Exhibit 10.40
LEASE NOVATION AGREEMENT (CAC [     ]), dated as of December 15, 2010 (this
“Agreement”), among WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, a US
national banking association, not in its individual capacity but solely as Owner
Trustee (“Existing Lessor”), THUNDERBIRD [   ] LEASING LIMITED, a Mauritius
company (“New Lessor”), and SOUTH AFRICAN AIRWAYS (PTY) LTD., a South African
private limited liability company (“Lessee”).
RECITALS
Pursuant to Lease Agreement (CAC [     ]), dated as of December 16, 2009 (as
previously amended and supplemented, the “Lease Agreement”), between Existing
Lessor, as lessor, and Lessee, as lessee, in respect of one Airbus A330-200
aircraft with manufacturer’s CAC [   ] and manufacturer’s serial number [     ]
(the “Aircraft”), Existing Lessor agreed to lease and Lessee agreed to take on
lease the Aircraft upon the terms and conditions set out therein.
Existing Lessor and New Lessor desire that Existing Lessor transfer to New
Lessor by novation the Lease Agreement, and Lessee is willing to agree to such
novation, in each case upon the terms and conditions contained herein.
AGREEMENT
In consideration of the foregoing premise, and for other good and valuable
consideration the adequacy and receipt of which are hereby acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS AND CONSTRUCTION
The capitalized terms used in this Agreement shall have the respective meanings
ascribed thereto below:
“Effective Time” means the acceptance of the Aircraft by Lessee from New Lessor,
as evidenced by Lessee’s execution of the Acceptance Certificate.
“Novated Lease” means the Lease Agreement as novated and amended by this
Agreement.
Capitalized terms used, but not defined, in this Agreement shall have the
respective meanings assigned to them in the Lease Agreement.
The provisions of Part II of Schedule 1 to the Lease Agreement shall apply to
this Agreement as if set out herein in full and as if references therein to
“this Agreement” were references to this Agreement.
2. NOVATION
As and with effect from the Effective Time:

  (1)   Lessee releases Existing Lessor from Existing Lessor’s obligations,
duties and liabilities to Lessee under the Lease Documents to the extent related
to the period, and which arise, after the Effective Time;     (2)   Existing
Lessor releases Lessee from Lessee’s obligations, duties and liabilities to
Existing Lessor under the Lease Documents and Existing Lessor agrees that it has
no further rights under the Lease Documents, in each case, to the extent related
to the period, and which arise, after the Effective Time;     (3)   New Lessor
agrees with Lessee to assume the rights, obligations, duties and liabilities of
Existing Lessor under the Lease Documents, to the extent related to the period,
and which arise, after the Effective Time;

 

--------------------------------------------------------------------------------

 

  (4)   Lessee consents to and accepts the assumption by New Lessor of Existing
Lessor’s rights, obligations, duties and liabilities under the Lease Documents;
    (5)   Lessee agrees that it will not assert against New Lessor any claim or
defense that it may have or have had against Existing Lessor under the Lease
Documents related to the period or arising prior to the Effective Time; and    
(6)   Lessee agrees with New Lessor to perform its obligations under the Lease
Documents (as amended and supplemented by this Agreement) in favor of New
Lessor,

each of the foregoing events and agreements being conditional on, and taking
effect simultaneously with, the others.
The Existing Lessor, New Lessor and Lessee accordingly agree that, as and with
effect from the Effective Time (subject to the satisfaction, or the waiver in
accordance with Section 5.3, of the conditions precedent set out in Sections 5.1
and 5.2), the Lease Agreement shall be novated to New Lessor with the effect of
constituting a new agreement in the form of the Novated Lease between New
Lessor, as lessor and Lessee, as lessee.
Without prejudice to the rights of New Lessor or Lessee hereunder or under the
Novated Lease, Lessee and Existing Lessor agree that, in respect only of any
losses, liabilities or claims suffered or incurred by either of them in respect
of the part of the Lease Period prior to the Effective Time, each shall have the
same rights and remedies against each other as it would have had if Existing
Lessor had remained the “Lessor” under the Lease Documents and this Agreement
had not been executed. The New Lessor shall not be responsible to Lessee in
respect of any such losses, liabilities or claims nor shall Lessee exercise any
set off or counterclaim against New Lessor in respect of any such losses,
liabilities or claims.
3. NEW LESSOR’S AGREEMENTS
Prior to the earlier of (x) the Effective Time and (y) January 31, 2011, New
Lessor will deliver to Lessee:

  (1)   A guarantee issued by Aircastle Holding Corporation Limited in the same
form as delivered by Aircastle Holding Corporation Limited to Lessee on
December 16, 2009, but guaranteeing the obligations of New Lessor;     (2)   An
officer’s certificate certifying that (a) Aircastle Holding Corporation Limited
has a net worth of at least $US$30,000,000 and (b) the accuracy of an attached
balance sheet for Aircastle Holding Corporation Limited, which attached balance
sheet will show that Aircastle Holding Corporation Limited has a tangible net
worth of at least $US$30,000,000.

