

“ Core Major Modules ” means the HPC, HPT, and Combustor Engine Modules.

“ Contracting State ” means a state which has ratified, accepted, approved or acceded to the Cape Town Convention in accordance with its own laws and the requirements of the Cape Town Convention.

“ Convention ” means the English-language version of the Convention on International Interests in Mobile Equipment adopted in Cape Town, South Africa on 16 November 2001, as set out in the schedule to the International Interests in Mobile Equipment (aircraft equipment) Act (Canada) and, as applicable, the provincial and territorial implementing legislation relating thereto in Canada, as the same may be amended from time to time.

“ CTC Location ” means the location where the Lessee is “situated” for purposes of the Cape Town Convention.

“ Default ” means an Event of Default or any event or circumstance specified in Clause 23 ( Events of Default ) which would (with the expiry of any grace period, the giving of any notice, the making of any determination by the Lessor under the Relevant Documents or any combination of the foregoing) be an Event of Default.

“ Default Notice ” has the meaning given to it in paragraph (a)(iii) of Clause 24.2 ( Lessor’s rights ).

“ Default Termination Date ” means the date identified by the Lessor in the Default Notice as the date upon which the leasing of the Aircraft shall terminate.

“ Defect ” means a recordable defect, deficiency or non-conformity of the Aircraft with the condition that it is required to be in under this Agreement.

“ Delivery ” means the delivery of the Aircraft by the Lessor to the Lessee and the acceptance of the Aircraft by the Lessee in accordance with this Agreement.

“ Delivery Condition ” means that the Aircraft complies with the description of the Aircraft in Schedule 1 ( Description of Aircraft ).

“ Delivery Date ” means the date on which Delivery takes place.

“ Delivery Inspection Location ” means TARMAC Aerosave in Spain.

“ Delivery Location ” means a repair facility in Europe, or such other location outside of Canada as agreed in writing between Lessor and Lessee.

“ Detention Exposure Event ” means an event whereby (i) Lessee has failed to pay amounts owed to any Canadian air navigation or airport authority when due; (ii) any applicable grace or standstill period available to Lessee under its arrangement with the relevant authority or granted to Lessee by such relevant authority has expired; and (iii) as a result of the foregoing, such Canadian air navigation or airport authority is entitled to exercise the right granted to such authority under applicable law to seek to seize and/or detain an aircraft operated by Lessee.

“ Dispute ” has the meaning given to it in paragraph (a) of Clause 29.2 ( Jurisdiction of English courts ).

“ Dollars ” or “ $ ” means the lawful currency of the United States of America.

“ EASA ” means the European Aviation Safety Agency established by Regulation (EC) No. 1592/2002, or any successor thereto.

“ Effective Date ” means the date of this Agreement.

“ Eligible Maintenance Item ” has the meaning given to it in Clause 4 of Part IV ( Supplemental Rent ) of Schedule 7.

“ Engine ” means:

(a) an engine installed on the Airframe at Delivery as identified in Schedule 1 ( Description of Aircraft ) and having the manufacturer’s serial number set out in the Acceptance Certificate, together with all Parts installed in or on such engine at Delivery; or
(b) any Replacement Engine which has replaced an engine referred to in paragraph (a) above or this paragraph (b) in accordance with this Agreement, title to which has vested in the Lessor,

and shall include all Replacement Parts at any time installed in or on any such engine in accordance with this Agreement.

“ Engine Health Monitoring Report ” means the raw data in relation to an Engine which is produced by the Engine Manufacturer.

“ Engine Hour ” means each hour or part of an hour (measured in minutes) during which the relevant Engine is operated, such measurement being made by reference to the Flight Hours elapsed by the Aircraft (or other aircraft on which an Engine is installed).

“ Engine Manufacturer ” means CFM International, S.A.

“ Engine Modules ” means any of the six major modules of an Engine, namely: (1) the High Pressure Compressor (“ HPC ”), (2) High Pressure Turbine (“ HPT ”), (3) Combustor, (4) Fan Booster/Low Pressure Compressor (“ Fan Booster/LPC ”), (5) Low Pressure Turbine (“ LPT ”), and (6) Gearbox, each of which is comprised of submodules, as set forth in the guidelines CFM Workscope Planning Guide.

“ Engine Reference Amount ” has the meaning given to it in Part IV ( Supplemental Rent ) of Schedule 7.

“ Eurocontrol ” means the European Organisation for the Safety of Air Navigation or any successor thereto.

“ Event of Default ” means any of the events or circumstances specified as such in Clause 23 ( Events of Default ).

“ Excluded Country ” means any jurisdiction which, at any relevant time, is subject to an embargo or sanction or prohibition order (or any similar order or directive) of:

(a) the United Nations Security Council;
(b) the European Union;
(c) the United States of America;
(d) the United Kingdom; or
(e) State of Registration,

and, in each case, the effect of which prohibits the export and/or use of the Aircraft or Airbus aircraft generally to or within such jurisdiction.

“ Expiry Date ” means the earliest to occur of:

(a) the Original Expiry Date (or any extension of that date pursuant to Clause 20.4 ( Requisition at end of Lease Period ) or Clause 21.3 ( Failure to comply );
(b) the Insurance Change Termination Date;
(c) the Total Loss Date;
(d) the Illegality Termination Date; and
(e) the Default Termination Date.

“ FAA ” means the Federal Aviation Administration of the United States of America or its successor thereto.

“ FAA Location ” means the jurisdiction in the United States in which the Lessee’s agent for the service of process for purposes of the FAA and the Uniform Commercial Code is located.

“ FAR ” means the Federal Aviation Regulations prescribed by the FAA.

“ FHA ” means a flight hour agreement in respect of the APU or an Engine .

“ Final Delivery Date ” means the date which is ninety (90) days after the Anticipated Delivery Date or such later date that the Lessor and the Lessee may agree.

“ Final Inspection ” means the inspection checks, ground tests and test flights required pursuant to Part II ( Redelivery Condition ) of Schedule 7.

“ Finance Documents ” means any document which is from time to time designated by the Lessor as a Finance Document by notice to the Lessee.

“ Finance Party ” means the Owner Participant, and any person from time to time designated by the Lessor as a Finance Party by notice to the Lessee as providing or participating in financial support, directly or indirectly, to Owner Participant or Lessor or any of their Affiliates in relation to the Aircraft, including but not limited to any security agent, security trustee, owner trust or trustee, manager, servicer, lender collateral agent, and/or financial guarantor.

“ Financial Indebtedness ” means any indebtedness for or in respect of:

(a) moneys borrowed;
(b) any amount raised by acceptance under any acceptance credit facility or dematerialised equivalent;
(c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;
(d) the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with GAAP, be treated as a finance or capital lease;
(e) receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);
(f) any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing;
(g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account);
(h) shares which are expressed to be redeemable;
(i) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and
(j) the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (i) above.
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“ Flight Charge ” means any en route navigation charge, airport charge, service charge, landing fees and any other charge (including NAV Canada and Eurocontrol charges) payable by the Operator for the use of, or for services provided at, any airport, whether in respect of the Aircraft or any other aircraft operated by the Operator.

“ Flight Cycle ” means one take-off and landing of the Aircraft or, in respect of any Engine or Part temporarily installed on another aircraft, of that other aircraft and for this purpose one (1) touch and go shall count as one (1) take-off and landing.

“ Flight Hour ” or “ FH ” means each hour or part thereof (rounded up to two decimal places) elapsing from the moment at which the wheels of the Aircraft, or in the case of any Part or Engine temporarily installed on another aircraft, leave the ground on takeoff until the wheels touch the ground on landing following such flight.

“ GAAP ” means, in relation to the Lessee, generally accepted accounting principles, standards and practices in the Lessee’s Home Jurisdiction from time to time.

“ Geneva Convention ” means the Convention on the International Recognition of Rights in Aircraft opened for signature at Geneva, Switzerland on 19 June 1948, as amended from time to time.

“ Guaranty ” means the guarantee and indemnity dated on or about the date hereof and entered into between the Guarantor and the Lessor in respect of the obligations of Lessee under this Agreement and any other Transaction Document.

“ Guarantor ” means Global Crossing Airlines, Group, Inc., a company incorporated in the State of Delaware whose registered address is 4200 N.W. 36[th] Street, Bldg. 5A Miami.

“ Habitual Base ” means Vancouver International Airport or any other airport in Canada in which the Aircraft is based from time to time in accordance with the provisions of this Agreement; or such other location that the Lessee and the Lessor may agree in writing in accordance with this Agreement, the Lessor’s agreement not to be unreasonably withheld or delayed.

“ Home Jurisdiction ” means, in relation to any person, the jurisdiction under the laws of which that person is constituted, in the case of the Lessee means, the province of British Columbia and the federal laws of Canada applicable therein.

“ IATA ” means the International Air Transport Association or any successor thereto.

“ IDERA ” means an irrevocable deregistration and export authorisation executed by the Lessee or a Permitted Sublessee in favour of the Lessor substantially in the form set out in Schedule 9 ( Form of IDERA ).

“ Illegality Event ” means:

(a) it being or becoming impossible or unlawful under any applicable law for the Lessee or the Lessor to perform any of its material obligations or to exercise any of its material rights under any Relevant Document; or
(b) any Relevant Document becoming invalid, ineffective or unenforceable, in whole or in part, or ceasing to constitute the legally valid, binding and
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enforceable obligations of the Parties with the result that the Lessor’s interests under any Relevant Document are materially and adversely affected,

in either case as a result of an event which is not caused by and is beyond the control of the Lessee.

“ Illegality Termination Date ” means, in relation to an Illegality Event:

(a) if the Illegality Event has occurred, the date notified to the Lessee by the Lessor as the Illegality Termination Date; or
(b) if the Illegality Event has not occurred, the date falling thirty (30) days before the date upon which the Illegality Event will occur or such other date as the Lessor and the Lessee may agree.

“ Indemnitee ” means the Lessor, the Owner Participant, each Finance Party, the Lease Manager and each of their respective successors and assigns, and their respective shareholders, Affiliates, directors, officers, agents, partners, servants, contractors and employees.

“ Insurance Change ” means, in relation to any of the Insurances, a material change in generally accepted industry-wide practice with respect to those Insurances, taking into account the type of the Aircraft and the routes on which the Aircraft is operated.

“ Insurance Change Termination Date ” means the date identified by the Lessor in the Insurance Change Termination Notice as the Insurance Change Termination Date.

“ Insurance Change Termination Notice ” has the meaning given to it in paragraph (e) of Clause 18.3 ( Lessor’s insurance requirements ).

“ Insurance Proceeds ” means the amounts that are payable as a consequence of a claim under the Insurances (other than the Liability Insurances).

“ Insurances ” means the insurance and reinsurance cover required to be effected and maintained under this Agreement.

“ Insurers ” means the insurers and reinsurers providing the Insurances.

“ Interest ” means interest payable both before and after judgment at the Relevant Rate and compounded at the end of each Reference Period selected by the Lessor.

“International Interest” has the meaning given to it in article 1(o) of the Cape Town Convention.

“ International Registry ” has the meaning given to it in article 1(p) of the Cape Town Convention.

“ Landing Gear ” means:

(a) the landing gear of the Aircraft of the make and model identified in Schedule 1 ( Description of Aircraft ) and having the manufacturer’s serial numbers set out in the Acceptance Certificate; or
(b) any landing gear substituted for that landing gear in accordance with this Agreement, title to which has transferred to the Lessor.
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“ Landing Gear Overhaul ” means an overhaul of a Landing Gear assembly in accordance with the Manufacturer's repair manual that restores such Landing Gear to a “zero time since overhaul” condition in accordance with the Manufacturer's repair manual and is performed in accordance with the Manufacturer's overhaul specifications and operating criteria (excluding any rotable components such as wheels, tires, brakes and consumable items).

“ Lease Manager ” means JSA International U.S. Holdings, LLC, a Delaware limited liability company, its successors and assigns.

“ Lease Period ” means the period starting on the Delivery Date and terminating on the Expiry Date.

“ Lease Termination Agreement ” means the undated lease termination agreement to be signed on or prior to the Delivery Date between the Lessor and the Lessee, substantially in the form attached as Schedule 10.

“ Lessee Obligation ” has the meaning given to it in paragraph (b)(i) of Clause 9.3 ( Commitment Fee ).

“ Lessee’s Conditions Precedent ” means the conditions to delivery of the Aircraft identified in Clause 4.1 ( Lessee’s Conditions Precedent ).

“ Lessor Party ” means Lessor, the Owner Participant, and Lease Manager.

“ Lessor’s Security ” means:

(a) any Security over the Aircraft created by any Lessor Party in connection with any Finance Document; and
(b) any other Security over the Aircraft resulting from claims against any Lessor Party which are not related to the transactions contemplated by the Relevant Documents.

“ Liability Insurances ” means the Insurances referred to in paragraph 1.4 of Schedule 6 ( Insurances ).

“ Life-limited Part ” or “ LLP ” means any Part which has a working life limit (expressed in Flight Hours, Flight Cycles or calendar time) determined by its manufacturer, the Aviation Authority, the FAA or EASA (as the case may be).

“ Loss Payee ” means the person to whom Insurance Proceeds are payable:

(a) in the case of a Total Loss of the Airframe, pursuant to paragraph 2.3 of Schedule 6 ( Insurances );
(b) in the case of a Total Loss of an Engine not involving a Total Loss of the Airframe, pursuant to Clause 19.3 ( Total Loss of Engine or Part ); and
(c) in the case of loss or damage other than a Total Loss, pursuant to Clause 18.6 ( Settlement of claims and loss adjustment ).

“ Losses ” includes all losses (including loss of profit), payments, damages, liabilities, claims, proceedings, actions, penalties, fines, duties, fees, rates, levies, charges,

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demands, royalties or other sanctions of a monetary nature, fees, insurance premiums, calls, judgments, costs and expenses.

“ Maintenance Programme ” means a maintenance programme for the Aircraft based on the current revision of the Manufacturer’s MPD and approved by the Aviation Authority and the Lessor.

“ Mandatory Action ” has the meaning given to it in paragraph (a)(vi) of Clause 15.1 ( General requirements ).

“ Manufacturer ” means Airbus S.A.S.

“ Manufacturer Warranty ” means an express or implied warranty given by the Manufacturer or the Engine Manufacturer (or any other manufacturer of any other Part) in relation to the Aircraft.

“ Material Adverse Effect ” means a material adverse effect on the business, assets or financial condition of the Lessee which, in the Lessor’s opinion, may affect the Lessee’s ability to perform its obligations under the Relevant Documents.

“ Modification ” means any modification, addition, alteration, removal or other change (including performance of Airworthiness Directives and Service Bulletins and the removal of obsolete parts) to the Airframe, any Engine or any Part.

“ Modification Part ” means a part, component, furnishing, appliance, module, accessory, instrument or other item of equipment installed in or added to the Aircraft as a result of a Modification (including a Mandatory Action).

“ Monthly Report ” has the meaning given to it in Clause 13.3 ( Information ).

“ MPD ” means, at any time, the Manufacturer’s then current revision of maintenance planning document for the Aircraft.

“ Notional Account ” has the meaning given to it in Part IV ( Supplemental Rent ) of Schedule 7.

“ OEM ” means the original equipment manufacturer.

“ OEM Approved Repair ” means a repair of the Airframe, Engine or any Part that is designed or approved by the applicable OEM.

“ OEM Part ” means a part that has been produced by or on behalf of an OEM or that has been repaired using a repair schedule approved by that OEM.

“ Operator ” means, in relation to the Aircraft or any Engine that is not for the time being attached to the Airframe, the Lessee or any other person who has operational control of the Aircraft or that Engine from time to time during the Lease Period in accordance with this Agreement.

“ Original Expiry Date ” means either the date immediately preceding the date falling 96 months from the Basic Rent Start Date and if such day is not a Business Day, the next succeeding Business Day.

“ Original Financial Statements ” means the audited consolidated financial statements of the Lessee for the financial year ended 31 December 2020.

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“ Original Lease Period ” means the period starting on the Delivery Date and terminating on the Original Expiry Date.

“ Other Relevant Document ” means any document which is a Relevant Document under (and as defined in) an Associated Lease.

“ Outgoings ” has the meaning given to it in paragraph (a) of Clause 10.2 ( Outgoings ).

“ Overhaul ” means the full reconditioning of the Aircraft, an Engine, the APU, the Landing Gear, a module or Part, as the case may be, in which the item has been fully disassembled into individual piece parts, cleaned, thoroughly inspected, repaired as necessary, reassembled and tested and returned to the highest standard specified by the applicable and current manufacturer’s manuals and may include, where defined in the manufacturer’s manuals or through an Airworthiness Directive, the replacement of Life-limited Parts.

“ Owner Participant ” means JSA International U.S. Holdings, LLC, a Delaware limited liability company with its address at 909 Montgomery Street, Suite 500, San Francisco, California 94133, its successors and assigns.

“ Part ” means:

(a) any part, component, furnishing, appliance, module, accessory, instrument or other item of equipment (including an APU and the Landing Gear but excluding a complete Engine) whether or not installed on the Aircraft at any time which is installed in, attached to or supplied with the Airframe or any Engine on Delivery, title to which is vested in the Lessor;
(b) any Modification Part, title to which has transferred to the Lessor; or
(c) any Replacement Part which has replaced a part referred to in paragraphs (a) and (b) above or this paragraph (c) in accordance with this Agreement, title to which has transferred to the Lessor,

but excludes any item title to which has ceased to vest in the Lessor in accordance with this Agreement.

“ Party ” means a party to this Agreement.
“ Permitted Lien ” means:
(a) the respective rights of the parties to the Relevant Documents as set out in the Relevant Documents;
(b)
any Lessor’s Security;
(c) liens for Taxes which are either not yet assessed or, if assessed, not yet due or being contested in good faith by appropriate proceedings (where adequate provision has been made for their payment and provided that such proceedings do not involve any material likelihood that the Aircraft will be sold, forfeited or lost or that any criminal liability is reasonably likely to be imposed on any Indemnitee); and
(d) liens with respect to Flight Charges, airport hangar keepers’, repairers’ and employees’ or similar liens arising by contract or in the ordinary course of
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business for the payment of amounts which are either not overdue or are being contested in good faith by appropriate proceedings (where adequate provision has been made for their payment and provided that such proceedings do not involve any material likelihood that the Aircraft will be sold, forfeited or lost or that any criminal liability is reasonably likely to be imposed on any Indemnitee).

For greater certainty, any Security relating to or arising from Flight Charges shall not be a Permitted Lien.

“ Permitted Sublease ” means any aircraft lease agreement entered into by the Lessee with a Permitted Sublessee in relation to the Aircraft which complies with the requirements of Clause 14.3 ( Sub-leasing ).

“ Permitted Sublessee ” means a solvent, commercial air carrier or air operator duly certificated holding a current and valid air operator’s certificate issued by a government entity acceptable to the Lessor.

“ Potential Illegality Event ” means any event or circumstance which, in the Lessor’s reasonable opinion, is likely to give rise to an Illegality Event.

“ PPSA ” means the Personal Property Security Act (British Columbia) including all regulations from time to time made thereunder or, if the context otherwise requires, in any other applicable province or territory of Canada.

“ PPSA Location ” means in respect of any person, its location as determined in accordance with the provisions of section 5 of the PPSA (or any successor provision thereof).

“ Prospective International Interest ” has the meaning given to it in article 1(x) of the Cape Town Convention.

“ Redelivery ” means the redelivery by the Lessee to the Lessor of the Aircraft under Clause 21 ( Redelivery ).

“ Redelivery Acceptance Certificate ” means a redelivery acceptance certificate substantially in the form set out in Part 2 of Schedule 5 ( Notices and certificates ).

“ Redelivery Check ” means the next due maintenance check for the Aircraft under the Maintenance Program and the MPD, including all lower level multiple maintenance checks (“A” checks and lesser checks) and inspections and all systems/zonal and structures/corrosion checks and inspections or equivalent maintenance or inspections that fall due within the next C Check period (24 months, 7,500 Flight Hours and 5,500 Flight Cycles).

“ Redelivery Condition ” has the meaning given to it in Clause 21.2 ( Redelivery Condition ).

“ Redelivery Date ” means the date on which Redelivery takes place.

“ Redelivery Location ” means an MRO in North America specified by Lessor, or such other location as may be agreed by the Lessor and Lessee.

“ Reference Period ” means a period in relation to which Interest is to be determined.

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“ Registrable Interest ” means an interest which is registrable with the International Registry pursuant to the Cape Town Convention.

“ Reinsurances ” means, if applicable, the reinsurance cover required to be maintained under this Agreement.

“ Reinsurers ” has the meaning given to it in paragraph (b) of Clause 18.2 ( Insurers, Reinsurers and Brokers ).

“ Relevant Aircraft ” means all aircraft owned, leased or operated by the Lessee or the Permitted Sublessee.

“ Relevant Documents ” means:

(a) this Agreement and each of the other documents listed in Schedule 2 ( Relevant Documents ); and
(b) any other document which is from time to time agreed by the Lessor and the Lessee to be a Relevant Document,

and any other agreement or instrument that may be entered into in connection with those documents.

“ Relevant Rate ” means the rate of interest which is four and a half per cent. (4.5%) per annum above the Prime Rate for such Reference Period as the Lessor may determine in its absolute discretion.

“ Renewal Date ” has the meaning given to it in paragraph (h) of Clause 18.4 ( Insurance covenants ).

“ Repeating Representations ” means the representations and warranties set out in Clause 2 ( Lessee’s representations and warranties ) other than those set out in Clause 2.2 ( Binding obligations ), Clause 2.3 ( Non-conflict with other obligations ), Clause 2.5 ( Validity and admissibility in evidence ) to Clause 2.8 ( No filing or stamp taxes ), paragraphs (a) and (c) of Clause 2.9 ( No default ), Clause 2.10 ( No misleading information ), Clause 2.16 ( Registration and Filings ), Clause 2.17 ( Export ), Clause 2.19 ( Material Adverse Change ), Clause 2.20 ( Import ) and Clause 2.22 ( No Restriction on Payments ).

“ Replacement Engine ” means, where it is intended that that engine will become an Engine, an engine:

(a) of the same manufacture and model as or, an improved or advanced version of, and in equivalent or better operating condition as and of at least the same value and utility as the Engine that it is replacing (assuming that that replaced Engine was in the condition and repair in which it is required to be maintained under this Agreement);
(b) (with complete certified back-to-birth records for its Life-limited Parts and each Engine Module (if applicable);
(c) with a list of all serialised components and QEC;
(d) which meets the requirements of the Aviation Authority;
(e) is certified in accordance with FAR145 or EASA145 or its successor for installation on the Aircraft;
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(f) is suitable for installation and use on the Airframe without impairing the value or utility of the Airframe;
(g) is compatible with the remaining installed Engine;
(h) is not “on watch”;
(i) which has not been involved in any incident or accident;
(j) title to which is capable of passing, free from Security (other than Permitted Liens), to the Lessor;
(k) which has undergone an equal or lower number of CFM56-5B Engine Performance Restorations;
(l) which has equivalent or better modification status;
(m) which has equivalent or less time since the last CFM56-5B Engine Performance Restoration;
(n) which has equivalent or lower time Life-limited Parts used on average;
(o) which has the equivalent or better remaining warranty status.
(p) which has not operated with fuel from the Commonwealth of Independent States (CIS) since its last performance restoration shop visit and hydromechanical unit (HMU) shop visit; and
(q) which has not had or does not have a non-OEM Part nor non-OEM Approved Repair Part fitted.

“ Replacement Part ” means a part, component, furnishing, appliance, module, accessory, instrument or other item of equipment:

(a) of the same manufacture (or of different manufacture, if suitable for use on the Aircraft) and model as or, an improved or advanced version of, and in equivalent or better operating condition as and of at least the same value and utility as the Part that it is replacing (assuming that that replaced Part was in the condition and repair in which it is required to be maintained under this Agreement);
(b) which meets the requirements of the Aviation Authority;
(c) which has equivalent or better modification status;
(d) which has not more than 110% TSN or CSN than that of replacement part;
(e) which is certified, where applicable, in accordance with EASA Part-145 or FAR-145 (or its equivalent successor) for installations on the Aircraft; and
(f) title to which is capable of passing, free from Security (other than Permitted Liens), to the Lessor.

“ Requisition ” means the requisition for hire, requisition of title, detention, forfeiture or other compulsory acquisition of the Aircraft by any Agency.

“ Requisition Proceeds ” means amounts payable by any Agency as a consequence of the Requisition of the Aircraft.

“ Security ” means a mortgage, charge, pledge, lien, encumbrance, assignment, right of detention, hypothecation, right of de-registration or export, any International Interest

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or, if registered, any Prospective International Interest or “prospective sale” as defined in the Cape Town Convention, or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.

“ Security Filings ” means all filings or recordations necessary or advisable to register this Agreement with TCCA and to otherwise maintain, protect and perfect the Lessor’s interest in the Aircraft and this Agreement and any permitted sublease with the International Registry, the relevant authorities in British Columbia, the District of Columbia and any other jurisdictions which Lessor may reasonably, from time to time, designate as a result of a change in the jurisdictions in which Lessee’s PPSA Location, FAA Location or CTC Location is located or as a result of a change in applicable law.

“ Service Bulletin ” or “ SB ” means any service bulletin issued by the Manufacturer, the Engine Manufacturer or the manufacturer of any Part.

“ Short-Form Lease” means the short-form lease agreement to be entered into between the Lessor and Lessee purposes of filing with TCCA in form and substance satisfactory to Lessor.

“ Specified Amount ” means $1,000,000 or its equivalent in any other currency.

“ SRM ” means the Structural Repair Manual.

“ State of Registration ” means Canada or any other jurisdiction in which the Aircraft is for the time being registered in accordance with this Agreement.

“ Structural Check” means, with respect to the Airframe, a structural check, and shall be construed to imply either the 6 Year Check or the 12 Year Check.

“ Subsidiary ” means in relation to any company, corporation or other legal entity, (a “ holding company ”), a company, corporation or other legal entity:

(a) which is controlled, directly or indirectly, by the holding company;
(b) more than half the issued share capital of which is beneficially owned, directly or indirectly, by the holding company; or
(c) which is a subsidiary of another Subsidiary of the holding company,

and, for this purpose, a company or corporation shall be treated as being controlled by another if that other company or corporation is able to determine the composition of the majority of its board of directors or equivalent body.

“ Supplemental Rent ” means the supplemental rent for the Aircraft payable under Clause 9.2 ( Supplemental Rent ).

“ Supplemental Rent Amounts ” means the supplemental rent for the Aircraft payable under Clause 9.2 ( Supplemental Rent ) in accordance with Part IV ( Supplemental Rent ) of Schedule 7.

“ Surplus Total Loss Proceeds ” means the amount by which the aggregate of any Total Loss Proceeds received by the Lessor following a Total Loss of the Airframe exceeds the Total Loss Amount.

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“ Tax ” means any tax, levy, impost, duty, fee or other charge or withholding of any nature whatsoever (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same), and wheresoever imposed, including, without limitation, value added tax or any similar tax and any franchise, transfer, goods and services, harmonized sales, sales, use, business, occupation, excise, personal property, real property, stamp, gross income, property, fuel, leasing, occupational, turnover, excess profits, excise, gross receipts, franchise, registration, licence, corporation, capital gains, export/import, income, levies, imposts, withholdings or other taxes or duties of any nature whatsoever (or any other amount corresponding to any of the foregoing) now or hereafter imposed, levied, collected, withheld or assessed by any national or regional taxing or fiscal authority or agency, together with any penalties, additions to tax, fines or interest thereon, and “Taxes” and “Taxation” shall be construed accordingly.

“ Tax Credit ” means a credit against, relief or remission for, or repayment of any Tax.

“ Tax Indemnitee ” means each of Lessor, the Owner Participant, Lease Manager, any Finance Party and each person with whom any of the foregoing files a consolidated tax return.

“ Tax Payment ” means either the increase in a payment on account of Tax made by the Lessee to a Lessor under paragraph (a) of Clause 12.4 ( No deductions or withholdings ) or a payment under Clause 11.1 ( Tax indemnity ).

“ Tax Residence ” means, in relation to any person, the jurisdiction in which that person is principally resident for the purposes of paying Tax on its capital or income.

“ TCCA ” means Transport Canada Civil Aviation, or any successor thereof.

“ Technical Acceptance Certificate ” means a technical acceptance certificate substantially in the form set out in Part II of Schedule 5 ( Notices and Certificates ).

“ Technical Records ” means all technical data, manuals, logbooks and other records relating to the Aircraft.

“ Temporary Engine ” has the meaning given to it in paragraph (b) of Clause 15.2 ( Temporary removal and replacement of Engines and Parts ).

“ Temporary Part ” has the meaning given to it in paragraph (b) of Clause 15.2 ( Temporary removal and replacement of Engines and Parts ).

“ Termination Amount ” has the meaning given to it in Clause 24.5 ( Termination Payments following Delivery ).

“ Termination Date ” means the Insurance Change Termination Date, the Illegality Termination Date or the Default Termination Date (as applicable).

“ Total Loss ” means any of the following events in relation to the Aircraft or any Engine:

(a) its actual, constructive or agreed total loss;
(b) its destruction, damage beyond economic repair or being rendered permanently unfit for normal use for any reason;
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(c) its requisition of title, confiscation, detention, forfeiture or any compulsory acquisition or seizure for a period of forty-five (45) consecutive days in the case of detention or seizure by an Agency, otherwise immediately) or requisition for hire (other than in the case of a requisition for hire for a temporary period of less than sixty (60) days, or in the case of requisition for hire by an Agency of the State of Registration one hundred and twenty (120) consecutive days) by or under the order of any Agency (whether civil, military or de facto);
(d) its hijacking for a period of thirty (30) consecutive days or longer; or
(e) solely with respect to an Engine, the loss by the Lessor of its title to that Engine resulting from the merger under applicable law of title to that Engine with title to the airframe (not being the Airframe) upon which that Engine is installed.

“ Total Loss Amount ” has the meaning given to it in paragraph (a) of Clause 19.2 ( Total Loss during the Lease Period ).

“ Total Loss Date ” means:

(a) in the case of an actual Total Loss or destruction, damage beyond repair, or being rendered permanently unfit for normal use, the date on which that loss, destruction, damage or rendition occurs (or, if the date of loss or destruction is not known, the date on which the Aircraft was last heard of);
(b) in the case of a constructive or agreed Total Loss, the earlier of (i) the thirtieth (30th) day after the date on which notice claiming that Total Loss is issued to the Insurers or broker, and (ii) the date on which that Total Loss is agreed by the Insurers;
(c) in the case of requisition for title, confiscation, detention, forfeiture, compulsory acquisition or seizure, the forty-fifth (45th) consecutive day after the date on which in the case of detention or seizure by an Agency, otherwise immediately;
(d) in the case of requisition for hire, the sixtieth (60th) consecutive day (or in the case of a requisition for hire by an Agency of the State of Registration, the one hundred and twentieth (120th) consecutive day) after the requisition commenced or, if earlier, the date on which the Insurers make payment on the basis of a Total Loss); and
(e) in the case of hijacking, the thirtieth (30th) consecutive day after the date on which the Operator lost possession of the Aircraft.

“ Total Loss Payment Date ” means, in relation to a Total Loss of the Aircraft which includes a Total Loss of the Airframe, the earlier of:

(a) the date upon which Total Loss Proceeds equal to at least the Agreed Value are received by the Loss Payee; and
(b) sixty (60) days after the Total Loss Date.

“ Total Loss Proceeds ” means the Insurance Proceeds, Requisition Proceeds or any other amount by way of compensation, damages or similar payment, for the loss of or damage to the Aircraft, arising in each case in respect of a Total Loss.

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“Transferee ” has the meaning given to it in paragraph (b) of Clause 25.2 ( Transfer by Lessor Party ).

“ Transferred Assets ” has the meaning given to it in paragraph (b) of Clause 25.2 ( Transfer by Lessor Party ).

“ Trust Agreement ” means the Trust Agreement between Trust Company and Owner Participant in respect of the Aircraft;

“ Trust Company ” means Bank of Utah, a corporation organized and existing under the laws of the State of Utah, in its individual capacity;

“ Trust Estate ” has the meaning set out in the Trust Agreement;

“ VAT ” means any value added tax or goods and services tax or similar levy levied on any supply of goods or services and any other tax of a similar nature.

1.2 Construction

(a) Unless the context requires otherwise, any reference in this Agreement to:

==> picture [11 x 11] intentionally omitted <==

the “Lessee”, the “Lessor”, the “Owner Participant”, any “Finance Party”, any “Indemnitee” or any “Party” shall be construed so as to include its successors in title, permitted assigns and permitted transferees;

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an “aircraft object” shall be interpreted in accordance with article 1(d) of the Cape Town Convention;

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“assets” includes present and future properties, revenues and rights of every description;

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a “consent” also includes an approval, authorisation, exemption, filing, licence, order, permission, recording or registration (and references to obtaining consents are to be construed accordingly);

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“indebtedness” includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

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“law” includes common, customary or civil law or any constitution, decree, judgment, legislation, order, ordinance, regulation, treaty or other legislative, judicial or administrative measure, requirement or decision (or its interpretation or application) whether or not having the force of law, but if not having the force of law, only if the persons to whom it is intended to apply generally comply with it;

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a “party” to any agreement or instrument includes a reference to that person’s successors, permitted assigns and permitted transferees;

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a “person” includes any individual, firm, company, corporation, government, state Agency or any association, trust, joint venture, consortium or partnership (in each case, whether or not having separate legal personality);

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a “regulation” includes any regulation, rule, official directive, request or guideline whether or not having the force of law, but if not having
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the force of law only if the persons to whom it is intended to apply generally comply with it, of any governmental, intergovernmental or supranational body, Agency, department or regulatory, self regulatory or other authority or organisation;

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a “Relevant Document”, a “Finance Document” or any other agreement or instrument is a reference to that Relevant Document, Finance Document or other agreement or instrument as amended, novated, supplemented, extended, restated (however fundamentally and whether or not more onerously) or replaced;

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a person being “situated” in a Contracting State shall be interpreted in accordance with article 4 of the Cape Town Convention;

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a provision of any law is a reference to that provision as amended or re-enacted;

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a provision of the Cape Town Convention is to the English language version of the Consolidated Text which is derived from the Convention and the Aircraft Protocol being read and interpreted together as a single instrument as required by article 6(1) of the Convention and any reference to the Consolidated Text shall include a reference to the provisions of the Convention and/or the Aircraft Protocol or from which such provision is derived and any reference to the Cape Town Convention, the Convention and/or the Aircraft Protocol shall be deemed to include a reference to the Consolidated Text, as applicable;

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a time of the day is a reference to London time; and

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a word referring to a plural number includes a reference to the singular and vice versa.
(b) The Clause and Schedule headings are for ease of reference only.
(c) Unless a contrary indication appears, a term used in any other Relevant Document or in any notice given under or in connection with any Relevant Document has the same meaning in that Relevant Document or notice as in this Agreement.
(d) A Default (other than an Event of Default) is “ continuing ” if it has not been remedied or waived and an Event of Default is “ continuing ” if it has not been waived.

1.3 Third party rights

(a) All rights expressed to be granted to each Indemnitee or Tax Indemnitee (other than Lessor) under this Agreement are given to Lessor on behalf of that Indemnitee or Tax Indemnitee, and each Indemnitee or Tax Indemnitee is an express third party beneficiary hereof. Except for Lessor, Owner Participant, each Indemnitee and each Tax Indemnitee, no other Person shall be a third party beneficiary of this Agreement.
(b) Any Indemnitee or Tax Indemnitee who is not a party to this Agreement may enforce the terms of this Agreement expressed to be for the benefit of or given by Lessee to or in favor of such Indemnitee or Tax Indemnitee.
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(c) All terms of this Agreement may be varied, amended or otherwise released by an agreement between Lessor and Lessee without reference to any Indemnitee, Tax Indemnitee or Owner Participant.
(d) If an Indemnitee or Tax Indemnitee is not a party to this Agreement, Lessee may require such Indemnitee or Tax Indemnitee to agree in writing, in a form reasonably acceptable to Lessee, to the terms of Clause 10 ( Expenses and Indemnities ) and Clause 11 ( Taxation ), as the case may be, prior to making any payments to such Indemnitee or Tax Indemnitee under Clause 10 or Clause 11, as the case may be.

2. LESSEE’S REPRESENTATIONS AND WARRANTIES

The Lessee makes the representations and warranties set out in this Clause 2 to the Lessor on the date of this Agreement.

2.1 Status

(a) It is a limited company, duly incorporated and validly existing under the law of its Home Jurisdiction.
(b) It has the power to own its assets and carry on its business as it is being conducted.
(c) The Lessee’s PPSA Location is located in the Province of British Columbia, (ii) its FAA Location is in the District of Columbia, (iii) Lessee’s “location” as such term is used in Section 9-307 of the Uniform Commercial Code is Washington, D.C and (iv) it is “situated” in Canada for purposes of the Cape Town Convention.

2.2 Binding obligations

The obligations expressed to be assumed by it in each Relevant Document are, subject to any general principles of law limiting its obligations which are specifically referred to in any legal opinion delivered pursuant to Clause 4 ( Conditions ), legal, valid, binding and enforceable obligations.

2.3 Non-conflict with other obligations

The entry into and performance by it of, and the transactions contemplated by, the Relevant Documents do not and will not conflict with:

(a) any law or regulation applicable to it;
(b) its constitutional documents; or
(c) any agreement or instrument binding upon it or any of its assets.

2.4 Power and authority

It has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Relevant Documents to which it is a party and the transactions contemplated by those Relevant Documents.

2.5 Validity and admissibility in evidence

All authorisations required or desirable:

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(a) to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Relevant Documents to which it is a party; and
(b) to make the Relevant Documents to which it is a party admissible in evidence in its Home Jurisdiction,

have been (or will on or before the Delivery Date have been) obtained or effected and are (or will on their being obtained or effected be) in full force and effect.

2.6 Governing law and enforcement

(a) The choice of New York law as the governing law of the Relevant Documents to which it is a party will be recognised and enforced in its Home Jurisdiction.
(b) Any judgment obtained in New York in relation to a Relevant Document to which it is a party will be recognised and enforced in its Home Jurisdiction.

2.7 Deduction of Tax

It is not required to make any deduction for or on account of Tax from any payment it may make under any Relevant Document.

2.8 No filing or stamp taxes

Save as specified in Clause 2.16 ( Registrations and Filings ), it is not necessary that the Relevant Documents be filed, recorded or enrolled with any court or other authority or that any stamp, registration or similar Tax be paid on or in relation to the Relevant Documents or the transactions contemplated by the Relevant Documents.

2.9 No default

(a) No Default is continuing or might reasonably be expected to result from the entry by it into the transactions contemplated by the Relevant Documents.
(b) No Event of Default is continuing or might reasonably be expected to result from the entry by it into the transactions contemplated by the Relevant Documents.
(c) No other event or circumstance is outstanding which constitutes a default under any other agreement or instrument which is binding on it or to which its assets are subject which might have a Material Adverse Effect.

2.10 No misleading information

(a) Any factual information provided by or on behalf of it to the Lessor for the purposes of the Relevant Documents was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated.
(b) Nothing has occurred or been omitted from the information provided pursuant to paragraph (a) above and no information has been given or withheld that results in that information being untrue or misleading in any material respect.
(c) The Lessee has disclosed all material facts relating to the leasing of the Aircraft from the Lessor to the Insurers and has not omitted to disclose any facts which may permit the Insurers to invalidate the Insurances.
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2.11 Original Financial Statements

(a) The Original Financial Statements were prepared in accordance with either GAAP or IFRS consistently applied.
(b) The Original Financial Statements fairly represent its financial condition and operations as at the end of and for the relevant financial year.

2.12 Pari passu ranking

Its payment obligations under the Relevant Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.

2.13 No proceedings pending or threatened

No litigation, arbitration or administrative proceedings of or before any court, arbitral body or Agency which, if adversely determined, might reasonably be expected to have a Material Adverse Effect have (to the best of the Lessee’s knowledge and belief) been started or threatened against it.

2.14 Civil commercial law

It is subject to civil commercial law with respect to its obligations under the Relevant Documents.

2.15 No immunity

Neither it nor any of its assets nor the Aircraft is entitled to any right of immunity and its entry into and performance of the Relevant Documents constitute private and commercial acts.

2.16 Registrations and Filings

No filing or recording of any instrument or document is necessary or advisable under the laws of, the State of Registration, or the Habitual Base in order to ensure the validity, effectiveness and enforceability of this Agreement or to establish, perfect or protect the rights and interests of Lessor in the Aircraft except for such matters as can only be effected as at Delivery and such matters will be effected at Delivery.

2.17 Export

No further approvals, licences or consents are necessary to enable Lessor to export the Aircraft from the Habitual Base and to deregister the Aircraft from the State of Registration upon the termination of the leasing of the Aircraft under this Agreement.

2.18 Excluded Countries

Lessee does not hold a contract or other obligation to operate the Aircraft to or from any Excluded Country and in violation of any laws applicable to it.

2.19 Material Adverse Change

There has been no material adverse change in the financial condition of the Lessee and its Affiliates or the incurrence of significant liabilities (contingent or otherwise) on the part of the Lessee or its Affiliates since the date of the Original Financial Statements.

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2.20 Import

All required import licences and all customs formalities relating to the import of the Aircraft into the Habitual Base have been obtained or will have been obtained or complied with by the Delivery Date and all Taxes payable in connection with the import of the Aircraft into the Habitual Base have been paid or will have been paid by the Delivery Date.

2.21 No Security Interest

The Aircraft is not subject to any Security other than Permitted Liens.

2.22 No Restriction on Payments

Under the laws of its Home Jurisdiction there are no restrictions on the Lessee’s ability to make the payments required by or in connection with this Agreement.

2.23 Deregistration Power of Attorney and IDERA

It has not issued a deregistration power of attorney, irrevocable deregistration and export authorisation or similar instrument with respect to the Aircraft or either Engine to any person other than the IDERA.

2.24 Fees and Charges

All Flight Charges in respect of the Relevant Aircraft have been paid when due. Lessee is not in default in the payment of any sums due by the Lessee to any air traffic control or airport authority in respect of any aircraft operated by the Lessee.

2.25 Repetition

(a) The representations and warranties set out in this Clause 2 are deemed to be made again by the Lessee on the Delivery Date by reference to the facts and circumstances then existing on the Delivery Date.
(b) The Repeating Representations are deemed to be made again by the Lessee on each Basic Rent Payment Date:

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by reference to the facts and circumstances then existing on that Basic Rent Payment Date; and

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as if the references in Clause 2.11 ( Original Financial Statements ) to the Original Financial Statements were to the then most recent audited financial statements of the Lessee.

3. LESSOR’S REPRESENTATIONS AND WARRANTIES

The Lessor makes the representations and warranties set out in this Clause 3 to the Lessee on the date of this Agreement.

3.1 Status

(a) It is a limited company duly formed and validly existing under the law of its Home Jurisdiction.
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(b) It has the power to own its assets and carry on its business as it is being conducted.

3.2 Binding obligations

3.3 The obligations expressed to be assumed by it in each Relevant Document are, subject to any general principles of law limiting its obligations, legal, valid, binding and enforceable obligations.

3.4 Non-conflict with other obligations

The entry into and performance by it of, and the transactions contemplated by, the Relevant Documents do not and will not conflict with:

(a) any law or regulation applicable to it;
(b) its constitutional documents; or
(c) any agreement or instrument binding upon it or any of its assets.

3.5 Power and authority

3.6 It has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Relevant Documents to which it is a party and the transactions contemplated by those Relevant Documents.

3.7 Validity and admissibility in evidence

3.8 All authorisations required or desirable to enable it lawfully to enter into, exercise its rights and comply with its obligations under the Relevant Documents to which it is a party have been (or will on or before the Delivery Date have been) obtained or effected and are (or will on being obtained or effected be) in full force and effect.

3.9 Governing law and enforcement

(a) The choice of New York law as the governing law of the Relevant Documents to which it is a party will be recognised and enforced in its Home Jurisdiction.
(b) Any judgment obtained in the State of New York in relation to a Relevant Document to which it is a party will be recognised and enforced in its Home Jurisdiction subject to the relevant qualifications set out in the legal opinion referenced in paragraph 2.5 of Part I of Schedule 3 issued on or about the date hereof addressed to the Lessor amongst others in respect of inter alia the entry by the Lessor into this Agreement.

3.10 Repetition

The representations and warranties set out in this Clause 3 are deemed to be made again by the Lessor on the Delivery Date by reference to the facts and circumstances then existing on the Delivery Date.

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4. CONDITIONS

4.1 Lessee’s Conditions Precedent

(a) The Lessee shall deliver to the Lessor, in form and substance satisfactory to the Lessor, all of the documents and other evidence listed in Part I of Schedule 3 ( Conditions ) on or prior to the Effective Date or the Delivery Date (as applicable).
(b) This Agreement is effective on the Effective Date but the Lessor shall not be obliged to deliver the Aircraft under this Agreement if:

==> picture [11 x 12] intentionally omitted <==

the Lessee has not complied with its obligations under paragraph (a) above to the satisfaction of the Lessor;

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the Lessor has not received all amounts due to it on or prior to the Delivery Date from the Lessee; or

==> picture [16 x 12] intentionally omitted <==

a Default, Illegality Event, Potential Illegality Event or Insurance Change has occurred and is continuing on the Delivery Date.

4.2 Lessee’s Conditions Subsequent

The Lessee shall fulfil the Lessee’s Conditions Subsequent in the manner and within the period identified in Part II of Schedule 3 ( Conditions ).

4.3 Lessor’s discretion

(a) The Lessee’s Conditions Precedent and Lessee’s Conditions Subsequent are for the sole benefit of the Lessor and the Lessor may waive or defer them, and may attach to such waiver or deferral any reasonable conditions (“ additional conditions ”) that it considers appropriate.
(b) If the Lessor agrees to deliver the Aircraft to the Lessee on terms that any Lessee’s Condition Precedent is waived or deferred or, if the Lessor agrees to waive or defer any Lessee’s Condition Subsequent and attaches additional conditions to its waiver or deferral, any failure by the Lessee to fulfil an additional condition shall constitute a breach of this Agreement.

4.4 Lessor’s Conditions Precedent

(a) The Lessor shall deliver to the Lessee, in form and substance satisfactory to the Lessee, all of the documents and other evidence listed in Part III of Schedule 3 ( Conditions ) on or prior to the Delivery Date.
(b) The Lessee shall not be obliged to take delivery of the Aircraft under this Agreement if:

==> picture [11 x 11] intentionally omitted <==

the Lessor has not complied with its obligations under paragraph (a) above to the satisfaction of the Lessee; or

==> picture [13 x 11] intentionally omitted <==

an Illegality Event, Potential Illegality Event or Insurance Change has occurred and is continuing on the Delivery Date.

==> picture [16 x 11] intentionally omitted <==

except as otherwise agreed in the Acceptance Certificate, the Aircraft is not in compliance with the Delivery Conditions.
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4.5 Lessee’s discretion

The Lessor’s Conditions Precedent are for the sole benefit of the Lessee and the Lessee may waive or defer them.

5. LEASE

The Lessor shall lease the Aircraft to the Lessee and the Lessee shall take the Aircraft on lease from the Lessor for the Lease Period, subject to the terms and conditions of this Agreement.

6. ACCEPTANCE AND DELIVERY

6.1 Technical Acceptance, Lease Acceptance and Delivery

(a) The Lessee’s pre-Delivery inspection of the Aircraft is further described in paragraph 1.2 ( General Delivery Considerations ) of Part 1 ( Delivery Condition ) of Schedule 7. Lessor shall tender the Aircraft for technical acceptance at the Delivery Inspection Location and Lessee shall execute the Technical Acceptance Certificate if it is satisfied that the Aircraft meets all of the requirements necessary for it to technically accept the Aircraft and that the Aircraft is in compliance with the Delivery Condition. Execution by Lessee of the Technical Acceptance Certificate shall be conclusive evidence of the fact that the Aircraft (including all Parts thereof and the Aircraft Documentation) is in all respects satisfactory to Lessee, other than completion of (i) the acceptance flight in accordance with paragraph 1.4 ( Acceptance Flight ) of Part I ( Delivery Condition ) of Schedule 7 to occur on the ferry flight from the Delivery Inspection Location to the Delivery Location, and (ii) the walk around inspection in accordance with paragraph 1.5 ( Lease Acceptance ) of Part I (Delivery Condition) of Schedule 7, which shall be addressed in the Acceptance Certificate. Immediately following the execution by Lessee of the Technical Acceptance Certificate, Lessor shall arrange for a ferry flight of the Aircraft to take place from the Delivery Inspection Location to the Delivery Location.
(b) Subject to the satisfaction of the conditions set forth in Clause 4.1 ( Lessee’s Conditions Precedent ), Lessor shall tender the Aircraft for delivery to Lessee in the Delivery Condition ( Schedule 7, Part I ) (except as otherwise agreed in the Acceptance Certificate) on the Delivery Date at the Delivery Location or at such other location as may be mutually agreed. Subject to satisfaction of the conditions set forth in Clause 4.4 ( Lessor’s Conditions Precedent ), Lessee shall accept delivery of the Aircraft by executing the Acceptance Certificate and delivering the same to Lessor, whereupon Lessor shall countersign on the Acceptance Certificate and the Aircraft shall become subject to this Lease.
(c) The Lessee shall indemnify each Indemnitee against all Losses arising from the death of or injury to any employee or other representative of the Lessee in connection with any pre-Delivery inspection of the Aircraft.
6.2 It is anticipated that the Delivery Date of the Aircraft will be the Anticipated Delivery Date. Lessor agrees to notify Lessee of any event of which it becomes aware which would cause a change in the Delivery Date. The date of the Acceptance Certificate shall be the Delivery Date of the Aircraft.

Delivery by the Lessee to the Lessor of the Acceptance Certificate will constitute conclusive proof as between the Lessor and the Lessee that the Lessee’s technical

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experts have had the opportunity to examine and investigate the Aircraft and any intellectual property rights associated with the Aircraft and that on the Delivery Date the Lessee considers:

(a) the Aircraft is satisfactory to Lessee and complies in all respects with the requirements of Part I ( Delivery Condition ) of Schedule 7;
(b) all actions required under Part I ( Delivery Condition ) of Schedule 7 have been performed in full to the complete satisfaction of Lessee; and
(c) Lessee has unconditionally and irrevocably accepted the Aircraft for lease under this Lease without any reservation whatsoever (except for any discrepancies which may be noted in the Acceptance Certificate).

6.3 Late Delivery

(a) Lessee acknowledges and agrees that the Delivery Date may be delayed and that Lessor shall not be responsible for any Losses arising from any such delay in delivery or non-delivery which are suffered or incurred by Lessee.
(b) If a Total Loss occurs prior to the Final Delivery Date or if the Delivery Date is delayed beyond the Final Delivery Date and such delay is not attributable to Lessee, Lessee or Lessor (in case of a Total Loss) or Lessee only (in case of delay beyond the Final Delivery Date and such delay is not attributable to Lessee) may give written notice of termination to the other in which event Lessor shall return the Commitment Fee it has actually received from Lessee promptly thereafter, and this Lease shall be without further force or effect. For the sake of clarity, Lessee shall not be entitled to give written notice of termination and Lessor shall not be obliged to return the Commitment Fee if the delay is attributable to Lessee or if Lessee has failed to satisfy any of the Conditions Precedent by the respective times specified.

6.4 Pre-acceptance termination

If this Agreement is terminated pursuant to Clause 6.4 ( Late Delivery ), neither the Lessor nor the Lessee shall have any further obligation to the other under this Agreement other than as expressly set out in this Agreement.

6.5 Delivery Authorisations

(a) Lessee shall, at its own expense, obtain all authorisations required to enable the Aircraft to be imported into and registered in the State of Registration.
(b) The Lessor shall provide the Lessee with all data and information that it has or that is reasonably requested by the Lessee to enable it to obtain the authorisations referred to in paragraph (a) above.

7. LESSOR’S LIABILITY

7.1 Risk

(a) The Lessee shall bear all risk of loss, theft, Requisition, hijacking, damage and destruction of or to the Aircraft throughout the Lease Period.
(b) The Lessee shall remain obliged to perform its obligations under this Agreement in full despite the occurrence of any loss, theft, Requisition, hijacking, damage or destruction of or to the Aircraft or any other event,
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circumstance or change in law which may deprive the Lessee of the use, possession or enjoyment of the Aircraft.

7.2 Deficiencies and delays

No Indemnitee shall be liable for, and the Lessee irrevocably waives (as far as it may do so under any applicable law) any claim that it may now or in the future have against any Indemnitee in respect of, any Losses caused directly or indirectly by:

(a) the Aircraft;
(b) any deficiency or defect of the Aircraft or any intellectual property rights associated with the Aircraft or any inadequacy or unsuitability of the Aircraft for any purpose;
(c) the use or performance of the Aircraft;
(d) any repair to or maintenance of the Aircraft;
(e) subject to Clause 6.4(b)(i) ( Late delivery ), any delay in Delivery for any reason; or
(f) any interruption or loss of service or use of the Aircraft.

7.3 Disclaimer

As between the Lessor and the Lessee, the Aircraft is leased in an “as is, where is” condition throughout the Lease Period and, unless otherwise stated in this Agreement, the Lessor gives no warranty, guarantee or representation, express or implied, arising by law or otherwise, with respect to the Aircraft, including but not limited to:

(a) any implied warranty as to its airworthiness, condition, design, operation, merchantability, satisfactory quality or fitness for use or operation;
(b) any implied warranty arising from performance, course of dealing, usage or trade;
(c) any obligation, liability, right, claim or remedy in tort, whether or not arising from the Lessor’s negligence, actual or imputed; or
(d) any obligation, liability, right, claim or remedy for loss of or damage to the Aircraft, for loss of use, revenue or profit with respect to the Aircraft, for any liability of the Lessee to any third party, or for any other direct, incidental or consequential damages,

and all such warranties, guarantees, representations, obligations, liabilities, rights, claims or remedies, express or implied, statutory or otherwise, are expressly excluded.

8. QUIET ENJOYMENT

Unless compelled to do so by any applicable law, so long as no Event of Default or Detention Exposure Event has occurred which is continuing, the Lessor shall not, and shall procure that no Finance Party shall, knowingly disturb the quiet use, possession and enjoyment of the Aircraft by the Lessee throughout the Lease Period.

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9. BASIC RENT AND OTHER PAYMENTS

9.1 Basic Rent

(a) The Lessee shall pay Basic Rent to the Lessor in respect of the Lease Period.
(b) The instalment of Basic Rent payable on each Basic Rent Payment Date shall be calculated in accordance with Schedule 4 ( Basic Rent amounts ).
(c) For any fixed monthly Basic Rent due, the Lessee shall pay an instalment of Basic Rent in respect of each Basic Rent Period in advance on the corresponding Basic Rent Payment Date.
(d) For any Basic Rent due based on the utilization pursuant to a “power by the Flight Hour” arrangement described in Schedule 4 ( Basic Rent amounts ), such Basic Rent shall be paid on or prior to the twentieth (20th) day following the last day of the calendar month for which such Basic Rent is due.

9.2 Supplemental Rent

The Lessee shall pay Supplemental Rent in accordance with Part IV ( Supplemental Rent ) of Schedule 7.

9.3 Commitment Fee

(a) The Lessee shall pay to the Lessor an amount equal to the Commitment Fee Amount as set out below:

==> picture [11 x 11] intentionally omitted <==

the Lessor acknowledges that, prior to the execution of this Agreement, the Lessee paid to the Lessor the sum of $157,500; and

==> picture [13 x 11] intentionally omitted <==

no later than two (2) Business Days prior to the Delivery Date the Lessee shall pay to the Lessor the balance of the Commitment Fee Amount.
(b) The Lessor may:

==> picture [11 x 11] intentionally omitted <==

deduct any amount due and payable from the Lessee (a “ Lessee Obligation ”) under any Relevant Document or any Other Relevant Document from the Commitment Fee, regardless of the place of payment or currency of that obligation; or

==> picture [13 x 11] intentionally omitted <==

apply or appropriate the Commitment Fee towards payment of any Lessee Obligation in any order that it deems fit.
(c) Application of the Commitment Fee Amount shall not cure an Event of Default until such Event of Default is actually cured by the Lessee (which in the case of a payment default, the Lessee may effect by complying with paragraph (d) below).
(d) If the Lessor has deducted from, applied or appropriated all or any part of the Commitment Fee in accordance with paragraph (b) above, the Lessee shall, within five (5) Business Days after the Lessor’s demand, pay to the Lessor an amount equal to the amount deducted, applied or appropriated so as to restore the Commitment Fee to its original amount.
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(e) The Lessee agrees that the Commitment Fee shall irrevocably and unconditionally become the property of the Lessor, and the Lessor shall be entitled to commingle the Commitment Fee with the Lessor’s general or other funds, and the Lessor will not hold any such funds as agent or on trust for the Lessee or in any similar fiduciary capacity. The Commitment Fee shall be for the Lessor’s unrestricted use and the Lessee acknowledges that it shall have no right or interest in that amount following its payment.
(f) Within five (5) Business Days after the Lessee has satisfied all Lessee Obligations and discharged all Permitted Liens (other than Lessor’s Security), the Lessor shall pay the Lessee an amount equal to the Commitment Fee (after which the balance of the Commitment Fee shall be deemed to be zero).
(g) If:

==> picture [11 x 11] intentionally omitted <==

a Total Loss of the Aircraft occurs prior to Delivery;

==> picture [13 x 11] intentionally omitted <==

Delivery does not occur due to the failure of the Lessor to perform its obligations under this Agreement other than as a consequence of the failure by the Lessee to perform its obligations under this Agreement; or

==> picture [16 x 11] intentionally omitted <==

Lessee has elected to terminate this Agreement in accordance with paragraph (b) of Clause 6.3 ( Late Delivery ),

the Lessor shall, within five (5) Business Days pay the Lessee an amount equal to any Commitment Fee paid by the Lessee to the Lessor pursuant to paragraph (a) above, less any amount which the Lessor has deducted or is entitled to deduct from the Commitment Fee pursuant to paragraph (b) above.

10. EXPENSES AND INDEMNITIES

10.1 Costs and expenses

(a) Each Party shall bear its own fees, costs and expenses (including legal fees) incurred by it in connection with the negotiation, preparation and execution of the Relevant Documents, provided that (i) Lessee shall bear all costs related to the registration of the Aircraft in the State of Registration and the delivery of related legal opinions satisfactory to Lessor and any Finance Party and (ii) Lessor shall bear all costs related to the registration of Lessor’s Security in the State of Registration.
(b) The Lessee shall pay to the Lessor immediately on demand an amount equal to all costs and expenses (including legal fees) incurred by the Lessor:

==> picture [11 x 11] intentionally omitted <==

in connection with the enforcement or preservation of its or any Finance Party’s rights under the Relevant Documents following the occurrence of a Default which is continuing; or

==> picture [13 x 11] intentionally omitted <==

in connection with any amendment to, or the granting of any waiver or consent under, the Relevant Documents (other than the Finance Documents) which is requested by the Lessee or required to implement any of the Relevant Documents.
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10.2 Outgoings

(a) The Lessee shall pay promptly all outgoings or other Losses arising from:

==> picture [11 x 11] intentionally omitted <==

the import of the Aircraft into, or its subsequent exportation from, the State of Registration, or any other country;

==> picture [13 x 11] intentionally omitted <==

the registration, deregistration (other than the deregistration from the Austrian registry immediately prior to the initial registration in the State of Registration), possession, control, leasing, sub-leasing, use, operation, storage, maintenance, repair, service, Modification, Overhaul, replacement, removal, repossession or redelivery of the Aircraft; and

==> picture [16 x 12] intentionally omitted <==

the insurance of the Aircraft,

(each an “ Outgoing ”).

(b) If the Lessee fails to pay any Outgoing when due:

==> picture [11 x 11] intentionally omitted <==

the Lessor may, without being obliged to do so and without prejudice to its right to treat that failure as an Event of Default, pay it; and

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the Lessee shall reimburse the Lessor immediately on demand for any amounts paid by the Lessor.

10.3 Operational indemnity

The Lessee shall indemnify and at all times keep indemnified each Indemnitee against all Losses which may at any time be incurred by that Indemnitee:

(a) relating to, or arising directly or indirectly in any manner whatsoever out of, the condition, testing, design, purchase, manufacture, importation to or exportation from any country, registration, deregistration (other than the deregistration from the Austrian registry immediately prior to the initial registration in the State of Registration), possession, control, leasing, subleasing, use, operation, storage, rental, maintenance, repair, service, modification, overhaul, replacement, insurance, removal, repossession, redelivery, disposal or Total Loss of the Aircraft;
(b) in preventing or attempting to prevent the arrest, confiscation, seizure, taking in execution, impounding, forfeiture or detention of the Aircraft during the Lease Period, or in securing the release of the Aircraft;
(c) in retaking possession of the Aircraft or detaining the Aircraft or any other aircraft in connection with the enforcement of the rights of that Indemnitee under the Relevant Documents; or
(d) resulting from the Lessee parting with possession of the Aircraft during the Lease Period.

10.4 Default indemnity

The Lessee will indemnify and keep indemnified the Lessor (for itself and on behalf of each other Indemnitee) against all Losses which may at any time be incurred by that Indemnitee as a consequence of the:

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(a) occurrence of any Default or Event of Default;
(b) the breach by the Lessee of any representation, warranty, covenant or other provision contained in any of the Relevant Documents;
(c) the enforcement or preservation of any of its rights under the Relevant Documents; or
(d) the investigation by it of any event which it reasonably believes to be an Event of Default.

10.5 Exclusion from indemnities

The Lessee need not indemnify an Indemnitee for any Losses under Clause 10.3 ( Operational indemnity ) or Clause 10.4 ( Default indemnity ) to the extent that such Losses:

(a) are the result of the fraud, gross negligence or wilful default of that Indemnitee;
(b) are compensated for by the indemnity in Clause 11.1 ( Tax indemnity ) (or would be compensated for by Clause 11.1 ( Tax indemnity ) but are not so compensated solely because any exclusion in paragraph (b) of that Clause applies);
(c) are the result of the breach by that Indemnitee of any of its express obligations under any of the Relevant Documents (other than a breach attributable to the breach by any other party to any Relevant Document of its obligations under the Relevant Documents);
(d) are the result of any misrepresentation by that Indemnitee set out in a Relevant Document to which it is party (other than a misrepresentation attributable to the misrepresentation of or breach by any other party to any Relevant Document); or
(e) constitute an ordinary and usual operating or overhead expense of that Indemnitee.

10.6 Payment of indemnity amounts

All amounts payable by the Lessee under this Clause 10 shall be paid within five (5) Business Days of the Lessor’s written request for payment (made on behalf of the relevant Indemnitee) in the same currency as the Losses to which they relate or, if required by the Lessor, in their Dollar equivalent notified by the Lessor to the Lessee.

10.7 Tax on indemnity payments

If, as a result of its Tax treatment, an Indemnitee would be in a worse position after receiving an indemnity payment under any of the Relevant Documents than it would have been in if the Loss giving rise to the right to be indemnified had not occurred, the Lessee shall pay to that Indemnitee such additional sum as may be necessary to leave that Indemnitee in the same position after Tax, that it would have been in had the Loss not occurred.

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10.8 Survival

The provisions of this Clause 10 shall remain in full force and effect following the termination of this Agreement or the Lease Period.

11. TAXATION

11.1 Tax indemnity

(a) The Lessee shall (within three (3) Business Days of demand by a Tax Indemnitee) pay to the Tax Indemnitee an amount equal to the Losses which the Tax Indemnitee determines will be or has been (directly or indirectly) suffered by it for or on account of Tax in relation to the Aircraft or the transactions contemplated by the Relevant Documents.
(b) Paragraph (a) above shall not apply with respect to any Tax assessed on the Tax Indemnitee:

==> picture [11 x 12] intentionally omitted <==

under the law of its Home Jurisdiction or Tax Residence if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by, or capital gain of, the Tax Indemnitee;

==> picture [13 x 11] intentionally omitted <==

to the extent that the Loss would not have arisen:
(A) if the Lessor had not failed to file any relevant tax return or computation that it was obliged to file under the law of its Home Jurisdiction or Tax Residence;
(B) but for the fraud, gross negligence or wilful misconduct of the Tax Indemnitee;
(C) but for the breach by the Tax Indemnitee of its obligations under any Relevant Document (other than a breach attributable to the breach by any other party to any Relevant Document of its obligations under the Relevant Documents); or
(D) but for any misrepresentation by the Tax Indemnitee set out in a Relevant Document (other than a misrepresentation attributable to the misrepresentation of or breach by any other party to any Relevant Document);

==> picture [16 x 11] intentionally omitted <==

if the Loss is compensated for by an increased payment under Clause 12.4 ( No deductions or withholdings ) or Clause 11.4 ( Value added tax ); or

==> picture [15 x 11] intentionally omitted <==

if the Loss results from the occurrence of any event or circumstance following Redelivery.
(c) If the Tax Indemnitee makes or intends to make a claim under paragraph (a) above, it shall promptly notify the Lessee of the event which will give, or has given, rise to the claim.
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11.2 Tax Credit

If the Lessee makes a Tax Payment and the Tax Indemnitee determines that:

(a) a Tax Credit is attributable either to an increased payment of which that Tax Payment forms part, or to that Tax Payment; and
(b) that the Tax Indemnitee has obtained, utilised and retained that Tax Credit,

the Tax Indemnitee shall (promptly after the Tax Indemnitee has obtained, utilised and retained that Tax Credit), pay an amount to the Lessee by way of rebate which the Lessor determines in its absolute discretion will leave the Tax Indemnitee (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been required to be made by the Lessee.

11.3 Stamp taxes

The Lessee shall pay and, within three (3) Business Days of demand, indemnify each Tax Indemnitee against any cost, Loss or liability that the Tax Indemnitee incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Relevant Document.

11.4 Value added tax

(a) All amounts expressed to be payable under a Relevant Document by the Lessee which (in whole or in part) constitute consideration for a supply for VAT purposes shall be deemed to be exclusive of VAT which is chargeable on such supply, and accordingly, if VAT is chargeable on any supply, the Lessee shall pay to such party in addition to and at the same time as paying the consideration an amount equal to the amount of the VAT (and such party shall promptly provide an appropriate VAT invoice to the Lessee).
(b) Where a Relevant Document requires the Lessee to reimburse a Tax Indemnitee for any costs or expenses, the Lessee shall also at the same time pay and indemnify the Tax Indemnitee against all VAT incurred by it in respect of those costs or expenses.

11.5 Conduct of business

No provision of this Agreement shall:

(a) interfere with the right of any Tax Indemnitee to arrange its Tax affairs in whatever manner it thinks fit;
(b) oblige a Tax Indemnitee to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or
(c) oblige a Tax Indemnitee to disclose any information relating to its Tax affairs or any computations in respect of Tax.

11.6 Mitigation

If the Lessee is required to pay, deduct or withhold, or to make additional payments to a Tax Indemnitee on account of any payment, deduction or withholding on account of, Tax under any of the Relevant Documents, or if it appears probable that the Lessee will

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become required to do so, the Tax Indemnitee shall, at the Lessee’s request and expense and provided that it can do so without prejudicing its position, consult and co-operate with the Lessee in order to avoid and/or mitigate any such Tax.

11.7 Survival

The provisions of this Clause 11 shall remain in full force and effect following the termination of the Lease Period or the leasing of the Aircraft under this Agreement.

12. PAYMENT MECHANICS

12.1 Method of payment

On each date on which the Lessee is required to make a payment under this Agreement, the Lessee shall make the same available to the Lessor for value on the due date in immediately available funds settled through the New York Clearing House System or such other funds as may for the time being be customary for the settlement in New York City of international payments in Dollars by SWIFT or wire transfer to the Basic Rent Collection Account or as otherwise agreed by the Lessor and the Lessee from time to time in writing. Any payment received in the Basic Rent Collection Account after 11:00 a.m. (at the place at which payment is to be made in accordance with the foregoing) on the due date shall be treated as having been received on the next succeeding Business Day.

12.2 Calculation of payments

(a) Interest, Basic Rent and any other amount payable pursuant to this Agreement shall accrue from the due date on a day-to-day basis and be calculated on the basis of the actual number of days elapsed and a year of 360 days.
(b) Basic Rent due in respect of each fraction of a Basic Rent Period shall be prorated.
(c) For the purposes of the Interest Act (Canada) and disclosure thereunder, whenever any interest or any fee to be paid hereunder or in connection herewith is to be calculated on the basis of a 360-day or 365-day year, the yearly rate of interest to which the rate used in such calculation is equivalent is the rate so used multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by 360 or 365, as applicable. The rates of interest under this Agreement are nominal rates, and not effective rates or yields. The principle of deemed reinvestment of interest does not apply to any interest calculation under this Agreement.

12.3 Obligations absolute

The Lessee’s obligation to pay Basic Rent and all other amounts payable under this Agreement is absolute and unconditional irrespective of any contingency, including (but not limited to):

(a) any right of set-off, counterclaim, defence or other right which any Party may have against any other;
(b) any interference with, unavailability of, or interruption of the use of, the Aircraft for any reason, including (but not limited to) its Requisition, hijacking and any prohibition or other restriction on its use, operation or possession;
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(c) any defect in the title, airworthiness, condition, design, operation or fitness for use or purpose of the Aircraft;
(d) any defect in any Relevant Document or the registration of any Relevant Document or of the Aircraft under the laws of any state;
(e) subject to Clause 19.2 ( Total Loss during the Lease Period ), the Total Loss of or any damage to the Aircraft;
(f) any failure, breach or delay by any Party, however fundamental and whether with or without fault on its part, in performing or complying with any of its obligations under this Agreement; or
(g) any insolvency, bankruptcy, winding-up, restructuring, receivership reorganisation, arrangement, readjustment of debt, dissolution, liquidation or similar proceedings by or against the Lessee or the Lessor.

12.4 No deductions or withholdings

(a) All payments by the Lessee under the Relevant Documents shall be made in full without any deduction or withholding (whether in respect of set-off, counter-claim, duties, Tax, charges or otherwise) unless a deduction or withholding is required by any applicable law, in which event the Lessee shall:

==> picture [11 x 11] intentionally omitted <==

ensure that the deduction or withholding does not exceed the minimum amount legally required;

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pay to the Lessor immediately the additional amount that will result in the net amount received by the Lessor being equal to the amount which would have been received by the Lessor had no such deduction or withholding been made;

==> picture [16 x 11] intentionally omitted <==

pay to the relevant Agency within the period for payment permitted by any applicable law the minimum amount of the deduction or withholding required by law (including the amount of any deduction or withholding on any additional amount paid under this Clause 12.4); and

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when requested to do so by the Lessor, provide to the Lessor, within the period for payment permitted by any applicable law, an official receipt (if available) of the relevant Agency for all amounts deducted or withheld, or if such receipts are not issued by the relevant Agency, a certificate of deduction or any other evidence of the relevant deduction or withholding reasonably required by the Lessor.
(b) The Lessee shall promptly upon becoming aware that it must make a withholding or deduction (or that there is any change in the rate or the basis of a withholding or deduction), notify the Lessor accordingly. Similarly, the Lessor shall notify the Lessee on becoming so aware in respect of a payment payable to the Lessor.
(c) The Lessor and the Lessee shall co-operate in completing any procedural formalities necessary for the Lessor and the Lessee to obtain authorisation to make each payment without deduction or withholding.
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12.5 Interest on late payments

If the Lessee fails to pay any amount payable by it under this Agreement on its due date, without prejudice to any other rights which the Lessor may have, the Lessee shall pay to the Lessor immediately on demand an amount by way of additional Basic Rent equal to Interest accrued on that overdue amount from the due date up to the date of actual payment.

12.6 Business Days

Any payment which is due to be made on a day that is not a Business Day, shall be made on the preceding Business Day (and in the case of Basic Rent the amount shall not be adjusted).

12.7 Certificates and determination

(a) Any certification or determination by the Lessor of a rate, amount payable or date upon which that amount is payable under this Agreement or any other Relevant Document shall, in the absence of manifest error, constitute prima facie evidence of the matter to which it relates and the Lessor shall, if requested by the Lessee, set out the relevant calculation of the amount concerned in reasonable detail.
(b) In any litigation or arbitration proceedings arising out of or in connection with a Relevant Document, the entries made in the accounts maintained by the Lessor are prima facie evidence of the matters to which they relate.

12.8 Lessor’s payment obligations

The Lessor shall not be obliged to pay or release any amount that is due and payable by it to the Lessee under a Relevant Document:

(a) unless the Lessee has paid in full all amounts then due and payable by the Lessee to it in respect of any Lessee Obligation; and
(b) if at the time the Lessor becomes obliged to pay or release that amount a Default has occurred which is continuing, until that Default is no longer continuing (at which point the Lessor shall pay or release that amount to the Lessee promptly).

12.9 Application of payments

If the Lessor receives a payment in respect of amounts then due and payable by the Lessee under this Agreement and such payment is insufficient to discharge all the amounts payable, the Lessor shall apply that payment towards Basic Rent, Interest, fees or any other amount due under any Relevant Document in such proportions and order and generally in such manner as the Lessor may determine.

12.10 Currency of payments

(a) Subject to Clause 10.6 ( Payment of indemnity amounts ), all amounts payable by the Lessee under the Relevant Documents shall be paid in Dollars in time to enable the funds to be cleared on the due date for payment.
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(b) If any sum due from the Lessee under the Relevant Documents (a “ Sum ”) or any order, judgment or award given or made in relation to a Sum has to be converted from the currency (the “ First Currency ”) in which that Sum is payable into another currency (the “ Second Currency ”) for the purpose of:

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making or filing a claim or proof against the Lessee; or

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obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings in any court or other tribunal,

the Lessee shall as an independent obligation, within three (3) Business Days of demand, indemnify the Lessor against any Losses arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to the Lessor at the time of its receipt of that sum.

12.11 Authorisations for payments

(a) The Lessee shall obtain and maintain in full force and effect all certificates and other authorisations which are from time to time required to enable it to make the payments required by the Relevant Documents.
(b) The Lessee shall make and maintain all the necessary filings to ensure the legality and validity of payment under the Relevant Documents.

13. GENERAL UNDERTAKINGS

13.1 General undertakings

Throughout the Lease Period the Lessee shall promptly:

(a) (i) obtain, comply with and do all that is necessary to maintain in full force and effect; and

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supply certified copies or, if so required by the Lessor, notarised copies to the Lessor of,
(b) any authorisation required under any law of its Home Jurisdiction, the Habitual Base or the State of Registration to enable it to perform its obligations under the Relevant Documents and to ensure the legality, validity, enforceability or admissibility in evidence in its Home Jurisdiction, the Habitual Base or the State of Registration of any Relevant Document;
(c) comply in all respects with all laws to which it may be subject, if failure so to comply would materially impair its ability to perform its obligations under the Relevant Documents;
(d) comply with all applicable laws relating to environmental matters (including in relation to greenhouse gas emissions) applicable to its operation of the Aircraft , and ensure any other operator of the Aircraft or any wet lessee or the Aircraft that relate to its operation of the Aircraft also complies;
(e) perform its obligations under the Relevant Documents;
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(f) notify the Lessor in writing of any change in its PPSA Location, FAA Location, location where it is “situated” for purposes of the Cape Town Convention, registered office, principal place of business not later than 30 days prior to such change; and
(g) do everything reasonably requested by the Lessor to maintain and protect the interests of the Lessor and the Finance Parties in the Aircraft and the Relevant Documents.

13.2 Notification of adverse events

From the date of this Agreement until the Expiry Date, the Lessee shall inform the Lessor immediately if it becomes aware that:

(a) a Default or an Event of Default has occurred;
(b) a Total Loss (or any event or circumstance occurring which with the passage of time would become a Total Loss) has occurred with respect to the Airframe or any Engine or the Aircraft has sustained damage which is expected to cost more than the Claims Limit to repair or replace;
(c) the Airframe or any Engine has been lost, arrested, confiscated, seized, impounded, taken in execution, detained or forfeited, or become the subject of a hijacking or Requisition; or
(d) the Airframe or any Engine has been involved in a reportable accident or incident as required by the Aviation Authority or IATA.
(e) if the Aircraft is subleased to a sublessee, if that sublease is terminated or terminates (other than as a result of the normal expiration thereof) or if the Lessee becomes aware of any breach of or default thereunder,

and shall provide the Lessor promptly upon request with reasonable details of any such event.

13.3 Information

Throughout the Lease Period, the Lessee shall:

(a) within ten (10) Business Days after the end of each calendar month provide to the Lessor a report (the “ Monthly Report ”) containing information regarding the location and use of the Airframe, each Engine, the APU and each Landing Gear during that calendar month in the form set out in Schedule 8 ( Form of Monthly Report ) or when reasonably requested by the Lessor from time to time;
(b) not object to the Engine Manufacturer providing the Lessor with access to the Engine Health Monitoring Reports or data with respect to each Engine;
(c) as soon as the same become available and in any event within ninety (90) days after the end of each of its financial years (beginning with the current one), deliver to the Lessor a copy of its annual report and audited consolidated financial statements for that financial year, together with copies of the related auditors’ reports;
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(d) as soon as the same become available and in any event within forty five (45) days after the end of each of its financial quarters deliver to the Lessor a copy of its quarterly unaudited financial statements, including balance sheet and related statements of income and cash flows, for that quarter,
(e) deliver to the Lessor all documents dispatched by the Lessee to its shareholders (or any class of them) or its creditors generally at the same time as they are dispatched;
(f) deliver to the Lessor any other information relating to the Lessee’s financial condition, business and operations that the Lessor may from time to time reasonably request;
(g) within thirty (30) days after receipt by the Lessee of the Lessor’s written request (or such shorter period as may be set forth in any related written request by any Agency for information or documents) or within such longer period as the Lessee may reasonably require to translate the information, provide the Lessor with such written information or documents (or copies thereof, certified as correct by an authorised officer of the Lessee) regarding the Aircraft as the Lessor may require to enable it or any of its Affiliates to file any report or document required to be filed by it with any Agency due to its ownership or other interest in the Aircraft, the Airframe or the Engines;
(h) at any reasonable time upon giving reasonable notice, without interfering with the Lessee’s commercial operations (and not more often than once annually so long as no Default has occurred which is continuing) permit the Lessor to visit the Lessee’s premises to discuss with the Lessee’s officers the Lessee’s operational and financial affairs; and
(i) upon written request by the Lessor (not to be unreasonably repeated) provide to the Lessor a confirmation as to whether an Event of Default under Clause 23.1 ( Non-payment ), Clause 23.6 ( Insolvency ), Clause 23.7 ( Insolvency proceedings ) or Clause 23.8 ( Creditor’s process ) has occurred and is continuing.

13.4 Inspection

(a) Throughout the Lease Period, the Lessee shall permit the Lessor, any Finance Party or any of their respective designated representatives upon giving reasonable notice (unless a Default has occurred and is continuing in which case no notice shall be required) to inspect the Aircraft and the Aircraft Documents:

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at the Lessor’s cost, once in each twelve (12) month period, and, unless a Default has occurred, subject to no unreasonable interference with the Lessee’s operations;

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at the Lessee’s cost, at any time following the occurrence of a Default; and

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at the Lessee’s cost, if a previous inspection indicated that the Aircraft or the Aircraft Documents were not in the condition required by this Agreement, following notification by the Lessee that it has remedied that breach to demonstrate that the Aircraft or the Aircraft Documents are in the condition required by this Agreement.
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(b) The Lessee shall give the Lessor at least thirty (30) days’ prior notice of the time and location of each SC Check and of any scheduled shop visit of any Engine scheduled during the Lease Period and permit the Lessor or its designated representative to inspect any area of the Aircraft that would normally be inspected during such SC Check or shop visit.
(c) The Lessee shall as soon as practicable carry out all repairs to the Aircraft that are shown by the inspections referred to in paragraph (a) above to be required in order to comply with the terms of this Agreement.
(d) The Lessor shall not be obliged to make any inspection of the Aircraft and shall not incur any liability or obligation by reason of not making any such inspection.
(e) Any inspection of the Aircraft (including any Aircraft Documents) shall be solely for the Lessor’s or the relevant Finance Party’s or prospective purchaser’s information and failure to notify the Lessee of any discrepancies thereafter shall not imply that the Lessee is in compliance with this Agreement, its maintenance provisions or applicable law.
(f) The Lessee shall provide a copy of all Aircraft Documents in such format agreed between Lessor and Lessee.

13.5 Storage

If the Aircraft is withdrawn from service or ceases to be operated for more than ten (10) consecutive Business Days (other than for the purposes of overhaul, repair, modification or maintenance in accordance with this Agreement), the Lessee shall:

(a) procure that the Aircraft, Engines and Aircraft Documents are stored in accordance with the AMM and the specifications and procedures and instructions and recommendations of the Engine Manufacturer (which shall include, but not be limited to, Aircraft and Engines storage and preservation, ordering and installation of, or compliance with, mandatory modifications and Airworthiness Directives as required by the Aviation Authority and maintained in accordance with the Maintenance Program);
(b) notify the Lessor and give the Lessor details of the manner and location in which the Aircraft is to be stored; and
(c) provide that all scanned records of prolonged parking or active storage maintenance and de-preservation records during such storage period.

13.6 Ownership and security

Throughout the Lease Period, the Lessee shall:

(a) not at any time represent or hold out the Lessor, the Owner Participant, the Lease Manager or any Finance Party as carrying goods or passengers on the Aircraft, or as having any operational interest in the Aircraft;
(b) not at any time represent itself as being the agent of the Lessor, the Owner Participant, the Lease Manager or any Finance Party for any purpose, unless expressly permitted to do so by the Lessor under this Agreement;
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(c) not:

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dispose (whether by way of sale, lease, assignment, the grant of any Security or otherwise) of the Aircraft Assets (other than as permitted by the Relevant Documents); or

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permit any Security to exist over the Aircraft Assets (other than Permitted Liens),

or attempt to hold itself out as having any power to or permit any person to do any of the above;

(d) promptly pay and discharge when due, or make adequate provision (by way of security or otherwise) for, all debts, claims, liabilities or obligations whatsoever (whether incurred by or imposed upon the Lessee or any other person) which may give rise to any Security (other than Permitted Liens);
(e) not do, omit to do, or permit to be done anything which might jeopardise the rights, title or interest of the Lessor or any Finance Party in the Aircraft;
(f) not pledge the credit of the Lessor for any maintenance, service, repairs, overhauls of, modifications to, or changes or alterations in, the Aircraft or otherwise; and
(g) affix and not remove or cover up (or permit to be removed or covered up):

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in a prominent position on the flight deck or cockpit of the Airframe and on each Engine, a fireproof plate of not less than 10cm x 7cm having the following text:

“Notice of Ownership

This [Aircraft/Engine] is owned by BANK OF UTAH, not in its individual capacity but solely as Owner Trustee, is leased to [AIRLINE] [and mortgaged in favour of [*]]”** ; and

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promptly after being notified by the Lessor of any change in the text set out in paragraph (g)(i) above, replacement fireproof plates of the same dimensions and in the same places as the plates referred to in paragraph (g)(i) above having the text from time to time notified by the Lessor to the Lessee.

14. OPERATIONAL UNDERTAKINGS ERROR! BOOKMARK NOT DEFINED.

Throughout the Lease Period, the Lessee shall comply with the following provisions of this Clause 14.

14.1 Possession of the Aircraft

Subject to Clauses 14.2 ( Wet-leasing ), 14.3 ( Sub-leasing ) and 20 ( Requisition for hire ), the Lessee shall keep the Aircraft in its own possession (other than for Overhaul, repair, Modification or maintenance in accordance with this Agreement).

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14.2 Wet Leasing

So long as no Event of Default has occurred and is continuing, the Lessee may wet lease (including any ACMI or damp lease (which for the avoidance of doubt shall mean a wet lease whereby the Lessee shall maintain flight control, but does not provide other cabin crew) the Aircraft with the Lessor’s prior written consent (such consent may only be withheld if such wet lease would cause the Trust Company to be in violation of regulations applicable to it), provided that such wet lease constitutes an arrangement whereby the Lessee agrees to furnish the Aircraft to a third party on terms pursuant to which:

(a) the Aircraft shall be under the operational control of the Lessee and operated solely by regular employees of the Lessee possessing all current certificates and licenses that are required by applicable regulations;
(b) the Aircraft shall continue to be covered by the Insurances;
(c) the Aircraft shall continue to be maintained in accordance with the Lessee’s Maintenance Programme;
(d) the Aircraft shall not be subject to any change in its State of Registration without the Lessor’s consent;
(e) such arrangement does not extend beyond the Expiry Date and is expressly subordinated to this Agreement and the rights of the Lessor and any Finance Parties; and
(f) if the Aircraft will be operated in a harsh environment (as defined by the Engine Manufacturer), Lessor may, acting in good faith, adjust the Supplemental Rent to reflect such change in operation.

14.3 Sub-leasing

(a) The Lessee may not enter into or agree to enter into any lease of the Aircraft other than:

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on the wet leasing terms described in Clause 14.2; or

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so long as no Event of Default has occurred and is continuing and with Lessor’s prior written consent, to a Permitted Sublessee pursuant to a Permitted Sublease.
(b) Each Permitted Sublease shall:

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contain provisions relating to the insurance, maintenance and operation of the Aircraft and to the transfer of title to Engines and Parts that are consistent with the terms of this Agreement;

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not extend (or be capable of being extended at the option of the Permitted Sublessee, as the case may be) beyond the Expiry Date;

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prohibit any further subleasing by the Permitted Sublessee; and

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not in any way discharge, diminish or conflict with any of the Lessor’s or any Finance Party’s right, title and interest in the Aircraft Assets.
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(c) If the proposed Permitted Sublease would involve a change in the State of Registration, the Permitted Sublease shall not commence unless the Lessee has provided the Lessor and the Finance Parties with a legal opinion in form and substance approved by the Lessor (the Lessor’s approval not to be unreasonably withheld or delayed) as to the matters referred to in paragraph (b) above.
(d) The Lessee shall notify the Lessor of its intention to sub-lease the Aircraft and the identity of any proposed Permitted Sublessee at least sixty (60) days before the relevant Permitted Sublease commences and shall provide the Lessor with a copy of the Permitted Sublease promptly following execution.
(e) The Lessee shall not permit any amendment of any Permitted Sublease which would result in any breach of paragraph (b) above and shall, before amending any Permitted Sublease in any material respect, provide the Lessor with a copy of the relevant amendment.
(f) The Lessee shall pay to the Lessor all costs and expenses (including legal and other costs) incurred by it or any Finance Party in connection with the consideration of any proposed sublease of the Aircraft or any change in the registration of the Aircraft contemplated by this Clause 14.3 (whether or not such sublease or change in registration is actually effected).
(g) The rights of the Permitted Sublessee under a Permitted Sublease shall be no greater than the rights of the Lessee under this Agreement and shall be expressly subject and subordinate to this Agreement and the other Relevant Documents, and to the rights, title and interests of the Lessor and the Finance Parties, and the Permitted Sublessee shall, at least one (1) Business Day prior to the execution of the Permitted Sublease, execute and deliver to the Lessor and the Finance Parties an acknowledgement of such rights in form and substance reasonably satisfactory to the Lessor, confirming that the Permitted Sublessee’s right to possession of the Aircraft under the Permitted Sublease will terminate immediately upon the termination of this Agreement and that it will return the Aircraft to the Lessor upon notification from the Lessor that an Event of Default has occurred and that the Lessor has, as a result thereof, terminated the Lessee’s right to possession of the Aircraft under this Agreement.
(h) The Lessee shall, at the Lessee’s cost and expense, provide to each of the Lessor and any Finance Party an opinion of counsel from the Lessee’s Home Jurisdiction, the Permitted Sublessee’s Home Jurisdiction and the State of Registration in form and substance reasonably acceptable to the Lessor and such Finance Parties to the effect that the rights of the Lessor and the Finance Parties in and to the Aircraft, the Relevant Documents and any Security created over the Aircraft Assets pursuant to the Finance Documents shall be protected and otherwise unaffected by the entry into and performance of the Permitted Sublease or any consequent change in the State of Registration (if approved by the Lessor) and that such Permitted Sublease will not prejudice the Lessor’s rights to repossess the Aircraft in the event of an Event of Default or an event of default under the Permitted Sublease.
(i) The Lessee shall procure that all necessary translations and filings in respect of any Permitted Sublease are made promptly in accordance with all applicable laws in any applicable jurisdiction.
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(j) The Aircraft shall continue to be insured in accordance with the terms of this Agreement and the Lessee shall procure that the Lessor is provided with an insurance certificate and broker’s letter of undertaking in form and substance satisfactory to the Lessor complying with the requirements of Clause 18 and Schedule 6 ( Insurances ).
(k) The Permitted Sublessee shall have a valid air operator’s certificate and any other relevant licences required for the operation of the same type of aircraft as the Aircraft.
(l) If necessary pursuant to applicable law, the Lessee shall execute and/or shall procure that the Permitted Sublessee execute and deliver financing statements or similar documents in the form prescribed by applicable law in order to the right, title or interest of the Lessor and the Finance Parties in the Aircraft Assets.
(m) The Lessee shall procure that the Permitted Sublessee provides the Lessor with an Aviation Authority Letter and a letter in form and substance reasonably satisfactory to the Lessor, addressed to Eurocontrol and each other relevant air traffic control authority, authorising the addressee to issue to the Lessor, upon the Lessor’s request from time to time, a statement of account of all sums due from the Permitted Sublessee to the relevant authority in respect of all aircraft (including, without limitation, the Aircraft) operated by the Permitted Sublessee.
(n) The Lessee shall execute an assignment of its rights and interests under the Permitted Sublease in favour of the Lessor or any Finance Party as security for its obligations under this Agreement and the Relevant Documents and shall procure that the Permitted Sublessee execute an acknowledgment in a form satisfactory to the Lessor.
(o) The Lessee shall procure that the Lessor is provided with a copy of the Permitted Sublessee’s maintenance programme for the Aircraft
(p) The Lessee shall at all times remain primarily liable for the performance of its obligations under this Agreement, provided that if any of the Lessee’s obligations under this Agreement is performed instead by a Permitted Sublessee under a Permitted Sublease, the Lessee shall be deemed to have discharged that obligation to the extent that it has been performed by that Permitted Sublessee.
(q) The Lessee shall provide the Lessor with evidence that all import and export Taxes and customs duties that may be required as a result of the change in the State of Registration or Habitual Base, have been paid as soon as possible following such change.
(r) If the Aircraft will be operated in a harsh environment (as defined by the Engine Manufacturer), Lessor may, acting in good faith, adjust the Supplemental Rent to reflect such change in operation.
(s) The Lessee shall procure that the Permitted Sublessee execute and deliver to the Aviation Authority an IDERA.
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14.4 Operation and use

(a) The Lessee shall ensure that the Aircraft is at all times used, operated and controlled in accordance with the requirements of the Aviation Authority (including certificate of airworthiness, licence or registration relating to the Aircraft) and the laws of each other jurisdiction to which the Lessee, the Operator and the Aircraft are subject (including the laws of any country to, from, in or over which the Aircraft may be flown).
(b) The Lessee shall not permit the Aircraft to be used:

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for any illegal purpose or in any illegal manner;

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for any purpose for which it is not designed or reasonably suited;

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outside the tolerances and limitations for which it was designed;

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contrary to any Manufacturer’s operating manuals or instructions;

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in any manner which might invalidate any Manufacturer Warranty;

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for the purpose of training, qualifying or re-confirming the status of cockpit personnel except for the benefit of the Lessee’s cockpit personnel, and then only if the use of the Aircraft for such purpose is not disproportionate to the use for such purpose of other aircraft of the same type operated by the Lessee;

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in any manner which would conflict with any prohibition, sanction or restriction issued or imposed by the United Nations Security Council, the European Union, the United States of America, Canada and any agency of the Canadian government or the United Kingdom; or,

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for any purpose or in any manner inconsistent with or not fully covered by the Insurances or outside any geographical limit imposed by the Insurances.
(c) The Lessee shall only permit the Aircraft to be used in commercial operations and shall not permit the Aircraft to be used for any military purpose unless:

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the Aircraft is requisitioned for hire or title in a manner which is beyond the control of the Lessee; or

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pursuant to a commercial charter of the Aircraft for the purpose of transporting military personnel and associated equipment, provided that the same remains within the scope of the Insurances.
(d) The Lessee shall not permit the Aircraft to be used to carry:

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whole animals living or dead, except in its cargo compartments according to IATA 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;

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acids, toxic chemicals, other corrosive materials, explosives, nuclear fuels, wastes, or any nuclear assemblies or components, except as
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permitted for passenger aircraft under the “Restriction of Goods” schedule issued by IATA from time to time and provided that all the requirements for packaging are fulfilled; or

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any other goods, materials or items of cargo which could reasonably be expected to cause damage to the Aircraft.
(e) The Lessee shall operate the Aircraft for international and commercial purposes from a Habitual Base until Redelivery.
(f) The Lessee shall not operate, maintain, modify, insure or deal with the Aircraft or any Engine or Part in a manner which discriminates against the Aircraft or such Engine or Part, when compared with the manner in which the Lessee operates, maintains, modifies, insures or deals with other similar aircraft, engines or parts in the Lessee’s fleet.
(g) The Lessee shall not cause or permit the Aircraft to proceed to, or remain at, any location in an Excluded Country.
(h) The Lessee shall not without the prior written consent of the Lessor change the State of Registration. If the Lessor consents to a change in the State of Registration, the Lessee shall bear all associated costs in respect of any such re-registration (including the cost of complying with any legal formalities in respect of the Relevant Documents and obtaining a legal option from counsel in the proposed state of registration in respect of such formalities).

14.5 Aircraft Documents

(a) The Lessee shall procure that:

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all revisions issued by the Manufacturer and the Engine Manufacturer during the Lease Period are inserted in the Aircraft Documents; and

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accurate, complete and current records are kept of:
(A) all flights made by the Airframe;
(B) all Flight Hours and Flight Cycles completed by each Engine, the APU and each Landing Gear; and
(C) all inspection, maintenance, Modification and repairs carried out to the Aircraft,

together with all other “approved data” and “accepted data” required by the FAA or EASA and by the Aviation Authority.

(b) The Lessee shall procure that the Aircraft Documents referred to in paragraph (a) above shall:

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be written in English;

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be kept up to date and maintained in accordance with the rules, regulations and requirements of the Aviation Authority, the FAA, the Manufacturer, the Engine Manufacturer and any applicable OEM;
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contain historical records / dirty fingerprints paperwork of all Aircraft maintenance checks and of all Engine, Landing Gear and APU shop visits performed during the Lease Period and permit back to birth traceability of all Parts;

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be kept by the Operator in its possession at a location approved by the Lessor and the Aviation Authority in fire-proof storage containers in an area free from any risk of flooding, and the Lessee shall not permit any other person (other than the Aviation Authority (for the purposes of inspection) or an Approved Maintenance Performer) to have possession of or control over them without the Lessor’s prior written consent;

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form part of the Technical Records and the Aircraft Documents; and

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be the property of the Lessor subject to this Agreement and to any relevant Finance Document and no original Aircraft Documents shall be destroyed without the written permission of the Lessor.
(c) The Lessee shall permit the Lessor or any authorised representative of the Lessor to examine the Technical Records upon giving reasonable notice.
(d) If Lessee uses a third party for storage of the Technical Records and/or Aircraft Documents (after obtaining Lessor’s consent pursuant to subclause (b)(iv) above), Lessee shall furnish a letter to Lessor permitting Lessor access to the Technical Records and/or Aircraft Documents, and such letter shall include such third party’s consent to providing Lessor with such access.

14.6 Flight Charges

(a) The Lessee shall:
(i) ensure that all Flight Charges, are paid promptly when due;
(ii) indemnify the Lessor and each Finance Party in respect of all Flight Charges, which indemnity shall remain in full force following the termination of the Lease Period or Redelivery;
(iii) provide the Lessor with a list of the airports to which the Lessee operates the Aircraft or its other aircraft five (5) Business Days before the Delivery Date and promptly after any change to the airports listed; and
(iv) authorise the Lessor to obtain direct from each airport to which the Lessee operates a general statement of account from time to time in relation to the status of the Lessee’s payment of Flight Charges; and
(b) The Lessee hereby authorises the Lessor to obtain direct from each of the Aviation Authority, NAV Canada, Eurocontrol and/or any air navigation or airport authority (as applicable) a general statement of account from time to time in relation to the status of the Lessee’s payment of Flight Charges owed by it.
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15. MAINTENANCE AND REPAIR

15.1 General requirements

(a) At all times during the Lease Period, the Lessee, at its own expense, shall:

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ensure that the Aircraft is serviced, repaired, maintained, overhauled and tested by the Approved Maintenance Performer and, where applicable, stored, in each case in accordance with the Maintenance Programme and the requirements of the Aviation Authority and EASA or the FAA so as:
(A) to keep it in equivalent or better repair, operating condition, appearance and airworthiness as when it was delivered to the Lessee on the Delivery Date, fair wear and tear from normal flight operations excepted;
(B) to keep it in such operating condition as is necessary to enable the certificate of airworthiness of the Aircraft to be maintained in good standing at all times under all applicable laws; and
(C) not to discriminate adversely against it in comparison with the other aircraft in the Lessee’s fleet;

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provide the Lessor promptly following the Lessor’s request with a copy of any revisions to the version of the Maintenance Programme provided to the Lessor pursuant to Clause 4.1 ( Lessee’s Conditions Precedent );

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ensure that all repairs which are beyond the limitations of the Manufacturer’s or the Engine Manufacturer’s (as applicable) approved maintenance and repair manuals are performed in accordance with approved data from the OEM, FAA or FAA designee consisting of a Designated Engineering Representative (DER) or Authorized Representative (AU), or in the case of EASA, approved by Design Organization Approval (DOA);

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for all Structural Checks, repairs which require grounding of the Aircraft for more than two (2) days, all off-wing maintenance of the APU, Landing Gear or Engines, furnish to the Lessor a copy of the workscope at least (y) fifteen (15) Business Days prior to the initiation of such maintenance if such maintenance is scheduled or (z) seven (7) days prior to commencement of such maintenance if such maintenance is unscheduled, and within thirty (30) days following release-toservice, Lessee shall furnish to the Lessor a complete details of the work performed, which may be in the form of a shop visit report, and all dirty finger print shop work cards and material data sheets covering all work performed;

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ensure that no Engine will remain in an unserviceable condition for more than six (6) months;

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ensure that any Airworthiness Directive or “alert” Service Bulletin that has been issued by the Aviation Authority, or the Manufacturer or Engine Manufacturer which affects the Aircraft and which has a
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compliance date during, or within one hundred and eighty (180) days after, the Lease Period (each such Airworthiness Directive or Service Bulletin, a “ Mandatory Action ”) is duly completed on a timely basis and for the sake of clarity, Lessee may not implement any AMOCs (Alternative means of compliance) without Lessor’s prior written approval.

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ensure incorporation in the Aircraft of all other service bulletins of Manufacturer, the Engine Manufacturer and other vendors which Lessee schedules to adopt within the Lease Period for the rest of its Airbus A320-200 aircraft fleet. It is the intent of the parties that the Aircraft will not be discriminated from the rest of Lessee’s fleet in service bulletin compliance (including method of compliance) or other maintenance matters;

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notify the Lessor when it has completed any Mandatory Action;

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except with Lessor’s prior written consent, under no circumstances install or permit to be installed on the Aircraft (including, without limitation, the Landing Gear, Engines, and the APU) any Parts that are not OEM Parts (except that OEM approved PMA parts may be accepted), or if repaired parts, any Parts that are not OEM Approved Repaired parts; and

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not permit any repairs that are not OEM Approved Repairs.

15.2 Temporary removal and replacement of Engines and Parts

(a) Subject to paragraph (b) below, the Lessee may not install or permit to be installed any engine or part on the Aircraft other than an Engine, an Associated Engine, a Part or an Associated Part without the prior written consent of the Lessor.
(b) The Lessee may remove or permit the removal of any Engine or Part from the Aircraft and install or permit the installation on the Aircraft of an engine (a “ Temporary Engine ”) or part (a “ Temporary Part ”) owned or operated by the Lessee (which is not an Engine, an Associated Engine, a Part or an Associated Part but which is of the same manufacture and model as the removed Engine or Part or an improved or advanced version) without the prior written consent of the Lessor, provided that:

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no Default has occurred and is continuing;

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in the case of a Temporary Engine:
(A) it informs the Lessor as soon as practicable after the substitution is made;
(B) it ensures that the Insurers waive any salvage rights that they may have with respect to the removed Engine for the duration of the substitution;

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it would have resulted in an unreasonable disruption of the operation of the Aircraft to have grounded the Aircraft until an Engine, an
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Associated Engine, a Part or an Associated Part became available for installation on the Aircraft; and

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as soon as practicable after installation of the Temporary Engine or Temporary Part on the Aircraft (and no later than the Expiry Date), the Lessee procures that it is removed and that an Engine, an Associated Engine, a Part or an Associated Part or (subject to Clause 15.4 ( Permanent replacement of Engines and Parts )) a Replacement Engine or a Replacement Part is installed on the Aircraft.
(c) The Lessee shall ensure that title to any Engine or Part removed from the Aircraft shall remain vested in the Lessor at all times and shall not take any steps which might jeopardise the Lessor’s or any Finance Party’s rights in that Engine or Part or lead any third party to believe that the Engine or Part is the property of any person other than the Lessor.
(d) The Lessee shall ensure that any Engine or Part which is removed from the Aircraft and which is not installed on an Associated Aircraft is:

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subject to Clause 15.3 ( Pooling of Engines ), safely stored, repaired or maintained in accordance with this Agreement; and

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subject to separate insurance cover while removed in accordance with Clause 18 ( Insurances ) and (in the case of an Engine) the Lessee shall notify the Insurers promptly of its removal and comply with any instructions of the Insurers in relation to it.

15.3 Pooling of Engines

The Lessee shall not install or permit to be installed any Engine on any aircraft other than the Aircraft without the prior written consent of the Lessor.

15.4 Permanent replacement of Engines and Parts

(a) The Lessee may install or permit the installation of a Replacement Engine or Replacement Part on the Aircraft in place of an Engine or Part:

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(in the case of a Replacement Engine) if:
(A) no Default has occurred and is continuing and the Engine being replaced has become lost, stolen, destroyed, seized, confiscated, damaged beyond economic repair or rendered permanently unfit for use; or
(B) the Lessee has obtained the Lessor’s prior written consent;

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unless doing so would cause the Lessor or any Finance Party to incur (or to risk incurring) Losses or Taxes which would not be incurred or risked if an Engine or Part were installed on the Airframe in place of the Replacement Engine or Replacement Part (unless the Lessee indemnifies the Lessor and/or that Finance Party to the Lessor’s satisfaction against those Losses or Taxes);

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if the Lessee procures at its expense that title to the Replacement Engine or Replacement Part (and any Manufacturer Warranties
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relating to it) vests in the Lessor free of any Security and becomes subject to this Agreement and, where applicable, any Relevant Document and any relevant Finance Document (at which time the Replacement Engine or Replacement Part shall become an Engine or Part);

(iii) if the Lessee procures that all steps are taken that may be required by law or reasonably requested by the Lessor to establish, maintain and protect the right, title and interest of the Lessor and the Finance Parties in and to the Replacement Engine or Replacement Part; and
(iv) (in the case of a Replacement Engine) if requested by the Lessor, if the Lessor receives a legal opinion in form and substance satisfactory to it as to the matters referred to in this paragraph (a).
(b) When the matters referred to in paragraph (a) above have been completed, the Lessor shall procure (at the cost of the Lessee) that title to the Engine or Part being replaced by the Replacement Engine or Replacement Part (and to any Manufacturer Warranties relating to that Engine or Part, so far as may be practicable) vests in the Lessee (or such person as the Lessee may direct) according to any applicable law free and clear of any Lessor’s Security but otherwise without any warranty by any Lessor Party or any Finance Party and ceases to be an “Engine” or “Part” for the purposes of this Agreement.
(c) The Lessee shall procure that any Part which may from time to time become worn out, lost, stolen, time-expired, destroyed, seized, confiscated, damaged beyond repair or rendered permanently unfit for use for any reason whatsoever is promptly replaced with a Replacement Part in accordance with this Clause 15.4 at its own expense.
(d) In respect of the replacement of any Part that is installed in an Engine, the Replacement Part must be manufactured or approved by the OEM and must comply with Clause 15.1(a)(ix) and 15.1(a)(x) ( General requirements ).
(e) At the same time as title to the Replacement Engine or Replacement Part is vested in Lessor, the amounts held in the Notional Accounts held by Lessor and attributable to the Engine or Part being replaced shall be adjusted (upwards or downwards) to reflect the status of the Replacement Engine or Replacement Part. Any upwards adjustment will be paid by Lessee within ten (10) Business Days of receipt of Lessor’s invoice. Any downwards adjustment, provided no Default has occurred which is continuing, will be made by Lessor in the form of a credit against future Supplemental Rent due from Lessee.

15.5 Fleet Aircraft

(a) The Lessee may install an Engine on another Airbus A320-200 aircraft in the Lessee’s fleet (“ Fleet Aircraft ”) if:

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the requirements of paragraph (b) below are met;

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the Lessee has operational control over the Fleet Aircraft;

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the Engine is removed from the Fleet Aircraft as soon as practicable but not later than the Expiry Date unless permanently replaced in accordance with this Agreement;
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any lease or other agreement under which the Lessee from time to time operates the Fleet Aircraft contains provisions that are consistent with the maintenance of the interests of the Lessor and any Finance Parties in the Engine; and

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the Lessee promptly notifies the Lessor.
(b) Any installation on a Fleet Aircraft under paragraph (a) above is subject to the further conditions that:

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no Default is continuing;

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the arrangements do not contemplate, require or result in transfer of title to the Engine;

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the arrangements do not contemplate or cause a re-registration of the Engine;

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the Lessor retains the ownership of the Engine concerned unless permanently replaced in accordance with this Agreement;

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the Lessee maintains separate insurance cover in accordance with Clause 18 ( Insurances ) in respect of the Engine while it is removed from the Airframe (and, if required by the Lessor, the Lessee furnishes to the Lessor waivers or acknowledgements by the insurers of the Fleet Aircraft on which the Engine is installed);

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

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the Lessee procures that either (x) any owner or lessor of, or person having a Security on, a Fleet Aircraft on which an Engine is installed acknowledges in writing to the Lessor, in form and substance satisfactory to the Lessor, acting reasonably, that it respects the interests of the Lessor in the Engine and it will not seek to exercise any rights whatsoever in relation to the Engine or (y) the terms of any lease, agreement or Security to which such Fleet Aircraft is subject contain an express undertaking for the benefit of the Lessor (which can be relied upon by the Lessor) that neither the relevant lessor, owner, seller or the holder of any Security under such lease, agreement or Security nor their successors or assigns will acquire, as against the Lessor, any right, title or interest in an Engine as a result of such Engine being installed on such Fleet Aircraft. The Lessor shall acknowledge in favour of such person that they respect the interests of such person in relation to such Fleet Aircraft on which an Engine may be installed.
(c) If a transfer of title to an Engine to a third party occurs under any such installation, this is deemed to be a Total Loss of such Engine but if the Lessee forthwith provides a Replacement Engine in accordance with Clause 15.4 ( Permanent replacement of Engines and Parts ) it does not constitute a breach of this Agreement.

15.6 Permitted Modifications

(a) The Lessee may make a Modification to the Aircraft provided that:
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it is made at no cost to the Lessor;

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it does not diminish or impair the marketability, value, utility or airworthiness of the Aircraft or result in any change in the category or status of the Aircraft for the purpose of any rules or regulations of the State of Registration or of the Aviation Authority;

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it would not invalidate any Manufacturer Warranty or support or result in the breach of any rules or regulations of the Aviation Authority;

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no such modification, alteration, addition or removal will result in deviation from the Aircraft’s original type, design or configuration;

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if it is reasonably estimated to cost over $250,000, the Lessee has obtained the Lessor’s prior written consent (such consent not to be unreasonably withheld or delayed);

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unless informed by the Lessor in writing before Redelivery that it need not do so, or unless the Modification is required to comply with a Mandatory Action, the Lessee procures that the Aircraft is returned to the Lessor on Redelivery in the original configuration that it was in on the Delivery Date;

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Lessor may review Lessee's proposed designs, plans, engineering drawings and diagrams, and flight and maintenance manual revisions for any proposed Modification. If requested by Lessor, Lessee will furnish Lessor (at Lessee’s expense) with such documents in final form and any other documents required by Law, as a result of such Modification. All Modifications incorporated on the Aircraft will be properly documented in the Aircraft Documentation; and

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no Modification will be made by Lessee if an Event of Default exists and is continuing hereunder.
(b) Title to any Modification Part shall, upon installation in or addition to the Aircraft, vest automatically in the Lessor free and clear of all Security and shall become subject to this Agreement and, where applicable, to any Relevant Document and any relevant Security Document and shall become a Part for the purposes of this Agreement.
(c) The Lessee may, upon giving to the Lessor not less than six (6) months’ prior written notice, remove a Modification Part or permit a Modification Part to be removed from the Aircraft before Redelivery if at the time of removal:

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either:
(A) that Modification Part is replaced by a Part or by a Replacement Part in accordance with Clause 15.4 ( Permanent replacement of Engines and Parts ); or
(B) that Modification Part is in addition to and not in replacement of or substitution for any Part previously installed on or attached to (or required to be installed on or attached to) the Aircraft;
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that Modification Part is not or would not be required to be installed on the Aircraft to comply with any Mandatory Action, including any Mandatory Action published during the Lease Period having a final compliance date during, or within one hundred and eighty (180) days after, the Lease Period;

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that Modification Part can be removed from the Aircraft without diminishing or impairing the marketability, value, utility or airworthiness which the Aircraft would have had if the Modification had not been made; and

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no Default has occurred and is continuing.
(d) Title to any Modification Part removed from the Aircraft in accordance with paragraph (b) of Clause 15.4 ( Permanent replacement of Engines and Parts ) shall upon removal vest in the Lessee or such person as the Lessee may direct, free of any Lessor’s Security but otherwise without any warranty by the Lessor or any Finance Party and that Replacement Part shall cease to be a Part for the purposes of this Agreement.
(e) During the Lease Period, the Lessee shall from time to time request, and shall install on the Aircraft or retain, all Service Bulletin kits relating to the Aircraft which are available to the Lessee at no cost other than shipping and handling costs.
(f) All FOC kits that have been supplied by the Manufacturer shall be returned with the Aircraft if not installed at time of Redelivery and shall be the property of the Lessor.
(g) During the Lease Period, if the Engine Manufacturer incorporates improvements into its CFM56-5B series engines, Lessee shall take reasonable efforts to procure that such improvements are incorporated into the Engines at such CFM56-5B Engine Performance Restoration shop visit as determined by the Engine Manufacturer.

16. TITLE AND REGISTRATION

16.1 Registration of Aircraft

(a) The Lessee shall do all things necessary or required by the Lessor and/or the Aviation Authority to:

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register and maintain the registration of the Aircraft Assets in the State of Registration including, without limitation, by filing the Short-Form Lease (and any amendments thereto) with TCCA. In the event of any conflict between the terms of the Short-Form Lease and this Agreement, this Agreement shall govern; and

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protect the right, title and interest of the Lessor and the Finance Parties in and to the Aircraft Assets against the claims of any other persons in the Lessee’s Home Jurisdiction, the Habitual Base, the State of Registration and in any jurisdiction in which the Lessee or any Permitted Sublessee may operate the Aircraft.
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(b) Title to the Aircraft shall remain vested in the Lessor subject to Lessor’s Security and any Permitted Lien.
(c) Without limiting the generality of the foregoing, to the extent permitted by applicable law, the Lessee will cause all Security Filings to be kept, filed or recorded and, at the reasonable request of the Lessor, the Lessee at Lessor’s cost and expense will cause all Security Filings thereafter to be refiled, rerecorded or renewed, as may be necessary, to maintain, protect and perfect the interests of Lessor as owner of the Aircraft and lessor under this Agreement.

16.2 International conventions

The Lessee shall do, or cause to be done, any act or thing which the Lessor deems necessary to ensure that the Lessor and the Finance Parties shall have the full benefit of the Geneva Convention and the Cape Town Convention, including any matters connected with the registration, perfection, preservation and/or enhancement of a Registrable Interest or any other interest of the Lessor Parties or the Finance Parties constituted by the Relevant Documents at the time.

(a) It is the intention of the parties that Lessor shall be entitled to the benefits of Cape Town Alternative A and all other remedies under the Cape Town Convention with respect to the right to take possession of the Aircraft, Airframe and Engines in the event of an Insolvency Proceeding in which Lessee is a debtor.
(b) Lessee agrees for the benefit of Lessor that Lessee:

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shall not, without the written consent of Lessor register any (x) International Interest with the International Registry with respect to the Aircraft and/or any Engine or (y) irrevocable deregistration and export request authorisation (other than the IDERA in favour of the Lessor) with the Aviation Authority or any other applicable government entity; and

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shall from time to time, do or cause to be done, at Lessor’s reasonable request and at Lessor’s cost, any and all acts and things which may be required or desirable to ensure that the international interests created pursuant to this Agreement are registered at the International Registry.

17. MANUFACTURER WARRANTIES

17.1 Benefit of warranties

(a) The Lessee will procure that the benefit of any Manufacturer Warranty that vested in the Lessee during the Lease Period shall vest in the Lessor upon termination or expiry of the Lease Period.

17.2 Right to enforce warranties

(a) During the Lease Period, the Lessee or its nominee may take, and the Lessor will provide all reasonable assistance to enable the Lessee or its nominee to take, any action that it reasonably considers fit, at the Lessee’s cost, to enforce any Manufacturer Warranty, provided that:

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no action of the Lessee or its nominee may jeopardise the rights of the Lessor or the Finance Parties in relation to that warranty;
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any action of the Lessee or its nominee is taken at no cost to the Lessor or the Finance Parties; and

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the Lessee ensures that any sums paid by the Manufacturer or Engine Manufacturer (as the case may be) and which are not in respect of compensation for loss of use of the Aircraft are applied by the Lessee towards the cost of rectifying the defect in respect of which the relevant action was taken and any excess shall be paid to Lessor.
(b) If an Event of Default has occurred and is continuing, the Lessee’s authority to enforce any Manufacturer Warranty shall automatically terminate and the Lessor may immediately:

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cause the proceeds of enforcement of any Manufacturer Warranty (“ Warranty Proceeds ”) that have not yet been paid by the Manufacturer or the Engine Manufacturer (as the case may be) to the Lessee to be paid instead to the Lessor; and

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recover from the Lessee any Warranty Proceeds previously paid to the Lessee which relate to any defect in the Aircraft, any Engine or any Part which has not been fully and completely rectified by the Lessee (unless the Lessee is already contractually obliged to pay an Approved Maintenance Performer for that rectification) and which are not related to the loss of use of the Aircraft.
(c) The Lessee agrees to indemnify the Lessor against any Losses that the Lessor or the Finance Parties may incur as a result of the Lessee taking any action under paragraph (a) above.

18. INSURANCES

18.1 Obligation to insure

The Lessee shall, at its own expense, procure that the Insurances are maintained in full force and effect with respect to the Aircraft at all times during the Lease Period and until Redelivery in form and substance acceptable to the Lessor.

18.2 Insurers, Reinsurers and Brokers

(a) The Insurances shall be effected with Insurers of recognised standing in the international aviation insurance markets who normally participate in aviation insurances and who are approved by the Lessor.
(b) If the Insurances are not effected in the leading international insurance markets, the Lessee shall, if required by the Lessor, procure that they are reinsured for not less than ninety-five per cent. (95%) of the risks insured with reinsurers (“ Reinsurers ”) in the leading international insurance markets who are of recognised standing and who meet the broker’s acceptable insurer criteria.
(c) The Insurances shall be effected through a broker of recognised international standing approved by the Lessor.
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18.3 Lessor’s insurance requirements

(a) The Insurances shall comply with the requirements of the Lessor as specified in this Clause 18 and in Schedule 6 ( Insurances )
(b) If at any time the Lessor considers that there has been (or is reasonably likely to be) an Insurance Change and as a consequence of that Insurance Change the Insurances are, or will be, insufficient to protect the interests of the Lessor and the Finance Parties, taking into account:

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the general availability of insurance in the market; and

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generally adopted practice in the aviation industry,
(c) the Lessor may notify the Lessee of its need to change its insurance requirements and the Lessor and the Lessee shall consult for at least one (1) month with a view to agreeing alternative insurance requirements.
(d) If the Lessee and the Lessor agree upon changes to the Insurances as a result of the consultation referred to in paragraph (b) above, the Lessee shall promptly amend the Insurances in order to give effect to those changes.
(e) If an Insurance Change affects the level of coverage in respect of third party liability risks, pending agreement on the terms of any amendments to the Lessor’s insurance requirements, the Lessor may, by notice in writing to the Lessee, require that the Aircraft be grounded at the Habitual Base (or such other location as the Lessor and the Lessee may agree). At any time whilst the Aircraft is grounded, the Lessee shall continue to procure that the Aircraft is insured in accordance with this Clause 18 and Schedule 6 ( Insurances ), save that the level and coverage of third party liability risks may be on such terms reasonably available to the Lessee at such time in the international insurance market.
(f) If the Lessor and the Lessee are unable to agree the terms of any change to the Lessor’s insurance requirements following the consultation referred to in paragraph (b) above, then at any time thereafter, the Lessor shall be entitled by notice in writing to the Lessee (an “ Insurance Change Termination Notice ”):

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to terminate the Lease Period on the Insurance Change Termination Date; and

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to recover from the Lessee the amounts referred to in Clause 24.4 ( Termination payments following Delivery ) on the Insurance Change Termination Date.

18.4 Insurance covenants

The Lessee shall:

(a) ensure that all applicable legal requirements relating to the insurance of the Aircraft which are from time to time imposed by the laws of the State of Registration or any country to, from or over which the Aircraft may be flown are complied with;
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(b) will include and insure (to the extent of the risks covered by the policies) the indemnity provisions of Clause 10.3 and Lessee will maintain such insurance of the indemnities for a minimum of two (2) years following the end of the Lease Period;
(c) if Lessee installs an engine not owned by Lessor (or Owner) on the Aircraft, Lessee’s hull insurance on the Aircraft will automatically increase to such higher amount as is necessary in order to satisfy both Lessor’s requirement to receive the Agreed Value in the event of a Total Loss and the amount required by the third party engine owner;
(d) ensure Lessor and the other additional insureds will be covered under Lessee’s legal liability insurance for death or injury to Lessee’s employees, pilots and crew;
(e) ensure that the terms and conditions of the Insurances are complied with and shall not do or agree to any act or omission which:

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invalidates or may invalidate the Insurances;

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renders or may render void or voidable the whole or any part of any of the Insurances; or

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brings any particular liability within the scope of an exclusion or exception to the Insurances;
(d) notify the Lessor immediately of any breach of this Clause 18.4 and provide the Lessor with full details of the steps that it is taking or proposes to take to remedy that breach;
(e) not, without the prior written approval of the Lessor, permit any insurance or reinsurance cover to be taken out in respect of the Aircraft other than as required under this Agreement;
(f) on request provide the Lessor with:

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copies of documents evidencing the Insurances;

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evidence that the insurance premiums have been paid in accordance with the terms of the relevant insurance policy; and

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any other insurance related information or assistance in respect of the Insurances that the Lessor may reasonably require;
(g) not make or permit any material modification or alteration to the Insurances which is adverse to the interests of any of the Indemnitees;
(h) commence renewal procedures at least thirty (30) days before the expiry of any of the Insurances (the “ Renewal Date ”) and provide to the Lessor:

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a written status report of the renewal negotiations fourteen (14) days before the Renewal Date;

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written confirmation that the Insurances have been renewed on or before the Renewal Date; and
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certificates of insurance (and where appropriate certificates of reinsurance) and brokers’ (including any reinsurance brokers’) letters of undertaking in form and substance reasonably satisfactory to the Lessor detailing the coverage of the Insurances and confirming the Insurers’ (including any Reinsurers’) agreement to the insurance requirements of this Agreement within seven (7) days after each Renewal Date; and
(i) be responsible for any deductible under the Insurances.

18.5 Failure to insure

(a) If the Lessee fails to procure that the Insurances are maintained as required by this Agreement, the Lessor may:

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at any time while that failure is continuing, require the Aircraft to remain at, or to proceed to and remain at, any airport designated by the Lessor until the failure is remedied or change addressed to its satisfaction;

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pay the premiums due or effect and maintain insurances satisfactory to it; and

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otherwise remedy that failure in any manner that it considers appropriate (including, without limitation, by effecting an “owner’s interest” policy),

in each case without prejudice to its right to treat that failure as an Event of Default.

(b) The Lessee shall immediately reimburse the Lessor for any amounts paid by the Lessor under paragraph (a) above.

18.6 Settlement of claims and loss adjustment

(a) The Lessee shall not settle any claim arising under any of the Insurances (other than a claim under the Liability Insurances which does not relate to any Indemnitee) in excess of the Claims Limit (or its equivalent in another currency) without the prior written consent of the Lessor, which may not be unreasonably withheld or delayed.
(b) If the Insurances incorporate AVN67B, any Insurance Proceeds resulting from damage to the Aircraft not amounting to a Total Loss shall be paid direct to the relevant repairers unless otherwise agreed between the insured, the Insurers and the relevant Contract Parties (as defined in the schedule to AVN67B) in accordance with the provisions of AVN67B as the case may be.
(c) If the Insurances do not incorporate AVN67B, provided no Event of Default has occurred or is continuing, any Insurance Proceeds resulting from damage to the Aircraft not amounting to a Total Loss shall be paid:

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to the relevant repairers if the amount of the Loss is less than the Claims Limit; and
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to the Lessor or its assignee or, with the Lessor’s express authorisation (not to be unreasonably withheld or delayed), to the relevant repairers if the amount of the Loss is greater than the Claims Limit.
(d) All proceeds of Liability Insurances shall, if not paid by the Insurers directly to the relevant third party, be paid to the Lessor or its assignee to enable it either to satisfy the relevant liability or to reimburse itself or the Lessee after that liability has been satisfied.
(e) The proceeds of insurances in respect of a Total Loss up to the Agreed Value shall be paid to the Lessor or its assignee.
(f) Notwithstanding anything contained herein to the contrary, if an Event of Default has occurred and is continuing, all proceeds of insurances shall be paid to the Lessor or its assignee.

18.7 Continuance of liability cover

(a) The Lessee shall procure that Liability Insurances are maintained for the benefit of the Indemnitees until the earlier of:

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two (2) years; and

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the completion of a SC Check on the Aircraft,

following the end of the Lease Period.

(b) The Lessee’s obligation under paragraph (a) above shall continue even if the Lessee ceases to be the lessee or Operator of the Aircraft and/or if any of the Indemnitees ceases to have any interest in respect of the Aircraft during the period referred to in paragraph (a) above.

19. TOTAL LOSS

19.1 Total Loss before Delivery

(a) If a Total Loss of the Airframe occurs prior to Delivery, the Lessor shall notify the Lessee promptly in writing and upon receipt by the Lessee of a such notice:

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the obligations of the Lessor to lease the Aircraft to the Lessee and of the Lessee to take the Aircraft on lease from the Lessor shall terminate; and

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the Lessor and the Lessee shall have no further obligations to each other under this Agreement other than as expressly set out in this Agreement.

19.2 Total Loss during the Lease Period

(a) If the Airframe becomes a Total Loss during the Lease Period, the leasing of the Aircraft shall terminate on the Total Loss Date and the Lessee shall, on or before the Total Loss Payment Date pay or procure the payment to the Lessor of an amount (the “ Total Loss Amount ”) equal to the aggregate of:

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all arrears of Basic Rent and other amounts due but unpaid under this Agreement;
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the Agreed Value as at the Total Loss Date;

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an amount equal to the Basic Rent that would have been payable in relation to the period from (and including) the Total Loss Date to (and including) the Total Loss Payment Date; and

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all Losses incurred by the Lessor in connection with the Total Loss (including the cost of recovering Insurance Proceeds or Requisition Proceeds and of exercising or enforcing any of its rights under the Relevant Documents),

less an amount equal to (i) any Basic Rent already received by the Lessor with respect to the period after the Total Loss Payment Date, and (ii) any Total Loss Proceeds already received by the Loss Payee.

(b) The Lessee shall be obliged to pay the Total Loss Amount in the circumstances contemplated by paragraph (a) above, regardless of:

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whether the Aircraft was insured or any amounts are recoverable under the Insurances;

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whether any amount payable under the Insurances is enough to cover the Total Loss Amount;

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the cause of the Total Loss; or

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whether any Requisition Proceeds are payable.
(c) The Lessor shall pay an amount equal to any Surplus Total Loss Proceeds to the Lessee, provided that:

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no Default has occurred or is continuing; and

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it shall, after paying that amount, be in the same position that it would have been in had it not received those Surplus Total Loss Proceeds.
(d) The Lessee shall do all things within its power that are necessary to assist the Lessor to collect or recover the Total Loss Proceeds and any other amounts that are due in respect of any loss or damage to the Aircraft.
(e) Provided the Lessor has received the Total Loss Amount in full and subject to any applicable rights of salvage of third parties, if the Airframe becomes a Total Loss and any part of the Aircraft has not become a Total Loss, the Lessor shall, at the Lessee’s cost, transfer title to that part of the Aircraft to the Lessee or its nominee on an “as is, where is” basis and without recourse to or warranty (other than as to the absence of any Lessor’s Security) from the Lessor or any Finance Party.

19.3 Total Loss of Engine or Part

(a) If an Engine (a “ lost Engine ”) or Part (a “ lost Part ”) becomes a Total Loss and the Airframe has not become a Total Loss, the Lessee shall:

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in the case of a lost Engine, APU or Landing Gear notify the Lessor promptly;
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replace the lost Engine or lost Part in accordance with paragraph (b) below; and

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continue to pay Basic Rent and all other sums due under this Agreement as if the Total Loss had not occurred.
(b) As soon as practicable after the Total Loss referred to in paragraph (a) above and in any event within one hundred and eighty (180) days of the occurrence thereof, the Lessee shall replace the lost Engine or lost Part at its own expense by ensuring that, in accordance with Clause 15.4:

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title to a Replacement Engine or Replacement Part (and any Manufacturer Warranties relating to that Replacement Engine or Replacement Part) vests in the Lessor free of any Security and becomes subject to this Agreement and to the Finance Documents;

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all steps are taken that may be required by law or reasonably requested by the Lessor to establish, maintain and protect the right, title and interest of the Lessor and the Finance Parties in and to that Replacement Engine or Replacement Part; and

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(in the case of a Replacement Engine) if requested by the Lessor, the Lessor receives a legal opinion in form and substance reasonably satisfactory to it as to the matters referred to in this paragraph (b),

following which the Replacement Engine or Replacement Part shall, as the case may be become an Engine or Part.

(c) If the Lessor receives any Total Loss Proceeds in relation to a lost Engine or lost Part, once the Lessee has performed its obligations under paragraphs (a) and (b) above, the Lessor shall pay to the Lessee or its nominee an amount equal to those Total Loss Proceeds received by the Lessor in relation to that lost Engine or lost Part, provided that:

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the Lessee has indemnified it in respect of any Losses and Taxes incurred by it in connection with that Total Loss and any other amounts then due and payable by the Lessee under the Relevant Documents; and

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it will, after paying that amount, be in the same position that it would have been in had it not received those Total Loss Proceeds.

20. REQUISITION FOR HIRE

20.1 Lessee’s obligations

(a) Subject to paragraph (b) below, if any Agency requisitions the Aircraft for hire during the Lease Period, the leasing of the Aircraft shall continue on the terms of this Agreement for the remainder of the Lease Period and the Lessee shall remain obliged to perform all its obligations under this Agreement other than those obligations that it is unable to perform as a consequence of the requisition for hire.
(b) If the Aircraft becomes a Total Loss during or as a consequence of its requisition for hire, the provisions of Clause 19 ( Total Loss ) shall apply.
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20.2 Entitlement to compensation

(a) The Lessee shall be entitled to retain any Requisition Proceeds in respect of the requisition for hire of the Aircraft which are paid to it or to the Lessor in relation to the Lease Period, provided that no Default shall have occurred and be continuing or that the Aircraft has not become a Total Loss.
(b) The Lessor shall be entitled to all Requisition Proceeds in respect of any change in the structure or condition of the Aircraft which are paid to it or to the Lessee in relation to any period of requisition for hire of the Aircraft but shall, unless a Default has occurred, pay to the Lessee an amount equal to the lesser of:

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the cost incurred by the Lessee in complying with its obligations under Clause 20.3 ( Restoration of condition ) and Clause 20.4 ( Requisition at end of Lease Period ); and

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the amount of such Requisition Proceeds received by the Lessor.

20.3 Restoration of condition

The Lessee shall put the Aircraft into the condition required by this Agreement at its cost as soon as practicable after any period of requisition for hire has ended, unless the Aircraft has become a Total Loss.

20.4 Requisition at end of Lease Period

(a) If the Airframe is under requisition for hire or the subject of a hijacking on the Expiry Date but a Total Loss has not yet occurred:

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the failure of the Lessee to redeliver the Aircraft in accordance with Clause 21 ( Redelivery ) on account of that requisition or hijacking shall not constitute an Event of Default;

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the Lessee’s obligations under this Agreement shall continue and the Lease Period shall (unless otherwise agreed between the Lessor and the Lessee) be deemed extended until the earlier of Redelivery following the end of the Requisition and the Total Loss Date; and

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provided that the Lessee pays the Basic Rent and all other amounts due under this Agreement and subject as provided in Clause 20.2(b) ( Entitlement to compensation ), the Lessee shall, unless a Default has occurred and is continuing, be entitled to any Requisition Proceeds paid to the Lessor or to the Lessee in respect of the period from the Original Expiry Date to the earlier of Redelivery following the end of the Requisition and the Total Loss Payment Date.

21. REDELIVERY

21.1 Redelivery

(a) On the Expiry Date, unless the Airframe has become a Total Loss, the Lessee shall at its own expense, redeliver the Aircraft to the Lessor at the Redelivery Location in the Redelivery Condition.
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(b) The provisions of Part II ( Redelivery Condition ) of Schedule 7 shall govern the parties’ respective rights and obligations regarding the return of the Aircraft.

21.2 Redelivery Condition

(a) Upon Redelivery, the Aircraft will be in a condition (the “ Redelivery Condition ”) that demonstrates that:

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the Lessee has in all respects complied with its obligations under this Agreement as to maintenance, repair modification, and general upkeep;

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it is in the condition referred to in Part II ( Redelivery Condition ) of Schedule 7; and

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it is free and clear of all Security (other than Lessor’s Security).

21.3 Failure to comply

(a) If the Lessee fails to redeliver the Aircraft on the Expiry Date at the Redelivery Location in the Redelivery Condition:

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the Lessor may require the Lessee at the Lessee’s expense to remedy promptly any Defects;

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the Lease Period shall be deemed extended until Redelivery (or any earlier date notified by the Lessor to the Lessee) and the Original Expiry Date shall be deemed to be replaced by the date on which Redelivery occurs or the date notified by the Lessor to the Lessee (as applicable); and

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the Lessee shall pay to the Lessor an amount equal to 150% of one thirtieth (1/30[th] ) of the previous month’s Basic Rent per day until the Defects have been remedied and the Aircraft is redelivered in accordance with this Agreement, provided that if in the reasonable opinion of the Lessor, the Lessee complied with the terms of Part II ( Redelivery Condition ) of Schedule 7 and an unforeseeable discrepancy from the Redelivery Condition prevents the redelivery of the Aircraft on the Expiry Date, the Lessee shall only be obliged to pay to the Lessor an amount equal to 100% of one thirtieth (1/30[th] ) of the previous month’s Basic Rent for each of the first fifteen (15) days of such delay (and thereafter 125% of one thirtieth (1/30[th] ) of the previous month’s Basic Rent) per day until the Defects have been remedied and the Aircraft is redelivered in accordance with this Agreement. The Lessee will not be obliged to pay the Lessor any such amount in respect of any delay that is the direct result of the Lessee performing any additional work referred to in paragraph 6.4 of Part II ( Redelivery Condition ) of Schedule 7.
(b) The extension of the Lease Period and the payment by the Lessee of the amounts referred to in paragraph (a) above shall not constitute a renewal of the terms of this Agreement or a waiver of any of the Lessor’s rights under this Agreement and shall not give the Lessee any greater rights in respect of the Aircraft than it would have had if such an extension had not occurred, other than as may be necessary to enable the Lessee to comply with its obligations under this Clause 21.
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(c) If the Lessee fails to remedy any Defects identified by the Lessor, the Lessor may remedy those Defects itself and the Lessee shall pay the Lessor immediately on demand the costs incurred by the Lessor in doing so.

22. EARLY TERMINATION

22.1 Termination upon Illegality

(a) If an Illegality Event or a Potential Illegality Event occurs, the Lessor and the Lessee shall consult with each other in accordance with Clause 22.2 ( Consultation ), if either Party requests the other to do so, to try to restructure the transactions contemplated by the Relevant Documents in a manner acceptable to the Lessor and the Lessee.
(b) If an Illegality Event occurs and, if neither the Lessor nor the Lessee has requested consultation or, where consultation has been requested, the Consultation Period has terminated without any agreement by the Lessor and the Lessee as to the continuation or restructuring of the transactions contemplated by the Relevant Documents, the Lessor shall be entitled by written notice to the Lessee either:

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if the Illegality Event or Potential Illegality Event occurs before Delivery, to cancel the obligations of the Lessor to lease, and of the Lessee to take on lease, the Aircraft under this Agreement and recover from the Lessee the amounts referred to in Clause 24.4 ( Termination payments before Delivery ); or

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if the Illegality Event or Potential Illegality Event occurs after Delivery, terminate the Lease Period on the Illegality Termination Date whereupon the Lessee shall redeliver the Aircraft to the Lessor in accordance with Clause 21 ( Redelivery ), and the Lessee shall pay to the Lessor the amounts referred to in Clause 24.5 ( Termination payments following Delivery ).

22.2 Consultation

(a) If either Party requests the other to consult pursuant to Clause 22.1 ( Termination upon Illegality ), the Lessor and the Lessee shall consult with each other for a period (the “ Consultation Period ”) of up to thirty (30) days to try to find a means of restructuring the transactions contemplated by the Relevant Documents so as to avoid or mitigate the effect of the event giving rise to the request for consultation.
(b) Neither Party shall be obliged to implement any restructuring proposal made during the consultations referred to in paragraph (a) above.
(c) Paragraph (a) above does not in any way limit the obligations of the Lessee under the Relevant Documents.
(d) The Lessor may terminate the consultations referred to in paragraph (a) above at any time by written notice to the Lessee if:

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an Event of Default has occurred and is continuing;
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the Lessor reasonably believes that its rights under the Relevant Documents are likely to be prejudiced if the consultations continue; or

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the continuation of the consultations would cause the Lessor to breach any applicable law.
(e) The Lessee shall indemnify the Lessor for all costs and expenses reasonably incurred by the Lessor as a result of steps taken by it pursuant to this Clause 22.2.

23. EVENTS OF DEFAULT

Each of the events or circumstances set out in this Clause 23 is an Event of Default and (where applicable) for the purposes of article 17 of the Cape Town Convention are defaults giving rise to the rights and remedies specified in the Cape Town Convention.

23.1 Non-payment

(a) The Lessee does not pay:

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Basic Rent or any other scheduled amount payable under any Relevant Document on the due date unless:
(A) its failure to pay is caused by an administrative or technical error; and
(B) payment is made within five (5) Business Days of the due date; or
(ii) any unscheduled amount payable under any Relevant Document which five (5) Business Days after being required to do so by the Lessor in writing.

23.2 Insurances

The Lessee fails to procure that the Insurances are obtained, maintained and kept in full force and effect or the Aircraft is operated outside the scope of the Insurances or a notice of cancellation of the Insurances is given by the Insurers (unless in the circumstances referred to in paragraph (d) of Clause 18.3 ( Lessor’s insurance requirements ), the Lessee has grounded the Aircraft and is insuring it in accordance with that paragraph (d)).

23.3 Other obligations

The Lessee does not comply with any provision of a Relevant Document to which it is a party (other than a provision referred to in Clause 23.1 ( Non-payment ) or Clause 23.2 ( Insurances ) or paragraph (b) of Clause 21.2 ( Redelivery condition )) and, where that failure is capable of being remedied, fails to remedy it within ten (10) days after being required by the Lessor to do so.

23.4 Misrepresentation

Any representation or statement made or deemed to be made by the Lessee in any Relevant Document or any other document delivered by or on behalf of the Lessee under or in connection with a Relevant Document is or proves to have been incorrect or inaccurate in any material respect when made or deemed to be made.

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23.5 Financial Indebtedness

(a) Any Financial Indebtedness of the Lessee is not paid when due nor within any originally applicable grace period.
(b) Any Financial Indebtedness of the Lessee is declared to be or otherwise becomes due and payable before its specified maturity as a result of an event of default (however described).
(c) Any commitment for any Financial Indebtedness of the Lessee is cancelled or suspended by a creditor of the Lessee as a result of an event of default (however described).
(d) Any creditor of the Lessee becomes entitled to declare any Financial Indebtedness of the Lessee due and payable before its specified maturity as a result of an event of default (however described).
(e) No Event of Default will occur under paragraphs (a) to (d) above if:

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the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (a) and (d) above is less than the Specified Amount; or

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the Lessee is contesting the obligation to pay, the cancellation or the suspension in good faith by appropriate proceedings and is able to demonstrate to the Lessor’s reasonable satisfaction that it has sufficient financial resources to meet the relevant Financial Indebtedness.

23.6 Insolvency

(a) The Lessee is unable or admits inability to pay its debts as they fall due, suspends making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness (which include the commission of an act that qualifies as an “act of bankruptcy” as that expression is defined in Section 42(1) of the Bankruptcy and Insolvency Act (Canada).
(b) The value of the Lessee’s assets is less than its liabilities (taking into account contingent and prospective liabilities).
(c) A moratorium is declared in respect of the Lessee’s indebtedness.

23.7 Insolvency proceedings

(a) Any corporate action, legal proceedings or other procedure or step is taken in relation to (including any announcement of an intention to carry out any of the following):

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the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of the Lessee other than a solvent liquidation or reorganisation on terms approved by the Lessor before the liquidation or reorganisation is undertaken;
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a composition, compromise, assignment or arrangement with any creditor of any the Lessee;

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the appointment of a liquidator (other than in respect of a solvent liquidation of the Lessee on terms approved by the Lessor before the appointment is made), receiver, administrator, administrative receiver, compulsory manager or other similar officer in respect of the Lessee or any of its assets; or

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the enforcement of any Security over any assets of the Lessee,

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or any analogous procedure or step is taken in any jurisdiction.

23.8 Creditors’ process

Any expropriation, attachment, sequestration, distress, execution or analogous process under the law of its Home Jurisdiction affects any asset or assets of the Lessee having an aggregate value in excess of the Specified Amount and is not discharged within ten (10) Business Days.

23.9 Repudiation

The Lessee repudiates a Relevant Document.

23.10 Change of business

The Lessee suspends or ceases or threatens to suspend or cease to carry on its business as a commercial airline operating on either scheduled or chartered routes.

23.11 Cross-default

As a result of an event of default, (however described) in any applicable documentation or any lease, hire purchase agreement, lease purchase agreement, conditional sale agreement or other agreement under which the Lessee has possession of any property becomes capable of being terminated or is terminated where the amount payable on termination or the value of the property leased would exceed the Specified Amount.

23.12 Certificates and licences

(a) The Aircraft is flown:
(i) without a valid certificate of airworthiness issued by the Aviation Authority; or
(ii) without any other valid authorisation required under any applicable laws or regulations of the State of Registration (including the Aviation Authority) or any jurisdiction to, over or within which the Aircraft may be flown, the effect of which would be to invalidate the Insurances or result in the arrest, seizure, confiscation or detention of the Aircraft.

23.13 Registration and Authorisations

(a) The registration of the Aircraft with the Aviation Authority is cancelled or any governmental or other authorisation required by the Lessee to enable it to perform its obligations under the Relevant Documents is withdrawn or modified and:
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(i) that cancellation, withdrawal or modification is not revoked within ten (10) days;
(ii) the Aircraft is not grounded pending the revocation of that cancellation, withdrawal or modification; and
(iii) the Lessor or any Finance Party is, in the Lessor’s opinion, materially and adversely affected.

23.14 Prejudicial act or omission

The rights and interests of the Lessor or the Finance Parties in the Aircraft are, in the opinion of the Lessor, materially jeopardised or prejudiced due to any act or omission of the Lessee.

23.15 Arrest or detention of Aircraft

The Aircraft is arrested, taken in execution, forfeited or otherwise detained in exercise (or purported exercise) of any Security or other claim and the Lessee fails to procure its release within ten (10) Business Days (or any longer period that the Lessor may, in its absolute discretion, agree in writing) or any event or circumstance which in the Lessor’s reasonable opinion is likely to give rise to the Aircraft being arrested, taken in execution, forfeited or otherwise detained in exercise (or purported exercise) of any Security or other claim.

23.16 Flight Charges

(a) The Lessee does not pay Flight Charges or any other amount payable to NAV Canada, Eurocontrol, the Aviation Authority or any other relevant air navigation or airport authority on the due date, at the place and in the currency such charges are expressed to be payable.
(b) An Event of Default shall not arise in respect of paragraph (a) above if the Lessee is contesting any Flight Charges or any other amount payable to NAV Canada in good faith by appropriate proceedings (where adequate provision has been made for their payment and provided that such proceedings do not involve any risk that the Aircraft will be or capable of being seized, detained, sold, forfeited or lost). Notwithstanding the preceding sentence, an Event of Default shall occur if the Lessee does not pay any Flight Charges or any other amount payable to NAV Canada within fifteen (15) days of its due date.

23.17 Material adverse change

The Lessor in good faith, reasonably determines that a Material Adverse Effect exists or has occurred.

23.18 Associated Event of Default

An event of default (however described) has occurred under an Associated Lease or Other Relevant Document.

23.19 Suspension of Business

The Lessee suspends or ceases or threatens to suspend or cease to carry on all or a substantial part of its business, or the Lessee announces generally or advises the Lessor

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that it (i) is declaring a moratorium on or suspension of any payments in respect of its Financial Indebtedness or (ii) does not intend to pay all or any portion of a payment of Basic Rent that is not yet due or which has become due but in respect of which the cure period has not expired under any Relevant Document.

23.20 Disposal

The Lessee conveys, leases, transfers or otherwise disposes (including, without limitation, by way of creation of Security) all of, or a substantial portion of, its property and assets or consolidates with or into any other Person unless the Lessee has obtained the Lessor’s prior written consent.

23.21 Redelivery

Lessee fails to redeliver the Aircraft to the Lessee on the Expiry Date in accordance with Clause 21 ( Redelivery ).

23.22 Litigation

Any final judgment of a court or tribunal or award for the payment of money not covered by insurance in excess of the Specified Amount, whether in aggregate or otherwise, shall be rendered against the Lessee and shall remain undischarged for a period of forty-five (45) days during which (i) execution thereof shall not be effectively stayed by agreement of the parties involved, by court order or as a result of any appeal or (ii) adequate security for the execution thereof shall not have been provided.

23.23 Conditions Subsequent

Any Condition Subsequent fails to be satisfied in accordance with Clause 4.2 ( Conditions Subsequent ) and has not been waived by the Lessor.

24. CONSEQUENCES OF AN EVENT OF DEFAULT

24.1 Consequences of an Event of Default

(a) The occurrence of any of the events or circumstances set out in:
(i) Clauses 23.1 ( Non-payment ) to 23.4 ( Misrepresentation ) inclusive shall constitute an event of default; and
(ii) Clauses 23.5 ( Financial Indebtedness ) to 23.22 ( Conditions Subsequent ) inclusive shall constitute an event of default,
(b) which in each case shall entitle the Lessor to terminate the leasing of the Aircraft in accordance with Clause 24.2 ( Lessor’s rights ) and to recover the amounts specified in Clause 24.5 ( Termination payments following Delivery ) from the Lessee as liquidated damages in the case of an event of default.

24.2 Lessor’s rights

(a) At any time after an Event of Default has occurred and for so long as such Event of Default is continuing, the Lessor may, at its option:

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without terminating the leasing of the Aircraft, direct the Lessee either:
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(A) to procure that the Aircraft is left at the airport where it is then located; or
(B) to procure the Aircraft is flown directly to such airport and on such date as the Lessor may direct;

whereupon the Lessee’s right to possession of the Aircraft shall be suspended until further notice from the Lessor

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without being obliged to give notice to the Lessee, take all steps necessary to deregister and export the Aircraft from the State of Registration and/or retake possession of the Aircraft wherever it is located, whereupon the leasing of the Aircraft shall terminate;

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by notice to the Lessee (a “ Default Notice ”) (in the case of an Event of Default described in Clauses 23.1 ( Non-payment ) to 23.4 ( Misrepresentation )) and (in the case of any Event of Default) terminate the leasing of the Aircraft and require the Lessee to redeliver the Aircraft at such location and on such date as specified in such Default Notice and in all respects in the condition required by this Agreement pursuant to Clause 21 ( Redelivery ) (it being understood that the Lessee shall not delay any such return for the purpose of placing the Aircraft in such condition, but shall nevertheless be liable to the Lessor for the failure of the Aircraft to be in such condition);

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exercise any other right or remedy available under applicable law and/or, if applicable, under the Convention, including without limitation, all rights and remedies under Chapter III of the Convention and Chapter II of the Aircraft Protocol; or

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if Delivery has not yet taken place, terminate its obligation to lease the Aircraft to the Lessee by giving a Default Notice;
(b) and/or

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enforce the performance by the Lessee of its obligations under this Agreement; and/or

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recover damages from the Lessee for breach of this Agreement and pursue any other remedies that it may have under applicable law by whatever court action the Lessor considers appropriate; and/or

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sell at private or public sale, as Lessor may determine, or hold, use, operate or lease to others the Aircraft as the Lessor in its sole discretion may determine, all free and clear of any rights of the Lessee.
(c) To help the Lessor to enforce its rights under this Agreement following an Event of Default, the Lessee irrevocably authorises the Lessor to enter into any premises belonging to, occupied by or under the control of the Lessee to retake possession of the Aircraft, and acknowledges that the Lessor shall not be responsible for any loss or damage caused by it when doing so.
(d) Where relevant, the Lessor and the Lessee agree that the remedies provided for in the Cape Town Convention shall be available to the Lessor on the occurrence of an Event of Default (includieng for the avoidance of doubt, the application for any of the orders listed in article 20(1) of the Cape Town Convention and
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the exercise of extra-judicial remedies provided by articles 14 and 15 of the Cape Town Convention). For the purposes of article 23(5)(a) of the Cape Town Convention, the relevant standard of maintenance is as set out in Clause 15 ( Maintenance and repair ) of this Agreement.

24.3 Lessor’s right to remedy

If the Lessee fails to comply with any provision of this Agreement:

(a) the Lessor may, without being obliged to do so and without prejudicing its right to treat that failure as an Event of Default, procure that the provision is complied with on behalf of the Lessee; and
(b) the Lessee shall indemnify the Lessor immediately on demand for any amounts paid by the Lessor (including legal costs) in connection with that failure.

24.4 Termination payments before Delivery

If the Lessor terminates its obligation to lease the Aircraft to the Lessee before Delivery in accordance with paragraph (e)(i) of Clause 18.3 ( Lessor’s insurance requirements ), paragraph (b)(i) of Clause 22.1 ( Termination upon Illegality ) or paragraph (a)(iv) of Clause 24.2 ( Lessor’s rights ), the Lessee shall immediately on demand pay to the Lessor an amount equal to the aggregate of:

(a) any sums (whether in respect of interest, costs, fees, expenses or otherwise) then accrued under the Relevant Documents;
(b) all Losses which the Lessor may incur as a consequence of the termination of its obligation to lease the Aircraft; and
(c) any Loss incurred by the Lessor in unwinding any funding, financing, guarantee, deposit, swap, forward interest rate agreement or other financial instrument undertaken or entered into in connection with the leasing of the Aircraft to the Lessee.

24.5 Termination payments following Delivery

If, after Delivery, the Lessor terminates the leasing of the Aircraft pursuant to paragraph (e)(i) of Clause 18.3 ( Lessor’s insurance requirements ), paragraph (b)(ii) of Clause 22.1 ( Termination upon Illegality ) or paragraph (a)(ii) or (a)(iii) of Clause 24.2 ( Lessor’s rights ), the Lessee shall pay to the Lessor on the Expiry Date as liquidated damages or, as the case may be, a debt, the amount (the “ Termination Amount ”) that the Lessor notifies the Lessee in writing to be the aggregate of:

(a) all arrears of Basic Rent and all other amounts payable under this Agreement and the other Relevant Documents that are due but unpaid at the Termination Date;
(b) an amount equal to all Losses (on an after-tax basis) incurred by the Lessor in connection with:
(i) recovering or having possession of the Aircraft;
(ii) recovering Basic Rent, Supplemental Rent or other amounts due under this Agreement;
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(iii) returning the Aircraft to the condition required by Clause 21.2 ( Redelivery Condition ); and
(iv) exercising or enforcing any of its rights under the Relevant Documents; and
(c) an amount equal to any other Losses (on an after-tax basis) which the Lessor may incur as a consequence of any Event of Default and/or the termination of the leasing of the Aircraft, including but not limited to:
(i) any loss of profit suffered by the Lessor because of the Lessor’s inability to place the Aircraft on lease for the remaining balance of the Original Lease Period with another lessee on terms as favourable to the Lessor as this Agreement or because any use to which the Lessor is able to put the Aircraft for the remaining balance of the Original Lease Period following Redelivery is not as profitable to the Lessor as this Agreement would have been;
(ii) any amount of interest, fees or other sums paid or payable on account of funds borrowed in order to fund any unpaid amount; and
(iii) any Loss incurred by the Lessor in unwinding or terminating any financing, guarantee, deposit, swap, forward interest rate agreement or other financial instrument undertaken or entered into in connection with the leasing of the Aircraft to the Lessee.

24.6 Further demands

After a demand has been issued under Clause 24.4 ( Termination payments before Delivery ) or Clause 24.5 ( Termination payments following Delivery ), the Lessor may issue further demands in respect of any amounts referred to in those Clauses which had not yet been incurred and/or quantified when any previous demand was made.

24.7 Lease Termination

The Lessor shall hold the Lease Termination Agreement in escrow until such time as Detention Exposure Event occurs and is continuing or, in the Lessor’s reasonable judgment, there is a material risk that a seizure or detention of the Aircraft is imminent, in which case Lessor may promptly, upon notice to Lessee, date and file the Lease Termination Agreement with TCCA. In the event that a Lease Termination Agreement is so filed with TCCA, the Lessee shall have a period of up to 30 days to satisfy the Lessor that the Detention Exposure Event is not continuing. If, during such period the Lessor is satisfied that the Detention Exposure Event is not continuing, it shall enter into a replacement lease in respect of the Aircraft with the Lessee with terms identical, with the necessary changes, to this Agreement. Otherwise, the Lessee shall comply with all obligations, including, without limitation, return conditions which result from an early termination of this Agreement; but, for greater certainty, the Lessor shall continue to maintain legal custody and control of the Aircraft while the Lessee complies with such obligation.

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25. TRANSFERABILITY

25.1 Transfer by Lessee

The Lessee may not assign, transfer, grant any Security over or otherwise dispose of any of its rights, title or obligations in, to or under this Agreement or any of the Aircraft Assets unless the Lessor has first given its written consent.

25.2 Transfer by Lessor Party

(a) Any Lessor Party may at any time assign or transfer to any person (such person being a “ Transferee ”) the Aircraft and/or all of its rights and obligations under this Agreement and the other Relevant Documents (the “ Transferred Assets ”) provided that:
(i) the Lessee shall have no greater obligation or liability under this Agreement and the other Relevant Documents as a result of such assignment or transfer, based on applicable current laws in effect at the time of such assignment or transfer, than it would have had if such transfer had not taken place;
(ii) the Lessor shall procure that the Transferee provides to the Lessee a covenant of quiet enjoyment in substantially the same terms as that set out in Clause 8 ( Quiet enjoyment );
(iii) the Lessor shall provide the Lessee with written notice of such assignment or transfer at least ten (10) days prior to the date of such assignment or transfer, specifying the name and address of the proposed Transferee;
(iv) the assignment or transfer would not result in the deregistration of the Aircraft; and
(v) the Lessee shall not bear any costs, expenses or any Taxes (including stamp Taxes) that may be payable with respect to the arrangements to assign or transfer the Transferred Assets and the Lessor shall indemnify the Lessee in relation thereto, provided that the Lessee shall, at the Lessor’s cost do everything that the Lessor may reasonably request to mitigate any such costs, expenses or Taxes.
(vi) the Transferee shall have a net worth of not less than $20,000,000 or shall be guaranteed by an entity having a tangible net worth of not less than US$20,000,000.
(b) The Lessee acknowledges that an increase in the number of Indemnitees as a consequence of a transfer referred to in this Clause 25.2 shall not, of itself, constitute an increase in the Lessee’s obligations under this Agreement or the other Relevant Documents.
(c) The Lessee agrees to do anything and execute and deliver any other instruments that may from time to time be required by law or reasonably requested by the Lessor to give effect to any assignment or transfer referred to in this Clause 25.2, in each case, at the Lessor’s cost.
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(d) Without limitation of the provisions of paragraph (a) above, the Lessee agrees (at the Lessor’s cost) to:

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execute and deliver to the Lessor, any Finance Party and any Transferee any documents (including, but not limited to, legal opinions of external counsel acceptable to such persons, and, in the case of any assignment or transfer, an acknowledgement of assignment in form and substance reasonably acceptable to the Lessor Transferee) an additional Deregistration Power of Attorney and an additional IDERA (if applicable) in favour of the Transferee;

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change the nameplates referred to in Clause 13.5 ( Ownership and security ) and to give all other reasonable assistance that the Lessor may require, including, but not limited to, assisting in efforts to minimize or eliminate Taxes related to such assignment or transfer;

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take any actions that are reasonably requested by the Lessor to effect, perfect, record or implement any such assignment or transfer, and otherwise co-operate with the Lessor and any Finance Parties in connection with the financing or refinancing of the Aircraft, any grant, amendment, modification or replacement of any Security; and

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in connection with any transfer of ownership of the Aircraft, use reasonable efforts (upon receiving reasonable notice from Lessor and having regard to Lessee’s planned operational, maintenance and crew availability, among other practical operational considerations) to temporarily re-locate the Aircraft.

26. FURTHER PROVISIONS

26.1 Nature of Lessee’s obligations

All obligations of the Lessee under this Agreement or any other Relevant Document constitute conditions, the time for performance of which will be of the essence (without prejudice to the grace periods specified in Clause 23 ( Events of Default )).

26.2 Further assurances

The Lessee agrees to do anything and execute and deliver any other instruments that may from time to time be required by law or reasonably requested by the Lessor to establish, maintain and protect the rights and remedies of the Lessor and the Finance Parties and to give effect to the Relevant Documents.

26.3 Remedies and waivers

(a) No failure to exercise, nor any delay in exercising on the part of the Lessor, any right or remedy under the Relevant Documents shall operate as a waiver, nor shall any single or partial exercise of any other right or remedy prevent any further or other exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.
(b) The rights of the Lessor against the Lessee or in relation to the Aircraft (whether arising under this Agreement or applicable law) are not capable of
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being waived or varied otherwise than by an express waiver or variation in writing.

26.4 Delegation

The Lessor may delegate to any person or persons all or any of its rights, powers or discretions under this Agreement and may do so upon such terms and conditions as it thinks fit, in its absolute discretion

26.5 Variation

This Agreement may only be varied by an instrument in writing executed by or on behalf of the Lessor and the Lessee.

26.6 Confidentiality

(a) Each Party acknowledges that the commercial and financial arrangements evidenced by the Relevant Documents and any other confidential financial or other information supplied by one Party to the other Party in relation to the transactions contemplated by the Relevant Documents (together the “ Confidential Information ”) are considered by the other Party to be confidential.
(b) Each Party shall treat the Confidential Information as confidential and shall not disclose the Confidential Information to any person without the prior written consent of the other Party except:

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to its professional advisers;

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as may be required by any applicable law;

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in the case of disclosure by the Lessor, to any Affiliate of the Lessor, any Finance Party or prospective Finance Party or any prospective Lessor Transferee, or

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to the extent that such Confidential Information is already in the public domain other than as a result of a breach by the disclosing party of its obligations under this Clause 26.6,

provided that, in connection with any such disclosure (other than disclosure falling within paragraph (b)(iv)), each Party shall request, and shall use reasonable endeavours to obtain, confidential treatment of the Confidential Information.

26.7 Partial invalidity

If, at any time, any provision of a Relevant Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction neither the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

26.8 Entire agreement

The Relevant Documents constitute the entire agreement between the Lessor and the Lessee in relation to the leasing of the Aircraft by the Lessor to the Lessee, and override

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all previous proposals, agreements and other written and oral communications relating to it.

26.9 Counterparts

Each Relevant Document may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of that Relevant Document.

26.10 Set-off

(a) The Lessor may set off any matured obligation owed by the Lessee under this Agreement against any obligation (whether or not matured) owed by the Lessor to the Lessee, regardless of the place of payment or currency. If the obligations are in different currencies, the Lessor may convert either obligation at the market rate of exchange available in London or (at Lessor’s option) New York for the purpose of the set-off.
(b) If an obligation is unascertained or unliquidated, the Lessor may in good faith estimate that obligation and set off in respect of the estimated amount, in which case when the obligation is ascertained or liquidated the Lessor or the Lessee shall make a payment to the other (as appropriate) in respect of any amount by which the ascertained or liquidated amount differs from the estimated amount.
(c) Notwithstanding any other provision of any Relevant Document, the Lessor shall not be obliged to pay any amount to the Lessee under any Relevant Document so long as any sums which are then due from Lessee under any Relevant Document remain unpaid, and if any Default has occurred and is continuing, any such amount which would otherwise be due shall fall due only if and when the Lessee has paid all such sums

26.11 No Brokers

Each of the Parties represents and warrants to the other that it has not paid, agreed to pay, or caused to be paid directly or indirectly to any person (other than its financial and other professional advisers), any commission, percentage, contingent fee, brokerage or other similar payments of any kind, in connection with the establishment or operation of this Agreement.

26.12 DISCLAIMER OF CONSEQUENTIAL DAMAGES

(a) LESSEE AGREES THAT IT SHALL NOT BE ENTITLED TO RECEIVE AND HEREBY DISCLAIMS AND WAIVES ANY RIGHT THAT IT MAY OTHERWISE HAVE TO RECOVER LOST PROFITS, LOST REVENUE OR OTHER CONSEQUENTIAL, SPECIAL, INCIDENTAL, INDIRECT OR PUNITIVE DAMAGES AS A RESULT OF ANY BREACH OR ALLEGED BREACH BY LESSOR OF ANY OF THE AGREEMENTS CONTAINED IN ANY RELEVANT DOCUMENT, EXCEPT TO THE EXTENT THAT IT IS EXPRESSLY CONTEMPLATED HEREIN THAT IT WILL HAVE SUCH A RIGHT.
(b) LESSOR AGREES THAT IT SHALL NOT BE ENTITLED TO RECEIVE AND HEREBY DISCLAIMS AND WAIVES ANY RIGHT THAT IT MAY OTHERWISE HAVE TO RECOVER LOST PROFITS, LOST REVENUE OR OTHER CONSEQUENTIAL, SPECIAL, INCIDENTAL, INDIRECT OR
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PUNITIVE DAMAGES AS A RESULT OF ANY BREACH OR ALLEGED BREACH BY LESSEE OF ANY OF THE AGREEMENTS CONTAINED IN ANY RELEVANT DOCUMENT, EXCEPT TO THE EXTENT THAT IT IS EXPRESSLY CONTEMPLATED HEREIN THAT IT WILL HAVE SUCH A RIGHT.

(c) LESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE PROVISIONS OF THIS CLAUSE 26.12 AND ACKNOWLEDGES THAT RENTAL AND OTHER AMOUNTS PAYABLE UNDER THIS AGREEMENT HAVE BEEN CALCULATED TAKING ITS PROVISIONS INTO ACCOUNT.

26.13 Statements of Owner Trustee

(a) The parties hereto agree that all of the statements, representations, covenants and agreements made by the Lessor contained in this Agreement and any agreement referred to herein, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate. Therefore, anything contained in this Agreement or such other agreements to the contrary notwithstanding (except for any express provisions that the Trust Company is responsible for in its individual capacity (and the Trust Company shall be responsible in its individual capacity for all statements, representations, warranties, covenants and agreements made by the Trust Company)), no recourse shall be had with respect to this Agreement or such other agreements against the Trust Company in its individual capacity or against any institution or Person which becomes a successor trustee or co trustee or any officer, director, trustee, servant or direct or indirect parent or controlling Person or Persons of any of them; provided, however, that this Clause 26.13 shall not be construed to prohibit any action or proceeding against any party hereto for its own willful misconduct or grossly negligent conduct for which it would otherwise be liable; and provided further, that nothing contained in this Clause 26.13 shall be construed to limit the exercise and enforcement in accordance with the terms of this Agreement or such other agreements of rights and remedies against the Trust Estate. The foregoing provisions of this Clause 26.13 shall survive the termination of this Agreement

27. NOTICES

27.1 Communications in writing

Any communication to be made under or in connection with the Relevant Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.

27.2 Addresses

The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Relevant Documents is:

(a) in the case of the Lessor:

Bank of Utah, not in its individual capacity, but solely as Owner Trustee 200 E. South Temple Suite 210 Salt Lake City, UT 84111

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Facsimile no. [REDACTED: Contact details] E-mail: [REDACTED: Contact details]

Attn: Corporate Trust Department

with a copy to Owner Participant at:

JSA International U.S. Holdings, LLC 909 Montgomery Street, Suite 500 San Francisco, California, 94133 U.S.A. Telephone: [REDACTED: Contact details] Fax: [REDACTED: Contact details] For the attention of: General Counsel

(b) in the case of the Lessee:

Canada Jetlines Operations, Ltd. 6299 Airport Road Suite 300 Mississauga, Ontario L4V 1N3 Canada Email: [REDACTED: Contact details] Attn: Mr. Eddy Doyle, CEO

Global Crossing Airlines Group, Inc. 4200 N.W. 36[th] Street Bldg. 5A 4[th] Floor Miami Int’l Airport Miami, Florida 33146 Attn: Edward J. Wegel, CEO Email: [REDACTED: Contact details]

or any substitute address, fax number or department or officer as that Party may notify to the other Party by not less than five (5) Business Days’ notice.

27.3 Delivery

Any communication or document made or delivered by one person to another under or in connection with the Relevant Documents will only be effective:

(a) if by way of fax, when received in legible form; or
(b) if by way of letter, when left at the relevant address;

and, if a particular department or officer is specified as part of its address under Clause 27.2 ( Addresses ), if addressed to that department or officer.

27.4 Electronic communication

(a) Any communication to be made between the Lessor and Lessee under or in connection with Relevant Documents may be made by electronic mail or other electronic means, if the Lessor and Lessee:

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agree that, unless and until notified to the contrary, this is to be an accepted form of communication;
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notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

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notify each other of any change to their address or any other such information supplied by them.
(b) Any electronic communication made between the Lessor and the Lessee will be effective only when actually received in readable form and in the case of any electronic communication made by the Lessee to the Lessor, only if it is addressed in such a manner as the Lessor shall specify for this purpose.
(c) Unless specifically agreed in writing, the Lessor will not accept communication of official notices from Lessee under the Relevant Documents by electronic mail or other electronic means.

27.5 English language

(a) Any notice given under or in connection with any Relevant Document must be in English.
(b) All other documents provided under or in connection with any Relevant Document must be:

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in English; or

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if not in English, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.

28. GOVERNING LAW, JURISDICTION AND WAIVER OF JURY TRIAL

28.1 Governing Law

PURSUANT TO AND IN ACCORDANCE WITH SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, THE PARTIES HERETO AGREE THAT THIS AGREEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS AGREEMENT, AND ALL ISSUES CONCERNING THE RELATIONSHIP OF THE PARTIES HEREUNDER AND THE ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK AS APPLIED TO CONTRACTS TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK (EXCLUSIVE OF SECTION 7-101 OF THE NEW YORK GENERAL OBLIGATIONS LAW WHICH IS INAPPLICABLE TO THIS AGREEMENT) WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES.

THE FOREGOING ELECTION OF THE LAWS OF THE STATE OF NEW YORK IS WITHOUT PREJUDICE TO THE RIGHT OF LESSOR TO APPLY THE LAWS OF CANADA TO ANY REPOSSESSION OR OTHER ENFORCEMENT OF RIGHTS UNDER THE LEASE WHILE THE AIRCRAFT IS LOCATED IN CANADA.

28.2 Jurisdiction

Pursuant to and in accordance with Section 5-1402 of the New York General Obligations Law, Lessee and Lessor each irrevocably agrees that (i) the United States District Court for the Southern District of New York sitting in The Borough of Manhattan and any New York state

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court sitting in the County of New York, New York, and all related appellate courts, and (ii) the courts of the jurisdictions in which the Aircraft at the relevant time is located, or any jurisdiction where Lessee or Lessor are domiciled, or their assets may be found, as the party bringing such action or proceeding may elect, including without limitation the courts of British Columbia, Canada, in the case of enforcement proceedings in respect of remedies hereunder, have exclusive jurisdiction to settle any disputes arising out of or relating to this Agreement or any of the other Relevant Documents and submits itself and its property to the jurisdiction of the foregoing courts with respect to such dispute, hereby waiving any other jurisdictions which may be available thereto by reason of domicile or otherwise.

28.3 Service of process

Without prejudice to any other mode of service allowed under any relevant law, the Lessee:

(a) confirms it has irrevocably appointed Cogency Global as its agent for service of process relating to any proceedings before the New York courts in connection with this Agreement and agrees to maintain the process agent in New York notified to Lessor;
(b) agrees that failure by a process agent to notify it of the process will not invalidate the service of such process or any relevant proceedings or any judgment based on it;
(c) agrees that if for any reason the process agent is unable to act as such or its appointment ceases to be effective, the Lessee will promptly notify the Lessor and within thirty (30) days will appoint a substitute process agent in New York acceptable to the Lessor (but if it fails to make such appointment within such period the Lessor shall be entitled to appoint such substitute process agent by notice to the relevant Lessee); and
(d) consents to the service of process relating to any such proceedings by prepaid posting, or prepaid courier, or delivery by hand, to the address of the process agent or any substitute process agent.
28.4 Waiver of Objections

Each of Lessee and Lessor:

(a) waives to the fullest extent permitted by Law any objection which it may now or hereafter have to the courts referred to in Clause 28.2 ( Jurisdiction ) on grounds of inconvenient forum or otherwise as regards proceedings in connection with this Agreement;
(b) waives to the fullest extent permitted by Law any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement brought in the courts referred to in Clause 28.2 ( Jurisdiction ); and
(c) to the extent permitted by applicable law, agrees that a judgment or order of any court referred to in Clause 28.2 ( Jurisdiction ) in connection with this Agreement is conclusive and binding on it and may be enforced against it in the courts of any other jurisdiction as if made by the highest court in that other jurisdiction and accordingly Lessee will not seek to, nor be entitled to, contest
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and/or delay and/or obstruct registration or enforcement of any such judgment and/or award and/or order on grounds of public policy or otherwise.

28.5 No Alternative Jurisdictions

Clause 28 shall survive, continue to take full effect and not merge in any order or judgment and this Clause 28.5 prohibits either party to bring proceedings against the other in connection with this Agreement or any other Relevant Document in any court other than as provided in Clause 28.2 ( Jurisdiction ) above.

28.6 Waiver of Sovereign Immunity and Other Defenses

Each of Lessee and Lessor irrevocably and unconditionally:

(a) agrees that if the other brings legal proceedings against it or its assets in relation to this Agreement no sovereign or other immunity from such legal proceedings (which will be deemed to include suit, court jurisdiction, attachment prior to judgment, attachment in aid of execution of a judgment, other attachment, the obtaining of judgment, execution of a judgment or other enforcement or legal process or remedy) will be claimed by or on behalf of itself or with respect to its assets;
(b) waives any such right of immunity which it or its assets now has or may in the future acquire and agrees that the foregoing waiver shall have the fullest extent permitted under the Foreign Sovereign Immunities Act of 1976 of the United States of America and is intended to be irrevocable for the purposes of such Act; and
(c) waives any requirement, of any kind whatsoever, for Lessor to provide any form of security in respect of the payment of any damages, costs, expenses or any other financial obligation resulting from the commencement or prosecution of proceedings or the making of or service of any order and Lessee undertakes (x) not to challenge the validity of any proceedings or the making of any orders without any requirement for the provision of such security, (y) to advise any court upon Lessor’s request that Lessee requires no such security, and (z) to provide security itself for any third party claims arising out of or in connection with such proceedings and/or orders.

28.7 Waiver of Jury Trial

EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL IN RESPECT OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND OTHER COMMON LAW AND STATUTORY CLAIMS. EACH OF LESSOR AND LESSEE REPRESENTS AND WARRANTS THAT EACH HAS REVIEWED AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH ITS LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS CLAUSE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

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SCHEDULE 1 DESCRIPTION OF AIRCRAFT

Airframe

Manufacturer Airbus Type and model: A320-200 Serial number: 4175 Maximum Take Off Weight 77,000 kgs Maximum Landing Weight 66,000 kgs Maximum Zero Fuel Weight 62,500 kgs LOPA As per Schedule 1, part B Engines Engine Manufacturer CFM International Inc. Type and model: CFM56-5B4/3 Engine serial numbers 699726 and 699765 APU Manufacturer Honeywell Type and model: GTCP131-9A Landing Gear Manufacturer Messier Dowty Main Gear Right MDL 4175 Main Gear Left MDL 4175 Nose Gear B3728 Aircraft Documents: As per Appendix 1 of the Acceptance Certificate and upon Redelivery, in accordance with Part IV of Schedule 7 Aircraft Specification: As per Schedule 1, Part B

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Part A

[REDACTED: Confidential and commercially sensitive financial information]

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----- Start of picture text -----

Part B
LOPA
----- End of picture text -----

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SCHEDULE 2 RELEVANT DOCUMENTS

1. Lease Agreement.

2. Acceptance Certificate.

3. IDERA.

4. Guarantee.

5. Lease Termination Agreement.

6. Short-Form Lease

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SCHEDULE 3 CONDITIONS

PART I

LESSEE’S CONDITIONS PRECEDENT

1. EFFECTIVE DATE CONDITIONS PRECEDENT

On or before the date of this Agreement, the Lessee shall provide to the Lessor (unless waived or deferred by the Lessor in writing) each of the items set out in this paragraph 1.

1.1 Lessee’s corporate documents

A certificate of the Lessee signed by an authorised officer of the Lessee and dated no earlier than the Effective Date to which is attached complete and up to date copies of:

(a) the Lessee’s certificate of incorporation, memorandum and articles of association and/or other constitutional documents;
(b) resolutions of the Lessee’s board of directors authorising the Lessee to enter into and perform each of the Relevant Documents to which it is a party and the transactions contemplated by them, certified by an officer of Lessee to be a true copy and as being in full force and not amended or rescinded;
(c) the seal certificate of each representative director of Lessee;
(d) the power of attorney issued by or on behalf of the Lessee, and not amended or rescinded, authorising the execution by the attorneys named therein of the Relevant Documents and bearing the registered seal of Lessee’s representative director;
(e) a certificate of a duly authorised officer of the Lessee setting out the names and signatures of the individuals authorised to sign each of the Relevant Documents to which it is a party and any related notice or document;

and certifying that each document listed in sub-paragraphs (a) to (g) above is correct, complete and in full force and effect.

1.2 Guarantor’s corporate documents

A certificate of the Guarantor signed by an authorised officer of the Guarantor and dated no earlier than the Effective Date to which is attached complete and up to date copies of:

(a) the Guarantor’s certificate of incorporation, by-laws, memorandum and articles of association and/or other constitutional documents;
(b) resolutions of the Guarantor’s board of directors authorising the Guarantor to enter into and perform each of the Relevant Documents to which it is a party and the transactions contemplated by them, certified by an officer of Guarantor to be a true copy and as being in full force and not amended or rescinded;
(c) the seal certificate of each representative director of Guarantor;
(d) the power of attorney issued by or on behalf of the Guarantor, and not amended or rescinded, authorising the execution by the attorneys named therein of the
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Relevant Documents and bearing the registered seal of Guarantor’s representative director;

(e) a certificate of a duly authorised officer of the Guarantor setting out the names and signatures of the individuals authorised to sign each of the Relevant Documents to which it is a party and any related notice or document;
(f) the Guarantor’s air operator certificate issued by the FAA showing that the Guarantor is allowed to operate in aviation activities under local applicable regulations;
(g) the Guarantor’s air transport licence issued by the FAA to the Guarantor and referring to aircraft of the same type as the Aircraft,

and certifying that each document listed in sub-paragraphs (a) to (g) above is correct, complete and in full force and effect.

1.2 Approvals

Evidence of the issue of each approval, license and consent which may be required in relation to, or in connection with, the remittance to Lessor in Dollars of all amounts payable under this Agreement or the performance by the Lessee of any of its other obligations hereunder and the other Relevant Documents to which it is a party, or if no such approvals are required, a statement to that effected included in the legal opinion described in paragraph 2.5 will satisfy Lessee’s obligation under this paragraph 1.2.

1.3 Relevant Documents

An original of the following Relevant Documents, duly executed by the parties to it (other than the Lessor):

(a) this Agreement;
(b) Guarantee; and
(c) all notices, acknowledgements and other instruments required in connection with the aforementioned documents.

1.4 Legal Opinions

An in-house legal opinion of the Lessee.

1.5 Know your customer

All such documentation and information from the Lessee as the Lessor may reasonably request in respect of its “Know Your Customer” checks, anti money laundering checks and any other similar requirements (provided that the Lessor shall have notified the Lessee of its “Know Your Customer” requirements at least ten (10) days prior to the Anticipated Delivery Date); and all such checks and requirements shall be satisfactory to the Lessor in its sole and absolute discretion.

2. DELIVERY DATE CONDITIONS PRECEDENT

On or before the Delivery Date, the Lessee shall provide to the Lessor (unless waived or deferred by the Lessor in writing) each of the items set out in this paragraph 2.

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2.1 Lessee’s corporate documents

A certificate of the Lessee signed by an authorised officer of the Lessee and dated no earlier than the Effective Date to which is attached complete and up to date copies of:

(a) the Lessee’s air operator certificate issued by the Aviation Authority showing that the Lessee is allowed to operate in aviation activities under local applicable regulations; and
(b) the Lessee’s air transport licence issued by the Aviation Authority to the Lessee and referring to aircraft of the same type as the Aircraft,

confirming that:

(c) no Default has occurred which is continuing at the Delivery Date;
(d) the representations and warranties contained in Clause 2 ( Lessee’s representations and warranties ) are true as at the Delivery Date;
(e) the documents attached to the certificate provided under paragraph 1.1 and 2.1(a) and (b) above remain true or correct (and in the event that any such documents have been amended then such complete and up to date copies of the amended documents shall be attached to the certificate).

2.2 Relevant Documents

A copy of the following Relevant Documents, duly executed by the parties to it (other than the Lessor):

(a) the Acceptance Certificate;
(b) the Short-Form Lease;
(c) the Lease Termination;
(d)
the IDERA; and
(e) all notices, acknowledgements and other instruments required in connection with the aforementioned documents.

2.3 Title documents

(a) A copy of the noise certificate in respect of the Aircraft.
(b) Confirmation of installation of the nameplates referred to in Clause 13.5 ( Ownership and security ) on the Aircraft.

2.4 Insurance documents

(a) Certificates of Insurance evidencing the Insurances.
(b) A broker’s letter of undertaking.

2.5 Legal opinions

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(a) A legal opinion (obtained at Lessee’s cost) of Blake, Cassels & Graydon LLP, legal advisers to the Lessor in the State of Registration, as to matters of Canadian law.
(b) A legal opinion (obtained at Lessee’s cost) of Law Offices of Ronald T. Bevans, legal advisers to the Guarantor, which, at a minimum, shall confirm the due execution of the Guaranty.

2.6 Registration documents

(a) Copies of the application for issuance of the Certificate of Registration (commercial) to TCCA in relation to the Aircraft
(b) Copies of the Certificate of Airworthiness in the scheduled air transport services (passenger) category, issued by the Aviation Authority in relation to the Aircraft and, each duly certified by an officer of the Lessee to be a true copy of the original provided that so long as the Aircraft is not operated, such copies may be delivered after the Delivery Date but prior to operation of the Aircraft.
(c) A copy of the ferry flight permit issued by the Aviation Authority with respect to the ferry flight of the Aircraft from the Delivery Location to the Habitual Base.
(d) Evidence that arrangements have been made for registration of the Aircraft under the laws of the State of Registration and that all filings, registrations, recordings and other actions have been or will be taken within the timeframes as set out in the Relevant Documents which are necessary or advisable to ensure the validity, effectiveness and enforceability of the Relevant Documents and to protect the rights and interests of the Lessor as owner.

2.7 Air Traffic Control Letter

Aviation Authority Letters from Lessee for each of NAV CANADA and the airport authorities in Vancouver Toronto, Montreal, Ottawa, and Calgary and a letter from Lessee addressed to Eurocontrol and each other relevant air traffic control authority pursuant to which Lessee authorises the addressee to issue to Lessor, upon Lessor's request from time to time, a statement of account of all sums due by Lessee to such authority and any other information in relation to Flight Charges that Lessor requests.

2.8 Import

Evidence that any required import recommendation issued by the Aviation Authority and all customs formalities relating to the import of the Aircraft into the Habitual Base have been obtained or complied with, and evidence that the import of the Aircraft into the Habitual Base is exempt from Taxes, or that any such Taxes have been paid in full.

2.9 Licences

Copies of Lessee's air transport licence, air operator's certificates listing aircraft of the type of the Aircraft, approval of the change in business plan of Lessee issued by the Aviation Authority and all other licences, certificates and permits required by Lessee in relation to, or in connection with, the operation of the Aircraft.

2.10 Approvals

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To the extent not available at the date of this Agreement, evidence of the issue of each approval, licence and consent which is required in relation to, or in connection with, the remittance to Lessor in Dollars of all amounts payable under this Agreement or the performance by Lessee of any of its other obligations hereunder or, if no such approvals are required, a statement to that effect included in the legal opinion described in paragraph 2.5 will satisfy Lessee's obligation under this paragraph 2.10.

2.11 Miscellaneous documents

(a) Copies of any government or other approvals and licences required to enable the Lessee to enter into the Lessee Documents (or confirmation that none are required in the counsel’s opinion referred to in paragraph 2.5 above).
(b)
A copy of the Original Financial Statements of the Lessee.
(c) A copy of the Maintenance Programme certified to be true and up to date by a duly authorised officer of the Lessee.
(d) The list of airports to which the Lessee operates its other aircraft referred to in paragraph (a)(iii) of Clause 14.6 ( Flight Charges ).

2.12 Process agent letter

A letter from the process agent appointed by Lessee accepting such appointment.

2.13 Payments

(a) Receipt by the Lessor of:
(a) the first month’s Basic Rent; and
(b) the Commitment Fee Amount.

2.14 Filings

(a) All relevant parties shall have been duly registered as Transaction User Entities before the International Registry and shall have granted their consent to conduct the required registrations of the applicable International Interests.
(b) UCC Form 1 financing statements with respect to this Agreement and the Aircraft in a form acceptable to Lessor and Owner Participant duly filed in Washington, D.C.
(c) Evidence that all other Security Filings have been made.
94 -

PART II LESSEE’S CONDITIONS SUBSEQUENT

Within 15 days following the execution and delivery of this Agreement, Lessee will deliver to Lessor:
(a) evidence that this Agreement has been properly filed pursuant to the International Registry and the UCC; and
(b) evidence of the discharge of all International Registry and UCC filings that in any way relate to this Agreement and/or the Aircraft (other than the filing made pursuant to paragraph (a) above), if any.
As soon as is reasonably practicable and within the time period set out below, Lessee will delivery to Lessor:
(a) a certified copy of the IDERA, duly endorsed by TCCA within seven days of Delivery;
(b) a copy of the permanent certificate of registration in respect of the Aircraft; and
(c) satisfactory evidence that the Aircraft has been imported into Canada in accordance with applicable law (including a certified copy of the Canada Customs B3 Form and all other necessary customs documents and evidence that any applicable import/customs duties have been paid) within seven days of Delivery.
95 -

PART III

LESSOR’S CONDITIONS PRECEDENT

1. EFFECTIVE DATE CONDITIONS PRECEDENT

On or before the date of this Agreement, the Lessor shall provide to the Lessee (unless waived or deferred by the Lessee in writing) each of the items set out in this paragraph 1.

1.1 Lessor’s corporate documents

A certificate of the Lessor signed by an authorised officer of the Lessor and dated no earlier than the Effective Date to which is attached complete and up to date copies of:

(a) the Lessor’s certificate of incorporation, memorandum and articles of association and/or other constitutional documents;
(b) resolutions of the Lessor’s board of directors authorising the Lessor to enter into and perform each of the Relevant Documents to which it is a party and the transactions contemplated by them;
(c) a certificate of a duly authorised officer of the Lessor setting out the names and signatures of the individuals authorised to sign each of the Relevant Documents to which it is a party and any related notice or document,

and certifying that each document listed in sub-paragraphs (a) to (b) above is correct, complete and in full force and effect.

1.2 Relevant Documents

A copy of this Agreement and the Short-Form Lease, duly executed by the parties to it (other than the Lessee).

2. DELIVERY DATE CONDITIONS PRECEDENT

On or before the Delivery Date, the Lessor shall provide to the Lessee (unless waived or deferred by the Lessee in writing):

2.1 the other Lessee Documents to which the Lessor is a party executed by the Lessor.
2.2 Evidence in the form of a “priority search certificate” from the International Registry that there are no International Interests, prospective International Interests or other interests registered in the International Registry in relation to the Airframe or any Engine, other than those arising under the transactions contemplated by the Relevant Documents or in respect of Lessor’s Security or prospective Lessor’s Security.
96 -

PART IV

LESSOR’S CONDITIONS SUBSEQUENT

Lessor will deliver to Lessee:a copy of the export certificate of airworthiness from the prior state of registration in respect of the Aircraft as soon as practicable.

97 -

SCHEDULE 4 BASIC RENT AMOUNTS

[REDACTED: Confidential and commercially sensitive financial information]

98 -

SCHEDULE 5 NOTICES AND CERTIFICATES

PART I FORM OF ACCEPTANCE CERTIFICATE

(Letterhead of the Lessee)

From: CANADA JETLINES OPERATIONS, LTD. (“ Lessee ”)

To: BANK OF UTAH, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS OWNER TRUSTEE (“ Lessor ”)

Dated [***]

Aircraft Lease Agreement dated [] 2021 between the Lessor and the Lessee (the “Lease”) relating to one Airbus A320-200 Aircraft bearing MSN 4175 with two (2) CFM56-5B4/3 engines bearing MSNs 699726 and 699765 (the “Aircraft”)*

Terms used in this Acceptance Certificate have the meaning given to them in the Lease.

1. The Lessee represents, warrants and confirms that as at [] hours ([] time) on [***], being the Delivery Date:

(a) the Aircraft was duly accepted by the Lessee in accordance with and subject to the provisions of the Lease and the execution and delivery of this Acceptance Certificate further confirms the unconditional, irrevocable acceptance of the Aircraft by the Lessee for all purposes of the Lease;
(b) the Aircraft has a Maximum Take Off Weight of [] tons, Maximum Landing Weight of [] tons and Maximum Zero Fuel Weight [***] tons;
(c) the Engines are installed on the Aircraft and each Engine is the [specify thrust rating] standard with [insert amount*] pounds thrust;
(d) Fuel on board the Aircraft at Delivery was [***] kilos.
(e) The Airframe and Engines had the following Flight Hours/Flight Cycles:

(i) Airframe

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Total Hours Total Landings Flight Hours/Flight
Cycles
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(ii) Engines

Position	Serial No.	Total Flight Hours	Total Flight Cycles

99 -

(iii) APU Engine number one Total Flight Hours / Position Cycles

(f) the Lessee became obliged to pay to the Lessor the amounts provided for in the Lease with respect to the Aircraft;
(g) the monthly Basic Rent amount is $[***];
(h) the Aircraft is insured in accordance with the terms of the Lease;
(i) the Lessee’s representations and warranties contained in Clause 2 ( Lessee’s representations and warranties ) of the Lease are, by reference to the facts and circumstances existing today, true and accurate in all respects;
(j) the Lessee’s duly appointed and authorised technical experts have inspected the Aircraft and have confirmed that the Aircraft conforms to the Lessee’s requirements;
(k) the Aircraft is airworthy and satisfactory in all respects [except for the open/miscellaneous items specified in Appendix II hereto and Lessee and Lessor agree to the payments and commitments specified therein];
(l) the Lessee has no right of set-off, deduction, withholding or counterclaim against the Lessor whatsoever;
(m) no Default has occurred and is subsisting;
(n) the list of all Aircraft Documents set out in Appendix 1 (Aircraft Documents) is correct and complete; and
(o) this Acceptance Certificate forms part of the Lease.

IN WITNESS WHEREOF, the Lessee [and Lessor] has [have] caused this Acceptance Certificate to be duly executed by an authorised officer on the date first above written.

CANADA JETLINES OPERATIONS, LTD.,

as Lessee

By: ____ Name: ____ Title: ______

100 -
101 -

PART II FORM OF TECHNICAL ACCEPTANCE CERTIFICATE

(Letterhead of the Lessee)

From: CANADA JETLINES OPERATIONS, LTD. (“ Lessee ”)

To: BANK OF UTAH, not in its individual capacity but solely as Owner Trustee (“ Lessor ”)

Dated [***]

Aircraft Lease Agreement dated [] 2021 between the Lessor and the Lessee (the “Lease”) relating to one Airbus A320-200 aircraft bearing manufacturer’s serial number 4175 and two CFM56-5B4/3 engines bearing MSNs 699765 and 699726 with Austrian registration mark [] and with anticipated Canadian registration mark [] (the “Aircraft”)*

Terms used in this Technical Acceptance Certificate have the meaning given to them in the Lease.

1. Confirmation: Lessee hereby represents, warrants and confirm s to Lessor that:

(a) Lessee has had the opportunity to inspect the Aircraft and is satisfied that the Aircraft meets all of the requirements necessary for it to technically accept the Aircraft and that the Aircraft is in the Delivery Condition, other than (i) completion of the acceptance flight in accordance with paragraph 1.4 ( Acceptance Flight ) of Part I of Schedule 7 of the Lease, and (ii) the walk around inspection in accordance with paragraph 1.5 ( Lease Acceptance ) of Part I of Error! Reference source not found. of the Lease; and
(b) Lessee has on [_] 2021, technically accepted the Aircraft pursuant to Clause 6.1 ( Technical Acceptance, Lease Acceptance and Delivery ) of the Lease.

IN WITNESS WHEREOF , Lessee has, by its duly authorised representative, executed this Technical Acceptance Certificate on the date specified in paragraph 1 above.

CANADA JETLINES OPERATIONS, LTD. ,

as Lessee

By Name: Title:

102 -

APPENDIX 1 List of Aircraft documents

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A Current Certificates
A001 Certificate of Airworthines from Redelivering Airline), and if applicable the
Airworthiness Review Certificate (ARC).
A002 Certificate of Registration (from redelivering airline)
A003 Certificate of Airworthiness for Export (if applicable)
A004 Noise Certificate (or equivalent) e.g. AFM page
A005 Copy of Radio Station License (from Redelivering Airline), including installed list
of all radio transmitting equipment.
A007 Burn Certification - Compliance with FAR 25.853 (or EASA equivalent) for seats,
carpets, curtains, interior surfaces including in-combination burn certification (as
applicable) (note - burn certificatio may be contained in the AIR/ARL or type
design / IPC).
A009 Air Operator Certificate
B Aircraft Maintenance Status Summaries (certified by designated airline
representative)
B001 Certified listing of Airframe Check / Inspection History / Maintenance Checks
Performed
B002 Certified status of Total Time in Service (Hours and Cycles)
B003 Aircraft Flight Time Report / Aircraft Log Book / or Airline Maintenance
Information System utilisation report (as applicable)
B004 Certified status of Airframe & Appliance (Component) Airworthiness Directives
(including AD revision, applicability status and statement as to method of
compliance .e.g. modified/repaired/inspected).
B005 Certified status of Manufacturer Service Bulletins incorporated (may be included
in combined Aircraft Modification Listing)
B006 Certified status of all Airframe Non-Manufacturer Modifications incorporated,
including STCs (may be included in combined Aircraft Modification Listing)
B007 Certified status of compliance with the Redelivering Airline's AMP, including task
listing, task source, last done and next due information, applicable instructions for
continued Airworthiness, and any "Out of Phase" inspections
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B008 Certified status of supplemental structural inspections or ALS items (Airbus) as
applicable. Tasks may be incorporated in Last Done/Next Due listing.
B009 Certified status of CPCP / ISIP Tasks (if applicable) - may be incorporated in Last
Done / Next Due listing.
B010 Certified status of Certification Maintenance Requirements (CMR) - may be
incorporated in LDND listing.
B011 Certified status of Airworthiness Limitation Items (ALIs) - may be incorporated in
Last Done/Next Due listing.
B012 Certified list of deferred maintenance items (if applicable)
B013 Certified status of installed Time Controlled Components, including detail of
applicable airworthiness limitation parameter.
B014 Certified status of Life Limited Parts (if applicable) indicating cycle limit, cycles
consumed since new, and cycles remaining.
B015 Certified listing of Operator's current tracked Components (including applicable
Engine Components). Listing is limited to components which do not have a life
limit (e.g. LLP) nor subject to periodic maintenance in a shop (i.e HT/TCC
Components), but which do have an S/N and are tracked in the Operator's
maintenance information system. The listing should show by P/N and S/N the date
of installation of the component and the Time & Cycles (if available).
B017 Certified Incident/Accident Clearance Statement (IATA / AWG format or
equivalent) to include Aircraft, Engines, (and if applicable Propeller) covering the
period of operation with Lessee.
B018 Certified listing of internal and external structural repairs & allowable damage,
including reference to applicable approved data, time limited items and if applicable
instructions for continued airworthiness. (ii) Certified map (Dent & Buckle File) of
external repairs.
B019 Certified Statement of Oil and Fluid types used in Aircraft, Engines and APU (may
be included in Aircraft status statement).
B020 Certified listing of installed Operator loadable software including part number and
revision date (limited to software that affects the operation and control of the
aircraft)
B021 Evidence of aircraft operational capability (ie RVSM, RNP, ETOPS, Landing
Category, MNPS, FANS, FM Immunity, 8.33 Spacing, ADS-B). May include
reference to Component Listing (B015), AFM, Modification Listing, Operator's
AMP to substantiate requirement.
B022 Certified Flight Data Recorder report verifying that required parameters are within
approved limits (following last commercial flight prior to redelivery)
B023 Approved Maintenance Program Summary of Redelivering Airline, including
introduction summary pages, LDND list, and if applicable the MPD to AMP task
cross reference table.
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B024 Certified Cockpit Voice Recorder report verifying that required parameters are
within approved limits following last commercial flight prior to Redelivery (EASA
Ops (CAT IDE) only requirement).
C Aircraft Maintenance Records
C001 Aircraft Technical Logs - minimum of last 3 years, or less if accepted by the
Aircraft's next State of Registry (electronic or analogue format as available).
C002 A Checks - last complete cycle of A Checks (or Operator Check equivalent),
including Tally Sheet and CRS (minimum of last 3 years required).
C003 C Checks - the last complete cycle of C Checks or Operator Check equivalent,
including Tally Sheet and CRS.
C004 All Major Airframe scheduled Structural Check Packages (e.g. 6/12 Yr, 8/10/12 Yr,
S4C/S8C etc) or Operator Check equivalent) including Tally Sheet and CRS
9Structural Check Packages maybe included in C Check Packages).
C005 CPCP/ISIP certified maintenance task Cards (including level of corrosion found
and rectification) (can be included in C002/003/004).
C006 File for each applicable Airframe and Appliance (Component) AD (limited to
Appliance/Component Ads accomplished on-wing) including AD copy,
accomplishment instrucionts (ie EO / SB) and certified maintenance task cards.
C007 File for each incorporated Manufacturer's Service Bulletin (limited to SBs
accomplished on wing) including copy of SB and certified maintenance task card
(maybe included in combined aircraft Modification File)
C008 File for each incorporated non-OEM modification (including STCs) including
substantiation data, regulatory approval. Copy of accomplishment DFP, right to use
letter, manual supplements, Instructions for Continued Airworthiness and related
LDND information (maybe included in combined Aircraft Modification File).
C009 Certified maintenance data for each Structural Repair and Allowable Damage
(including embodiment instructions, Instructions for Continued Airworthiness,
revision of data used, amd Regulatory or Manufacturer approval if not within
SRM).
C010 Aircraft weight report reflecting current configuration
C011 Flight control balance status - original manufacturer data, and if applicable the latest
certified maintenance task card.
C012 Last Demonstration Flight report and relevant Technical Log (refers to end of lease
Demonstration Flight if applicable).
C013 Compass Deviation report including certified task card (last performed Operator
task card) (if applicable)
C014 Current Hard Copy records inventory (if applicable)
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D Configuration Status
D001 Layout of Passenger Accommodation (LOPA) Drawing including Seat Part
Numbers
D002 Galley Drawings
D003 Emergency Equipment Drawing with item description and Part Numbers
D004 Inventory of Loose and Galley Equipment
D005 Inventory Listing of Avionics Units installed (E and E Bay) (if available or as
incorporated in component listing).
D006 Electrical Load analysis (either current ELA or Original ELA plus any applicable
supplements).
E Aircraft Manufacturer Records
E001 Certificate of Airworthiness or Certificate of Airworthiness for Export at
Manufacture (if applicable)
E002 Manufacturer report of Airworthiness Directives incorporated at Mannufacture.
E003 Manufacturer's original component fitted listing (e.g. (AIR/ARL)
E004 Manurfacturer's Repair/Alteration Report/Significant Repair Log.
E005 Manufacturer Rreport of Modifications incorporated at manufacture.
E007 Production Aircraft Test Completion Record.
E009 Aircraft Historical / Miscellaneous Log (Boeing).
E010 Manufacturer Report of Landing Gear Life Limited Parts installed at Manufacture
including Part Numbers and Serial Numbers (if not included in other documents).
E011 Statement of the Aircraft eligible Type Certification
E012 Certified Aircraft Weighing Report at Manufacture
E013 Certificate of Conformance (if applicable to Aircraft Type)
E016 Rigging Brochure (If applicable to Aircraft Type)
F Engine Records (Separate folder for each respective Engine)
F001 Manufacturers Delivery Documents (EDS, Log Book, Test Data/Performance
Summary, Configuration Listing and SB Status at Manufacture)
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F002 Certificate of Airworthiness for Export at Manufacture (if applicable)
F003 Certified statement of Total Time in Service (Hours and Cycles)
F004 Certified status of Engine Airworthiness Directives (including applicability status
and statement as to method of compliance e.g. modified/repaired/inspected)
F005 Certified status of incorporated Engine Manufacture Service Bulletins
F006 Certified status of incorporated Engine Non Manufacturer modifications including
STC's with applicable regulatory approval.
F007 Certified Life Limited Parts listing indicating cycle limit, cycles consumed since
new and cycles remaining
F008 Individual total cycle substantiation data for each Life Limited Part since
manufacture.
F009 All historical Engine/Module Shop Visit reports (which may not include engine
DFP records and shop task cards).
F010 Condition Monitoring Report (current Trend Data)
F011 Engine Log Book and/or Master record of Installation & Removals (as applicable)
F012 Last Borescope report (including video) (if required by lease).
F013 Last Engine Test Cell Report.
F014 Last On-wing maximum power Assurance Ground Run (as performed during end
of lease maintenance check if applicable).
F015 Certified Engine Incident & Accident Clearance Statement for period of operation
with Lessee (IATA/AWG format or equivalent, if not coverd by Aircraft ICS in
B016)
F016 Certified Power Rating Operation statement (including (if applicable) cycles of
operation at different thrust ratings) - may be included in Disc Sheet or LLP tracking
template.
F017 Certified maintenance task cards for Specialist Engine Field Repairs since last shop
visit (if applicable)
F018 Certified maintenance task cards for Fan Blade Distribution (including P/N, S/N
and Moment Weight information)
F019 Certified inspection status and maintenance task card for last inspection of installed
Engine Mounts (if not covered by LDND)
F020 Certified High Pressure Turbine Blade listing to include TSN/CSN/TSO/CSO.
F021 Copy of current OEM concessions, (E.G Customer Departure Record (CDR-
GE/CFM), One Time Concession (OTC-PW/IAE) or Technical Variance (TV-RR))
as applicable.
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F022 Certified Engine component listing including serialised line replaceable units as
tracked by redelivery operator (if not already supplied in B015). Including
TSN/CSN/TSO/CSO (if available).
F023 ETOPS compliance report and certified maintenance task cards (if applicable)
F024 Certified maintenance task cards - Long Term Preservation - (if applicable)
F025 Certified statement- No PMA/ DER Repaired Parts fitted on the Engines
G APU Log Book and/or Master record of Installation & Removals (as
applicable).
G001 (i) Certified Total Time in Service of APU (including current Hours and Cycles)
(ii) Certified statement of ratio between Aircraft Hours to APU Hours
G002 Certified Status of APU Airworthiness Directives (including applicability status
and statement as to method of compliance e.g. modified /repaired/inspected).
G003 Certified Status of incorporated APU Manufacture Service Bulletins
G004 APU Log Book and/or Master record of Installation & Removals (as applicable).
G005 All APU Shop Visit Reports back to last Heavy SV, and if available Shop Visit
Reports prior to last Heavy SV (SV Reports may not include engine DFP records
and shop task cards).
G006 Certified Life Limited Parts Listing indicating hour or cycle limit, hours or cycles
consumed since new, and hours or cycles remaining, and if applicable the individual
total hour or cycle substantiation record for each Life Limited Part since
manufacture.
G007 Operational Performance Test (on-wing) - certified maintenance task card (if
applicable)
G008 Last Borescope report ((including video), if required by lease).
G009 Certified Maintenance Status of the APU to include Time since Last Heavy Shop
Visit
G010 Last Test Cell Report
G011 Certified statement- No PMA/ DER Repaired Parts fitted on the APU
H Component Records
H001 Authorised Release Certificate for each Time Controlled Component per OEM
Classifaction (including last overhaul / repair / shop test report as applicable).
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H002 Authorised Release Certificate for each operator tracked compomemt (requirement
to produce related component certificate is subject to lease agreement or
Redelivering Lessee's regulatory authority oversight).
I Landing Gears (Separate folder for each respective Landing Gear)
I001 Manufacturer report of Life Limited Parts installed at Manufacture (for installed
Landing Gear), including Part Number and Serial Number.
I002 Authorised Release Certificate from last Overhaul of each major Landing Gear
Assembly.
I003 Certified status of Life Limited Parts of each Landing Gear showing cycle limit,
cycles consumed since new and cycles remaining.
I004 Last Overhaul Shop Report.
I005 Individual total cycle substantiation data for each Life Limited Part (as identified
by applicable OEM document) since manufacture.
J Manuals (as applicable at EOL in then current format and redacted as
appropriate to protect operator proprietary data). Manuals which can be
sourced from an OEM directly are excluded.
J001 Airplane Flight Manual (including all supplements acceptable to the Aircraft state
of design)
J002 Wiring Diagram Manual
J003 Illustrated Parts Catalogue
J004 Maintenance Manual
J005 System Schematics Manual
J006 Wire List and Hookup Charts
J007 Aircraft Operating Manual
J008 Quick Reference Handbook
J009 Weight & Balance Manual
J010 Power Plant Buildup Manual
J011 Structural Repair Manual
J012 Engine Maintenance Manual
J013 Engine Illustrated Parts Manual
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J014 Master Minimum Equipment List
J015 Manufacturer's Maintenance Planning Document
J016 Dispatch Deviation Procedures Guide
J017 Manufacturer's Cabin Crew Operating Manual
J018 Passenger Seat Manuals (CMM & IPC), subject to proprietary data restrictions
J019 Galley CMM
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110 -

PART II FORM OF REDELIVERY ACCEPTANCE CERTIFICATE

(On letterhead of Lessee)

To: BANK OF UTAH, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS OWNER TRUSTEE (“ Lessor ”)

From: CANADA JETLINES OPERATIONS, LTD. (“ Lessee ”)

Dated [***]

Aircraft Lease Agreement dated [] 2021 between the Lessor and the Lessee (the “Lease”) relating to one [] Aircraft bearing MSN 4175 with two (2) []engines bearing MSNs 699726 and 699765 (the “Aircraft”)*

Terms used in this Redelivery Acceptance Certificate have the meaning given to them in the Lease.

1. The Lessor represents, warrants and confirms that as at [] hours ([] time) on [***], being the Redelivery Date:

(a) the Aircraft was in the Redelivery Condition and was duly accepted by the Lessor in accordance with and subject to the provisions of the Lease and the execution and delivery of this Redelivery Acceptance Certificate further confirms the acceptance of the Aircraft by the Lessor and the termination of the leasing of the Aircraft for all purposes of the Lease [except for the open/miscellaneous items specified in Appendix II hereto and Lessee and Lessor agree to the payments and commitments specified therein];
(b) the Engines are installed on the Aircraft;
(c) the Lessor’s duly appointed and authorised technical experts have inspected the Aircraft and have confirmed that the Aircraft conforms to the Lessor’s requirements;
(d) Fuel on board the Aircraft at Redelivery was [***] kilos / Lbs.
(e) The Airframe and Engines had the following Flight Hours/Flight Cycles:

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Airframe

Total Hours	Total Landings	Flight Hours/Flight Cycles	Flight Hours/Flight Cycles since last C Check

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Engines

Position	Serial No.	Total Flight Hours	Total Flight Cycles	Flight Hours/Flight Cycles since last shop visit	Flight Hours/ Flight Cycles since CFM56- 5B Engine Performance

111 -

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Restoration
Visit
APU
MSN Total Flight Hours Flight Hours/Flight Flight Hours/Flight
Cycles / Months Cycles remaining
remaining until on turbine and
next inspection compressor life
limited parts
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Landing Gears

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----- Start of picture text -----

Position Serial No. Total Flight Flight Flight Hours/
Hours/Flight Hours/Flight Flight Cycles
Cycles Cycles / /Months to next
Months since scheduled
last overhaul removal
Nose
Right Main
Left Main
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(f) the list of all Aircraft Documents set out in Appendix 1 ( Aircraft Documents ) is correct and complete.
(g) A copy of delivery LOPA …….

For and on behalf of the Lessor

By Name: Title:

[For and on behalf of the Lessee

By Name: Title:]

112 -

PART III

FORM OF EUROCONTROL LETTER

(On letterhead of Lessee)

The Director of the Central Route Charges Office European Organisation for the Safety of Air Navigation (EUROCONTROL) Rue de la Fusée, 96 1130 Bruxelles Belgium Email : [email protected]

[Date]

Dear Sirs

Aircraft model [], Registration mark [], MSN 4175 (the “Aircraft”)

We have leased the Aircraft from BANK OF UTAH, not in its individual capacity but solely as Owner Trustee (the “ Lessor ”) in accordance with a lease agreement dated [***] 2021 between us and the Lessor.

We hereby authorise you to provide the Lessor (hereby represented by JSA International U.S. Holdings, LLC as the Lessor’s duly authorised representative) with a general statement of account in relation to air navigation charges incurred by us and due to EUROCONTROL. Access to the statement(s) of account will be provided in accordance with the procedures established by EUROCONTROL.

The authorisation contained in this letter may only be revoked or amended by a written instruction signed by us and the Lessor.

Yours faithfully,

For and on behalf of [AIRLINE]

By: ____ Name: ____ Title: ______

113

PART IV FORM OF AVIATION AUTHORITY LETTER

[MSN 4175 ]

TO: THE AIR AUTHORITIES LISTED ON SCHEDULE “A” HERETO SUBJECT: STATEMENT OF ACCOUNTS FOR CANADA JETLINES DATE:  , 20__

Dear Sirs:

We refer to:

(a) Aircraft Lease Agreement dated as of  , 2021 as amended and supplemented from time to time between Bank of Utah, not in its individual capacity, but as owner trustee (“ Lessor ”), as lessor and Canada Jetlines Operations, Ltd., as lessee in respect of one (1) Boeing 737-8 Aircraft, bearing manufacturer’s serial number 4175 and Canadian Registration Marks C-  (the “ Aircraft ”).

We hereby irrevocably authorize you to release to Lessor at any time upon Lessor’s request, so long as Lessor has an interest in the Aircraft, a statement of account of all fees and charges then owed by Lessee (whether or not currently due and payable), as at the date of such request.

[Signature page follows]

114

Yours truly,

CANADA JETLINES OPERATIONS, LTD.

By:

Name: Title:

115

SCHEDULE “A”

VANCOUVER INTERNATIONAL AIRPORT AUTHORITY

Vancouver International Airport 3211 Grant McConachie Way Richmond, B.C. V7B 1Y7

AEROPORTS DE MONTREAL 800, Place Leigh-Capreol Bureau 1000 Dorval, Québec H4Y 0A5

GREATER TORONTO AIRPORTS AUTHORITY Toronto Pearson International Airport P.O. Box 6031, 3111 Convair Drive Toronto, AMF, Ontario L5P 1B2

MONTRÉAL-PIERRE ELLIOTT TRUDEAU INTERNATIONAL AIRPORT 975 Romeo-Vachon Blvd North Suite 317 Montreal, Quebec H4Y 1H1

NAV CANADA 77 Metcalfe Street Ottawa, Ontario K1P 5L6

THE CALGARY AIRPORT AUTHORITY

2000 Airport Road NE Calgary, Alberta V2E 6W5

OTTAWA INTERNATIONAL AIRPORT AUTHORITY

1000 Airport Parkway Private, Suite 2500 Ottawa, ON K1V 9B4

116 -

SCHEDULE 6 INSURANCES

1. Types of Insurance

The Lessee shall maintain the following Insurances with respect of the Aircraft:

1.1 Hull All Risks of loss or damage whilst flying and on the ground with respect to the Aircraft on an “agreed value” basis for at least the Agreed Value and with a deductible not exceeding $750,000 or, such other amount agreed by the Lessor from time to time, and to include deductible insurances, if necessary, to achieve that limit.
1.2 Hull War and Allied Perils according to policy form LSW555D , being the risks excluded from the Hull All Risks policy, (including confiscation and requisition by the State of Registration) for the Agreed Value, in each case to the fullest extent available from the leading international insurance markets.
1.3 All Risks (including War and Allied Perils) property insurance on all Engines and Parts when not installed on the Aircraft on an “agreed value” basis for their full replacement value and including engine test and running risks.
1.4 Aircraft Third Party (Bodily Injury and Property Damage), Passenger, Baggage, Cargo and Mail and Airline General Third Party (including Products and Contractual) Legal Liability for a combined single limit (bodily injury/property damage) of an amount not less than $750,000,000 any one occurrence (but in respect of products liability this limit may be an aggregate limit for any and all losses occurring during the currency of the policy). War and Allied Risks are also to be covered under the Policy to the fullest extent available but in any event for a minimum amount of $750,000,000 from the leading international insurance markets.

2. Hull and spares insurance

The hull and spares insurance referred to in paragraph 1 above shall:

2.1 name the Lessor and any Finance Party nominated by the Lessor as additional insured for their respective rights and interests;
2.2 provide that any loss will be payable in Dollars;
2.3 provide that insurers have no right to replace the Aircraft following a Total Loss (arranged, constructive or otherwise);
2.4 provide that in the event of a Total Loss of the Aircraft, insurers agree to pay Lessor all amounts up to the Agreed Value based solely upon Lessor’s (not Lessee’s) execution of the appropriate form of release/discharge document;
2.5 provide that settlement will be made to or to the order of the Lessor or its assignee where any claim becomes payable on the basis of a Total Loss;
2.6 provide that any loss (other than a Total Loss) shall be payable in the manner contemplated by Clause 18.6 ( Settlement of claims and loss adjustment );
2.7 provide that the Agreed Value shall be paid in full to the Lessor notwithstanding that one or more of the engines on the Airframe at the time of the Total Loss was not an Engine; and
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2.8 include a 50/50 provision in accordance with market practice (being AVS103 in the current market language) if separate Hull “All Risks” and “War Risks” insurances are arranged.

3. Liability insurance

The liability insurances referred to in paragraph 1 above shall:

3.1 include the Lessor and each of the Indemnitees as additional insureds for their respective rights and interests;
3.2 operate in all respects as if a separate policy had been issued covering each party insured, provided that the total liability of the Insurers shall not exceed the limits of liability stated in the relevant policy;
3.3 contain a provision confirming that the relevant policy is primary and without right of contribution from any other insurance available to the Lessor and each of the Indemnitees; and
3.4 provide cover denominated in any other currency which the Lessor may reasonably require.

4. All insurances

All Insurances shall:

4.1 be in accordance with normal industry practice of operators of aircraft similar to the Aircraft in similar circumstances;
4.2 operate on a world-wide basis subject to such limitations and exclusions as the Lessor may agree, acting reasonably;
4.3
provide for Write-back of any Date Recognition Exclusion;
4.4 acknowledge that the Insurers are aware of this Agreement and that the Aircraft is owned by the Lessor and (as the case may be) that the Insurances are subject to a security assignment in favour of the Lessor or a Finance Party;
4.5 provide that, in relation to the interests of each of the additional insureds, the Insurances shall not be invalidated by any act or omission (including misrepresentation and nondisclosure) of any other person which results in a breach of any term, condition or warranty of the policy, provided that the additional insured so protected has not caused, contributed to or knowingly condoned that act or omission;
4.6 provide that upon payment of any loss or claim to or on behalf of any additional insured:
(a) the Insurers be subrogated to all legal and equitable rights of that additional insured (other than its rights against any of the other additional insureds) to the extent and in respect of such payment;
(b) the Insurers shall not exercise their rights of subrogation without the consent of the relevant Indemnitee, which may not be unreasonably withheld; and
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(c) the relevant additional insureds shall do all things reasonably necessary to assist the Insurers to exercise the rights referred to in this paragraph 4.5 at, in each case, the expense of the Insurers;
4.7 provide that the additional insureds shall have no obligation or responsibility for the payment of any premiums due and that the Insurers shall not exercise any right of setoff or counter-claim in respect of any premium due against the respective interests of the additional insureds other than outstanding premiums relating to the Aircraft which is the subject of the relevant claim; and
4.8 provide that the Insurers may only cancel or materially alter the Insurances in a manner adverse to the additional insureds if they give at least thirty (30) days’ notice in writing to the appointed broker (or such lesser period as is customarily available in respect of war and allied risks) unless the relevant policy or endorsement specifically provides for the cancellation or automatic termination of the Insurances. Any such notice of cancellation or termination shall:
(a) be deemed to commence when that notice is given by the Insurers; and
(b) may not be given prior to the normal expiry date of the relevant policy or any endorsement.

5. Reinsurance

Any Reinsurances required in accordance with paragraph (b) of Clause 18.2 ( Insurers, Reinsurers and Brokers ) shall:

5.1 be on the same terms as the original Insurances and will include the provisions of this Schedule 6;
5.2 provide that the Reinsurers will be obliged to make any payment due under the relevant policy of reinsurance in full even if the reinsured has become insolvent; and
5.3 contain a “cut-through” clause in the following form (or otherwise, satisfactory to the Lessor):
5.4 “The Reinsurers and the Reinsured agree that if any valid claim arises under the reinsurances in respect of a total loss, that claim shall be paid to the person named as loss payee under the primary insurances. The Reinsurers shall pay to the person named as loss payee under the primary insurances effected by the Reinsured that portion of any loss for which the Reinsurers would otherwise be liable to pay the original Reinsured (subject to proof of loss) and, by paying that amount, the Reinsurers shall (to the extent of such payment) be fully discharged from any further liability in connection therewith, provided that such provisions do not contravene any applicable law”.

6. AVN67B

The Lessee may maintain Insurances in respect of the Aircraft for the purposes of this Agreement which incorporate AVN67B during the Lease Period and AVN99 following Redelivery. In that event, to the extent that any provision of AVN67B and/or AVN99 (as applicable) conflicts or is otherwise inconsistent with the requirements of this Agreement relating to Insurances, then (so long as it is general practice to insure aircraft financed or leased on the basis of AVN67B and/or AVN99) that conflicting or inconsistent provision of AVN67B and/or AVN99 (as applicable) shall prevail and the requirements of this Agreement shall be

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deemed to have been satisfied by the incorporation of AVN67B and/or AVN99 into the Insurances.

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SCHEDULE 7

PART I DELIVERY CONDITION

The Lessor shall procure that the Aircraft is delivered to the Lessee complying with the following conditions:

1. General Delivery Considerations

1.1 Aircraft Documentation Review : For a period commencing no less than three (3) months prior to the Anticipated Delivery Date and continuing until the date on which the Aircraft is delivered to Lessee in the condition required by this Agreement, Lessor will provide for the review of Lessee and/or its representative all of the Aircraft records and historical documents in one central room with access to telephone, photocopy, and internet connections at the Delivery Inspection Location. If applicable, Lessor shall provide Lessee with the list of software related to the Aircraft as of the Delivery Date which is subject to a separate agreement between Lessee and any other party together.
1.2 Aircraft Inspection : The Aircraft inspection shall commence upon execution of this Agreement and continue until the date on which the Aircraft is delivered to the Lessee in the condition required by this Agreement. During such inspection the Lessee and/or its representatives will have an opportunity to observe functional and operational system checks, perform a visual inspection of the Aircraft (taking into account the type, age, use, level of check performed and other known factors with respect to the Aircraft), and have the right, to the extent mutually agreed between Lessor and Lessee, to have additional panels or areas opened in order to allow further inspection by any inspecting party.
1.3 Lessee’s Technical Inspection : The Aircraft shall be made available to Lessee and/or Lessee’s designated representative(s) during and after completion of the delivery workscope at the Delivery Inspection Location. Lessee shall conduct final technical inspection at the Delivery Inspection Location and following such inspection, Lessee shall execute the Technical Acceptance Certificate

1.4 Acceptance Flight

Following completion of the delivery workscope and as part of Lessee’s inspection, an acceptance flight of the Aircraft shall be carried out on the ferry flight from the Delivery Inspection Location to the Delivery Location. In each case, Lessee or Lessee's representatives shall be entitled to observe. The acceptance flight shall be based on the Airbus change of operator demonstration flight profile for used aircraft and shall be for a duration not to exceed (2) two hours. Lessee shall have the option to permit up to two (2) representatives to be on board during such Aircraft acceptance flight. Any deficiencies noted necessary for the delivery of the Aircraft in the condition required herein shall be corrected and Lessee shall be entitled to receive satisfactory evidence of such correction (or, if agreed by the parties, may be noted in the certificate of acceptance).

1.5 Lease Acceptance

After the Aircraft has been ferried from the Delivery Inspection Location to the Delivery Location, Lessee shall be entitled to conduct a walk around inspection of the Aircraft (without the opening of any panels or cowlings nor the conduct of any borescope inspection of the Engine or APUs). If any new defects are discovered and caused by the ferry flight from the

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Delivery Inspection Location to the Delivery Location, Lessee shall support Lessor in rectifying such defect (unless otherwise agreed, at Lessor’s cost) at the Delivery Location. The rectification of any discrepancies found upon arrival of the Aircraft at the Delivery Location after the ferry flight from the Delivery Inspection Location shall not be construed as cause for a late delivery of the Aircraft to Lessee.

2. General Condition of Aircraft at Delivery

2.1 Condition

Lessor shall deliver the Aircraft to Lessee with all pilot discrepancies and carry-over or deferred maintenance items cleared, ready for flight, and with engines, components and systems, fully functional and operating within limits and guidelines established by the relevant manufacturer and EASA.

2.2 Strip & Paint

The exterior of the fuselage, wings, empennage and Engine cowlings shall have been stripped and freshly painted white, and all required markings applied in accordance with the Aircraft IPC and the manufacturer’s then-applicable painting standards and procedures. All other painted exterior surfaces will have been touched up as necessary.

2.3 Component Standards

2.3.1 Each Part that is controlled by both part number and serial number (as identified in the Aircraft Readiness Log prepared by the Airframe Manufacturer at Delivery) shall have EASA Form One or FAA8130-3 certification including where applicable, details of any maintenance, inspection, repair or modification activities, and in respect of Life Limited Parts, traceability back to birth, and including, original manufacturer certification. Lessor shall provide and substantiate TSN/CSN and TSO/CSO data for all time controlled and Life Limited Parts,
2.3.2 All time controlled and Life Limited Parts (excluding emergency equipment) shall have EASA Form One or FAA8130-3 certification. Lessor shall provide and substantiate TSN/CSN and TSO/CSO data for all time controlled and Life Limited Parts, including, where applicable, details of any maintenance, inspection, repair or modification activities, and in respect of Life Limited Parts, traceability back to birth, and including, original manufacturer certification.
2.4 Airworthiness standard : The Aircraft shall be in condition and certification standard to (a) comply with all requirements for issuance of a current and effective certificate of airworthiness from the Austrian Aviation Authority, and shall have a valid export certificate of airworthiness issued by the Austrian Aviation Authority.
2.5 AD thresholds : The Aircraft shall comply with all applicable EASA requirements and Airworthiness Directives on a terminating action basis which by their terms require compliance (i) on or before the Delivery Date, (ii) falling due within ninety (90) days. Any Airworthiness Directive not having a terminating option, shall be cleared on the basis of the highest level of inspection and/or maintenance option permitted by such Airworthiness Directive on the Redelivery Date.

3. Status and Condition of Engines and APU

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3.1 Lessor will provide evidence to Lessee reasonable satisfaction that the Engine borescope inspection, along with historical and technical records, do not reveal any condition which would cause the Engines to be unserviceable, beyond serviceable limits or serviceable with an increased frequency of inspection or with calendar time, flight hour or flight cycle restrictions under the AMM. Lessor will correct any discrepancies in accordance with the guidelines set out by OEM manufacturer which may be discovered during such inspection.
3.2 If the Engine condition trend monitoring data from new or since last performance restoration shop visit indicate any abnormal deterioration in the performance of any Engine, Lessor will correct, to Lessee reasonable satisfaction and subject to the OEM manufacturer's recommendations, such conditions which are determined to be causing such abnormal deterioration.
3.3 Each Engine and APU shall pass a magnetic chip detection inspection in accordance with the AMM.
Status of Repairs, Inspections & Maintenance Program
4.1.1 There will be no temporary, time limited or interim repairs on the Aircraft unless Manufacturer specifically recommends such repair. There shall be no external doubler repairs on the Aircraft unless Manufacturer specifically recommends such repair exclusive of other options. There shall be no repairs in the RVSM area unless Manufacturer specifically recommends such repairs. All repairs to the Aircraft will have been accomplished in accordance with Manufacturer's Structural Repair Manual (SRM). Repairs outside the scope of the SRM shall be provided with manufacturer's repair design approval sheet (RDAS) and either approved under (i) EASA Part 21 certification (or any subsequent EASA or FAA equivalent certification).
4.1.2 There will be no “on watch” conditions, special callouts, reduced inspection intervals, or special repetitive inspections in effect on the Airframe, any Engine, the APU or any Part.
4.1.3 The Aircraft shall be in compliance with all MPD tasks without sampling basis.
4.1.4 The entire fuselage, wings and empennage will be substantially free from corrosion and all mild and moderate corrosion found exceeding the limits of in the SRM will be adequately cleaned and treated and all severe or exfoliated corrosion shall be rectified in accordance with the requirements of the SRM.
4.1.5 The Aircraft interior including cockpit, main cabin and cargo compartments shall be in a condition that is acceptable by international commercial airline standards, normal wear and tear accepted, and shall have been maintained in accordance with the limits of the AMM or CMM, as applicable per the MPD.
4.1.6 The thrust reversers, nacelles and inlet nose cowlings shall have had inspections of all structures, acoustical coverings, attachment points and faying surfaces for damage, corrosion and de-lamination in accordance with the AMM and/or the SRM.
Checks & Part Lives
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5.1 Airframe: The Airframe shall be delivered to Lessee fresh out of a block C Check in accordance with the then current Manufacturer’s MPD (meaning based on a revision not earlier than 6 months prior to Delivery) with a minimum clearance of seven thousand (7,000) Flight Hours, four thousand five hundred (4,500) Flight Cycles and eighteen (18) months of operation as applicable. All damage to the Aircraft shall have been permanently repaired with no repeat inspection requirement (unless there is no terminating repair available from the Manufacturer) and certified in accordance with the requirements of the Manufacturer, the Aviation Authority and EASA. There shall be no repairs in the RVSM area unless Manufacturer specifically recommends such repair. The fuselage shall be free of dents, abrasions and loose or pulled rivets which exceed the limits of the Manufacturers Structural Repair Manual (“SRM”). The fuselage shall be substantially free from corrosion and the Aircraft shall be in compliance with the Manufacturer's corrosion prevention and control document (the CPCP) and the MPD.
5.2 Engines: Each Engine shall be fully serviceable and shall have at least five thousand (5,000) Flight Hours and four thousand (4,000) Flight Cycles remaining until its next anticipated CFM56-5B Engine Performance Restoration. No Engine shall be on watch or subject to any repeat inspection requirement or subject to any manufacturer concession.
5.3 Engine LLPs: Each Engine Life Limited Part shall have at least four thousand (4,000) Flight Cycles remaining until its next scheduled removal and replacement.
5.4 APU: The APU shall be in a serviceable condition in accordance with the AMM.

5.5 Landing Gear :

5.5.1 Each Landing Gear shall have no less than twenty (20) months of life remaining to next scheduled Landing Gear Overhaul.
5.5.2 All tires, wheels and brakes will have no less than forty percent (40%) of their useful life remaining in average, with no individual brake or tire having less than twentyfive percent (25%) service life remaining.
5.6 Components: Each Hard Time Component shall be delivered with a minimum of two thousand seven hundred (2,700) Flight Hours, one thousand five hundred (1,500) Flight Cycles and twelve (12) calendar months as applicable.
Certain Lessor Modifications .
6.1 The below modifications have been incorporated by Lessor at the request of the Lessee:
6.1.1 D -CF-2011-03R2 Lavatory Chemical O2 generators - Compliant
6.1.2 MOD 24064 - Embodied
6.1.3 MOD 39257 – Embodied
6.1.4 MOD 37147 - Embodied
6.1.5 MOD 21329 - Embodied
6.1.6 MOD 21215 – Embodied
6.1.7 Dual latching coffee maker/brewer equipment or Single latching with placard
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PART II REDELIVERY CONDITION

At the time of its Redelivery to Lessor under this Agreement, the Aircraft shall comply with the following conditions:

1. GENERAL PRE-REDELIVERY CONSIDERATIONS

1.1 Pre-redelivery Meeting : For a period commencing twelve (12) months prior to the proposed date of Redelivery, Lessee and Lessor will agree to conduct a pre-redelivery meeting for the purpose of: (a) the upcoming workscopes for the Redelivery Check and, if applicable, any Engine, APU, or Landing Gear shop visit, and (b) reviewing all documentation to be provided by Lessee in preparation for the review of the Aircraft Documents in conjunction with the Redelivery of the Aircraft.
1.2 Aircraft Documentation Review : For a period commencing no less than three (3) months prior to the proposed date of Redelivery and continuing until the date on which the Aircraft is returned to Lessor in the Redelivery Condition as required by this Lease, Lessee will provide for the review of Lessor and/or its representative all of the Aircraft Documents, records and historical documents in one central room with access to telephone, photocopy and internet connections at the Redelivery Location. If applicable, Lessee shall provide Lessor with the list of software related to the Aircraft as of redelivery which is subject to a separate agreement between Lessee and any other party.
1.3 Aircraft Inspection: The Aircraft inspection shall commence upon induction into the Redelivery Check and continue until the date on which the Aircraft is returned to Lessor in the Redelivery Condition required by this Agreement. During this inspection, the Lessee will make the Aircraft available to the Lessor for inspection in order to verify that the condition of the Aircraft complies with this Schedule 7. During this inspection Lessor and/or its representatives will have an opportunity to observe functional and operational system checks and perform a visual inspection of the Aircraft (taking into account the Aircraft type, age, use and other known factors with respect to the Aircraft) and have the right, to the extent mutually agreed between Lessor and Lessee, to have additional panels or areas opened in order to allow further inspection by Lessor's representatives.
1.4 Request for Additional Work : Lessor and Lessee agree to discuss, in good faith, the possible incorporation of additional work (at Lessor’s expense) into the Redelivery work package. The completion of such work shall be at Lessee’s option. Lessor will furnish Lessee with such additional work request at least one (1) month prior to the Redelivery Check to ensure that such work can be carried out as part of the redelivery package of work. Lessee will not be required to pay Basic Rent to Lessor for any whole days that Redelivery of the Aircraft to Lessor is delayed solely as a result of Lessor’s requests that additional work be performed over and above the work necessary to redeliver the Aircraft in the required Redelivery Condition.
1.5 Prior to the Expiry Date, the Lessee will, if the Lessor so requests, deliver to the Lessor a complete copy of the Maintenance Programme. The Lessor agrees that it will not disclose the Maintenance Programme to any entity except to the extent necessary to monitor the Lessee’s compliance with the provisions of this Agreement and/or to bridge the maintenance programme for the Aircraft from the Maintenance Programme to another maintenance programme after Redelivery.
1.6 Acceptance Flight: Immediately prior to redelivery of the Aircraft, Lessee will carry out for Lessor and/or Lessor’s representatives an Aircraft acceptance flight in accordance with the Airbus change of operator demonstration flight profile procedure for used aircraft, which will be for not less than two (2) hours. Lessor shall have the option to permit up to two (2)
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representatives to be on board during such Aircraft acceptance flight. Any deficiencies noted necessary for the delivery of the Aircraft in the condition required herein shall be corrected and Lessor shall be entitled to receive satisfactory evidence of such correction (or, if agreed by the parties, may be noted in the certificate of acceptance). Flight costs and fuel will be furnished by and at the expense of Lessee.

2. General Condition

2.1 The Aircraft shall be:

2.1.1 in as good condition, normal wear and tear from commercial passenger operations excepted, clean by international commercial airline standards and ready for flight and with the components in equivalent or better modification status as at the commencement of this Agreement;
2.1.2 with all installed equipment, components and systems fully functional and operating within limits and/or guidelines established by the relevant manufacturers and the Aviation Authority;
2.1.3 with all pilot discrepancies, “on-watch conditions”, special callouts, special repetitive inspections, and deferred / log-book maintenance items cleared on a terminating action basis;
2.1.4 with no leakage of fuel, oil, hydraulic fuel, or water that exceeds allowable limits set forth in the AMM;
2.1.5 with fluid reservoirs (excluding fuel but including oil, hydraulic, water and waste tanks) serviced to maximum levels in accordance with Manufacturer’s requirements; and
2.1.6 in compliance with all MPD tasks as a single aircraft without reliance upon (i) compliance status of other aircraft in the Lessee’s fleet or (ii) sampling of other aircraft.

2.2 Strip & Paint :

2.2.1 The exterior of the fuselage, wings, empennage and Engine cowlings shall have been stripped and freshly painted white or in a livery to be advised by Lessor, and all required markings applied in accordance with the Aircraft IPC and the Manufacturer’s then-applicable painting standards and procedures. All other painted exterior surfaces will have been touched up as necessary. Lessee shall be responsible at redelivery for permanent rectification of any scribe marks outside SRM limits.

2.3 Status and Condition of Parts & Components

2.3.1 All Parts fitted to the Aircraft that are controlled by both part number and serial number (as identified in the Aircraft Readiness Log prepared by the Airframe Manufacturer at Delivery) shall have EASA Form One or FAA 8130-3 certification.
2.3.2 All time controlled and Life Limited Parts shall have EASA Form One or FAA Form 8130-3 certification including where applicable, details of any maintenance, inspection, repair or modification activities, and in respect of Life Limited Parts, traceability back to birth, and including, original manufacturer certification). Lessee shall provide and substantiate TSN/CSN and TSO/CSO data for all time controlled and Life Limited Parts.
2.3.3 All condition-monitored Parts shall be supported by an industry standard reliability programme in accordance with the Maintenance Programme.

2.4 Status of Airworthiness Directives & Alert Service Bulletins

2.4.1 Airworthiness standard : The Aircraft shall be maintained in accordance with OEM recommendations and in a condition and certification standard, by
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modification if required, to (a) comply with all requirements of Transport Canada and in addition, will meet the full operating requirements of Transport Canada.

2.4.2 AD thresholds: The Aircraft shall comply with all applicable EASA requirements and Airworthiness Directives on a terminating action basis which by their terms require compliance (i) on or before the Redelivery Date, and (ii) falling due ninety (90) days thereafter. Any Airworthiness Directive not having a terminating option, shall be cleared on the basis of the highest level of inspection and/or maintenance option permitted by such Airworthiness Directive on the Redelivery Date.
2.4.3 The Aircraft shall have had accomplished all outstanding Airworthiness Directives (ADs) and Alert Service Bulletins (ASBs) affecting such model of Aircraft issued by EASA and the Aviation Authority, with no waivers or deviations regarding compliance with such ADs or ASBs, in order to clear the Aircraft for ninety (90) days, or the equivalent amount of,Flight Hours or Flight Cycles (as applicable) of operation from the Expiry Date.
2.4.4 Where repetitive inspections are required under an AD or ASB, the Lessee will ensure that at the Termination Date, the Aircraft is cleared for 6 months, 1,500 Flight Hours or 1,200 Flight Cycles (as applicable) or if the repetitive inspection interval is for 6 months, 1,500 Flight Hours or 1,200 Flight Cycles (as applicable) or less, then for one hundred percent (100%) of such inspection interval.
2.4.5 Any Airworthiness Directive not having a terminating option, shall be cleared on the basis of the highest level of inspection and/or maintenance option permitted by such Airworthiness Directive on the Redelivery Date.

2.5 Status and Condition of Engines and APU

2.5.1 With Lessor and/or its representatives present, Lessee will perform at its cost, a full and complete hot and cold section videotape borescope on each Engine and APU in accordance with Manufacturer’s Aircraft Maintenance Manual.
2.5.2 Lessee will provide evidence to Lessor’s reasonable satisfaction that the Engineborescope inspection, along with historical and Technical Records, do not reveal any condition which would cause the Engines or the APU to be unserviceable, beyond serviceable limits or serviceable with an increased frequency of inspection or with calendar time, flight hour or flight cycle restrictions resulting in a condition that imposes reduced mean-time on-wing operation under the AMM. Lessee will correct any discrepancies in accordance with the guidelines set out by the relevant OEM manufacturer , which may be discovered during such inspection. Lessor shall have option to conduct its own borescope inspections of the engines immediately prior to Delivery, at Lessor’s cost
2.5.3 If the Engine condition trend monitoring data from new or since last CFM56-5B Engine Performance Restoration indicate any abnormal deterioration in the performance of any Engine, Lessee will correct, to Lessor’s reasonable satisfaction and subject to the OEM manufacturer’s recommendations, such conditions which are determined to be causing such abnormal deterioration.
2.5.4 Each Engine and APU shall pass a magnetic chip detection inspection in accordance with the AMM.
2.5.5 With Lessor and/or its representatives present, Lessee will accomplish a maximum power assurance run on the Engines in accordance with AMM.
2.5.6 With Lessor and/or its representatives present Lessee will perform an APU function check in accordance with the AMM.

2.6 Status of Repairs, Inspections & Maintenance Program

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2.6.1 There will be no temporary, time limited or interim repairs on the Aircraft unless Manufacturer specifically recommends such repair.
2.6.2 There shall be no repairs in the RVSM area unless Manufacturer specifically recommends such repairs. All repairs to the Aircraft will have been accomplished in accordance with Manufacturer's Structural Repair Manual (SRM). Repairs outside the scope of the SRM shall be provided with manufacturer's repair design approval sheet (RDAS) and either approved under (i) EASA Part 21 or (ii) FAA 8100-9 certification (or any subsequent EASA or FAA equivalent certification).
2.6.3 All external doublers installed during the Lease Period shall be replaced with flush repairs, all in accordance with the Manufacturer’s Structural Repair Manual (SRM), provided however, such replacement of a doubler shall not be required where installation of such doubler is (i) the only approved repair in accordance with the Manufacturer’s SRM or Approved Repair Instructions, (ii) the result of a Manufacturer recommended Service Bulletin,
2.6.4 There will be no “on watch” conditions, special callouts, or special repetitive inspections in effect on the Airframe, any Engine, the APU or any Part.
2.6.5 The Aircraft shall be in compliance with all MPD tasks without sampling basis.
2.6.6 The entire fuselage wings and empennage will be substantially free from corrosion and all mild and moderate corrosion found exceeding the limits of in the SRM will be adequately cleaned and treated and all severe or exfoliated corrosion shall be rectified in accordance with the requirements of the SRM.
2.6.7 The Aircraft interior including cockpit, main cabin and cargo compartments shall be in a condition that is acceptable by international commercial airline standards, normal wear and tear accepted, and shall have been maintained in accordance limits of the AMM or CMM, as applicable per the MPD. The Aircraft shall deliver in accordance with Lessee’s standard high density LOPA with all installed seats upholstered in a manner consistent with commercial passenger airline standards and in serviceable condition in accordance with the AMM.
2.6.8 The thrust reversers, nacelles and inlet nose cowlings shall have had inspections of all structures, acoustical coverings, attachment points and faying surfaces for damage, corrosion and de-lamination in accordance with the AMM and/or the SRM, and/or all damage, corrosion and de-lamination shall have been repaired in accordance with the AMM and/or the SRM. The Lessor shall have the option to appoint an inspector to carry out such inspection. Reasonable wear and tear and damage should be acceptable so long as they are within limitations detailed in the AMM/SRM
2.6.9 Lessee shall provide Lessor with a “Dents and Damage” chart, or equivalent thereof, detailing all damage and locations, and shall provide all associated repair certification for the Aircraft and a repair file detailing each repair carried out on the Aircraft since Delivery.

2.7 Fuel

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2.7.1 The Aircraft fuel tanks shall have the same quantity of fuel as at Delivery as detailed on the Acceptance Certificate. On Redelivery, Lessor and Lessee (as the case may be) will have the option to pay to the other a cash adjustment in respect of the difference in the fuel on board at Deliver and Redelivery, at the prevailing cost of fuel at the Redelivery Location.
2.8 S tatus of Fuselage, Windows and Doors
2.8.1 The entire fuselage will be substantially free from corrosion and all mild and moderate corrosion found exceeding the limits of in the SRM will be adequately cleaned and treated and all severe or exfoliated corrosion shall be rectified in accordance with the requirements of the SRM.
2.8.2 The fuselage and doors will be free of dents and abrasions outside of the Manufacturer’s SRM limits.
2.8.3 All doors will be free of defects outside the limits of the AMM, correctly rigged and free moving, fitted with serviceable seals and free of pressurization leaks.
2.8.4 All windows (ie cockpit, cabin and doors) shall be free of delamination, blemishes, crazing and shall be properly sealed in accordance with the AMM.
2.9 Interior and Cockpit
2.9.1 The Aircraft interior including cockpit, main cabin and cargo compartments shall be in at least the same condition as at Delivery, normal wear and tear excepted considering the age of the Aircraft, and shall have been maintained in accordance with the limits of the AMM or CMM, as applicable per the MPD.
2.9.2 Seats, galleys, toilets and all other cabin installations will be clean, fully functioning, having a matching coordinated colour and fabric scheme (as per the Aircraft specification at Delivery). No seats or seat belts will have evidence of cracks or breakages and all placards shall be legible.
2.9.3 The flight deck shall be clean, free of stains and cracks and all systems shall function properly. Soft furnishings including galley floor coverings, carpets, curtains, seat covers and seat cushions will be in good condition, clean and free of stains and meet FAR 25 and any subsequent FAA fire resistance regulations. Interior panels (including overhead bins, sidewall and ceiling panels, bulkheads and cargo compartment panels), and related seals (including window seals) shall be clean and newly painted if discolored or stained and free of holes, cracks, temporary repairs and dents. Safety belts and harnesses shall be free of stains, discoloration, and fraying.
2.9.4 Cargo nets (the full complement), panels and floors will be in good condition with no tears or frayed areas, normal wear and tear excepted. All items which are found to be defective, non-compliant, or missing, as per the Manufacturer’s limits, in the Aircraft’s interior will be replaced or repaired. Cargo compartment panels shall be clean and sealed or taped as appropriate to meet all FAA fire resistance regulations
2.9.5 All signs, placards and decals shall be at least in the English language and shall be clean and legible.
2.9.6 The cabin and cockpit shall be free of all Lessee colour branding, markings and logos, which shall be removed and replaced
2.9.7 All galley catering inserts including trollies, containers, ovens, hot cups, coffee makers and water boilers shall be serviceable and in good working condition.
2.9.8 Where in-flight entertainment (IFE) equipment is fitted in the cabin during the Lease Period and is not removed during any configuration change (all in
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accordance with the provisions of this Agreement), all Lessee software and branding shall be removed and system return to baseline configuration, the complete system (shall operate correctly in accordance with the manufacturer's instructions).

2.10 Wings and Empennage

2.10.1 All leading edges shall be free from damage outside the SRM limits.
2.10.2 All control surfaces shall be free of damage outside the SRM limits and delamination and shall be refurbished and treated to the same standard as on the Lessee’s other aircraft fresh out of C Check or equivalent.
2.10.3 All unpainted cowlings and fairings shall be cleaned to the same standard as on the Lessee’s other aircraft.
2.10.4 Wings shall be free of fuel leaks, and to the extent permitted by the limits outlined in the AMM, the wings shall be free of oil & hydraulic leaks. The fuel tanks will have recently undergone an anti-fungus biological growth contamination laboratory evaluation with appropriate correction taken in accordance with the Manufacturer’s maintenance manual in the event contamination is identified.

2.11 Avionics

2.11.1 The Aircraft’s avionics shall be equipped to the same extent as at Delivery, with the then current software standard for all systems and the current revision for all periodically updated databases. All legally required modifications, as well as modifications or additions of navigation, communication and IFE accomplished during the Lease Period shall become the property of the Lessor at Redelivery.

2.12 Deregistration & Certificate of Airworthiness Matters

2.12.1 Upon redelivery of the Aircraft to Lessor, Lessor, at Lessee’s cost and expense and with Lessee’s reasonable assistance, shall procure the immediate deregistration of the Aircraft by the Aviation Authority.
2.12.2 Lessee agrees to provide Lessor with a current Certificate of Airworthiness for the Aircraft and, if applicable, obtain a Certificate of Airworthiness for Export to the next country of registry (such country to be designated in a timely manner in writing by Lessor to Lessee), issued by the Aviation Authority. Lessee will not be responsible for the cost of any modifications required to import the Aircraft into the next country of operation.
2.12.3 The Aircraft shall be in a position to be (i) in full compliance with the rules and regulations of the country of manufacture and with applicable Type Certificate Data Sheets, (ii) and in such condition as to be immediately eligible for issuance of a Standard Certificate of Airworthiness from EASA & Transport Canada.

2.13 Modification Kits and Incident/Accident Clearance Statement

2.13.1 At Redelivery, Lessee shall deliver to Lessor all free of charge Service Bulletin kits and any other free of charge modifications kits that have been delivered or made available to Lessee by any relevant manufacturer or supplier but have not been installed on the Aircraft. Any such Service Bulletin or kit that is on order at the time of Redelivery shall be delivered to Lessor (or as Lessor may direct) reasonably promptly after the same is received by Lessee after Redelivery.
2.13.2 Lessee shall provide a Statement from the Quality Assurance Manager or designee of the Lessee identifying the serial number (S/N) of the Aircraft and the S/N of its installed Engines APU and Landing Gear and confirming that they have not been involved in any accident or incident while in the possession of the Lessee.
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2.14 Checks and Part lives

2.14.1 Airframe : The Airframe shall be returned to Lessor fresh out of Lessee’s next due block C-Check inclusive of all lower level multiple maintenance checks (‘A’ checks and lesser checks) and inspections in accordance with the MPD and all systems/zonal and structures/corrosion checks and inspections or equivalent maintenance or inspections that fall due within Lessee’s next due C-Check period in force at that time, all performed by an Approved Maintenance Performer, but in any event not less than seven thousand (7,000) Flight Hours, four thousand five hundred (4,500) Flight Cycles and eighteen (18) months of operation.
2.14.2 Engines : Each Engine shall be fully serviceable and shall have at least five thousand (5,000) Flight Hours and four thousand (4,000) Flight Cycles remaining until its next anticipated shop visit. No Engine shall be on watch or subject to any repeat inspection requirement or subject to any manufacturer concession.
2.14.3 Engine LLPs: Each Engine Life Limited Part shall have at least four thousand (4,000) Flight Cycles remaining to its respective certified life limit
2.14.4 APU : The APU shall be returned in a serviceable condition in accordance with the AMM.
2.14.5 Landing Gear :
- (a) Each Landing Gear shall have no less, than twenty (20) months of life remaining to next scheduled removal or Landing Gear Overhaul.
- (b) All tires, wheels and brakes will have no less than forty percent (40%) of their useful life remaining with no individual brake or tire having less than twenty-five percent (25%) service life remaining
2.14.6 Components: Each Hard Time Component shall be returned with a minimum of two thousand seven hundred (2,700) Flight Hours, one thousand five hundred (1,500) Flight Cycles and twelve (12) calendar months as applicable.
2.15 Aircraft Documents
2.15.1 The Aircraft Documents shall be those listed in Part III of this Schedule 7, together with all additions, renewals, revisions and replacements as required by this Agreement, the Aviation Authority and the FAA, including back-to-birth traceability of Life Limited Parts. All Aircraft Documents (including all such additions, renewals, revisions and replacements) shall be maintained in English and a detailed list shall be provided to Lessor not less than 90 days prior to the scheduled Redelivery date.
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PART III AIRCRAFT DOCUMENTS REQUIRED AT REDELIVERY

Certain Aircraft Records and Manuals

At Redelivery Lessee shall return all archived delivery, maintenance, repair, shop visit AD, SB and modification documents and certificates associated with the Aircraft. All documentation described in this paragraph and listed below shall be in the English language and up to date to the Manufacturer’s latest revision. All documents requiring a quality assurance certification shall be duly signed by Lessee’s Quality Assurance representative.

All records listed in this Part III of Schedule 7 shall be provided notwithstanding any policies of the Aviation Authority that may allow the disposal of such records.

For the avoidance of doubt, the Aircraft Documents shall comply with the Aviation Authority and EASA / FAA archiving rules. All original documents for Engine, APU, Landing Gear shop visits and Aircraft C-Check or higher maintenance checks shall be maintained.

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A Current Certificates
A001 Certificate of Airworthines from Redelivering Airline), and if applicable the
Airworthiness Review Certificate (ARC).
A002 Certificate of Registration (from redelivering airline)
A003 Certificate of Airworthiness for Export (if applicable)
A004 Noise Certificate (or equivalent) e.g. AFM page
A005 Copy of Radio Station License (from Redelivering Airline), including installed list
of all radio transmitting equipment.
A006 Aircraft De-Registration confirmation (if applicable).
A007 Burn Certification - Compliance with FAR 25.853 (or EASA equivalent) for seats,
carpets, curtains, interior surfaces including in-combination burn certification (as
applicable) (note - burn certificatio may be contained in the AIR/ARL or type
design / IPC).
A009 Air Operator Certificate
B Aircraft Maintenance Status Summaries (certified by designated airline
representative)
B001 Certified listing of Airframe Check / Inspection History / Maintenance Checks
Performed
B002 Certified status of Total Time in Service (Hours and Cycles)
B003 Aircraft Flight Time Report / Aircraft Log Book / or Airline Maintenance
Information System utilisation report (as applicable)
B004 Certified status of Airframe & Appliance (Component) Airworthiness Directives
(including AD revision, applicability status and statement as to method of
compliance .e.g. modified/repaired/inspected).
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B005 Certified status of Manufacturer Service Bulletins incorporated (may be included
in combined Aircraft Modification Listing)
B006 Certified status of all Airframe Non-Manufacturer Modifications incorporated,
including STCs (may be included in combined Aircraft Modification Listing)
B007 Certified status of compliance with the Redelivering Airline's AMP, including task
listing, task source, last done and next due information, applicable instructions for
continued Airworthiness, and any "Out of Phase" inspections
B008 Certified status of supplemental structural inspections or ALS items (Airbus) as
applicable. Tasks may be incorporated in Last Done/Next Due listing.
B009 Certified status of CPCP / ISIP Tasks (if applicable) - may be incorporated in Last
Done / Next Due listing.
B010 Certified status of Certification Maintenance Requirements (CMR) - may be
incorporated in LDND listing.
B011 Certified status of Airworthiness Limitation Items (ALIs) - may be incorporated in
Last Done/Next Due listing.
B012 Certified list of deferred maintenance items (if applicable)
B013 Certified status of installed Time Controlled Components, including detail of
applicable airworthiness limitation parameter.
B014 Certified status of Life Limited Parts (if applicable) indicating cycle limit, cycles
consumed since new, and cycles remaining.
B015 Certified listing of Operator's current tracked Components (including applicable
Engine Components). Listing is limited to components which do not have a life
limit (e.g. LLP) nor subject to periodic maintenance in a shop (i.e HT/TCC
Components), but which do have an S/N and are tracked in the Operator's
maintenance information system. The listing should show by P/N and S/N the date
of installation of the component and the Time & Cycles (if available).
B016 -Omitted-
B017 Certified Incident/Accident Clearance Statement (IATA / AWG format or
equivalent) to include Aircraft, Engines, (and if applicable Propeller) covering the
period of operation with Lessee.
B018 Certified listing of internal and external structural repairs & allowable damage,
including reference to applicable approved data, time limited items and if applicable
instructions for continued airworthiness. (ii) Certified map (Dent & Buckle File) of
external repairs.
B019 Certified Statement of Oil and Fluid types used in Aircraft, Engines and APU (may
be included in Aircraft status statement).
B020 Certified listing of installed Operator loadable software including part number and
revision date (limited to software that affects the operation and control of the
aircraft)
B021 Evidence of aircraft operational capability (ie RVSM, RNP, ETOPS, Landing
Category, MNPS, FANS, FM Immunity, 8.33 Spacing, ADS-B). May include
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reference to Component Listing (B015), AFM, Modification Listing, Operator's
AMP to substantiate requirement.
B022 Certified Flight Data Recorder report verifying that required parameters are within
approved limits (following last commercial flight prior to redelivery)
B023 Approved Maintenance Program Summary of Redelivering Airline, including
introduction summary pages, LDND list, and if applicable the MPD to AMP task
cross reference table.
B024 Certified Cockpit Voice Recorder report verifying that required parameters are
within approved limits following last commercial flight prior to Redelivery (EASA
Ops (CAT IDE) only requirement).
C Aircraft Maintenance Records
C001 Aircraft Technical Logs - minimum of last 3 years, or less if accepted by the
Aircraft's next State of Registry (electronic or analogue format as available).
C002 A Checks - last complete cycle of A Checks (or Operator Check equivalent),
including Tally Sheet and CRS (minimum of last 3 years required).
C003 C Checks - the last complete cycle of C Checks or Operator Check equivalent,
including Tally Sheet and CRS.
C004 All Major Airframe scheduled Structural Check Packages (e.g. 6/12 Yr, 8/10/12 Yr,
S4C/S8C etc) or Operator Check equivalent) including Tally Sheet and CRS
9Structural Check Packages maybe included in C Check Packages).
C005 CPCP/ISIP certified maintenance task Cards (including level of corrosion found
and rectification) (can be included in C002/003/004).
C006 File for each applicable Airframe and Appliance (Component) AD (limited to
Appliance/Component Ads accomplished on-wing) including AD copy,
accomplishment instrucionts (ie EO / SB) and certified maintenance task cards.
C007 File for each incorporated Manufacturer's Service Bulletin (limited to SBs
accomplished on wing) including copy of SB and certified maintenance task card
(maybe included in combined aircraft Modification File)
C008 File for each incorporated non-OEM modification (including STCs) including
substantiation data, regulatory approval. Copy of accomplishment DFP, right to use
letter, manual supplements, Instructions for Continued Airworthiness and related
LDND information (maybe included in combined Aircraft Modification File).
C009 Certified maintenance data for each Structural Repair and Allowable Damage
(including embodiment instructions, Instructions for Continued Airworthiness,
revision of data used, amd Regulatory or Manufacturer approval if not within
SRM).
C010 Aircraft weight report reflecting current configuration
C011 Flight control balance status - original manufacturer data, and if applicable the latest
certified maintenance task card.
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C012 Last Demonstration Flight report and relevant Technical Log (refers to end of lease
Demonstration Flight if applicable).
C013 Compass Deviation report including certified task card (last performed Operator
task card) (if applicable)
C014 Current Hard Copy records inventory (if applicable)
D Configuration Status
D001 Layout of Passenger Accommodation (LOPA) Drawing including Seat Part
Numbers
D002 Galley Drawings
D003 Emergency Equipment Drawing with item description and Part Numbers
D004 Inventory of Loose and Galley Equipment
D005 Inventory Listing of Avionics Units installed (E and E Bay) (if available or as
incorporated in component listing).
D006 Electrical Load analysis (either current ELA or Original ELA plus any applicable
supplements).
E Aircraft Manufacturer Records
E001 Certificate of Airworthiness or Certificate of Airworthiness for Export at
Manufacture (if applicable)
E002 Manufacturer report of Airworthiness Directives incorporated at Mannufacture.
E003 Manufacturer's original component fitted listing (e.g. (AIR/ARL)
E004 Manurfacturer's Repair/Alteration Report/Significant Repair Log.
E005 Manufacturer Rreport of Modifications incorporated at manufacture.
E006 Service Difficulty Reports (if any) / Delivery Inspection Report (as applicable).
E007 Production Aircraft Test Completion Record.
E008 Manufacture Flight Logs (Hours and Cycles recorded).
E009 Aircraft Historical / Miscellaneous Log (Boeing).
E010 Manufacturer Report of Landing Gear Life Limited Parts installed at Manufacture
including Part Numbers and Serial Numbers (if not included in other documents).
E011 Statement of the Aircraft eligible Type Certification
E012 Certified Aircraft Weighing Report at Manufacture
E013 Certificate of Conformance (if applicable to Aircraft Type)
E014 Production Flight Certificate (if applicable to Aircraft type).
E015 Final Inspection Report (if applicable to Aircraft Type)
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E016 Rigging Brochure (If applicable to Aircraft Type)
E017 Certificate of Sanitary Construction (if applicable)
E018 Detailed Specification / Technical Description Document (if applicable)
E019 Interior Finish Specification Document
E020 Customer Checklist Document (if applicable)
F Engine Records (Separate folder for each respective Engine)
F001 Manufacturers Delivery Documents (EDS, Log Book, Test Data/Performance
Summary, Configuration Listing and SB Status at Manufacture)
F002 Certificate of Airworthiness for Export at Manufacture (if applicable)
F003 Certified statement of Total Time in Service (Hours and Cycles)
F004 Certified status of Engine Airworthiness Directives (including applicability status
and statement as to method of compliance e.g. modified/repaired/inspected)
F005 Certified status of incorporated Engine Manufacture Service Bulletins
F006 Certified status of incorporated Engine Non Manufacturer modifications including
STC's with applicable regulatory approval.
F007 Certified Life Limited Parts listing indicating cycle limit, cycles consumed since
new and cycles remaining
F008 Individual total cycle substantiation data for each Life Limited Part since
manufacture.
F009 All historical Engine/Module Shop Visit reports (which may not include engine
DFP records and shop task cards).
F010 Condition Monitoring Report (current Trend Data)
F011 Engine Log Book and/or Master record of Installation & Removals (as applicable)
F012 Last Borescope report (including video) (if required by lease).
F013 Last Engine Test Cell Report.
F014 Last On-wing maximum power Assurance Ground Run (as performed during end
of lease maintenance check if applicable).
F015 Certified Engine Incident & Accident Clearance Statement for period of operation
with Lessee (IATA/AWG format or equivalent, if not coverd by Aircraft ICS in
B016)
F016 Certified Power Rating Operation statement (including (if applicable) cycles of
operation at different thrust ratings) - may be included in Disc Sheet or LLP tracking
template.
F017 Certified maintenance task cards for Specialist Engine Field Repairs since last shop
visit (if applicable)
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F018 Certified maintenance task cards for Fan Blade Distribution (including P/N, S/N
and Moment Weight information)
F019 Certified inspection status and maintenance task card for last inspection of installed
Engine Mounts (if not covered by LDND)
F020 Certified High Pressure Turbine Blade listing to include TSN/CSN/TSO/CSO.
F021 Copy of current OEM concessions, (E.G Customer Departure Record (CDR-
GE/CFM), One Time Concession (OTC-PW/IAE) or Technical Variance (TV-RR))
as applicable.
F022 Certified Engine component listing including serialised line replaceable units as
tracked by redelivery operator (if not already supplied in B015). Including
TSN/CSN/TSO/CSO (if available).
F023 ETOPS compliance report and certified maintenance task cards (if applicable)
F024 Certified maintenance task cards - Long Term Preservation - (if applicable)
F025 Certified statement- No PMA/ DER Repaired Parts fitted on the Engines
G APU Log Book and/or Master record of Installation & Removals (as
applicable).
G001 (i) Certified Total Time in Service of APU (including current Hours and Cycles)
(ii) Certified statement of ratio between Aircraft Hours to APU Hours
G002 Certified Status of APU Airworthiness Directives (including applicability status
and statement as to method of compliance e.g. modified /repaired/inspected).
G003 Certified Status of incorporated APU Manufacture Service Bulletins
G004 APU Log Book and/or Master record of Installation & Removals (as applicable).
G005 All APU Shop Visit Reports back to last Heavy SV, and if available Shop Visit
Reports prior to last Heavy SV (SV Reports may not include engine DFP records
and shop task cards).
G006 Certified Life Limited Parts Listing indicating hour or cycle limit, hours or cycles
consumed since new, and hours or cycles remaining, and if applicable the individual
total hour or cycle substantiation record for each Life Limited Part since
manufacture.
G007 Operational Performance Test (on-wing) - certified maintenance task card (if
applicable)
G008 Last Borescope report ((including video), if required by lease).
G009 Certified Maintenance Status of the APU to include Time since Last Heavy Shop
Visit
G010 Last Test Cell Report
G011 Certified statement- No PMA/ DER Repaired Parts fitted on the APU
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H Component Records
H001 Authorised Release Certificate for each Time Controlled Component per OEM
Classifaction (including last overhaul / repair / shop test report as applicable).
H002 Authorised Release Certificate for each operator tracked compomemt (requirement
to produce related component certificate is subject to lease agreement or
Redelivering Lessee's regulatory authority oversight).
I Landing Gears (Separate folder for each respective Landing Gear)
I001 Manufacturer report of Life Limited Parts installed at Manufacture (for installed
Landing Gear), including Part Number and Serial Number.
I002 Authorised Release Certificate from last Overhaul of each major Landing Gear
Assembly.
I003 Certified status of Life Limited Parts of each Landing Gear showing cycle limit,
cycles consumed since new and cycles remaining.
I004 Last Overhaul Shop Report.
I005 Individual total cycle substantiation data for each Life Limited Part (as identified
by applicable OEM document) since manufacture.
J Manuals (as applicable at EOL in then current format and redacted as
appropriate to protect operator proprietary data). Manuals which can be
sourced from an OEM directly are excluded.
J001 Airplane Flight Manual (including all supplements acceptable to the Aircraft state
of design)
J002 Wiring Diagram Manual
J003 Illustrated Parts Catalogue
J004 Maintenance Manual
J005 System Schematics Manual
J006 Wire List and Hookup Charts
J007 Aircraft Operating Manual
J008 Quick Reference Handbook
J009 Weight & Balance Manual
J010 Power Plant Buildup Manual
J011 Structural Repair Manual
J012 Engine Maintenance Manual
J013 Engine Illustrated Parts Manual
J014 Master Minimum Equipment List
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J015	Manufacturer's Maintenance Planning Document
J016	Dispatch Deviation Procedures Guide
J017	Manufacturer's Cabin Crew Operating Manual
J018	Passenger Seat Manuals (CMM & IPC), subject to proprietary data restrictions
J019	Galley CMM

PART IV

SUPPLEMENTAL RENT AND LESSOR CONTRIBUTIONS

[REDACTED: Confidential and commercially sensitive financial information]

139 -

PART IV

SCHEDULE 8 FORM OF MONTHLY REPORT

[] MSN: 4175 Type: [] Model: [] Config: [] Lessor: JSA Operator: [] First Flight [●] [] Current AC Logunits:** Ac TSN: [●] Ac CSN: [●]

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A/C [] [XXXX]
Month FH/Period TSN CY/Period CSN
[●] [●] [●] [●] [●]
APU Pn/Sn [] [●]
Month FH/Period TSN CY/Period CSN Location
[●] [●] [●] [●] [●] [●]
APU FH/Period is shown as ¼ of the actual value (rounded to full minute)
ENG1 Pn/Sn CFM56-5B4/3 [●]
Month FH/Period TSN CY/Period CSN Location
[●] [●] [●] [●] [●] [●]
ENG2 Pn/Sn CFM56-5B4/3 [●]
Month FH/Period TSN CY/Period CSN Location
[●] [●] [●] [●] [●] [●]
LH MLG Pn/Sn [] [●]
Month FH/Period TSN CY/Period CSN Location
[●] [●] [●] [●] [●] [●]
RH MLG Pn/Sn [] [●]
Month FH/Period TSN CY/Period CSN Location
[●] [●] [●] [●] [●] [●]
NLG Pn/Sn [] [●]
Month FH/Period TSN CY/Period CSN Location
[●] [●] [●] [●] [●] [●]
*----- End of picture text -----

140 -

SCHEDULE 9 FORM OF IDERA

IRREVOCABLE DE-REGISTRATION AND EXPORT REQUEST AUTHORISATION

Date: 

To: Canadian Civil Aircraft Register, Transport Canada Aviation
Re: Irrevocable De-Registration and Export Request Authorisation

The undersigned is the registered owner of the Boeing 737-8 (CTC Model B737-8) Aircraft bearing manufacturer’s serial number  and Canadian Registration Marks C-  , together with all installed, incorporated or attached accessories, parts and equipment, (the “ Aircraft ”).

This instrument is an irrevocable de-registration and export request authorisation issued by the undersigned in favor of Bank of Utah, not in its individual capacity, but as owner trustee (“ the Authorised Party ”), under the authority of Article XIII of the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment. In accordance with that Article, the undersigned hereby requests:

(i) recognition that the Authorised Party or the person it certifies as its designee is the sole person entitled to:
(a) procure the de-registration of the Aircraft from the Canadian Civil Aircraft Register maintained by Transport Canada for purposes of Chapter III of the Convention on International Civil Aviation, signed at Chicago, on 7 December 1944; and
(b) procure the export and physical transfer of the Aircraft from Canada; and
(ii) confirmation that the Authorised Party or the person it certifies as its designee may take the actions specified in clause (i) above on written demand without the consent of the undersigned and that, upon such demand, the authorities in Canada shall cooperate with the Authorised Party with a view to the speedy completion of such action.

The rights in favor of the Authorised Party established by this instrument may not be revoked by the undersigned without the written consent of the Authorised Party.

141

Please acknowledge your agreement to this request by notation in the space provided below and lodging this instrument in the Canadian Civil Aircraft Register maintained by Transport Canada.

Sincerely yours,

CANADA JETLINES OPERATIONS, LTD.

By: ________ Name: Title:

Agreed to and lodged this 

TRANSPORT CANADA

By: ________ Name:

Title:

142

SCHEDULE 10 FORM OF LEASE TERMINATION AGREEMENT

LEASE TERMINATION AGREEMENT MSN 4175

THIS AGREEMENT is made as of _, _,

BETWEEN : Canada Jetlines Operations, Ltd., (“ Lessee ”); and Bank of Utah, not in its individual capacity, but as owner trustee (“ Lessor ”).

RE: Aircraft Lease Agreement dated (the “ Lease ”) with respect to one Boeing 737-8 model Aircraft, MSN 4175, C-  (the “ Aircraft ”).

IT IS AGREED as follows:

1. LEASE TERMINATION

Lessor and Lessee hereby terminate the lease and all rights of Lessee to operate the Aircraft as of _ o’clock __ m. _____ time on the date hereof and release the Aircraft from all of the terms and conditions of the Lease.

IN WITNESS whereof the parties hereto have executed this Agreement as of the date first written above.

LESSOR: BANK OF UTAH, not in its individual capacity, but as owner trustee By: Name: Title:	LESSOR: BANK OF UTAH, not in its individual capacity, but as owner trustee By: Name: Title:	LESSEE: CANADA JETLINES OPERATIONS, LTD. By: Name: Title:	LESSEE: CANADA JETLINES OPERATIONS, LTD. By: Name: Title:
By:
			Name: Title:

143 -

LEASE AGREEMENT – MSN 4175– SIGNATURE PAGES

IN WITNESS WHEREOF Lessor and Lessee have executed and delivered this Agreement as of the date shown at the beginning of this Agreement.

BANK OF UTAH, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS OWNER TRUSTEE ,

as Lessor

By: “ Jenny Miller ” Name: Jenny Miller Title: Vice President

CANADA JETLINES OPERATIONS, LTD.,

as Lessee

By: “Eddy Doyle” Name: Eddy Doyle Title: CEO

GLOBAL CROSSING AIRLINES , as Guarantor

By: “Edward J Wegel” Name: Edward J Wegel Title: Chair and CEO

144 -

AI assistant

Canada Jetlines Operations Ltd. — Capital/Financing Update 2022

48174_rns_2022-03-29_2b93b0e7-c112-4c4e-a942-fae015e08aa9.pdf

DATED 15 DECEMBER 2021

BANK OF UTAH,

CANADA JETLINES OPERATIONS, LTD. ,

AIRCRAFT LEASE AGREEMENT

CONTENTS

PAGE

BACKGROUND

1. DEFINITIONS AND INTERPRETATION

1.1 Definitions

“ Approved Maintenance Performer ” means:

“ Total Loss Date ” means:

1.2 Construction

1.3 Third party rights

2. LESSEE’S REPRESENTATIONS AND WARRANTIES

2.1 Status

2.2 Binding obligations

2.3 Non-conflict with other obligations

2.4 Power and authority

2.5 Validity and admissibility in evidence

2.6 Governing law and enforcement

2.7 Deduction of Tax

2.8 No filing or stamp taxes

2.9 No default

2.10 No misleading information

2.11 Original Financial Statements

2.12 Pari passu ranking

2.13

No proceedings pending or threatened

2.14 Civil commercial law

2.15 No immunity

2.16 Registrations and Filings

2.17 Export

2.18 Excluded Countries

2.19

Material Adverse Change

2.20 Import

2.21 No Security Interest

2.22 No Restriction on Payments

2.23 Deregistration Power of Attorney and IDERA

2.24 Fees and Charges

2.25

Repetition

3. LESSOR’S REPRESENTATIONS AND WARRANTIES

3.1 Status

3.2 Binding obligations

3.4 Non-conflict with other obligations

3.5

Power and authority

3.7

Validity and admissibility in evidence

3.9

Governing law and enforcement

3.10 Repetition

4. CONDITIONS

4.1 Lessee’s Conditions Precedent

4.2 Lessee’s Conditions Subsequent

4.3 Lessor’s discretion

4.4 Lessor’s Conditions Precedent

4.5 Lessee’s discretion

5. LEASE

6. ACCEPTANCE AND DELIVERY

6.1 Technical Acceptance, Lease Acceptance and Delivery

6.3

Late Delivery

6.4 Pre-acceptance termination

6.5

Delivery Authorisations

7. LESSOR’S LIABILITY

7.1 Risk

7.2 Deficiencies and delays

7.3

Disclaimer

8. QUIET ENJOYMENT

9. BASIC RENT AND OTHER PAYMENTS

9.1 Basic Rent

9.2 Supplemental Rent

9.3 Commitment Fee

Canada Jetlines Operations Ltd. Capital/Financing Update 2022

This [Aircraft/Engine] is owned by BANK OF UTAH, not in its individual capacity but solely as Owner Trustee, is leased to [AIRLINE] [and mortgaged in favour of [*]]”** ; and