Further, New Lessor confirms to Lessee that:

  (1)   So long as no Event of Default shall have occurred and be continuing,
none of Owner, New Lessor or any Person validly claiming by or through Owner or
New Lessor shall violate Lessee’s quiet enjoyment of the use, operation and
possession of the Aircraft and rights thereto under this Lease Agreement;    
(2)   Lessee’s obligations under the Operative Documents shall not, as measured
at the Effective Time, increase as a consequence of the novation contemplated
hereby (other than in respect of Taxes, which are addressed in Schedule 6 to the
Lease Agreement) and Lessee’s rights and benefits under the Operative Documents
shall not, as measured at the Effective Time, be diminished as a consequence of
the novation contemplated hereby. Neither a change in the Person or Persons to
whom, or for whose benefit, Lessee performs its obligations under the Operative
Documents, nor an increase in the number of, or change in the nature of,
beneficiaries under any indemnification, insurance or other obligation shall, in
each case, constitute by itself or in the aggregate an increase in the
obligations of Lessee under the Operative Documents; and

 

--------------------------------------------------------------------------------

 

  (3)   New Lessor shall reimburse (or cause to be reimbursed) to Lessee
promptly upon invoice Lessee’s reasonable out-of-pocket expenses actually
incurred in connection with co-operating with Existing Lessor and New Lessor in
relation to any such transfer or proposed transfer referred to in this Agreement
(such costs to include the fees and expenses of Skadden and, if any, Lessee’s
Mauritius counsel), provided that such expenses are substantiated to New
Lessor’s reasonable satisfaction and provided further that no Event of Default
has occurred and is continuing.     (4)   Other than the execution and delivery
of this Agreement, and the performance of the obligations set forth herein,
Existing Lessor and New Lessor do not require Lessee to execute or deliver any
other documents or assurances, or take any other action, in each case pursuant
to Section 14.1 of the Lease Agreement, to establish or protect the rights and
remedies created or intended to be created in favor of the New Lessor.

3. LEASE AMENDMENT
As of, and with effect from, the Effective Time the Lease Agreement, as novated
hereby, will be amended as follows:

  (1)   the expression “Lessor” wherever it appears in each of the Lease
Documents will be treated as though it referred to New Lessor to the exclusion
of Existing Lessor;     (2)   where the context so permits, the expression “this
Agreement” wherever it appears in the Lease Agreement will be treated as though
it referred to the Lease Agreement as novated and amended hereby;     (3)  
clause (a) of Section 5.1(1) will be amended and restated as follows:        
(a) is a company duly organized under the Laws of the Lessor Jurisdiction    
(4)   the definition of “Business Day” in Part I of Schedule 1 will be amended
and restated as follows:         “Business Day” means a day (other than a
Saturday or Sunday) on which banks are open for business in Johannesburg, New
York and Port Louis.     (5)   the definition of “Lessor Jurisdiction” in Part I
of Schedule 1 will be amended and restated as follows:         “Lessor
Jurisdiction” means Mauritius.     (6)   the definition of “Other Aircraft” in
Part I of Schedule 1 will be amended and restated as follows:         “Other
A330 Aircraft” means the other five A330-200 aircraft (CAC [      ], CAC
[     ], CAC [      ], CAC [      ], CAC [      ]) subject to lease agreements,
dated as of the date hereof, between Lessee and Affiliates of Lessor.     (7)  
the definition of “Indemnified Party” in Part I of Schedule 1 will be amended
and restated as follows:         “Indemnified Party” means Lessor, Owner,
Remarketing Servicers, Administrative Agent, any backup remarketing servicer,
each Financing Party, Manufacturing Inspector and the successors and permitted
transferees and assigns of each of the foregoing, and the directors, officers,
corporate stockholders, partners, employees, contractors, servants and agents of
each of the foregoing.     (8)   Section 1.6 of Schedule 2 will be amended and
restated as follows:

  (1)   In the case of the Airframe, in the upper sill of the left-hand forward
entry door, adjacent to Airframe Manufacturer’s plate, “THIS AIRCRAFT IS OWNED
BY THUNDERBIRD [ ]

 

--------------------------------------------------------------------------------

 

      LEASING LIMITED AND IS HELD UNDER LEASE BY SOUTH AFRICAN AIRWAYS
(PTY) LTD.”     (2)   In the case of each Engine, in a clearly visible place in
close proximity to the manufacturer’s plate, “THIS ENGINE IS OWNED BY
THUNDERBIRD [ ] LEASING LIMITED AND IS HELD UNDER LEASE BY SOUTH AFRICAN AIRWAYS
(PTY) LTD.”

  (9)   the Lessor’s notice details in Schedule 5 will be amended and restated
as follows:

Thunderbird [ ] Leasing Limited
c/o Aircastle Advisor LLC
300 First Stamford Place
Fifth Floor
Stamford CT 06902 USA

Fax: +1 (917) 591-9106
Attention: Lease Management
4. REPRESENTATIONS AND WARRANTIES
4.1 Lessee’s Representations to New Lessor
Lessee represents and warrants to New Lessor as of the Effective Time that
Lessee’s representations and warranties in Section 5.2 of the Lease Agreement
are true and correct including with respect to the Lease Agreement as amended
hereby and with this Agreement as an Operative Document.
4.2 New Lessor’s Representations
New Lessor represents and warrants to Lessee as of the Effective Time that the
representations and warranties in Section 5.1 of the Lease Agreement are true
and correct including with respect to the Lease Agreement as amended hereby and
with this Agreement as an Operative Document.
5. MISCELLANEOUS
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
ENGLAND AND WALES.
The provisions of Sections 16, 17, 18.2 to 18.4, and 19 of the Lease Agreement
shall apply to this Agreement mutatis mutandis.
This Agreement is an “Operative Document” for purposes of the Lease Agreement.
IN WITNESS whereof the parties hereto or their duly authorized representatives
have executed this Agreement on the date written above.

 

--------------------------------------------------------------------------------

 

WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
as Owner Trustee

         
By:
       
 
 
 
Name:    
 
  Title:    
 
        THUNDERBIRD [ ] LEASING LIMITED    
 
       
By:
       
 
 
 
Name:    
 
  Title:    
 
        SOUTH AFRICAN AIRWAYS (PTY) LTD.    
 
       
By:
       
 
 
 
Name:    
 
  Title:    
 
       
By:
       
 
 
 
Name:    
 
  Title:    
 
       
By:
       
 
 
 
Name:    
 
  Title: