Portions of this agreement have been omitted based upon a request for
confidential treatment. This agreement, including the non-public information,
has been filed separately with the Securities and Exchange Commission. “[*]”
designates portions of this document that have been redacted pursuant to the
request for confidential treatment filed with the Securities and Exchange
Commission.

MASTER SUBLEASE AGREEMENT
Dated as of September 16, 2014
between
REPUBLIC AIRLINE INC.
as Sublessor
and
FLYBE LIMITED
as Sublessee

To the extent, if any, that this Master Sublease Agreement constitutes chattel
paper (as such term is defined in the Uniform Commercial Code as in effect in
any applicable jurisdiction) no security interest in this Master Sublease
Agreement may be created through the transfer or possession of any counterpart
other than the original executed counterpart, which shall be identified as the
counterpart containing the receipt therefor executed by the Sublessor on the
signature page thereof.

 

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TABLE OF CONTENTS

Page

 
 
 
Section 1
Definitions
2
Section 2
Acceptance and Sublease
3
Section 3
Term and Rent
3
Section 4
Disclaimer; Sublessor’s Representations, Warranties and Agreements
5
Section 5
Return of the Aircraft
8
Section 6
Liens
10
Section 7
Registration, Maintenance, Operation and Reregistration; Possession and
Permitted Subleases, Insignia
11
Section 8
Replacement and Pooling of Parts; Alterations, Modification and Additions
19
Section 9
Loss, Destruction, Requisition, etc
21
Section 10
Insurance
25
Section 11
Inspection and Access
25
Section 12
 Assignment
26
Section 13
Events of Default
27
Section 14
Remdies
29
Section 15
Sublessee's Cooperation Concerning Certain Matters
33
Section 16
Notices
33
Section 17
Net Sublease; No Set-Off, Counterclaim, etc
34
Section 18
Investment of Security Funds
34
Section 19
Miscellaneous
35
Section 20
Sublease for the UCC
35
Section 21
No Brokers
35
Section 22
Cape Town Convention Consents
36
Section 23
Consent to Jurisdiction
36
 
 
 
 
Annexes and Exhibits
 
Annex A
Definitions
 
Annex B
Delivery Conditions
 
Annex C
Return Conditions
 
Exhibit A
Form of Sublease Supplement
 
Exhibit B
Agreed Value Schedule
 
Exhibit C
Insurance
 

    -1-

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TABLE OF CONTENTS
(continued)
Page

ANNEXES AND EXHIBITS

ANNEX A
–
Definitions
ANNEX B
–
Delivery Conditions
ANNEX C
–
Return Conditions
EXHIBIT A
–
Form of Sublease Supplement
EXHIBIT B
–
Agreed Value Schedule
EXHIBIT C
–
Insurance
 
–
 

MASTER SUBLEASE AGREEMENT
This MASTER SUBLEASE AGREEMENT, dated as of September 16, 2014 (as amended,
modified or supplemented from time to time, this “Sublease”), between REPUBLIC
AIRLINE INC., an Indiana Corporation with its principal office at 8909 Purdue
Road, Suite 300, Indianapolis, Indiana 46268 (together with its successors and
permitted assigns, “Sublessor”), and FLYBE LIMITED, a company organized under
the laws of England and Wales with its registered office at with its registered
office at Jack Walker House, Exeter International Airport, Exeter Devon EX5 2HL,
United Kingdom (together with its successors and permitted assigns,
“Sublessee”);
W I T N E S S E T H:
WHEREAS, the Head Lessor and Sublessor are parties to Master Lease Agreement
dated August 12, 2012, providing for the leasing of the Items of Equipment from
the Head Lessor to Sublessor on the terms and conditions set forth therein;
WHEREAS, Sublessor and Sublessee desire to enter into this Sublease to provide
for the subleasing of each Item of Equipment from Sublessor to Sublessee,
subject to the terms and conditions hereof;
WHEREAS, Sublessee and Sublessor agree that each will enter into a Sublease
Supplement supplementing this Sublease in respect of such Item of Equipment
pursuant to which Sublessee will sublease such Item of Equipment from Sublessor
and Sublessor will sublease such Item of Equipment to Sublessee when required
pursuant to the terms of the Additional Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein contained and
other good and valuable consideration, the parties hereto agree as follows:
Section 1.Definitions. Capitalized terms used herein, including, without
limitation, in the foregoing provisions, but not otherwise defined herein, shall
have the respective meanings set forth or incorporated by reference, and shall
be construed and interpreted in the manner described, in Annex A hereto.

2

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Section 2.    Acceptance and Sublease. On the Delivery Date for an Item of
Equipment, Sublessor hereby agrees (subject to satisfaction of the conditions
set forth in Section 4(a) of the Additional Agreement) to tender delivery of
such Item of Equipment at the Delivery Location for sublease to Sublessee
hereunder, and Sublessee hereby agrees (subject to satisfaction of the
conditions set forth in Section 4(b) of the Additional Agreement) to accept such
Item of Equipment under sublease from Sublessor hereunder, as evidenced by the
execution by Sublessor and Sublessee of a Sublease Supplement in respect of such
Item of Equipment subleasing such Item of Equipment hereunder. Sublessee hereby
agrees that such acceptance of such Item of Equipment, as evidenced by its
execution of a Sublease Supplement in respect of such Item of Equipment, shall
be regarded as absolute, unconditional and irrevocable acceptance of such Item
of Equipment for all purposes of this Sublease.

Section 3.    Term and Rent.
(a)    Term. The Term for an Item of Equipment shall commence on the Delivery
Date for such Item of Equipment, as determined pursuant to Section 2 of the
Additional Agreement, and, unless earlier terminated in accordance with any
provision of this Sublease, shall end on the Term Expiration Date for such Item
of Equipment.
(b)    Basic Rent. On each Rent Payment Date, Basic Rent in respect of each Item
of Equipment shall be due and payable and Sublessee shall pay Basic Rent in
respect of each Item of Equipment in Dollars in an amount equal to (a) [*] for
each Aircraft and (b) [*] for each Spare Engine, in each case prorated [*], and
payable in advance. Each payment of Basic Rent shall be final and Sublessee
shall not seek, or claim any right, to recover all or any part of such payment
from Sublessor or any other Person for any reason whatsoever. On each Rent
Payment Date, Sublessee will provide Sublessor with evidence that the applicable
Base Rent payment has been made.
(c)    Supplemental Rent. (i) Sublessee shall pay (or cause to be paid) promptly
to Sublessor, or to whomsoever shall be entitled thereto, any and all
Supplemental Rent constituting Agreed Value in respect of an Item of Equipment
as the same shall become due and owing and all other amounts of Supplemental
Rent within five (5) Business Days after demand or within such other relevant
period as may be provided in any Sublease Operative Document, and in the event
of any failure on the part of Sublessee to pay any Supplemental Rent when due,
Sublessor shall have all rights, powers and remedies provided for herein or in
any other Sublease Operative Document or by Law or equity or otherwise in the
case of nonpayment of Basic Rent. Sublessee also will pay to Sublessor, or to
whosoever shall be entitled thereto, on demand, as Supplemental Rent, to the
extent permitted by applicable Law, interest at the Past Due Rate on any part of
any installment of Basic Rent not paid when due for any period from the due date
for such installment of Basic Rent until the same shall be paid in full and on
any part of any payment of Supplemental Rent not paid when due for the period
until the same shall be paid in full. All computations of interest under this
Sublease shall be made on the basis of a year of 360 days comprised of twelve
30-day months and actual days elapsed.

3

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(d)    Initial Payment. Sublessee shall make a payment (the “Initial Payment”)
to or at the direction of Sublessor in an amount equal to [*] for each Aircraft
in [*] per Aircraft as follows: (i) [*]
The Initial Payment shall remain the property of the Sublessee and shall be held
by the Owner Participant (either directly or in accounts over which Owner
Participant shall have a security interest) and, with respect to each Aircraft,
and to the extent previously paid with respect to such Aircraft, shall be paid
to Sublessee upon (or within 10 days following) due performance by Sublessee of
all the Redelivery Conditions applicable to that Aircraft provided that no Event
of Default shall have occurred and be continuing and, to the extent previously
paid with respect to an Aircraft shall be refunded to Sublessee (i) promptly if
an Event of Loss occurs prior to the applicable Delivery Date with respect to
such Aircraft, (ii) so long as no Default or Event of Default has occurred and
is continuing, within 10 days following due performance by Sublessee of its
obligations under this Sublease if an Event of Loss with respect to such
Aircraft occurs after the applicable Delivery Date, and (iii) promptly if such
Aircraft does not satisfy the Delivery Condition Requirements on a date that is
six months after the scheduled date for delivery of that Aircraft, as set out in
Schedule I to the Additional Agreement.
The Initial Payment, to the extent previously paid with respect to an Aircraft,
shall be forfeited to Sublessor (or if not yet paid, shall remain due and owing
from Sublessee to Sublessor) if Sublessee fails to take delivery of such
Aircraft following the satisfaction of all applicable conditions precedent for
any reason other than Sublessor’s failure to perform under the Sublease
Operative Documents.
(e)    Payments in General. All payments of Rent shall be made directly by
Sublessee (whether or not any Permitted Sublease shall be in effect) by wire
transfer of immediately available funds prior to 1:00 p.m., New York time, on
the date of payment, to Sublessor at the account specified in Schedule II to the
Additional Agreement (or such other account as Sublessor shall direct in a
notice to Sublessee at least ten (10) Business Days prior to the date such
payment of Rent is due) (which Sublessor confirms is and will be the account to
which it pays “Basic Rent” under the Head Lease). Sublessor hereby directs and
Sublessee agrees that all payments of Supplemental Rent owing to any Person
pursuant to the Sublease Operative Documents shall be made in Dollars in
immediately available funds prior to 1:00 p.m., New York time, on the due date
thereof at such office of such financial institution located in the continental
United States of North America as the party entitled thereto may so direct at
least ten (10) Business Days prior to the due date thereof.
(f)    Business Day Convention. Notwithstanding anything to the contrary
contained herein, if any date on which a payment of Rent becomes due and payable
is not a Business Day, then such payment shall not be made on such scheduled
date but shall be made on the next succeeding Business Day with the same force
and effect as if made on such scheduled date and (to the extent any such payment
of Rent is made on such next succeeding Business Day) no interest shall accrue
on the amount of such payment of Rent from and after such scheduled date to such
next succeeding Business Day.

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Section 4.    Disclaimer; Sublessor’s Representations, Warranties and
Agreements.
(a)    Disclaimer. SUBLESSOR AND SUBLESSEE AGREE THAT THE DISCLAIMERS, WAIVERS
AND CONFIRMATIONS SET FORTH IN THIS SECTION SHALL APPLY TO EACH ITEM OF
EQUIPMENT AT ALL TIMES DURING THE TERM. SUBLESSEE’S ACCEPTANCE OF AN ITEM OF
EQUIPMENT ON THE DELIVERY DATE FOR SUCH ITEM OF EQUIPMENT SHALL BE CONCLUSIVE
EVIDENCE THAT SUBLESSEE HAS FULLY INSPECTED SUCH ITEM OF EQUIPMENT AND EVERY
PART THEREOF AND THAT SUCH ITEM OF EQUIPMENT, THE PARTS THEREOF AND THE AIRCRAFT
DOCUMENTS IN RESPECT THEREOF ARE TECHNICALLY ACCEPTABLE TO SUBLESSEE AND SATISFY
THE DELIVERY CONDITION REQUIREMENTS FOR SUCH ITEM OF EQUIPMENT AND ARE IN
SUITABLE CONDITION FOR DELIVERY TO AND ACCEPTANCE BY SUBLESSEE.
(b)    Exclusion. BY ITS EXECUTION AND DELIVERY OF A SUBLEASE SUPPLEMENT IN
RESPECT OF AN ITEM OF EQUIPMENT, SUBLESSOR SUBLEASES AND SUBLESSEE TAKES SUCH
ITEM OF EQUIPMENT “AS-IS, WHERE-IS”. SUBLESSEE ACKNOWLEDGES AND AGREES THAT AS
BETWEEN SUBLESSEE AND SUBLESSOR, (i) SUBLESSEE IS SATISFIED THAT SUCH ITEM OF
EQUIPMENT IS SUITABLE FOR ITS PURPOSES AND (ii) EXCEPT AS SET FORTH IN
SECTIONS 4(c)(i) AND 4(c)(ii) WITH RESPECT TO SUBLESSOR, NONE OF SUBLESSOR, HEAD
LESSOR, THE TRUSTEE OR OWNER PARTICIPANT MAKES, HAS MADE OR SHALL BE DEEMED TO
HAVE MADE, AND EACH WILL BE DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO: (I) THE AIRWORTHINESS,
VALUE, CONDITION, DESIGN, OPERATION, TITLE CONVEYED, ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR USE OR FOR ANY PARTICULAR PURPOSE OF SUCH ITEM OF
EQUIPMENT OR ANY PART THEREOF, (II) THE QUALITY OF THE MATERIAL OR WORKMANSHIP
WITH RESPECT TO SUCH ITEM OF EQUIPMENT OR ANY PART THEREOF, (III) THE ABSENCE OF
LATENT OR ANY OTHER DEFECT IN SUCH ITEM OF EQUIPMENT OR ANY PART THEREOF,
WHETHER OR NOT DISCOVERABLE, (IV) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT,
TRADEMARK OR COPYRIGHT OR THE LIKE, OR (V) THE ABSENCE OF OBLIGATIONS BASED ON
STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO SUCH ITEM OF EQUIPMENT OR ANY PART THEREOF.
(c)    Representations, Warranties and Covenants of Sublessor. Sublessor
(i) represents and warrants that on or before the Delivery Date for an Item of
Equipment, Sublessor shall have a good and valid leasehold interest to such Item
of Equipment, (ii) represents and warrants that on such Delivery Date such Item
of Equipment shall be free of Sublessor Liens, (iii) covenants that neither it
nor any Person claiming by, through or under it will, through its own actions or
inactions, interfere in Sublessee’s or any Permitted Sublessee’s continued
possession, use, operation and quiet enjoyment of such Item of Equipment during
the Term unless an Event of Default has

5

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occurred and is continuing and this Sublease has been duly declared (or, with
respect to Section 13(m) or (n), is deemed declared) in default, and this
Sublease shall not be terminated except as provided herein and (iv) covenants
that it will not directly or indirectly create, incur, assume or suffer to exist
any Sublessor Lien attributable to it on or with respect to any Item of
Equipment and (v) represents and warrants that as of each Delivery Date the
Sublessor has obtained all necessary consents required pursuant to Head Lease or
otherwise to deliver and lease to the Sublessee each Item of Equipment to be
delivered and leased to the Sublessee on such date.
(d)    SUBLESSOR SHALL NOT HAVE ANY OBLIGATION OR LIABILITY WHATSOEVER TO
SUBLESSEE (WHETHER ARISING IN CONTRACT OR IN TORT, AND WHETHER ARISING BY
REFERENCE TO NEGLIGENCE, MISREPRESENTATION OR STRICT LIABILITY OF SUBLESSOR OR
OTHERWISE) FOR:
(i)    ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR
INDIRECTLY BY ANY AIRCRAFT, AIRFRAME, ENGINE, SPARE ENGINE OR PROPELLER OR BY
ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER
CIRCUMSTANCE IN CONNECTION THEREWITH (EXCEPT FOR DIRECT DAMAGES DUE TO
SUBLESSOR’S BREACH AS AND TO THE EXTENT EXPRESSLY PROVIDED IN SECTION 4(c));
(ii)    THE USE, OPERATION OR PERFORMANCE OF ANY AIRCRAFT, AIRFRAME, ENGINE,
SPARE ENGINE OR PROPELLER OR ANY RISKS RELATING THERETO;
(iii)    ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR
ANY OTHER DIRECT INDIRECT OR CONSEQUENTIAL LOSS OR DAMAGE (EXCEPT FOR DIRECT
DAMAGES DUE TO SUBLESSOR’S BREACH AS AND TO THE EXTENT EXPRESSLY PROVIDED IN
SECTION 4(c)); OR
(iv)    THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR
REPLACEMENT OF ANY AIRCRAFT, AIRFRAME, ENGINE, SPARE ENGINE OR PROPELLER OR ANY
PART.
(e)    Waiver. SUBLESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND SUBLESSOR, ALL ITS
RIGHTS IN RESPECT OF ANY CONDITION, WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, ON THE PART OF SUBLESSOR AND ALL CLAIMS AGAINST SUBLESSOR HOWSOEVER AND
WHENEVER ARISING AT ANY TIME IN RESPECT OF OR OUT OF ANY OF THE MATTERS REFERRED
TO IN THIS SUBLEASE (EXCEPT IN RESPECT OF ANY BREACH BY THE SUBLESSOR OF ITS
OBLIGATIONS UNDER SECTION 4(c)).
(f)    Disclaimer of Consequential Damages. SUBLESSEE AGREES THAT IT SHALL NOT
BE ENTITLED TO RECOVER, AND HEREBY DISCLAIMS AND WAIVES ANY RIGHT THAT IT
MAY OTHERWISE HAVE TO RECOVER, FOR INTERRUPTION OF

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SERVICE, LOSS OF BUSINESS, LOST PROFITS OR REVENUES OR CONSEQUENTIAL DAMAGES (AS
DEFINED IN SECTION 2A-520 OF THE UCC OR OTHERWISE) OR ANY SPECIAL OR INDIRECT
DAMAGES AS A RESULT OF ANY BREACH OR ALLEGED BREACH BY SUBLESSOR OF ANY OF THE
AGREEMENTS, REPRESENTATIONS OR WARRANTIES OF SUBLESSOR CONTAINED IN THE SUBLEASE
(INCLUDING A BREACH BY SUBLESSOR UNDER SECTION 4(c)).
(g)    Confirmation. SUBLESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE PROVISIONS
OF THIS SECTION 4 AND ACKNOWLEDGES THAT RENT AND OTHER AMOUNTS PAYABLE UNDER THE
OPERATIVE DOCUMENTS HAVE BEEN CALCULATED BASED ON ITS PROVISIONS.
(h)    Manufacturers’ Warranties. Unless an Event of Default shall have occurred
and be continuing and this Sublease shall have been duly declared (or, with
respect to Section 13(m) or (n) hereof, is deemed declared) in default,
Sublessor agrees to make available to Sublessee during the Term such rights as
Sublessor may have under any remaining unexpired warranty that is freely
assignable with respect to any Item of Equipment made by the Manufacturer, the
Engine Manufacturer, the Propeller Manufacturer or any affiliate thereof or any
of its subcontractors or suppliers and any other claims (whether or not existing
on the Delivery Date) against the Seller, the Manufacturer, the Engine
Manufacturer, the Propeller Manufacturer or any affiliate thereof, or any such
subcontractor or supplier with respect to any Item of Equipment. At any time an
Event of Default has occurred and is continuing and this Sublease has been duly
declared or deemed declared in default, all of Sublessee’s rights under any
remaining unexpired warranty or other obligation with any of such Persons, with
respect to the Equipment shall automatically revert to Sublessor.
(i)    Delivery Condition Requirements. The Sublessor shall tender for delivery
each Item of Equipment in compliance with the Delivery Condition Requirements
set forth in Annex B.

7

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Section 5.    Return of the Aircraft.
(a)    Condition Upon Return. Sublessee shall comply with each of the provisions
of Annex C hereto, which provisions are hereby incorporated by this reference as
if set forth in full herein. All references to “Section 5” or “this Section 5”
shall be deemed to include Annex C hereto.
(b)    Parking and Related Matters. If Sublessor gives written notice to
Sublessee not less than thirty (30) days nor more than one hundred eighty (180)
days prior to the end of the Term in respect of an Item of Equipment requesting
parking or storage of such Item of Equipment upon its return hereunder,
Sublessee will assist Sublessor, at Sublessor’s expense, in arranging outdoor
parking or storage facilities for such Item of Equipment for a period up to 90
days, commencing on the date of such return, at such maintenance or storage
facility as Sublessee and Sublessor may agree; provided that such location shall
be a location generally used for the parking of commercial aircraft and spare
engines by aircraft owners or operators or otherwise a facility used by the
Sublessee for the parking of commercial aircraft and/or spare engines.
Notwithstanding subsection (1)(A) of Annex C, such location shall be deemed to
be the return location of such Item of Equipment for purposes of Annex C. Such
parking or storage shall be at Sublessor’s risk and expense and Sublessor shall
pay all applicable parking, storage, maintenance and insurance fees and
expenses. Sublessee’s obligation to assist Sublessor in arranging parking or
storage for an Item of Equipment shall be subject to Sublessor (or Head Lessor)
entering into an agreement satisfactory to Sublessee prior to the commencement
of the outdoor parking or storage period with the relevant facility providing,
among other things, that Sublessor (or Head Lessor) shall bear all parking,
storage and maintenance charges (other than maintenance required as a direct
breach of Sublessee’s obligations under this Section 5) and other costs
(including those costs referred to above) incurred relating to such storage.
(c)    Return of Other Engines or Propellers. In the event that any Engine
and/or Propeller owned by Head Lessor shall not be installed on an Airframe at
the time of return of such Airframe hereunder, Sublessee shall be required to
return such Airframe hereunder with an Acceptable Alternate Engine and/or
Acceptable Alternate Propeller meeting the requirements of, and in accordance
with, this Section 5 and Section 9 (as if the Engine and/or Propeller owned by
Head Lessor was subject to an Event of Loss; provided that the requirements set
forth in clauses (i), (ii) and (iii) of Section 9(b) shall be completed on or
before the date of return). Thereupon, Sublessor will request that Head Lessor
transfer to Sublessee on an “as is, where is, with all faults” basis the Engine
and/or Propeller constituting part of such Aircraft but not installed on such
Airframe at the time of the return of such Airframe.
(d)    Obligations Continue Until Return. If Sublessee shall, for any reason,
fail to return any Item of Equipment at the time and in the condition specified
herein, all obligations of Sublessee under this Sublease shall continue in
effect with respect to such Item of Equipment until such Item of Equipment is so
returned to Sublessor and Sublessee shall pay to Sublessor an amount equal to
[*] for such Item of Equipment [*] for such Item of Equipment to but excluding
[*]; provided, however, that Sublessee shall not be responsible for Sublessor’s
failure to accept return of such Item of Equipment in accordance with this
Section 5 in a timely manner or for any Rent with respect to periods after
Sublessee has tendered such Item of Equipment for return in accordance

8

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with this Sublease. Any Rent owed to Sublessor pursuant to this Section 5(d)
shall be payable upon acceptance of such Item of Equipment by Sublessor or on
the last day of each calendar month following the last day of the Term for such
Item of Equipment if such Item of Equipment has not been accepted earlier.

9

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Section 6.    Liens. Sublessee will not directly or indirectly create, incur,
assume or suffer to exist any Lien on or with respect to any Item of Equipment,
title thereto or any interest therein or in this Sublease (or any Permitted
Sublease), except (i) the rights of Head Lessor as owner of the Equipment, the
rights of Sublessor as lessee under the Head Lease, the respective rights of
Sublessor and Sublessee as provided herein, the rights of any Permitted
Sublessee under a Permitted Sublease and any other rights of any Person existing
pursuant to the Sublease Operative Documents, (ii) the rights of others under
agreements or arrangements to the extent permitted by the terms of Sections 7(b)
and 8(b) hereof, (iii) Sublessor Liens, (iv) Head Lessor Liens, (v) Liens for
Taxes of Sublessee (or any Permitted Sublessee) either not yet due or being
contested in good faith by appropriate proceedings so long as such proceedings
do not involve any material danger of the sale, forfeiture or loss of any
Airframe, Engine, Propeller or Spare Engine or any interest of the Sublessor,
Head Lessor or Owner Participant therein, any risk of any material civil
liability or any risk of criminal liability on the part of Sublessor, Head
Lessor, the Trustee or the Owner Participant so long as Sublessee has maintained
adequate reserves, (v) materialmen’s, mechanics’, workmen’s, repairmen’s,
employees’ or other like Liens arising in the ordinary course of Sublessee’s
(or, if a Permitted Sublease is then in effect, Permitted Sublessee’s) business
(including those arising under maintenance agreements entered into in the
ordinary course of business) securing obligations that are not overdue for a
period of more than thirty (30) days or are being contested in good faith by
appropriate proceedings so long as such proceedings do not involve any material
danger of the sale, forfeiture or loss of any Airframe, Engine, Propeller or
Spare Engine or any interest of the Owner Participant, Head Lessor or Sublessor
therein, any risk of any material civil liability or any risk of criminal
liability on the part of Sublessor, Head Lessor, the Trustee or the Owner
Participant so long as Sublessee has maintained adequate reserves, (vi) any Lien
of any EU ETS Authority arising in the ordinary course of business by operation
of law in respect of obligations which are not overdue or are being contested in
good faith by appropriate proceedings so long as such proceedings do not involve
any material danger of the sale, forfeiture or loss of any Airframe, Engine,
Propeller or Spare Engine or any interest of the Owner Participant, Head Lessor
or Sublessor therein, any risk of any material civil liability or any risk of
criminal liability on the part of Sublessor, Head Lessor, the Trustee or the
Owner Participant so long as Sublessee has maintained adequate reserves;
(vii) Liens arising out of any judgment or award against Sublessee (or any
Permitted Sublessee) not covered by insurance, unless the judgment secured shall
not, within sixty (60) days after the entry thereof, have been discharged,
vacated, reversed or execution thereof stayed pending appeal or shall not have
been discharged, vacated or reversed within sixty (60) days after the expiration
of such stay or there is at any time any risk of any material civil liability or
any risk of criminal liability on the part of the Sublessor, Head Lessor, the
Trustee or the Owner Participant, (viii) any other Lien with respect to which
Sublessee (or any Permitted Sublessee) shall have provided a bond, cash
collateral or other security adequate in the reasonable opinion of Sublessor,
(ix) Liens of any Financing Party incurred in connection with any back-leverage
or similar transaction, and (ix) Liens approved in writing by Sublessor.
Sublessee will promptly, at its own expense, take (or cause to be taken) such
actions as may be necessary to discharge duly any such Lien not excepted above
if the same shall arise at any time.

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Section 7.    Registration, Maintenance, Operation and Reregistration;
Possession and Permitted Subleases; Insignia.
(a)    Registration, Maintenance, Operation and Reregistration.
(v)    Registration and Maintenance. Sublessee, at its own cost and expense,
shall (or shall cause any Permitted Sublessee to): (A) ensure that each Aircraft
is registered in the name of Sublessee (as lessee or charterer) on the United
Kingdom Register of Civil Aircraft with the interest of the Head Lessor as owner
thereof and the Sublessor as lessee and sublessor thereof notified to the
Aviation Authority and Sublessee shall not do, and shall use its commercially
reasonable endeavors to procure that no third party does, any act or thing which
might prejudice or cancel such registration; provided that Sublessor shall
execute and deliver (and request that Head Lessor execute and deliver) all such
documents as Sublessee (or any Permitted Sublessee) may reasonably request for
the purpose of effecting and continuing such registration, and Sublessee shall
not register the Aircraft or permit the Aircraft to be registered other than
with the Aviation Authority at any time, (B) maintain, service, repair and/or
overhaul (or cause to be maintained, serviced, repaired and/or overhauled) each
Item of Equipment (i) so as to keep each Item of Equipment in as serviceable an
operating condition as when delivered to Sublessee (ordinary wear and tear
excepted and subject to hours and cycle usage) and in such condition as
necessary to enable the airworthiness certification for each Item of Equipment
to be maintained in good standing at all times under the applicable requirements
of the Aviation Authority and (ii) in accordance with Sublessee’s Maintenance
Program or, if applicable, the maintenance program approved by the government of
registry for the Equipment and utilizing the same manner of maintenance,
service, repair or overhaul used by Sublessee (or any Permitted Sublessee) with
respect to similar aircraft, engines and propellers operated by it and without
in any way discriminating against the Equipment on the basis of its leased
status or otherwise; (C) maintain or cause to be maintained in English all
records, logs, other Aircraft Documents and other materials required to be
maintained in respect of the Equipment by the Aviation Authority, which records,
logs and other materials are understood and agreed to be the property of Head
Lessor and subject to return to Sublessor in conjunction with any return to
Sublessor of the Aircraft; and (D) promptly furnish to Head Lessor and Sublessor
any information reasonably required to enable Sublessor and Head Lessor to
perform any applicable government filings required of the owner of the
Equipment.
(vi)    Lawful and Safe Operation. Sublessee will not maintain, use, service,
repair, overhaul, locate or operate the Equipment, or permit any Permitted
Sublessee to maintain, use, service, repair, overhaul, locate or operate any
Item of Equipment in violation of any applicable Law or certificate of any
government or governmental authority (domestic or foreign) having jurisdiction
over the Equipment, or contrary to any airworthiness certificate, license or
registration relating to the Equipment issued by any such authority, except to
the extent Sublessee (or, if a Permitted Sublease is then in effect, any
Permitted Sublessee) is contesting in good faith and by appropriate proceedings
the validity or application of any such law, rule, regulation or order which
does not involve (x) any more

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than de minimis risk of sale, forfeiture or loss of any part of the Equipment,
(y) any risk of criminal liability to Sublessor, Owner Participant, the Trustee,
or Head Lessor or (z) any risk of material civil liability against Sublessor,
the Owner Participant, the Trustee or Head Lessor. Sublessee will not operate
the Equipment, or permit any Permitted Sublessee to operate the Equipment, in
any area excluded from coverage by any insurance required by the terms of
Section 10. Until the termination of the Sublease, Sublessee will only operate
the Equipment for commercial purposes from a base or bases within the European
Union or from such other base or bases outside the European Union pursuant to
Sublease or a wet-Sublease complying with Section 7(b)(viii), provided always
that Sublessee must not use or operate any Item of Equipment or suffer or permit
any Item of Equipment to be used or operated:
(A)    in violation of any applicable Law;
(B)    for any purpose for which such Item of Equipment was not designed or
which is illegal;
(C)    to carry cargo which could reasonably be expected to damage such Item of
Equipment;
(D)    in any circumstances or place where such Item of Equipment is not covered
by the Insurance; or
(E)    for purposes of training, qualifying or re-confirming the status of
cockpit personnel except for the benefit of Sublessee’s or a Permitted
Sublessee’s cockpit personnel, and then only if the use of an Aircraft for such
purpose is not disproportionate to the use for such purpose of other aircraft of
the same type operated by Sublessee or any Permitted Sublessee, as the case may
be.
(vii)    SECURITY MEASURES. FOR THE AVOIDANCE OF DOUBT, AS BETWEEN SUBLESSEE AND
THE INDEMNITEES, SUBLESSEE ACKNOWLEDGES AND AGREES THAT:
(A)    SUBLESSEE IS SOLELY RESPONSIBLE FOR THE DETERMINATION AND IMPLEMENTATION
OF ALL SECURITY MEASURES AND SYSTEMS NECESSARY OR APPROPRIATE FOR THE PROPER
PROTECTION OF THE EQUIPMENT (WHETHER ON THE GROUND OR IN FLIGHT) AGAINST
(A) THEFT, VANDALISM, HIJACKING, DESTRUCTION, BOMBING, TERRORISM OR SIMILAR
ACTS, DIRECTLY OR INDIRECTLY AFFECTING IN ANY WAY THE EQUIPMENT OR ANY PART
THEREOF, OR ANY PERSONS WHO (WHETHER OR NOT ON BOARD AN AIRCRAFT) MAY SUSTAIN
ANY INJURY OR DAMAGE AS A RESULT OF ANY SUCH ACTS, (B) THE USE OF THE EQUIPMENT
IN ANY ACTS, INCLUDING THOSE OF DESTRUCTION, BOMBING, TERRORISM OR SIMILAR ACTS,
AND (C) THE TAKING, THEFT OR USE OF ANY PRODUCTS, CHEMICALS, GOODS, OR MATERIALS
OF ANY KIND, FORM, OR NATURE

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LOCATED ON BOARD AN AIRCRAFT OR BEING TRANSPORTED VIA AN AIRCRAFT;
(B)    SUBLESSEE’S IMPLEMENTATION OF SUCH SECURITY MEASURES AND SYSTEMS IS A
MATERIAL OBLIGATION OF SUBLESSEE UNDER THE SUBLEASE, AND THAT SUBLESSOR AND HEAD
LESSOR SHALL HAVE ABSOLUTELY NO RESPONSIBILITY THEREFOR, AND
(C)    SUBLESSEE, BEING IN SOLE OPERATIONAL CONTROL OF THE EQUIPMENT AND BEING
IN THE BUSINESS OF OPERATING COMMERCIAL AIRCRAFT, IS UNIQUELY IN A POSITION TO
IDENTIFY AND IMPLEMENT THOSE MAINTENANCE AND SECURITY MEASURES AS ARE NECESSARY
TO COMPLY WITH ALL APPLICABLE REGULATIONS, AND AS ARE OTHERWISE APPROPRIATE AND
THAT IN DOING SO, SUBLESSEE HAS NOT RELIED UPON, AND SHALL NOT RELY UPON, ANY
STATEMENT, ACT, OR OMISSION OF SUBLESSOR OR HEAD LESSOR.
(b)    Possession and Permitted Subleases. Sublessee will not, without the prior
written consent of Sublessor, sublease or otherwise in any manner deliver,
transfer or relinquish possession of any Airframe, Engine, Propeller or Spare
Engine or install or permit any Engine, Propeller or Spare Engine to be
installed on any airframe other than an Airframe or enter into any Wet Lease;
provided that, (1) unless an Event of Default shall have occurred and be
continuing, (2) this Sublease shall have been duly declared (or, in the case of
an Event of Default of the type described in Section 13(m) or (n) hereof, been
deemed declared) in default, and (3) Sublessor shall have taken action to
terminate this Sublease or to repossess or demand repossession of the Aircraft,
Sublessee may (or may permit any Permitted Sublessee to), without the prior
written consent of Sublessor:
(i)    subject any Engine or Spare Engine to normal interchange agreements or
any Engine or Spare Engine to pooling or similar arrangements, in each case on
substantially similar terms as are customarily obtained by similarly situated
commercial airlines operating similar aircraft and entered into by Sublessee
(or, if a Permitted Sublease is then in effect, by Permitted Sublessee) in the
ordinary course of its business; provided that (A) no such agreement or
arrangement contemplates or requires the transfer of title to any Airframe,
(B) if Head Lessor’s title to any Engine or Spare Engine shall be divested under
any such agreement or arrangement, such divestiture shall be deemed to be an
Event of Loss with respect to such Engine or Spare Engine and Sublessee shall
(or shall cause Permitted Sublessee to) comply with Section 9(b) hereof in
respect thereof, Sublessor not intending hereby to waive any right or interest
it may have to or in such Engine or Spare Engine under Law until compliance by
Sublessee with such Section 9(b), (C) any interchange agreement to which any
Engine or Spare Engine may be subject shall be with an air carrier based in the
United Kingdom, and (D) the rights of any Engine or Spare Engine (other than
Sublessee) under an interchange agreement covering any Airframe shall be

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expressly subject and subordinate to all of the terms of this Sublease and the
Head Sublease and Sublessor’s and Head Lessor’s rights to repossess such Engine
or Spare Engine and void such interchange agreement;
(ii)    deliver possession of any Airframe, Engine, Propeller or Spare Engine to
the manufacturer thereof (or for delivery thereto) or to any organization (or
for delivery thereto) for testing, service, repair, maintenance or overhaul work
on such Airframe, Engine, Propeller or Spare Engine or any part of any thereof
or for alterations or modifications in or additions to such Airframe, Engine,
Propeller or Spare Engine to the extent required or permitted by the terms of
Section 8(c) hereof;
(iii)    install an Engine, Propeller or Spare Engine on an airframe owned by
Sublessee (or any Permitted Sublessee) free and clear of all Liens, except:
(A) Permitted Liens and those which apply only to the engines (other than
Engines or Spare Engines), propellers (other than Propellers) appliances, parts,
instruments, appurtenances, accessories, furnishings and other equipment (other
than Parts) installed on such airframe (but not to the airframe as an entirety),
(B) in the case of pooling or similar arrangements contemplated by clause (i)
above, the rights of third parties under such pooling or similar arrangements,
provided that Head Lessor’s title and Sublessor’s leasehold interest to such
Engine, Propeller or Spare Engine shall not be divested or impaired as a result
thereof and (C) mortgage liens or other security interests, provided that (as
regards this clause (C)) the documents creating such mortgage liens or other
security interests (or, if applicable, another enforceable written agreement
governing such mortgage liens or other security interests) effectively provide
that such Engine, Propeller or Spare Engine shall not become subject to the Lien
of such mortgage or security interest, notwithstanding the installation thereof
on such airframe;
(iv)    install an Engine, Propeller or Spare Engine on an airframe leased to
Sublessee (or any Permitted Sublessee) or purchased by Sublessee (or any
Permitted Sublessee) subject to a conditional sale or other security agreement,
provided that (x) such airframe is free and clear of all Liens, except: (A) the
rights of the parties to the lease or conditional sale or other security
agreement covering such airframe, or their assignees and (B) Liens of the type
permitted by clause (iii) of this paragraph (b) and (y) such lease, conditional
sale or other security agreement effectively provides that such Engine,
Propeller or Spare Engine shall not become subject to the Lien of such lease,
conditional sale or other security agreement, notwithstanding the installation
thereof on such airframe;
(v)    install an Engine, Propeller or Spare Engine on any Airframe;
(vi)    install an Engine, Propeller or Spare Engine on an airframe owned by
Sublessee (or any Permitted Sublessee), leased or subleased to lessee (or any
Permitted Sublessee) or purchased by Sublessee (or any Permitted Sublessee)
subject to a conditional sale or other security agreement under circumstances
where neither clause (iii) nor clause (iv) of this paragraph (b) is applicable,
provided that such installation shall be deemed an Event of Loss with respect to
such Engine, Propeller or Spare Engine and Sublessee shall (or shall cause any
Permitted Sublessee to) comply with Section 9(b) hereof in respect thereof,
Sublessor not intending hereby to waive any right or interest it may have to or
in

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such Engine, Propeller or Spare Engine under applicable Law until compliance by
Sublessee with such Section 9(b);
(vii)    to the extent permitted by Section 8(b) hereof, subject any Parts owned
by Sublessor and removed from any Airframe, Engine, Propeller or Spare Engine to
any pooling arrangement referred to in clause (i) of this paragraph (b);
(viii)    for a period not to extend beyond the end of the Term for an Item of
Equipment, enter into a Wet Sublease for the applicable Airframe and Engines (or
Spare Engines) or engines then installed thereon with any third party; provided
that if Sublessee (or any Permitted Sublessee) shall enter into any Wet Lease
for a period of more than one year (including renewal options), Sublessee shall
provide Sublessor written notice of such Wet Lease (such notice to be given
prior to entering into such Wet Lease, if practicable, but in any event promptly
after entering into such Wet Lease), and each such Wet Lease shall be expressly
made subject and subordinate to the terms of this Sublease;
(ix)    [*]
The rights of any Permitted Sublessee or other transferee who receives
possession by reason of a transfer permitted by this Section 7(b) (other than
where the transfer is of an Engine, Propeller or Spare Engine which is deemed an
Event of Loss) shall be subject and subordinate to, and any Permitted Sublease,
Wet Lease or interchange arrangement permitted by this Section 7(b) shall be
expressly subject and subordinate in accordance with the terms of this Sublease
to, all the terms of the Head Lease and this Sublease and Sublessor’s and Head
Lessor’s rights to repossess and to void such Permitted Sublease or other
permitted transfer upon such repossession (and the right to require such person
to forthwith deliver the relevant Aircraft, Airframe, Engines, Propellers or
Spare Engines subject to such transfer upon the occurrence and during the
continuation of an Event of Default and the declaration (or deemed declaration)
of this Sublease being in default, subject in each case to the terms and
conditions of this Sublease), and Sublessee shall remain primarily liable
hereunder for the performance of all of the terms of this Sublease, and the
terms of any such Permitted Sublease or permitted transfer shall not by their
terms permit any Permitted Sublessee or other permitted transferee to take any
action not permitted to be taken by Sublessee in this Sublease with respect to
any Item of Equipment. In respect of any such Permitted Sublease, Sublessee
shall furnish to Sublessor satisfactory evidence that the insurance required by
Section 10 remains in effect or shall cause Permitted Sublessee to maintain
insurance that complies with Section 10 and Sublessee shall make or cause to be
made all necessary filings and recordings at Sublessee’s expense to preserve
Head Lessor’s title to, and Sublessor’s leasehold interest in, the relevant
Equipment. No pooling agreement, Sublease or other relinquishment of possession
of any Airframe, Engine, Propeller or Spare Engine or Wet Lease shall in any way
discharge or diminish any of Sublessee’s obligations to Sublessor hereunder
(including, without limitation, Section 5 hereof) or constitute a waiver of
Sublessor’s rights or remedies hereunder. Sublessor agrees for the benefit of
Sublessee and for the benefit of any mortgagee or other holder of a security
interest in any engine (other than an Engine or Spare Engine) or propeller
(other than a Propeller) owned by Sublessee (or any Permitted Sublessee), any
Lessor of any engine (other than an Engine or Spare Engine) or propeller (other
than a Propeller) leased to Sublessee (or any Permitted Sublessee) and any
conditional vendor of

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any engine (other than an Engine or Spare Engine) or propeller (other than a
Propeller) purchased by Sublessee (or any Permitted Sublessee) subject to a
conditional sale agreement or any other security agreement, that no interest
shall be created hereunder in any engine or propeller so owned, leased or
purchased and that none of Sublessor, its successors or assigns will acquire or
claim, as against Sublessee (or any Permitted Sublessee) or any such mortgagee,
lessor or conditional vendor or other holder of a security interest or any
successor or assignee of any thereof, any right, title or interest in such
engine or propeller as the result of such engine or propeller being installed on
any Airframe.
Any Wet Lease or similar arrangement under which Sublessee maintains operational
control of an Aircraft shall not constitute a delivery, transfer or
relinquishment of possession of an Aircraft for purposes of this Section 7(b).
Sublessor acknowledges that any consolidation or merger of Sublessee or
conveyance, transfer or Sublease of all or substantially all of Sublessee’s
assets otherwise expressly permitted by the Operative Documents shall not be
prohibited by this Section 7(b). In addition, Sublessor acknowledges that the
restrictions on assignment set forth in Section 12 hereof shall not prohibit the
exercise by Sublessee of its rights under this Section 7(b).
With respect to any Permitted Sublease to which the Cape Town Convention is
applicable, (i) Sublessee shall cause any International Interest created by the
Permitted Sublease, and assignment of Associated Rights made pursuant to the
permitted assignment, to be registered at the International Registry and
(ii) Sublessee shall cooperate with Sublessor (at no cost to Sublessor) in
connection with the execution and filing of any documents, and registration on
the International Registry of any International Interest (including the
amendment, extension, subordination, assignment and/or discharge thereof
necessary to conform to the terms hereof), as may be reasonably required by
Sublessor to be executed, filed and/or registered from time to time with the
International Registry and/or any registry or authority in the United States of
America, the United Kingdom or any other applicable jurisdiction in order to
protect the interests of Sublessor, Head Lessor, Owner Participant and Financing
Parties’ Representative in and to the relevant Equipment, the Sublease or the
Permitted Sublease under the Cape Town Convention and/or to ensure the validity,
enforcement or priority thereof.
(c)    Insignia. On or prior to the Delivery Date for an Item of Equipment, or
as soon as practicable thereafter, Sublessee agrees to affix and maintain (or
cause to be affixed and maintained), at its expense, in the cockpit of the
applicable Airframe adjacent to the airworthiness certificate therein and on
each Engine and Spare Engine a nameplate bearing the inscription:
“This Aircraft/Engine is owned by Regional Equipment Trust, is leased to
Republic Airline Inc. and subleased to Flybe Limited and may not be or remain in
the possession of or be operated by, any other person without the prior written
consent of Republic Airline Inc.”;
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Head Lessor as permitted under the Head Lease Operative
Documents). Except as above provided, Sublessee will not allow the name of any
Person to be placed on any Airframe or on any Engine or Spare Engine or on any
Propeller as a designation that might be interpreted as a claim of ownership;
provided that nothing herein contained shall prohibit Sublessee (or any
Permitted Sublessee) from placing its customary colors and insignia on any
Airframe, Engine, Spare Engine or Propeller.

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(d)    Air Traffic Control Information.
(i)    The Sublessee shall:
(A)    use commercially reasonable efforts to ensure Eurocontrol and any other
relevant air traffic control authority or airport shall furnish to the
Sublessor, upon the Sublessor’s request from time to time, statements of account
of all sums due by the Sublessee or any Permitted Sublessee to such authorities
or airports in respect of all aircraft (including the Aircraft) operated by the
Sublessee or any Permitted Sublessee;
(B)    issue a validly executed Eurocontrol Letter;
(C)    ensure that each Eurocontrol Letter is promptly sent to Eurocontrol in
accordance with Eurocontrol’s advertised procedures;
(D)    promptly;
(I)    enter into any agreement (including a “CEFA” agreement) required by
Eurocontrol in accordance with its relevant standard procedures to enable the
Sublessee or its authorized representative (or, as applicable, any Permitted
Sublessee or its authorized representative) to access details of the information
referred to in the Eurocontrol Letter via Eurocontrol’s web-based data retrieval
service; and
(II)    if requested by the Sublessor, provide to it a copy of any such
agreement when executed by all parties thereto.
(E)    promptly provide the Sublessor with all relevant login, password and/or
access codes (including any replacement codes) to enable the Sublessor to access
details of the information relevant to aircraft (including the Aircraft)
operated by the Sublessee referred to in the Eurocontrol’s web-based data
retrieval service;
(F)    if requested by the Sublessor (which request shall not be made more than
once per year unless such information is not otherwise available to Sublessor
pursuant to clause (E) above), promptly obtain from Eurocontrol a general
statement of account in relation to charges incurred by the Sublessor or any
Permitted Sublessee and forward it to the Sublessor;
(G)    if Eurocontrol’s procedures relating to the availability to aircraft
lessors and/or financiers of general statements of account are amended, take
such actions as are reasonably requested by the Sublessor to ensure that the
Sublessor is able to obtain such general statements of account in accordance
with such procedures; and

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(ii)    The Sublessee hereby authorizes disclosure by any Indemnitee to any
other Indemnitee of any information relating to the Sublessee and obtained
pursuant to this Section 7(d) or any “CEFA” agreement referred to above.
(e)    EU ETS Laws
The Sublessee shall:
(i)    comply with all EU ETS Laws applicable to it or the Aircraft and ensure
that it or any Permitted Sublessee (and not the Sublessor) shall be the
“aircraft operator” for the purposes of the EU ETS Laws and the Sublessee shall
identify itself as such to any EU ETS Authority (or procure that any Permitted
Sublessee so identifies itself) whenever required under the EU ETS Laws or
whenever requested by the Sublessor;
(ii)    promptly upon request by Sublessor, supply to Sublessor evidence
reasonably satisfactory to Sublessor that the Sublessee and any Permitted
Sublessee is or are in compliance with all EU ETS Laws applicable to the
Sublessee or, as the case may be, the Permitted Sublessee or the Aircraft
including, but not limited to copies of their latest EU ETS Emissions Report, EU
ETS Monitoring Plan, EU ETS Fleet Report (or any changes to such documentation)
and evidence of the annual surrender of a sufficient quantity of allowances in
accordance with EU ETS Laws, and if EU ETS Laws are in application in respect of
the Sublessee or any Permitted Sublessee, the Sublessee shall provide an EU ETS
Letter to the Sublessor signed by the Sublessee or the Permitted Sublessee (as
applicable);
(iii)    on or prior to the Delivery Date, if required by applicable Law, notify
the relevant EU ETS Authority that the Sublessor and Head Lessor are persons
with an interest in the Aircraft;
(iv)    promptly notify Sublessor if it is or becomes subject to either a civil
penalty or an operational ban issued by any EU ETS Authority in respect of any
EU ETS Laws; and
(v)    promptly notify Sublessor upon becoming aware of any changes to the EU
ETS Authority who is responsible for regulating its activities in respect of EU
ETS Laws from time to time and promptly file a replacement EU ETS Letter with
any new regulator and notify them of the interests of the Sublessor and the Head
Lessor in the Aircraft.

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Section 8.    Replacement and Pooling of Parts; Alterations, Modifications and
Additions.
(a)    Replacement of Parts. Sublessee, at its cost and expense, promptly will
replace or cause to be replaced all Parts, including any such Parts removed from
any Airframe, Engine, Propeller or Spare Engine which may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for any reason whatsoever, except
as otherwise provided in paragraphs (b) or (c) of this Section 8. In addition,
at its cost and expense, Sublessee may, and may permit a Permitted Sublessee (or
any maintenance provider for the Equipment) to remove (or cause to be removed)
in the ordinary course of maintenance, service, repair, overhaul or testing, or
as may be required or, in Sublessee’s (or any Permitted Sublessee’s) reasonable
opinion, advisable, in contemplation of the return of the Equipment to Sublessor
in accordance with this Sublease, any Parts, whether or not worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use; provided that Sublessee will, except as otherwise
provided herein, at its cost and expense, replace, or cause to be replaced, such
Parts as promptly as practicable. All replacement parts (other than replacement
parts temporarily installed on any Airframe, Engine, Propeller or Spare Engine
as provided in Section 8(b) hereof) shall be free and clear of all Liens (except
Permitted Liens), and shall be in as good an operating condition, and shall have
value and utility substantially equal to, the Parts replaced, assuming such
replaced Parts were in the condition and repair required to be maintained by the
terms hereof (but without taking into consideration hours and cycles remaining
until overhaul). All Parts at any time removed from the any Airframe, Engine,
Propeller or Spare Engine shall remain the property of Head Lessor, no matter
where located, until such time as such Parts shall be replaced by parts which
meet the requirements for replacement parts specified above. Upon any
replacement part becoming incorporated or installed in or attached to any
Airframe, Engine, Propeller or Spare Engine, without further act (subject only
to Permitted Liens and any arrangement permitted by Section 8(b) hereof),
(i) such replacement part shall become the property of Head Lessor and shall
become subject to the Head Lease and this Sublease and be deemed a Part for all
purposes hereof to the same extent as the Parts originally incorporated or
installed in or attached to such Airframe, Engine, Propeller or Spare Engine and
(ii) the replaced Part shall no longer be the property of Head Lessor and shall
no longer be deemed a Part hereunder or under the Head Sublease, and title to
such replaced Part shall vest in Sublessee (or, if a Permitted Sublease is then
in effect, the Permitted Sublessee) as provided in this Sublease. No DER Parts
or PMA Parts may be installed on any Item of Equipment or any part thereof
without Sublessor’s consent, acting reasonably, except that no such consent
shall be required to the extent that following such installation, the value of
all DER Parts or PMA Parts then installed on such Item of Equipment does not
exceed [*].
(b)    Pooling of Parts; Temporary Replacement Parts. Any Part removed from any
Airframe, Engine, Propeller or Spare Engine as provided in Section 8(a) hereof
may be subjected by Sublessee (or any Permitted Sublessee) to a normal pooling
arrangement of the type permitted for Engines and Spare Engines under
Section 7(b)(i); provided that the part replacing such removed Part shall be
incorporated or installed in or attached to such Airframe, Engine, Propeller or
Spare Engine in accordance with Section 8(a) hereof as promptly as practicable
after the removal of such removed Part. In addition, Sublessee may use temporary
parts or pooled parts on the Equipment as temporary replacements for Parts;
provided that Sublessee as promptly thereafter as practicable,

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either causes such pooled or temporary replacement part to become the property
of Head Lessor free and clear of all Liens other than Permitted Liens or
replaces such replacement part with a further replacement part owned by
Sublessee which meets the requirements of Section 8(a) hereof and which shall
become the property of Head Lessor, free and clear of all Liens other than
Permitted Liens and provided further that, Sublessee may install any engine or
part on an Aircraft by way of replacement if: (A) there is not available to
Sublessee at the time and in the place that the engine or part is required to be
installed on such Aircraft, a replacement engine or part complying with the
other requirements of this Sublease; (B) it would result in an unreasonable
disruption of the operation of such Aircraft and/or the business of Sublessee to
ground the aircraft until an engine or part complying with the terms of this
Sublease becomes available for installation on such Aircraft; (C) as soon as
practicable after installation of the same on such Aircraft, but in any event
prior to the Term Expiration Date, Sublessee will remove any such engine or part
and replace it with the Engine or Part replaced by it or an engine or part
otherwise complying with this Sublease;
(c)    Alterations, Modifications and Additions. Sublessee will, at its cost and
expense, make (or cause to be made) such alterations, modifications and
additions to the Equipment as may be required during the applicable Term to meet
the applicable standards of the Aviation Authority including, without
limitation, the implementation and/or completion of the EASA Modifications;
provided, however, that Sublessee (or, if a Permitted Sublease is then in
effect, any Permitted Sublessee) may, in good faith, contest the validity or
application of any such law, rule regulation or order by appropriate proceedings
which does not adversely affect Sublessor, Head Lessor, the Owner Participant,
the Trustee, any Financing Party (or their respective interests in the
Equipment) or risk loss of any part of the Equipment or criminal liability for
Sublessor, Head Lessor, the Owner Participant or any Financing Party and so long
as such proceeding does not involve a material reasonable possibility of the
sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted
Lien) on, the Equipment, or any part thereof unless in such an event Sublessee
shall have posted a bond or other security satisfactory to the Sublessor, Head
Lessor, the Owner Participant and any Financing Party in respect to such risk.
In addition, Sublessee (or any Permitted Sublessee) may from time to time alter
the passenger (seating) configuration of the Aircraft and may make such
alterations and modifications in and additions to the Equipment as Sublessee (or
any Permitted Sublessee) reasonably may deem desirable in the proper conduct of
its business, including removal of Parts which Sublessee (or any Permitted
Sublessee) reasonably deems to be obsolete or no longer suitable or appropriate
for use on any Airframe, Engine, Spare Engine or Propeller (such Parts,
“Obsolete Parts”); provided that, other than in respect of the EASA
Modifications, no such alteration, modification, removal or addition impairs the
condition or airworthiness of the Equipment, or materially diminishes the value,
utility or remaining useful life of the Equipment below the value, utility or
remaining useful life thereof immediately prior to such alteration,
modification, removal or addition, assuming that the Equipment is in the
condition required to be maintained by the terms of the Sublease, except that
the value (but not the utility or remaining useful life) of any Item of
Equipment may be reduced by the value of Obsolete Parts which shall have been
removed so long as the aggregate value of all Obsolete Parts which shall have
been removed and not replaced shall not exceed in the aggregate, in value at the
time of removal, [*]. All parts incorporated or installed in or attached or
added to the Equipment as the result of such alteration, modification or
addition (the “Additional Part” or “Additional Parts”) shall, without further
act, automatically become the property of Head Lessor (provided that, those

20

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parts which Sublessee has Subleased from others and Parts which may be removed
by Sublessee pursuant to the next sentence shall not automatically become
property of Head Lessor). Notwithstanding the foregoing, Sublessee may remove
(and not replace) any Additional Part in the course of implementation and/or
completion of the EASA Modifications and otherwise, provided that such
Additional Part (i) is in addition to, and not in replacement of or substitution
for, any Part originally incorporated or installed in or attached to the
relevant Equipment at the time of delivery thereof under this Sublease or any
Part in replacement of or substitution for any such Part, (ii) is not required
to be incorporated or installed in or attached or added to the relevant
Equipment pursuant to the terms of Section 7(a)(i) or the first sentence of this
Section 8(c) and (iii) can readily be removed from the relevant Equipment
without causing any material damage to such Equipment and without diminishing or
impairing the value, utility, condition or remaining useful life which such
Equipment would have had at such time had such alteration, modification or
addition not occurred. Upon removal of such Part, the Equipment affected shall
be returned to the condition it was prior to such change assuming the Equipment
was in the condition and repair required to be maintained by the terms hereof.
Upon the removal thereof as provided above, such Additional Parts shall no
longer be deemed the property of Head Lessor or part of the relevant Equipment
from which it was removed and title thereto shall, without further act, vest in
Sublessee (or, if a Permitted Sublease is then in effect, the Permitted
Sublessee). Any Additional Part not removed as above provided prior to the
return of the relevant Equipment to Sublessor hereunder shall remain the
property of Head Lessor.
(d)    Certain Matters Regarding Passenger Convenience Equipment. Sublessee may
install on any Airframe, subject to the requirements of Section 8(c) above,
Passenger Convenience Equipment that is (i) owned by another Person and leased
to Sublessee, (ii) sold to Sublessee by another Person subject to a conditional
sale contract or other retained security interest, (iii) leased to Sublessee
pursuant to a lease which is subject to a security interest in favor of another
Person or (iv) installed on such Airframe subject to a license granted to
Sublessee by another Person, and in any such case Sublessor will not acquire or
claim, as against any such other Person, any right, title or interest in any
such Passenger Convenience Equipment solely as a result of its installation on
such Airframe in accordance with this Sublease. Sublessee agrees that if any
such Person repossesses (or Sublessee removes, pursuant to return of the
relevant Aircraft to Sublessor) such Passenger Convenience Equipment, Sublessee
will (or will cause such Person to) restore such Aircraft to the condition it
would have been in had the installation of such Passenger Convenience Equipment
not occurred (including the plugging of all places where such Passenger
Convenience Equipment was installed, in a manner reasonably acceptable to
Sublessor). At or prior to the return of such Aircraft in accordance with
Section 5 hereof, Sublessee shall either (i) remove all Passenger Convenience
Equipment in accordance with Sections 8(c) and 8(d) hereof, or (ii) with the
consent of the Sublessor transfer title to all such Passenger Convenience
Equipment to Head Lessor, free and clear of all Liens.

Section 9.    Loss, Destruction, Requisition, etc.
(a)    Event of Loss with Respect to the Aircraft. Upon the occurrence of an
Event of Loss with respect to any Airframe or any Airframe, Engines and
Propellers (and/or engines and/or propellers then installed thereon), Sublessee
shall

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(i)    promptly (and in any event, within [*] after such occurrence) give
Sublessor and Head Lessor written notice of such Event of Loss, and,
(ii)    make the payments specified in this clause (ii), in which event not
later than [*], Sublessee shall pay or cause to be paid to Head Lessor in funds
of the type specified in Section 3(c) hereof, an amount equal to the sum of the
Agreed Value of the Aircraft on or immediately following the Loss Payment Date
(the “Determination Date”) and all other amounts that then may be due with
respect to such Item of Equipment under this Sublease or any of the other
Sublease Operative Documents (including, without limitation, all accrued and
unpaid Basic Rent due with respect to such Item of Equipment on such
Determination Date and all Supplemental Rent then due with respect to such Item
of Equipment).
At such time as Head Lessor shall have received the amounts specified in clause
(ii) above and all other amounts due under the Sublease Operative Documents with
respect to such Item of Equipment, (1) the obligation of Sublessee to pay the
installments of Basic Rent in respect of such Aircraft shall cease to accrue,
(2) this Sublease in respect of such Aircraft shall terminate, (3) Sublessor
will request that Head Lessor transfer to or at the direction of Sublessee,
without recourse, representation or warranty (except as to the absence of Head
Lessor Liens), all of Head Lessor’s right, title and interest in and to such
Airframe, Engines and Propellers subject to such Event of Loss, and furnish to
or at the direction of Sublessee a bill of sale to transfer “as is, where is,
with all faults” all of Head Lessor’s right, title and interest therein without
recourse, representation or warranty (except as to the absence of Head Lessor
Liens) in form and substance reasonably satisfactory to Sublessee (or any
Permitted Sublessee), evidencing such transfer and (4) Sublessee will be
subrogated to all claims of Head Lessor and Sublessor, if any, against third
parties, for damage to or loss of such Airframe, Engines and Propellers which
were subject to such Event of Loss to the extent of the then insured value of
the relevant Aircraft.
(b)    Event of Loss with Respect to any Engine, Propeller or Spare Engine. Upon
the occurrence of an Event of Loss with respect to any Engine or Propeller under
circumstances in which there has not occurred an Event of Loss with respect to
any Airframe, or the occurrence of an Event of Loss with respect to any Spare
Engine, Sublessee shall forthwith (and in any event, within [*] after such
occurrence) give Head Lessor and Sublessor written notice thereof and shall,
within [*], convey or cause to be conveyed to Head Lessor, as replacement for
the Engine, Propeller or Spare Engine with respect to which such Event of Loss
occurred, title to an Acceptable Alternate Engine or Acceptable Alternate
Propeller, as the case may be. Prior to or at the time of any such conveyance,
Sublessee, at its own expense, will (i) furnish Head Lessor with a warranty (as
to title) bill of sale, in form and substance reasonably satisfactory to Head
Lessor, with respect to such Acceptable Alternate Engine or Acceptable Alternate
Propeller, as the case may be, which in the case of any such transfer of an
engine to which the Cape Town Convention is applicable shall be in such form as
will qualify as a “contract of sale” pursuant to Article V of the Protocol,
(ii) cause a Sublease Supplement to be duly executed by Sublessee and cause such
Sublease Supplement to be filed for recording pursuant to the applicable Laws,
rules and regulations of the Cape Town Convention or any applicable jurisdiction
(iii) furnish Sublessor and the Head Lessor with such evidence of compliance
with the insurance provisions of Section 10 hereof with respect to such
replacement engine or such replacement propeller as Sublessor may reasonably
request and

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Sublessor will request that Head Lessor transfer to or at the direction of
Sublessee without recourse, representation or warranty (except as to absence of
Head Lessor Liens) all of Head Lessor’s right, title and interest, if any, in
and to (A) the Engine, Propeller or Spare Engine with respect to which such
Event of Loss occurred and furnish to or at the direction of Sublessee a bill of
sale in form and substance reasonably satisfactory to Sublessee, evidencing such
transfer, which in the case of any such transfer of an engine to which the Cape
Town Convention is applicable shall be in such form as will qualify as a
“contract of sale” pursuant to Article V of the Protocol, and (B) all claims, if
any, against third parties, for damage to or loss of the Engine, Propeller or
Spare Engine subject to such Event of Loss, and such Engine, Propeller or Spare
Engine shall thereupon cease to be an Engine, Propeller or Spare Engine
subleased hereunder. For all purposes hereof and of the other Sublease Operative
Documents, each such replacement engine or replacement propeller shall, after
such conveyance, be deemed part of the property Subleased hereunder, and shall
be deemed an “Engine”. No Event of Loss with respect to an Engine, Propeller or
Spare Engine under the circumstances contemplated by the terms of this paragraph
(b) shall result in any suspension or reduction in Basic Rent.
Notwithstanding the requirements of this Section 9(b), upon the occurrence of an
Event of Loss with respect to any Spare Engine, Sublessee shall have the option,
in lieu of replacing such Spare Engine with an Acceptable Alternate Engine
pursuant to the requirements noted above, of making the payments noted below, in
which event not later than [*], Sublessee shall pay or cause to be paid to Head
Lessor in funds of the type specified in Section 3(c) hereof, an amount equal to
the sum of the Agreed Value of the Spare Engine on or immediately following the
Spare Engine Loss Payment Date (the “Spare Engine Determination Date”) and all
other amounts that then may be due with respect to such Item of Equipment under
this Sublease or any of the other Sublease Operative Documents (including,
without limitation, all accrued and unpaid Basic Rent due with respect to such
Item of Equipment on such Spare Engine Determination Date and all Supplemental
Rent then due with respect to such Item of Equipment).
At such time as Head Lessor shall have received the amounts specified in the
preceding paragraph and all other amounts due under the Sublease Operative
Documents with respect to such Item of Equipment, (1) the obligation of
Sublessee to pay the installments of Basic Rent in respect of such Spare Engine
shall cease to accrue, (2) this Sublease in respect of such Spare Engine shall
terminate, (3) Sublessor will request Head Lessor to transfer to or at the
direction of Sublessee, without recourse, representation or warranty (except as
to the absence of Head Lessor Liens), all of Head Lessor’s right, title and
interest in and to such Spare Engine subject to such Event of Loss, and furnish
to or at the direction of Sublessee a bill of sale to transfer “as is, where is,
with all faults” all of Head Lessor’s right, title and interest therein without
recourse, representation or warranty (except as to the absence of Head Lessor
Liens) in form and substance reasonably satisfactory to Sublessee (or any
Permitted Sublessee), evidencing such transfer and (4) Sublessee will be
subrogated to all claims of Head Lessor and Sublessor, if any, against third
parties, for damage to or loss of such Spare Engine which was subject to such
Event of Loss to the extent of the then insured value of the relevant Spare
Engine.
If an Event of Loss occurs with respect to any Airframe and any Engine which is
part of the related Aircraft (a “Surviving Engine”) has not suffered an Event of
Loss. Sublessor will, at the written request of Sublessee (but subject to any
applicable rights of salvage and provided Sublessor

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has received all amounts due under this Sublease) exercise all rights that it
may have under the Head Lease to procure the transfer of the title to such
Surviving Engine to Sublessee or its designee in each case free of all
Headlessor Liens and Sublessor Liens, Sublessor shall deliver, or exercise all
rights that it may have under the Head Lease to cause the Headlessor to deliver,
to Sublessee all bills of sale or other documents reasonably required by
Sublessee to evidence the passing of Sublessor’s rights and interest in and to
the Surviving Engine as aforesaid.
(c)    Application of Payments from Governmental Authorities for Requisition of
Title, etc. Any payments (other than insurance proceeds the application of which
is provided for in Section 10) received at any time by Sublessor or by Sublessee
from any governmental authority or other Person with respect to an Event of Loss
will be applied as follows:
(vi)    if payments are received with respect to any Airframe (or any Airframe
and any Engine or engines and any Propellers or propellers then installed
thereon), after reimbursement of Sublessor, Head Lessor and the Owner
Participant for reasonable costs and expenses, so much of such payments
remaining as shall not exceed the Agreed Value in respect of such Aircraft
required to be paid by Sublessee pursuant to Section 9(a), shall be applied in
reduction of Sublessee’s obligation to pay Agreed Value in respect of such
Aircraft, if not already paid by Sublessee, or, if already paid by Sublessee,
shall be applied to reimburse Sublessee for its payment of Agreed Value in
respect of such Aircraft, and following the foregoing application, the balance,
if any, of such payments will be divided between Sublessor and Sublessee, to
compensate Sublessor for its loss of its Sublessor’s residual interest in such
Aircraft, and to compensate Sublessee for its loss of its leasehold interest in
such Aircraft; and
(vii)    if such payments are received with respect to an Engine, Propeller or
Spare Engine under circumstances contemplated by Section 9(b) hereof, so much of
such payments remaining after reimbursement of Sublessor, Head Lessor and the
Owner Participant for reasonable costs and expenses shall be paid over to, or
retained by, Sublessee.
(d)    Requisition for Use of any Aircraft by the United States Government or
the Government of Registry of such Aircraft. In the event of the requisition for
use of any Airframe and the Engines (or Spare Engines) or engines and Propellers
or propellers installed on such Airframe during the Term for such Airframe by
the United States Government or any other government of registry of such
Aircraft or any instrumentality or agency of any thereof which does not
constitute an Event of Loss, Sublessee shall promptly notify Head Lessor and
Sublessor of such requisition, and all of Sublessee’s obligations under this
Sublease with respect to such Aircraft shall continue to the same extent as if
such requisition had not occurred (except to the extent that any failure or
delay in repairing or maintaining such Aircraft shall have been caused directly
by such requisition). If, in the event of any such requisition, Sublessee shall
fail to return such Aircraft at the end of the Term for such Aircraft, such
failure shall not constitute an Event of Default. If, in the event of any such
requisition, Sublessee shall fail to return such Aircraft on or before [*], such
failure shall constitute an Event of Loss which shall be deemed to have occurred
on the last day of the Term for such Aircraft and in such event Sublessee shall
make the payment contemplated by Section 9(a)(i) in respect of such Event of
Loss. All payments received by Sublessor or Sublessee from such government for
the use of such Equipment during such Term shall be paid over to, or retained
by,

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Sublessee (or, if directed by Sublessee, any Permitted Sublessee); and all
payments received by Sublessor or Sublessee from such government for the use of
such Equipment after the end of such Term shall be paid over to, or retained by
Sublessor or Head Lessor, as their interests may appear.
(e)    Requisition for Use of any Engine, Propeller or Spare Engine by the
United States Government or the Government of Registry of any Aircraft. In the
event of the requisition for use of an Engine, Propeller or Spare Engine by the
United States Government or any other government of registry of the applicable
Aircraft or any agency or instrumentality of any thereof (other than in the
circumstances contemplated by paragraph (d)), Sublessee shall replace such
Engine, Propeller or Spare Engine hereunder by complying (or causing any
Permitted Sublessee to comply) with the terms of Section 9(b) to the same extent
as if an Event of Loss had occurred with respect thereto, and, upon compliance
with Section 9(b) hereof, any payments received by Sublessor or Sublessee from
such government with respect to such requisition shall be paid over to, or
retained by, Sublessee (or, if directed by Sublessee, Permitted Sublessee).
(f)    Application of Payments During Existence of Specified Default or Event of
Default. Any amount referred to in this Section 9 which is payable to or
retainable by Sublessee (or any Permitted Sublessee) shall not be paid to or
retained by Sublessee (or such Permitted Sublessee) if at the time of such
payment or retention a Specified Default or an Event of Default has occurred and
is continuing, but shall be held by or paid over to Sublessor as security for
the obligations of Sublessee (or such Permitted Sublessee) under this Sublease
and, if an Event of Default has occurred and is continuing hereunder, applied
against Sublessee’s obligations hereunder as and when due. At such time as there
shall not be continuing any such Specified Default or Event of Default, such
amount shall be paid to Sublessee (or such Permitted Sublessee) to the extent
not previously applied in accordance with the preceding sentence.

Section 10.    Insurance. Sublessee will maintain the Insurance in full force
during the Term, and thereafter as expressly required by this Sublease.

Section 11.    Inspection and Access.
(a)    Sublessee will permit Sublessor’s and Head Lessor’s representative access
to the Equipment and the Aircraft Documents at any reasonable time, any such
Person will give Sublessee reasonable prior notice and, unless an Event of
Default has occurred and is continuing and this Sublease has been duly declared
(or in the case of an Event of Default under Section 13(m) or (n) deemed
declared) in default, no exercise of such inspection right shall interfere with
the normal operation or maintenance of the Equipment by Sublessee (or any
Permitted Sublessee). Sublessee shall comply with the reasonable requests of
Sublessor’s and Head Lessor’s representative, subject to any applicable Laws and
insurance requirements to review Aircraft Documents.
(b)    [*],
(i)    [*]

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(ii)    [*]
[*]
(c)    No liability or obligation will be incurred by Sublessor or Head Lessor
or its respective representative, as the case may be, by reason of non-exercise
by any of them of the rights referred to in this Section 11. For the avoidance
of doubt, any viewing of any Item of Equipment by Sublessor or Head Lessor or
its respective representative, as the case may be, shall be for such Person’s
information purposes only (provided that Sublessor may determine as a result of
such inspection that Sublessee is not in compliance with its obligations under
the Sublease Operative Documents), and there shall be no inference or
implication therefrom that Sublessee is in compliance with its obligations under
the Sublease.

Section 12.    Assignment. Except as provided in Section 7 hereof or in
Section 6(f) of the Additional Agreement, Sublessee will not, without the prior
written consent of Sublessor, in whole or in part assign (or, by delegation,
purport to be released from legal responsibility for) any of its rights or
obligations hereunder. Sublessor agrees that it will not assign or convey its
right, title and interest in and to this Sublease or any Item of Equipment
except as provided herein, in the Additional Agreement or in any other Sublease
Operative Document, except that (A) the Sublessor may at any time assign some or
all of its rights, title and interest in and to this Sublease and any Item of
Equipment to any Affiliate so long as (x) such Affiliate assumes any such
obligations to be performed in accordance with the terms hereof and (y) either
(i) after giving effect to such assignment, the net worth of such Affiliate is
at least equal to the net worth of the Sublessor immediately prior to such
assignment or (ii) the Sublessor provides a guaranty of the obligations of such
Affiliate under the Sublease Operative Documents in form and substance
reasonably acceptable to Sublessee and (B) Sublessor may assign all of its
right, title and interest in this Sublease to the Head Lessor as security for
the obligations of the Sublessor under the Head Lease and, upon request,
Sublessee agrees to consent to such assignment. Subject to the foregoing, the
terms and provisions of this Sublease shall be binding upon and inure to the
benefit of Sublessor and Sublessee and their respective successors and permitted
assigns.
Sublessee shall reasonably cooperate to facilitate Head Lessor and Owner
Participant financings, provided that (a) Sublessor agrees to reimburse
Sublessee for any reasonable legal fees and other reasonable third party related
expenses in connection with any such ownership transfer or financing and (b)
none of the obligations, liabilities, duties and risks of Sublessee in the use
and operation of the Equipment or under or in respect of the Sublease or any
other Sublease Operative Agreement shall be increased and none of Sublessee’s
rights and benefits in respect of such use and operation or under or in respect
of the Sublease or any other Sublease Operative Document shall be diminished.
Sublessor and Sublessee shall use reasonable efforts to facilitate the transfer
of the leasing of the Aircraft so that the Aircraft become leased directly from
Head Lessor to Subleasee.

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Section 13.    Events of Default. Each of the following events shall constitute
an Event of Default and a “default” for purposes of Article 11 of the Cape Town
Convention (whether any such event shall be voluntary or involuntary or come
about or be effected by operation of law or pursuant to or in compliance with
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body) and each such Event of Default shall
continue so long as, but only as long as, it shall not have been remedied or
waived:
(a)    Sublessee shall not have made a payment of (i) Basic Rent within [*]
after the same shall have become due or, (ii) Supplemental Rent within [*],
after receipt by Sublessee of written notice that the same is past due; or
(b)    Sublessee shall have failed to perform or observe (or caused to be
performed and observed) in any material respect any of its covenants or
agreements under any Operative Document, and such failure shall continue
unremedied for a period of [*] after receipt by Sublessee as the case may be of
written notice thereof from Sublessor; provided, however, that if Sublessee
shall have undertaken to cure any such failure and notwithstanding the diligence
of Sublessee in attempting to cure such failure, such failure is not cured
within said [*] period but is curable with future due diligence, there shall
exist no Event of Default under this Section 13 so long as Sublessee is
proceeding with due diligence to cure such failure and adequate reserves, if
applicable, have been set aside for such purpose and such failure is remedied
not later than [*] after receipt by Sublessee of such written notice (provided
that such cure right will not apply to any covenant or agreement which is
otherwise provided for in this Section 13); or
(c)    any representation or warranty made by Sublessee herein or in the
Additional Agreement or any document or certificate furnished by Sublessee in
connection herewith or therewith or pursuant hereto or thereto, shall prove to
have been incorrect in any material respect at the time made and if it possible
to remedy the circumstances which caused such representation to be false or
incorrect, the same has not been remedied within [*] after notice thereof from
Sublessor to Sublessee; or;
(d)    Any Event of Default occurs under any Other Operative Document; or
(e)    Authority of Sublessee or any Permitted Sublessee to operate the
Equipment under an air carrier operating certificate issued by the Aviation
Authority is revoked, suspended, cancelled, withdrawn, terminated, not renewed
or otherwise not in effect at any time; or
(f)    Any default under the Engine Servicing Agreement, which is not cured
within any applicable cure period, or any termination event (howsoever such
events are described under an Engine Servicing Agreement) occurs and is
continuing with respect to the obligations of Sublessee or any Permitted
Sublessee and which results in the Engine Manufacturer terminating the Engine
Servicing Agreement, or
(g)    Sublessee fails to accept delivery of any Item of Equipment under the
Sublease on the relevant Delivery Date or fails to fulfill the conditions
precedent for which it is responsible under Section 4(a) of the Additional
Agreement on or before such Delivery Date; provided that the conditions
precedent which are the responsibility of Sublessor under Section 4(b)

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of the Additional Agreement have been satisfied (or could reasonably be expected
to have been satisfied if delivery on such Delivery Date had occurred); or
(h)    Sublessee fails to return any Item of Equipment to Sublessor on the
applicable Redelivery Date in accordance with Section 5 hereof; or
(i)    Sublessee fails to comply with its obligations set forth in Section 6(f)
of the Additional Agreement or Parent Guarantor fails to comply with its
obligation set forth in Section 9.1.5 of the Parent Guarantee; or
(j)    Sublessee makes or permits any assignment or transfer of the Sublease, or
any interest herein, or of the right to possession of any Aircraft, Airframe,
Engine, Propeller or Spare Engine, or any obligations under the Sublease, or
Sublessee Subleases any Aircraft, Airframe, Engine, Propeller or Spare Engine,
in any case except as expressly permitted in the Sublease; or
(k)    Sublessee fails to comply with its obligation to replace an Engine,
Propeller or Spare Engine within [*] after the required time following an Event
of Loss in respect thereof, as set forth in Section 9(b) hereof; or
(l)    Any of the following shall occur:
(i)    Sublessee or Parent Guarantor is unable or admits inability to pay its
debts as they fall due, suspends making payments on any of its debts; or
(ii)    A moratorium is declared in respect of any indebtedness of Sublessee or
Parent Guarantor.
(m)    Any corporate action, legal proceedings or other procedure or step is
taken in relation to:
(i)    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 Sublessee or Parent Guarantor;
(ii)    a composition, compromise, assignment or arrangement with any creditor
of Sublessee or Parent Guarantor;
(iii)    the appointment of a liquidator, receiver, administrative receiver,
administrator, compulsory manager or other similar officer in respect of the
Sublessee or Parent Guarantor or any of their respective assets; or
(iv)    enforcement of any security over any assets of Sublessee or Parent
Guarantor,
(v)    or any analogous procedure or step is taken in any jurisdiction

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unless in any such case, where steps are being taken by a person other than the
Sublessee the same is being contested in good faith and by appropriate
proceedings and is terminated, withdrawn or dismissed within a period of [*]
from the date of its commencement.
(n)    Sublessee shall fail to carry and maintain on or with respect to any Item
of Equipment (or cause to be carried and maintained) insurance required to be
maintained in accordance with the provisions of Section 10 hereof; provided
that, the foregoing shall not constitute an Event of Default if any such
insurance is cancelled or terminated following the occurrence of any event or
circumstances beyond the control of Sublessee which results in the cancellation
or termination of similar policies of insurance in the international aviation
insurance markets generally and each Aircraft is grounded and stored at all
times during such period and continues to be covered during such period by
insurance policies on such terms as Sublessor and Sublessee shall have agreed
within [*] after notice thereof from Sublessor to Sublessee requiring the same;
or
(o)    Any judgment for the payment of money in excess of [*] is rendered
against Sublessee or Parent Guarantor and the same shall remain undischarged or
unbonded for a period of thirty (30) days during which execution of such
judgment shall not be effectively stayed, or an attachment or other Lien shall
be issued against any of the property of Sublessee or Parent Guarantor for an
amount in excess of [*] and shall remain undischarged or unbonded for thirty
(30) days;
(p)    A default shall occur under any bond, debenture, note or other evidence
of indebtedness of Sublessee or Parent Guarantor owed to any Person having an
outstanding principal balance equal to or greater than [*] under any indenture
or other instrument under which any such evidence of indebtedness has been
issued or by which it is governed, and the expiration of the applicable period
of grace, if any, specified in such evidence of indebtedness, bond, indenture
note or other instrument; or
(q)    The Parent Guarantee ceases to be in full force and effect or the Parent
Guarantor disclaims any of its obligations thereunder.
provided, however, that, notwithstanding anything to the contrary contained in
Section 13(b) or (c) hereof, any failure of Sublessee to perform or observe any
covenant, condition, agreement or any error in a representation or warranty
shall not constitute an Event of Default if such failure or error is caused
solely by reason of an event that constitutes an Event of Loss so long as
Sublessee is continuing to comply with all of the terms of Section 9 hereof.
At any time following the occurrence of an Event of Default, or following any
termination of this Sublease, Sublessor may take such action as it deems
appropriate to discharge the registration of any International Interest arising
under the Sublease from the International Registry, and in connection herewith,
Sublessee agrees to take such action at the International Registry and with the
Aviation Authority as is required of Sublessee in order to effect the discharge
of such registrations at the International Registry as Sublessor may request.

Section 14.    Remedies. Upon the occurrence of any Event of Default and at any
time thereafter so long as the same shall be continuing, Sublessor may, at its
option, declare by written notice to Sublessee this Sublease to be in default
(provided that upon the occurrence of an Event

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of Default under Section 13(m) of this Sublease, this Sublease automatically
shall be in default without the necessity of a declaration) and at any time
thereafter, so long as any such outstanding Events of Default shall not have
been remedied, Sublessor may do one or more of the following with respect to all
or any part of the Equipment (including with respect to any individual Aircraft
or group of Aircraft) as Sublessor in its sole discretion shall elect, to the
extent permitted by, and subject to compliance with any mandatory requirements
of, applicable Law then in effect:
(a)    upon the written demand of Sublessor and at Sublessee’s expense, cause
Sublessee to return promptly, and Sublessee shall return promptly, all or any
part of the Equipment, as Sublessor may so demand, to Sublessor or its order in
the manner and condition required by, and otherwise in accordance with all the
provisions of Section 5 as if such Equipment was being returned at the end of
the relevant Term, or Sublessor, at its option, may enter upon the premises
where all or any part of the Equipment is located and take immediate possession
of and remove the same by summary proceedings or otherwise (and/or, at
Sublessor’s option, store the same at Sublessee’s premises until disposal
thereof by Sublessor), all without liability accruing to Sublessor for or by
reason of such entry or taking of possession or removing whether for the
restoration of damage to property caused by such action or otherwise;
(b)    with or without taking possession thereof, agree that the Head Lessor may
sell all or any part of the Equipment at public or private sale, as Sublessor
may determine, or otherwise dispose of, hold, use, operate, lease to others or
keep idle all or any part of the Equipment as Sublessor, in its sole discretion,
may determine, all free and clear of any rights of Sublessee, except as
hereinafter expressly set forth in this Section 14;
(c)    whether or not Sublessor shall have exercised, or shall thereafter at any
time exercise, any of its rights under paragraph (a) or paragraph (b) above with
respect to all or any part of the Equipment, Sublessor, by written notice to
Sublessee specifying a payment date which shall be not earlier than three (3)
Business Days from the date of such notice, may demand that Sublessee pay to
Sublessor, and Sublessee shall pay Sublessor (or on its behalf), on the payment
date so specified, for loss of a bargain and not as a penalty (in lieu of the
installments of Basic Rent due on Rent Payment Dates which occur on or after the
date specified as the payment date in such notice):
(i)    all Rent and other amounts which are or become due and payable under the
Sublease (including Maintenance Payments) prior to the earlier to occur of the
date Sublessor sells or re-Subleases the Aircraft or receives payment of the
amount calculated pursuant to clause (ii) below;
(ii)    an amount equal to the Mitigated Rent Amount (defined below);
(iii)    an amount equal to Sublessor’s reasonably anticipated enforcement and
remarketing Expenses and Expenses required to conform the Aircraft to the return
condition required by Annex C;
(iv)    all amounts indemnified by Sublessee pursuant to Section 5 of the
Additional Agreement;

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(v)    all attorney’s fees, costs and Expenses incurred to enforce the Sublease
or Sublessor’s rights and/or remedies or as a result of Sublessee’s default
under the Sublease or failure to comply with the obligations under the Sublease;
and
(vi)    any loss of profit, to the extent not covered in clause (ii) above,
suffered by Sublessor.
It being understood that, to the extent that any of the foregoing amounts
(excluding any amount referenced in clause (ii) above as part of the Mitigated
Rent Amount) represents an estimate by Sublessor of losses, damages, costs or
Expenses which Sublessor expects to incur, (x) Sublessor shall use commercially
reasonable endeavors to mitigate the loss, damage, cost and Expense suffered or
incurred by it and shall adjust the amount thereof as needed to reflect the
actual amount of such losses, damages, costs or Expenses incurred by Sublessor
when substantially all of such amounts become known to Sublessor including
giving a credit to Sublessee in respect of any lease rental or other income
obtained by or on behalf of Sublessor from any release of the relevant Item of
Equipment during any remaining period of Term, but Sublessee shall nevertheless
be obligated to pay the amount demanded by Sublessor (subject to such subsequent
adjustment), and (y) notwithstanding the amount specified in such demand,
Sublessor shall be entitled to claim such other (and greater or additional)
amount in any action against Sublessee under the Sublease, subsequent demand
and/or any other damages that Sublessor may sustain; and/or require Sublessee to
pay, and Sublessee shall pay to Sublessor, interest on all unpaid amounts at the
Past Due Rate, from the due date until the date of payment in full; and/or make
demand against any Guarantor for any or all of the foregoing.
No remedy referred to in this Section 14 is intended to be exclusive, but, to
the extent permissible under the Sublease or under applicable Law, each shall be
cumulative and in addition to any other remedy referred to above or otherwise
available to Sublessor at law or in equity and in Sublessor’s sole and absolute
discretion; and the exercise by Sublessor of any one or more of such remedies
shall not preclude the simultaneous or later exercise by Sublessor of any or all
of such other remedies. No waiver by Sublessor of any Default or Event of
Default shall in any way be, or be construed to be, a waiver of any future or
subsequent Default or Event of Default.
“Mitigated Rent Amount” means [*]
(d)    Failure to Redeliver. Where Sublessor has sought physical redelivery
under Section 14(a) above but any Item of Equipment has not been redelivered in
accordance therewith (but without regard to the physical condition thereof), in
lieu of exercising its rights under Section 14(c), Sublessor may require
Sublessee on Sublessor’s first written demand to pay to Sublessor the Agreed
Value in respect of such Item of Equipment; provided that Sublessor retains all
rights to claims with respect to Annex C. Within seven (7) days of Sublessor’s
receipt of the Agreed Value in respect of such Item of Equipment and all other
amounts then payable under the Sublease, Sublessor agrees to request that Head
Lessor execute and deliver a bill of sale transferring title to such Item of
Equipment to Sublessee. Any sale under this Clause would be in an “as is, where
is” condition and without any warranty on the part of Sublessor, Head Lessor,
the Trustee or Owner Participant and Sublessee shall indemnify Sublessor, Head
Lessor, the Trustee and Owner Participant

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for all fees, expenses and Taxes incurred by Sublessor, Head Lessor, the Trustee
or Owner Participant in connection with any such transfer; and
(e)    Sublessor may cancel, terminate or rescind this Sublease, and/or may
exercise any other right or remedy which may be available to it under applicable
Law or proceed by appropriate court action to enforce the terms hereof or to
recover damages for breach hereof.
In addition, Sublessee shall be liable, except as otherwise provided above and
without duplication of amounts payable hereunder, for any and all unpaid Rent
due hereunder and all amounts due under the Engine Servicing Agreement, before,
after or during the exercise of any of the foregoing remedies (other than Basic
Rent due on or after the payment referenced in paragraph (c) above has been made
in full) and for all reasonable legal fees and other costs and Expenses incurred
by Sublessor, in connection with the enforcement of its rights and remedies
hereunder including, without limitation, return of all or part of the Equipment
in accordance with the terms of Section 5 of the Sublease or in placing any
Aircraft, Airframe, Engine, Propeller or Spare Engine in the condition and
airworthiness required by such Section of the Sublease.

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Section 15.    Sublessee’s Cooperation Concerning Certain Matters. Forthwith
upon the execution and delivery of each Sublease Supplement from time to time
required by the terms hereof and upon the execution and delivery of any
amendment to this Sublease, Sublessee will cause such Sublease Supplement, (and,
in the case of the initial Sublease Supplement, this Sublease, as well) or
amendment to be duly filed and recorded, and maintained of record, in accordance
with the applicable laws of the government of registry of the Aircraft. In
addition, Sublessee will promptly and duly execute and deliver to Sublessor such
further documents and take such further action as Sublessor, the Head Lessor the
Trustee or Owner Participant may from time to time reasonably request in order
more effectively to carry out the intent and purpose of this Sublease and to
establish and protect the rights and remedies created or intended to be created
in favor of Sublessor, Head Lessor, the Trustee and the Owner Participant
hereunder, and if requested by Sublessor, Head Lessor, the Trustee or the Owner
Participant, at the expense of Sublessee, the execution and delivery of
supplements or amendments hereto, in recordable form, subjecting to this
Sublease, any airframe, engine or propeller substituted for any Airframe,
Engine, Propeller or Spare Engine pursuant to the terms thereof and the
recording or filing of counterparts thereof, in accordance with the laws of such
jurisdictions as Sublessor may from time to time deem advisable. Sublessee
agrees to furnish to Sublessor and promptly after execution and delivery of any
supplement and amendment hereto an opinion of counsel (which may be Sublessee’s
General Counsel, Deputy General Counsel, Associate General Counsel or Assistant
General Counsel) reasonably satisfactory to Sublessor and as to the due
execution of such supplement or amendment, as applicable.

Section 16.    Notices. All notices required under the terms and provisions
hereof shall be by facsimile or other telecommunication means (with such
facsimile or other telecommunication means to be confirmed in writing), or if
such notice is impracticable, by courier, or by personal delivery of written
notice and any such notice shall become effective when received, addressed:
(a)    if to Sublessee, at its address specified in Schedule I to the Additional
Agreement, or to such other address or facsimile number as Sublessee shall from
time to time designate in writing to Sublessor, and
(b)    if to Sublessor, at its address specified in Schedule I to the Additional
Agreement, or to such other address or facsimile number as Sublessor shall from
time to time designate in writing to Sublessee, and
(c)    if to the Head Lessor, at its address or facsimile number set forth in
Schedule I to the Additional Agreement, or such other address or facsimile
number as the Head Lessor or Sublessor shall from time to time designate in
writing to the parties hereto.

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Section 17.    Net Sublease; No Set-Off, Counterclaim, etc. This Sublease is a
net Sublease. All Rent shall be paid by Sublessee to Sublessor in funds of the
type specified in Section 3(d). Except as expressly provided herein, Sublessee’s
obligation to pay all Rent payable under the Sublease Operative Documents shall
be absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, (i) any set-off, counterclaim, recoupment,
defense or other right which Sublessee may have against the Sublessor, Head
Lessor, the Trustee, the Trust Company, the Owner Participant, or any other
Person for any reason whatsoever (whether in connection with the Transactions or
any other transactions), including, without limitation, any breach by Sublessor,
Head Lessor, the Trustee or the Owner Participant of their respective
warranties, agreements or covenants contained in any of the Operative Documents,
(ii) any defect in the title, registration, airworthiness, condition, design,
operation, or fitness for use of, or any damage to or loss or destruction or
theft of, any Aircraft, Airframe, Engine, Propeller or Spare Engine, or any
interruption, cessation in, restriction or prohibition of the use or possession
thereof by Sublessee (or any Permitted Sublessee) for any reason whatsoever,
including, without limitation, any such interruption, cessation, restriction or
prohibition resulting from the act of any government authority, (iii) any
insolvency, bankruptcy, reorganization or similar case or proceedings by or
against Sublessee (or any Permitted Sublessee), or any other Person, or (iv) any
other circumstance, happening, or event whatsoever, whether or not unforeseen or
similar to any of the foregoing. If for any reason whatsoever any Operative
Document shall be terminated in whole or in part by operation of Law or
otherwise except as specifically provided herein, Sublessee nonetheless agrees,
without limitation of the other rights or remedies of Sublessor hereunder, to
pay to Sublessor (or on its behalf) an amount equal to each Rent payment at the
time such payment would have become due and payable in accordance with the terms
of the applicable Operative Document had such Operative Document not been
terminated in whole or in part. Sublessee hereby waives, to the extent permitted
by applicable Law, any and all rights which it may now have or which at any time
hereafter may be conferred upon it, by statute or otherwise, to terminate,
cancel, quit or surrender this Sublease except in accordance with the express
terms hereof.

Section 18.    Investment of Security Funds. Any moneys held by Sublessor as
security hereunder, for future payments to Sublessee at a time when there is not
continuing an Event of Default shall, until paid to Sublessee or otherwise
applied in accordance with the terms of the Sublease Operative Documents, be
invested by Sublessor [*] in Cash Equivalents. There shall be promptly remitted
to Sublessee or its order (but no more frequently than monthly) any gain
(including interest received) realized as a result of any such investment (net
of any fees, commissions and other expenses, if any, incurred in connection with
such investment) unless a Specified Default or an Event of Default shall have
occurred and be continuing. [*]

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Section 19.    Miscellaneous. Any provision of this Sublease which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. No term or provision of
this Sublease may be amended, supplemented, modified, changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
Sublessor, Sublessee and any assignee of Sublessor’s rights hereunder. This
Sublease shall constitute an agreement of Sublease, and nothing contained herein
shall be construed as conveying to Sublessee any right, title or interest in the
Equipment except as a Sublessee only. Neither Sublessee nor any Affiliate of
Sublessee will file any tax returns in a manner inconsistent with the foregoing
fact or with Sublessor’s ownership of the Equipment. The section and paragraph
headings in this Sublease and the table of contents are for convenience of
reference only and shall not modify, define, expand or limit any of the terms or
provisions hereof and all references herein to numbered sections, unless
otherwise indicated, are to sections of this Sublease. THIS SUBLEASE HAS BEEN
DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT REFERENCE TO
PRINCIPLES OF CONFLICTS OF LAW OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW
YORK GENERAL OBLIGATIONS LAW. This Sublease may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.

Section 20.    Sublease for the UCC. The parties intend and agree that the
Sublease:
(i)    constitutes a “true Sublease”, and not a “security interest” as defined
in Section 1-201(35) of the UCC; and
(ii)    confers only a leasehold interest on Sublessee in and to the Equipment
on and subject to the terms of the Sublease, and no ownership or other interest
with respect to the Equipment is provided to Sublessee under the Sublease.
Sublessee shall not file a tax return that is inconsistent with the provisions
of this Section 23.

Section 21.    No Brokers. Each of the parties hereby represents and warrants to
the other that it has not paid, agreed to pay or caused to be paid directly or
indirectly in any form, any commission, percentage, contingent fee, brokerage or
other similar payments of any kind, in connection with the establishment or
operation of the Sublease, to any Person (other than fees payable to legal
advisers or portfolio services).

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Section 22.    Cape Town Convention Consents. Sublessor and Sublessee each
hereby consents to the registrations of the International Interests in and to
each Airframe, each Engine and each Spare Engine created in favor of Sublessor
under the Sublease and the relevant Sublease Supplement.

Section 23.    Consent to Jurisdiction. Each of the parties hereto (A) hereby
irrevocably submits itself to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Sublease or any other Operative Document, the subject matter of any
thereof or any of the Transactions or thereby brought by any party or parties
thereto, or their successors or permitted assigns and (B) hereby waives, and
agrees not to assert, by way of motion, as a defense, or otherwise, in any such
suit, action or proceeding, to the extent permitted by applicable law, that the
suit, action or proceeding is brought in an inconvenient forum, that the venue
of the suit, action or proceeding is improper, or that this Sublease or any
other Operative Document or the subject matter of any thereof or any of the
Transactions or thereby may not be enforced in or by such courts; provided,
however that the foregoing shall not apply to the right any party may have to
seek removal of such suit, action or proceeding to federal court or to seek
consolidation of any separate actions, suits or proceedings brought by one or
more of the other parties in the same or different jurisdictions.
[This space intentionally left blank]

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IN WITNESS WHEREOF, Sublessor and Sublessee have each caused this Sublease to be
duly executed as of the day and year first above written.
 
REPUBLIC AIRLINE INC.,  
as Sublessor 

 
By: /s/ Ethan J. Blank 
Name: Ethan J. Blank
Title: Vice President General Counsel
 
FLYBE LIMITED, 
as Sublessee 

 
By: /s/ S. Hammad 
Name: S. Hammad
Title: CEO

 

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ANNEX A
DEFINITIONS

The following terms shall have the following meanings for all purposes of the
Sublease Operative Documents referred to below, and such meanings shall be
equally applicable to both the singular and the plural forms of the terms herein
defined. In the case of any conflict between the provisions of this Annex A and
the provisions of the main body of any Sublease Operative Document, the
provisions of the main body of such Sublease Operative Document shall control
the construction of such Sublease Operative Document.
Except as otherwise provided herein, all references to any agreement defined in
this Annex A shall be deemed to include such agreement as the same may from time
to time be amended, supplemented or otherwise modified in accordance with its
terms and, where applicable, the terms of the other Operative Documents. All
references to statutes, rules and regulations shall be deemed to include all
amendments, replacements and successors thereto unless otherwise specified
herein. Any reference to any Person shall be deemed to include its successors
and permitted assigns.
“Acceptable Alternate Engine” means an engine of the same make and model as the
Engines and Spare Engines (or of an improved model) suitable for use on any
Airframe and having a value and utility equal to or greater than the Engine or
Spare Engine being replaced, assuming such engine is in the condition required
by the Sublease; provided that the primary purpose of designating any engine as
an Acceptable Alternate Engine is not to reduce the aggregate life, value and
utility from that of the substituted Engine or substituted Spare Engine, as the
case may be.
“Acceptable Alternate Propeller” means a propeller of the same make and model as
the Propellers (or of an improved model) suitable for use on any Engine or Spare
Engine and having a value and utility equal to or greater than the Propeller
being replaced, assuming such propeller is in the condition required by the
Sublease; provided that the primary purpose of designating any propeller as an
Acceptable Alternate Propeller is not to reduce the aggregate life, value and
utility from that of the substituted Propeller.
“Additional Agreement” means the Additional Agreement, dated as of the Signing
Date, between Sublessor and Sublessee.
“Additional Insured” means Sublessor, Head Lessor, Trust Company, the Trustee,
the Owner Participant, any previous Owner Participant, if any, the Financing
Parties and each of their respective Affiliates, successors and permitted
assigns, and the respective directors, officers, employees and agents of the
foregoing.
“Additional Part” has the meaning specified for such term in Section 8(c) of the
Sublease.
“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
For the purposes of this

 
Annex A

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definition, “control” (including “controlled by” and “under common control
with”) shall mean the power, directly or indirectly, to direct or cause the
direction of the management and policies of such Person whether through the
ownership of voting securities or by contract or otherwise.
“After-Tax Basis” means in the case of any amount payable on an “After-Tax
Basis” to or for the benefit of any Person (including any amount payable
pursuant to this definition), after deduction of the net amount of all Taxes
required to be paid by such Person with respect to the receipt or accrual by it
of such amount (and assuming that such Person is subject to (i) United States
federal income tax at the highest marginal statutory rate imposed on
corporations in the highest taxable income bracket for the relevant period,
(ii) United States state and local income taxes at the composite of the highest
marginal statutory rates imposed on such Person for the relevant period, as such
composite rate shall be certified by a financial officer of such Person, and
(iii) income taxes (if any) imposed by countries outside the United States at
the actual rates imposed on such Person).
“Agreed Value” shall mean, in respect of an Item of Equipment, the amount set
forth in Exhibit B to the for such Item of Equipment, which such amount shall be
the Agreed Value as of the Delivery Date for such Item of Equipment [*] during
the Term for such Item of Equipment (as such schedule of annual Agreed Values
shall be confirmed by the Sublease Supplement for such Item of Equipment).
“Aircraft” means, individually, an Airframe, together with the two (2) related
Engines and two (2) related Propellers identified in a Sublease Supplement with
respect to such Airframe, whether or not any of such Engines or Propellers may
from time to time be installed on such Airframe or may be installed on any other
airframe or on any other aircraft, which Aircraft is certified by the Aviation
Authority to transport at least eight (8) persons or crew or goods in excess of
2750 kilograms, and includes all Aircraft Documents and all logs, manuals, and
data and inspection, modification, repair and overhaul records required to be
maintained with respect to the foregoing, and collectively, all of the Aircraft.
“Aircraft Documents” means, in respect of an Item of Equipment, the documents
listed in Annex C-2 to the Lease plus all other documents, data and records
required in connection with Sublessee’s obligations under the Sublease,
according to best airline practice and so as to satisfy the requirements of all
applicable Aviation Authority regulations and Sublessee’s Maintenance Program
(including, without limitation, the Technical Reports), and all additions,
renewals, revisions and replacements from time to time made to any of the
foregoing in accordance with the Sublease.
“Airframe” means (i) each Bombardier DHC-8-402 airframe (excluding Engines,
Spare Engines, engines, Propellers and propellers) bearing the manufacturer’s
serial number and current U.S. Registration number specified in the Sublease
Supplement with respect to the related Aircraft, which Airframe shall be leased
by Sublessor to Sublessee under the Sublease and under such Sublease Supplement;
and (ii) any and all Parts (A) so long as the same shall be incorporated or
installed in or attached to such Airframe, or (B) so long as title thereto shall
remain vested in Lessor in accordance with the terms of Section 8 of the
Sublease after removal from such Airframe; provided, however, that at such time
as an aircraft shall be deemed part of the property leased under the Sublease in
substitution for the Airframe pursuant to the applicable provisions of the
Lease, the replaced Airframe shall cease to be an Airframe under the Lease; and
provided, further, that each

 
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Airframe shall not include Passenger Convenience Equipment. As of the Signing
Date, subject to the terms of the Operative Documents, the Airframes that will
be eligible for lease under the Lease are identified in Schedule I to the
Additional Agreement.
“Airframe Payment Redelivery Adjustment” has the meaning specified for such term
in Annex C-1 of the Lease.
“APU” means, in respect of an Aircraft, the auxiliary power unit installed on
such Aircraft.
“APU Hour” means, in respect of an APU for an Aircraft, each hour or part
thereof such APU is operated, elapsing from the moment the APU is started until
such APU is shut down.
“APU Payment Redelivery Adjustment” has the meaning specified for such term in
Annex C-1 of the Lease.
“Associated Rights” has the meaning given to such term in the Cape Town
Convention.
“Aviation Authority” means each person which is from time to time vested with
the control and supervision of, or has jurisdiction over, the registration,
airworthiness and operation of aircraft or other matters relating to civil
aviation in the United Kingdom.
“Bankruptcy Code” means Title 11 of the United States Code, as amended, or any
subsequent legislation that amends, supplements or supersedes such provisions.
“Base Rate” means the rate of interest reported by the Wall Street Journal from
time to time as the “prime rate.”
“Basic Rent” means, in respect of an Item of Equipment, the rent payable for
such Item of Equipment pursuant to Section 3(b) of the Sublease, as confirmed by
the applicable Sublease Supplement in respect of such Item of Equipment.
“Business Day” means any day other than a Saturday or Sunday or a day on which
commercial banks are required or authorized to close in New York, New York,
London or the city where the principal office of the Trustee is located.
“Cape Town Convention” means collectively, the official English language texts
of the Convention on International Interests in Mobile Equipment (the
“Convention”) and the Protocol to the Convention on International Interests in
Mobile Equipment on Matters Specific to Aircraft Equipment (the “Protocol”),
both signed in Cape Town, South Africa on November 16, 2001, together with any
protocols, regulations, rules, orders, agreements, instruments, amendments,
supplements, revisions or otherwise that have or will be subsequently made in
connection with the Convention or the Protocol by the “Supervisory Authority”
(as defined in the Consolidated Text), the International Registry or “Registrar”
(as defined in the Consolidated Text) or any other international or national,
body or authority, all as in effect in the United States or other relevant
Contracting State (as used in the Consolidated Text). Except to the extent
otherwise defined in the Sublease Operative Documents, terms used in the
Sublease Operative Documents that are defined

 
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in the Cape Town Convention shall when used in relation to the Cape Town
Convention have the meanings ascribed to them in the Cape Town Convention.
“Cash Equivalents” means (i) direct obligations of the United States of America
and agencies guaranteed by the United States government having a final maturity
of ninety (90) days or less from date of purchase thereof; (ii) certificates of
deposit issued by, bankers’ acceptances of, or time deposits with, any bank,
trust company or national banking association incorporated under the laws of the
United States of America or one of the states thereof having combined capital
and surplus and retained earnings as of its last report of condition of at least
$500,000,000 and having a rating of Aa or better by Moody’s or AA or better by
S&P and having a final maturity of ninety (90) days or less from date of
purchase thereof; and (iii) commercial paper of any holding company of a bank,
trust company or national banking association described in (ii) and commercial
paper of any corporation or finance company incorporated or doing business under
the laws of the United States of America or any state thereof having a rating
assigned to such commercial paper of AA by S&P or Aa by Moody’s and having a
final maturity of ninety (90) days or less from the date of purchase thereof.
“Code” means the Internal Revenue Code of 1986, as amended.
“Consolidated Text” means the combination of the Convention or the Protocol
(each as defined in the definition of Cape Town Convention) that was authorized
and created pursuant to Resolution No. 1 adopted by the Cape Town Diplomatic
Conference and any reference to a provision of the Consolidated Text is a
reference to the provision of the Convention or the Protocol from which it is
derived.
“Cycle” means, in respect of an Aircraft, one take-off and landing of such
Aircraft.
“Default” means any condition, circumstance, act or event which with the giving
of notice or the lapse of time or both would become an Event of Default.
“Delivery Condition Requirements” means the requirements identified in Annex B
to the Sublease; provided that such requirements are solely a description of the
condition in which the Item of Equipment must be in order for Sublessee to be
obligated to accept an Item of Equipment under the Sublease.
“Delivery Date” means, with respect to an Item of Equipment, the date of the
initial Sublease Supplement for such Item of Equipment, which date shall be the
date such Item of Equipment is leased by Sublessor to Sublessee and accepted by
Sublessee under the Sublease.
“Delivery Location” shall mean Toronto. Canada or such other location in the
continental United States or Canada which is mutually acceptable to Sublessor
and Sublessee, taking into account all tax considerations.
“DER Part” shall mean a replacement part which has not been manufactured by the
original manufacturer of the Part to be replaced, but which replacement part has
been approved by a Designated Engineering Representative certified by the FAA.

 
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“Determination Date” has the meaning set forth in Section 9(a)(ii) of the
Sublease.
“Dollars” and “$” mean the lawful currency of the United States of America.
“EASA Modifications” means the modification and/or updates required to be
effected to the Aircraft and the Aircraft Documents pursuant to the Sky Services
Agreement in order to comply with (j) EASA requirements, (iii) Aviation
Authority requirements, and (iii) Sublessee requirements, in each case in
respect of the operation of the Aviation in passenger service within the
Sublessee’s fleet.
“Engine” means, with respect to each Aircraft (i) each of the two Pratt &
Whitney Canada model PW150A engines listed by manufacturer’s serial number in
the initial Sublease Supplement for such Aircraft, whether or not from time to
time thereafter installed on any Airframe or installed on any other airframe or
on any other aircraft; and (ii) any Acceptable Alternate Engine therefor and in
all cases with a minimum of 1750 lbs of thrust or its equivalent, together in
each case with any and all Parts incorporated or installed in or attached
thereto or any and all Parts removed therefrom so long as title thereto shall
remain vested in Head Lessor in accordance with the terms of Section 8 of the
Sublease after removal from such Engine; provided, however, that at such time as
an engine shall be deemed part of the property leased under the Sublease in
substitution for an Engine pursuant to the applicable provisions of the
Sublease, the replaced Engine shall cease to be an Engine under the Sublease or
other Sublease Operative Documents. The term “Engines” means, as of any date of
determination, all Engines then leased under the Lease. As of the Signing Date,
subject to the terms of the Sublease Operative Documents, the Engines that will
be eligible for sublease under the Sublease are identified in Schedule I to
Participation Agreement.
“Engine Cycle” means, in respect of an Engine or a Spare Engine, operation of
such Engine or Spare Engine on an aircraft from and including a take-off to and
including the landing of that aircraft.
“Engine Flight Hour” means, in respect of an Engine or a Spare Engine, each hour
or part thereof such Engine or Spare Engine is operated, elapsing from the
moment the wheels of an aircraft on which such Engine or Spare Engine is
installed leave the ground until the wheels of such aircraft next touch the
ground.
“Engine Lease” means the General Terms Engine Lease Agreement between Willis
Finance, as Lessor and Sublessor, as Lessee, dated as of March 6, 2013, and each
“Lease” constituting a part thereof.

“Engine Manufacturer” means United Technologies Corporation, a corporation
organized and existing under the laws of the State of Delaware, acting by and
through its Pratt & Whitney Canada division, or any successor division,
subsidiary or affiliate thereof.

 
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“Engine Manufacturer Consent” shall mean the Consent and Agreement dated as of a
date on or prior to the initial Delivery Date by the Engine Manufacturer with
respect to the Engine Servicing Assignment.
“Engine Servicing Agreement” means that certain Term Cost Program to be entered
into between Sublessee and the Engine Manufacturer (including all
exhibits thereto, together with all letter agreements entered into that by their
terms constitute part thereof), as the same may be amended or otherwise
supplemented from time to time.
“Engine Servicing Assignment” means that certain Assignment of Term Cost Program
to be entered into between Sublessee and Sublessor, as said Assignment of Term
Cost Program may from time to time be, supplemented or amended to the extent
permitted by, and in accordance with, the terms thereof.
“Equipment” means, collectively, all of the Aircraft and the Spare Engines.
“EU ETS Authority” means any Government Entity of a member state of the European
Union with jurisdiction for the application and administration of EU ETS Laws in
relation to any of the Sublessee, any Permitted Sublessee or the Aircraft.
“EU ETS Directive” means Directive 2003/87/EC of the European Parliament and of
the Council of 13 October 2003 establishing a scheme for greenhouse gas
emissions allowance trading and amending Council Directive 96/61/EC, as the same
may be amended, supplemented, superseded or re-adopted from time to time
(whether with or without modifications).
“EU ETS Emissions Report” means the annual verified emissions report required to
be submitted by the Lessee to the EU ETS Authority by 31 March of each year in
respect of the previous reporting year’s emissions under EU ETS Laws.
“EU ETS Fleet Report” means the current fleet list as submitted by the Lessee to
the relevant EU ETS Authority together with any updates and supplementary
information provided or maintained by the Sublessee in respect of its obligation
under EU ETS laws.
“EU ETS Laws” means:
(a)    the EU ETS Directive; and
(b)    any Applicable Law of a member state of the European Union implementing
the EU ETS Directive.
“EU ETS Letter” means any letter executed or to be executed by the Sublessee or,
as the case may be, any Permitted Sublessee in respect of the Aircraft in the
form of Exhibit B to the Additional Agreement.
“EU ETS Monitoring Plan” means the Sublessee’s current monitoring plan detailing
how its emissions will be measured and reported in respect of its obligations
under EU ETS Laws as approved by the EU ETS Authority.

 
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“EU Institution” means (whether having a distinct legal personality or not) the
organs of the European Union having power to issue binding laws, regulations,
directives, decisions, regulatory requirements, judgments, orders or directions
including, without limitation, the European Commission, the European Council,
the European Court of Justice, the European Parliament and EASA.
“Eurocontrol Letter” means any letter executed, or to be executed, by the
Sublessee or, as the case may be, any Permitted Sublessee in respect of the
Aircraft in the form of Exhibit A to the Additional Agreement together with
Eurocontrol’s acknowledgement of receipt.
“Event of Default” has the meaning specified for such term in Section 13 of the
Sublease.
“Event of Loss” means, with respect to any Aircraft, Airframe, Engine, Spare
Engine or Propeller, any of the following events with respect to such property:
(i) the loss of such property or of the use thereof due to the destruction of or
damage to such property which renders repair uneconomic or which renders such
property permanently unfit for normal use for any reason whatsoever; (ii) any
damage to such property which results in an insurance settlement with respect to
such property on the basis of a total loss, or a constructive or compromised
total loss; (iii) the theft or disappearance of such property for a period in
excess of sixty (60) days or, if earlier, the expiration of the Term for such
property; (iv) the requisition for use of such property by any governmental
authority (other than a requisition for use by the United States Government or
any government of registry of the Aircraft or any agency or instrumentality
thereof) that shall have resulted in the loss of possession of such property by
Lessee (or any Permitted Sublessee) for a period in excess of ninety (90)
consecutive days or, if earlier, the expiration of the Term for such property;
(v) the requisition for use by the United States Government or any government of
registry of any Aircraft or any instrumentality or agency thereof, which shall
have occurred during the Term for the relevant property and shall have continued
for a period of thirty (30) days beyond such Term; (vi) the condemnation,
confiscation or requisition of such property by the United States Government or
any government of registry, if such condemnation, confiscation or requisition
results in a loss by the Lessor of its title to such property or the taking of
title to any Aircraft, Airframe, Engine, Spare Engine or Propeller by the United
States Government or any government of registry; and (vii) with respect to an
Engine, Spare Engine or Propeller only, any divestiture of title to or interest
in such property or any event with respect to such property that is deemed to be
an Event of Loss with respect to such property pursuant to Section 7(b)(v) of
the Lease. An Event of Loss with respect to an Aircraft shall be deemed to have
occurred if an Event of Loss occurs with respect to the Airframe for such
Aircraft.
“Expenses” means all liabilities, obligations, losses, damages, settlements,
penalties, claims, actions, suits, costs, expenses and disbursements (including,
without limitation, reasonable fees and disbursements of legal counsel,
accountants, appraisers, inspectors or other professionals and reasonable costs
of investigation) of whatsoever kind and nature.
“Financing Parties” means any Person or Persons from time to time notified by
Sublessor to Sublessee as providing financing, or participating in a transaction
the purpose of which is to provide financing, to Head Lessor or the Owner
Participant in respect of its acquisition, ownership or leasing of any Item of
Equipment, whether by way of loan, superior lease or otherwise.

 
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“Financing Parties’ Representative” means any one or more Financing Parties from
time to time notified to Lessee as being the Financing Parties’ Representative.
“Flight Hour” means, in respect of an Aircraft, each hour or part thereof
elapsing from the moment the wheels of such Aircraft leave the ground on
take-off until the wheels of such Aircraft next touch the ground.
“Foreign Air Carrier” means any air carrier which is not a U.S. Air Carrier and
which would qualify as a Permitted Sublessee.
“GAAP” means applicable generally accepted accounting principles, consistently
applied.
“Government Entity” means (a) any federal, state, provincial or similar
government, and any body, board, department, commission, court, tribunal,
authority, agency or other instrumentality of any such government or otherwise
exercising any executive, legislative, judicial, administrative or regulatory
functions of such government or (b) any other government entity having
jurisdiction over any matter contemplated by the Sublease Operative Documents or
relating to the observance or performance of the obligations of any of the
parties to the Sublease Operative Documents.
“Habitual Base” means the United Kingdom, or, subject to the prior written
consent of Lessor, any other country or countries in which an Item of Equipment
is for the time being habitually based.
“Head Lease” means that certain Master Lease Agreement, dated as of August 12,
2012 between Head Lessor and Sublessor, as said Master Lease Agreement may from
time to time be supplemented or amended to the extent permitted by, and in
accordance with, the terms thereof. The term “Lease” shall also include each
Lease Supplement from time to time entered into pursuant to the terms of the
Lease.
“Head Lessor” means Regional Equipment Trust, a Delaware statutory trust, or any
of its successors and permitted assigns acting as lessor under the Head Lease.
“Head Lessor Liens” means any Lien or disposition of title or interest arising
as a result of (i) claims against Head Lessor, the Trust Company in its
individual capacity, the Trustee or the Owner Participant not related to the
Transactions, (ii) any act or omission of the Owner Participant, Head Lessor,
the Trustee or the Trust Company in its individual capacity, which is not
related to the Transactions or is in violation of any of the terms of the
Operative Documents, (iii) claims against the Owner Participant, Head Lessor,
the Trustee or the Trust Company in its individual capacity, with respect to
Taxes or Expenses against which Head Lessee is not required to indemnify the
Owner Participant, Head Lessor, the Trustee or the Trust Company in its
individual capacity, and (iv) claims against Head Lessor or the Owner
Participant arising out of any transfer by Head Lessor or the Owner Participant
of all or any portion of the respective interests of Head Lessor or the Owner
Participant in the Equipment, the Trust Estate or the Operative Documents other
than the transfer of possession of the Aircraft pursuant to the Lease, a
transfer of the Aircraft pursuant to Sections 9, 10 or 19 of the Lease or
pursuant to the exercise of the remedies set forth in Section 14 of the Lease.

 
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“Indemnitee” means (i) the Head Lessor, (ii) the Trust Company, in its
individual capacity and as trustee under the Trust Agreement, (iii) Sublessor,
(iv) the Owner Participant, (v) the Trustee, (vi) the Financing Parties, (vii)
 the Trust Estate, (viii) each Affiliate of the Persons described in clauses (i)
through (vi), inclusive, (ix) the respective directors, officers, employees,
agents and servants of each of the Persons described in clauses (i) through
(viii), inclusive, and (x) the successors and permitted transferees and assigns
of the Persons described in clauses (i) through (ix), inclusive.
“Insurance” means the insurance in respect of the Equipment required by
Section 10 of the Sublease and Exhibit D thereto.
“Insurance Brokers” has the meaning specified for such term in paragraph (c) of
Exhibit D to the Sublease.
“International Interest” has the meaning specified for such term in the Cape
Town Convention.
“International Registry” means the registry established pursuant to the Cape
Town Convention.
“Item of Equipment” means any Aircraft or either Spare Engine.
“Landing Gear Safe-Life Payment Redelivery Adjustment” has the meaning specified
for such term in Annex C-1 of the Lease.
“Law” means (a) any constitution, treaty, statute, law, regulation, order, rule
or directive of any Government Entity and (b) any judicial or administrative
interpretation or application of, or decision under, any of the foregoing.
“Lien” means any mortgage, pledge, lien, International Interest, Prospective
International Interest, charge, claim, encumbrance, lease, sublease or security
interest affecting the title to or any interest in property.
“Loss Payable Threshold” means, in respect of an Item of Equipment, the amount
specified in paragraph (e) of Exhibit D to the Sublease.
“Loss Payment Date” has the meaning specified for such term in Section 9(a)(ii)
of the Sublease.
“Main Landing Gear Payment Redelivery Adjustment” has the meaning specified for
such term in Annex C-1 of the Sublease.
“Maintenance Payment” means, collectively, all applicable amounts to be paid at
the rates, as modified from time to time, referred to in Annex C of the Sublease
with respect to Airframe Payment, APU Payment Redelivery Adjustment, Propeller
Payment Redelivery Adjustment, Nose Landing Gear Payment Redelivery Adjustment
and Main Landing Gear Payment Redelivery Adjustment, as the case may be.

 
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“Maintenance Program” means a maintenance program approved by the Aviation
Authority for the Equipment in accordance with the Manufacturer’s and/or OEM’s
specifications, requirements, service bulletins, planning documents, maintenance
manuals and documents and encompassing scheduled maintenance (including block
maintenance), condition-monitored maintenance, and/or on-condition maintenance
of the Airframes, Engines, Spare Engines, Propellers and Parts, including
servicing, testing, preventive maintenance, repairs, structural inspections,
system checks, overhauls, approved modifications, service bulletins, engineering
orders, airworthiness directives, corrosion control, inspections and treatments.
“Maintenance Provider” means, (x) Dowty, in the case of the Propellers and (y)
Hamilton Sundstrand, in the case of the APU or, with respect to either the
Propellers or the APU, such other reputable provider of power by the hour
maintenance programs selected by Sublessee.
“Manufacturer” means Bombardier Inc., and its successors and permitted assigns.
“Maximum Deductible Amount” has the meaning specified for such term in paragraph
(d) of Exhibit D to the Sublease.
“Minimum Liability Insurance Amount” has the meaning specified for such term in
paragraph (a)(1) of Exhibit D to the Sublease.
“Mitigated Rent Amount” has the meaning specified for such term in Section 14(c)
of the Sublease.
“Moody’s” means Moody’s Investors Service, Inc., and any successor thereto.
“MPD” means the Maintenance Planning Document published by the Manufacturer and
applicable to the Aircraft.
“Nose Landing Gear Payment Redelivery Adjustment” has the meaning specified for
such term in Annex C-1 of the Sublease.
“OEM” means, in relation to any Part, the original equipment manufacturer of
such Part.
“Omnibus Consents” shall mean each Consent and Agreement by the applicable
manufacturer or third party maintenance provider with respect to any Omnibus
Servicing Assignment.
“Omnibus Servicing Assignment” means any security assignment with respect to any
Other Servicing Agreement entered into between Sublessee and Sublessor, the
terms of which shall include requirements for notice to Sublessor prior to
termination and related cure rights and provide for the continuation of services
for the benefit of Sublessor (or its designee) following the Term Expiration
Date as may from time to time be, supplemented or amended to the extent
permitted by, and in accordance with, the terms thereof.
“Operative Documents” has the meaning given to such term in the Participation
Agreement.

 
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“Other Operative Documents” means any documentation executed in connection with
any leasing or financing transaction between Sublessor and Sublessee.
“Other Servicing Agreements” means any maintenance servicing agreement entered
into between Sublessee and the applicable Maintenance Provider relating to the
maintenance of the APU or Propellers in a “power by the hour” maintenance
program (including all exhibits thereto, together with all letter agreements
entered into that by their terms constitute part thereof).
“Owner Participant” means Export Development Canada, and its successors and
transferees.
“Parent Guarantee” means, the Guarantee, dated as of the Signing Date, delivered
to Sublessor by the Parent Guarantor.
“Parent Guarantor” means, Flybe Group plc.
“Participation Agreement” means that certain Participation Agreement, dated as
of the August 12, 2012 among the Trustee, Sublessor, Head Lessor and the Owner
Participant, as the same may from time to time be supplemented or further
amended, to the extent permitted by, and in accordance with, the terms thereof.
“Parts” means all appliances, parts, components, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
(a) complete Engines, Spare Engines or engines or complete Propellers or
propellers and (b) cargo containers) which may from time to time be incorporated
or installed in or attached to any Airframe, Engine, Spare Engine or Propeller
or so long as title thereto shall remain vested in Head Lessor in accordance
with Section 8 of the Sublease after removal therefrom; provided that “Parts”
shall not include Passenger Convenience Equipment.
“Passenger Convenience Equipment” means components or systems installed on or
affixed to an Airframe that are used to provide individual telecommunications to
passengers aboard such Airframe.
“Past Due Rate” means a rate per annum equal to [*] over the Base Rate.
“Payment Date” means the 1st of the month.
“Permitted Lien” means any Lien referred to in clauses (i) through (ix) of
Section 6 of the Sublease.
“Permitted Sublease” means a sublease permitted under Sections 7(b)(x) and
7(b)(xi) of the Sublease.
“Permitted Sublessee” means the sublessee under a Permitted Sublease.

 
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“Person” means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency, authority or political subdivision
thereof.
“PMA Parts” shall mean Parts manufactured in accordance with a Parts
Manufacturing Approval Supplement issued by the FAA.
“Prohibited Country” means any state, country or jurisdiction which is subject
to any sanction, resolution, order or embargo by (1) the United Nations Security
Council, (2) any government entity of the EU, the United States of America or
the State of Registration, and which sanction, resolution, order or embargo
prohibits the Sublessee or any Permitted Sublessee from operating, exporting or
using the Aircraft to, from or in that state, country or jurisdiction.
“Prohibited Person” means any Person (whether designated by name or by reason of
being included in a class of Persons) against whom Sanctions are directed.
“Propeller” means, with respect to each Aircraft (i) each of the two (2) Dowty
Aerospace model R408/6-123-F/17 propellers listed by manufacturer’s serial
number in the initial Lease Supplement for such Aircraft, whether or not from
time to time thereafter installed on any Engine or Spare Engine or installed on
any other engine; and (ii) any Acceptable Alternate Propeller therefor, together
in each case with any and all Parts incorporated or installed in or attached
thereto or any and all Parts removed therefrom so long as title thereto shall
remain vested in Head Lessor in accordance with the terms of Section 8 of the
Sublease after removal from Propeller; provided, however, that at such time as a
propeller shall be deemed part of the property leased under the Sublease in
substitution for a Propeller pursuant to the applicable provisions of the
Sublease, the replaced Propeller shall cease to be a Propeller under the
Sublease or other Sublease Operative Documents. The term “Propellers” means, as
of any date of determination, all Propellers then leased under the Sublease. As
of the Signing Date, subject to the terms of the Sublease Operative Documents,
the Propellers that will be eligible for sublease under the Sublease are
identified in Schedule I to the Additional Agreement.
“Propeller Cycle” means, in respect of a Propeller, operation of such Propeller
on an aircraft from and including a take-off to and including the landing of
that aircraft.
“Propeller Flight Hour” means, in respect of a Propeller, each hour or part
thereof such Propeller is operated, elapsing from the moment the wheels of an
aircraft on which such Propeller is installed leave the ground until the wheels
of such aircraft next touch the ground.
“Propeller Manufacturer” means Dowty Aerospace, and its successors and permitted
assigns.
“Propeller Payment Redelivery Adjustment” has the meaning specified for such
term in Annex C-1 of the Sublease.
“Prospective International Interest” has the meaning given to such term in the
Cape Town Convention.

 
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“Redelivery Date” has the meaning specified for such term in Annex C of the
Sublease.
“Rent” means Basic Rent and Supplemental Rent, collectively.
“Rent Payment Date” shall mean, in respect of an Item of Equipment, (i) Delivery
Date and (ii) each of the successive Payment Dates thereafter.
“Replacement Engine” means any engine substituted for an Engine or a Spare
Engine pursuant to Section 9(b) of the Sublease.
“Replacement Propeller” means any propeller substituted for a Propeller pursuant
to Section 9(b) of the Sublease.
“S&P” means Standard & Poor’s Ratings Group, a division of the McGraw-Hill
Companies, Inc., and any successor thereto.
“Sanctions” means any sanctions, embargos, freezing provisions, prohibitions or
other restrictions relating to trading, doing business, investment, exporting,
financing or making assets available (or other activities similar to or
connected with any of the foregoing) imposed by the United Nations (UN), the
European Union (EU), the US Office of Foreign Assets Control (OFAC) and/or HM
Treasury and the Foreign and Commonwealth Office of the United Kingdom.
“Securities Act” means the Securities Act of 1933, as amended.
“Signing Date” means September 16, 2014.
"Sky Services" means Sky Service F.B.O. Inc.
"Sky Services Agreement" means the agreement between Sublessor and Sky Services
attached to the Sublease as Appendix B-4.
“Spare Engine” means (i) the Pratt & Whitney Canada model PW150A engine listed
by manufacturer’s serial number in the initial Sublease Supplement for such
Spare Engine, whether or not from time to time thereafter installed on an
Airframe or installed on any other airframe or on any other aircraft; and
(ii) any Acceptable Alternate Engine therefor and in all cases with a minimum of
1750 lbs of thrust or its equivalent, together in each case with any and all
Parts incorporated or installed in or attached thereto or any and all Parts
removed therefrom so long as title thereto shall remain vested in Head Lessor in
accordance with the terms of Section 8 of the Sublease after removal from such
Spare Engine, and includes all Aircraft Documents and all logs, manuals, and
data and inspection, modification, repair and overhaul records required to be
maintained with respect to the foregoing; provided, however, that at such time
as an engine shall be deemed part of the property leased under the Lease in
substitution for a Spare Engine pursuant to the applicable provisions of the
Lease, the replaced Spare Engine shall cease to be a Spare Engine under the
Lease or other Operative Documents. The term “Spare Engines” means, as of any
date of determination, all Spare Engines then leased under the Lease. As of the
Signing Date, subject to the terms of the Sublease Operative Documents, the
Spare Engines eligible for sublease under the Sublease are identified in
Schedule I to the Additional Agreement.

 
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“Specified Default” means a Lease Default of the type described in
Section 13(a), (b), (e), (l) or (m) of the Sublease.
“Sublease” means the Master Sublease Agreement, dated of the Signing Date,
between Sublessor and Sublessee.
“Sublease Operative Documents” means the Additional Agreement, the Sublease, the
Engine Service Agreement, the Engine Service Agreement Consent, the Parent
Guarantee, the Other Servicing Agreement, any Omnibus Servicing Assignment and
any Omnibus Consents.
“Sublease Supplement” shall mean each sublease supplement to be entered into
between Sublessor and Sublessee under the Sublease in respect of an Item of
Equipment dated the Delivery Date for such Item of Equipment, substantially in
the form of Exhibit A to the Sublease, for the purpose of leasing such Item of
Equipment under and pursuant to the terms of the Lease, and any other Lease
Supplement entered into in accordance with the terms of the Sublease.
“Sublessee Documents” means each Sublease Operative Document to which Sublessee
is a party and each other agreement between the Sublessee and the respective
parties thereto relating to the Transactions.
“Sublessee’s Maintenance Program” means the Maintenance Program approved by the
Aviation Authority for Sublessee’s maintenance of the Equipment.
“Sublessor” means Republic Airline Inc., an Indiana corporation, and its
permitted successors and assigns.
“Sublessor Documents” means each Sublease Operative Document to which the
Sublessor is a party and each other agreement between the Sublessor and the
respective parties thereto relating to the Transactions.
“Sublessor Liens” means any Lien or disposition of title or interest arising as
a result of (i) claims against Sublessor not related to the Transactions,
(ii) any act or omission of the Sublessor, which is not related to the
Transactions or is in violation of any of the terms of the Operative Documents,
(iii) claims against the Sublessor with respect to Taxes or Expenses against
which Sublessee is not required to indemnify the Sublessor, (iv) claims against
Sublessor arising out of any transfer by Sublessor of all or any portion of the
respective interests of Sublessor in the Equipment, or the Sublease Operative
Documents other than the transfer of possession of the Aircraft pursuant to the
Sublease, a transfer of the Aircraft pursuant to Sections 9 or 10 of the
Sublease or pursuant to the exercise of the remedies set forth in Section 14 of
the Sublease.
“Subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
of which securities or other ownership interests representing more than 50% of
the equity or more than 50% of the

 
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ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held by
the parent. Unless otherwise expressly specified, when used herein “Subsidiary”
shall mean a Subsidiary of the Sublessee.
“Supplemental Rent” means, without duplication, all amounts, liabilities,
indemnities and obligations (other than Basic Rent) that Sublease assumes or
becomes obligated to or agrees to pay under any Sublessee Document to or on
behalf of Sublessor or any other Person, including, without limitation, any such
amounts with respect to Agreed Value, and payments of indemnities under
Section 5 of the Additional Agreement.
“Taxes” means any and all fees (including, without limitation, license,
recording, documentation and registration fees), taxes (including, without
limitation, income, gross receipts, sales, rental, use, turnover, value added,
property (tangible and intangible), excise and stamp taxes), withholding,
license, levies, imposts, duties, recording charges and assessments of any kind
whatsoever that are in the nature of taxes or other governmental charges
including interest, penalties and additions to tax.
“Technical Report” means a report of the Flight Hours, Cycles, Engine Flight
Hours, Engine Cycles, Propeller Flight Hours and Propeller Cycles operated by
the Airframe, Engines, Spare Engines and Propellers in respect of each calendar
month in the format typically produced by Sublessee for its lessors.
“Term” means, in respect of an Item of Equipment, the term for which such Item
of Equipment is leased pursuant to Section 3(a) of the Sublease, commencing on
the Delivery Date for such Item of Equipment, and ending on the Term Expiration
Date for such Item of Equipment.
“Term Expiration Date” means, in respect of an Item of Equipment, the date that
is specified as the Lease Expiry Date in Schedule I to the Additional Agreement
and the Sublease Supplement for such Item of Equipment.
“Transactions” means the transactions contemplated by the Additional Agreement
and the other Sublease Operative Documents.
“Trust Agreement” means that certain Amended and Restated Trust Agreement dated
as of May 17, 2012 between the Owner Participant and the Trustee, as the same
may be amended, supplemented or modified from time to time to the extent
permitted by, and in accordance with, the provisions thereof, including, without
limitation, supplementation thereof by the Trust Supplements entered into
pursuant to the applicable provisions thereof.
“Trust Company” means the institution acting as Trustee, in its individual
capacity.
“Trust Estate” has the meaning given to such term in the Participation
Agreement.
“Trustee” means Wells Fargo Delaware Trust Company, National Association, and
any entity appointed as successor Trustee pursuant to the terms of the Trust
Agreement, and references

 
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to a predecessor Trustee in its individual capacity by name in the Operative
Documents shall include such successor Trustee in its individual capacity from
and after such succession.
“United States Government” means the Federal government of the United States of
America.
“U.S. Air Carrier” means any Certificated Air Carrier as to which there is in
force an air carrier operating certificate issued pursuant to Part 121 of the
regulations under the Transportation Code, or which may operate as an air
carrier by certification or otherwise under any successor or substitute
provisions therefor or in the absence thereof.
“U.S. Person” means any Person that qualifies as a “United States person” under
Section 7701(a)(30) of the Code.
“Wet Lease” means any arrangement whereby the Sublessee (or any Permitted
Sublessee) agrees to furnish any Airframe, Engine, Spare Engine and/or Propeller
or engines or propellers installed thereon to a third party pursuant to which
such Airframe, Engine, Spare Engine and Propeller or engines or propellers
(i) shall be operated solely by regular employees of Sublessee (or any Permitted
Sublessee) possessing all current certificates and licenses that would be
required under the Transportation Code, or, if such Aircraft is not registered
in the United States, all certificates and licenses required by the laws of the
jurisdiction of registry, for the performance by such employees of similar
functions within the United States of America or such other jurisdiction of
registry (it is understood that cabin attendants need not be regular employees
of Sublessee (or any Permitted Sublessee); and provided that any pilot is a
regular employee of Sublessee (or any Permitted Sublessee)), and (ii) shall be
maintained by Lessee (or any Permitted Sublessee) in accordance with Sublessee’s
Maintenance Program and without in any way discriminating against the Aircraft
on the basis of its leased status or otherwise. For the avoidance of doubt, a
code share agreement under which the Sublessee (or any Permitted Sublessee)
operates an Aircraft under another air carrier’s livery and two-letter flight
designator code shall not be deemed a Wet Lease.
“Willis Engine” means each “Engine” under the Engine Lease.
“Willis Finance” means Willis Lease Finance Corporation.

 
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ANNEX B

DELIVERY CONDITIONS
Each Item of Equipment (to the extent applicable) shall satisfy the following
conditions on the Delivery Date:
[*]

    
Annex B-1

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

Appendix B-1
[*]

 
Appendix B-1-1

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

Appendix B-2
[Intentionally left blank]

 
Appendix B-2-1

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Appendix B-3
[Intentionally left blank]

 
Appendix B-3-1

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Appendix B-4
[Sky Services Agreement to be attached]

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0 sky service
:rave a
Maintenance Proposal BOMDAS-0814-04R6

Maintenance Proposal
REPUBLIC AIRWAYS
Attention: Lars Amell
Maintenance Proposal: BOMDAS-0814-04R6 Dash 8-0400 — FAA to EASA Modifications
Sent electronically: larnell@rjet.com

Dear Lars:
Per your request for a quote on five Dash 8-0400s, S/Ns —4187, 4332, 4333. 4338
and 4380 ('Aircraft"), Sky Service F.B.O. Inc ("Skyservice") is pleased to
submit the following proposal for your perusal. This proposal is based on the
statement of work provided to Skyservice by Republic Airways ("Customer"), and
is as accurate as the information provided.
1.0 FAA to EASA Modifications
Quotation is for Skyservice to cany out the FAA to EASA modifications listed
below only and does not include any discrepancies or parts and outside services.
All parts and outside services as well as discrepancies will be billed at time
and material as per the labour rates and policies listed below. Reference
Appendix A for a full listing of modifications.
[*]

Note 1: [*]
Note 2: [*]
Note 3: All prices highlighted in green are Fixed Firm prices.
Note 4: [*]

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skyservice    Maintenance Proposal BOMDAS-0814-04R6
Note 5: Skyservice does not have historical data on item #11. Exact cost of the
AFM Supplement will be determined once the response to the P&O is received from
Bombardier. Customer has the option to apply directly to Bombardier for the AFM
supplement.
Note 6: For items 7, and 9, these will be developed and approved under an EASA
minor mod, not an EASA STC.
Note 7: [*]
Note 8: [*]
Note 9: [*]
Note 10: [*]
Note 11: [*]
Please indicate your acceptance or refusal by signing in the appropriate area
below:
Accept /s/ Ethan J. blank Decline ________________ Date September 16, 2014

2.0 Additional Costs
[*]
3.0 General Information
3.1    Inclusions in Overall Price
a)[*]
3.2    Exclusions in Overall Price
The following additional charges are not reflected in the quotation;
[*]
3.3 Assumptions
[*]
3.4 Disclosure of Information
[*]
3.5 Lead-time
[*]
3.6 Scheduling
[*]

3.7 Taxes and Duties
Tax and duties will be charged on parts and services where applicable.
3.8    Flight Testing
[*]

3.9 Terms of Payment

    

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

[*]
3.10 Warranty
If the Aircraft is under a warranty program Skyservice will submit work scope to
warranty provider. If work scope is rejected for any reason all costs will be
billed to customer.
Skyservice warrants for the benefit of Customer and Flybe (and their respective
affiliates) that the services performed pursuant to this contract shall be in
accordance with Transport Canada regulations and the manufacturers approved
maintenance program. Moreover, the aforementioned work shall be free from
defects in workmanship or installation for a period of [*], whichever occurs
first after the Aircraft is delivered to or on behalf of the Customer. The sole
and exclusive obligation and liability of Skyservice shall be to rectify any
defect reported by the Customer or Flybe and agreed to by Skyservice within the
warranty period at Skyservice's facility. No warranty is given with respect to
parts, components and products not manufactured by Skyservice. Such items are
subject to the terms of each vendors warranty. Skyservice will endeavour to
obtain the best possible warranties from its vendors
Skyservice agrees to assign to Republic and Flybe, the end user of the services
more fully detailed herein, any assignable warranty rights available for these
services, parts, components or equipment used pursuant to this Agreement.
3.11 Indemnification
Skyservice shall defend and hold Customer and Flybe (and their respective
affiliates) harmless from and against any and all claims, causes of action and
other liabilities (including reasonable attorney's fees) arising in connection
with the performance or non-performance by Skyservice of its obligations under
this Agreement to the extent that such claim, cause of action or liability is
not caused by the gross negligence or wilful misconduct of Customer or Flybe, as
the case may be, its agents, employees or representatives.
Customer shall defend and hold Skyservice harmless from and against any and all
claims, causes of action and other liabilities (including reasonable attorney's
fees) arising in connection with the performance or nonperformance by Customer
of its obligations under this Agreement to the extent that such claim, cause of
action or liability is not caused by the gross negligence or wilful misconduct
of Skyservice, its agents, employees or representatives.
Notwithstanding anything in this Agreement to the contrary, neither party shall
be liable for special, incidental nor consequential damages including, but not
limited to, loss of use, revenue, profit or business opportunities, even if the
other party has been advised, knew or should have known of the possibility of
such damages.
Skyservice shall add Customer and Flybe as additional insured under its policy
prior to the commencement of work and will provide a copy of the insurance
certificate as evidence. The delivered certificate will include evidence of
liability coverage.
3.12 Validity of Quotation
This quote shall not become a binding contract between the Customer and
Skyservice unless signed and returned to Skyservice within 30 days of the date
of the quote.
3.13 Policies — Labour Rates
[*]
3.14 Excusable Delays
Skyservice shall not be held liable for delays in delivery, performance, or
failure to perform due to causes beyond
its reasonable control, acts of the Customer, and delays in transportation or
shortages of parts from vendors, additional work requests or from Force Majeure.
In any case, Skyservice shall not be liable for without limiting the following,
any loss of profit, direct or indirect expenses, alternate charter costs, crew
lodging, per diems or alternate means of transportation.
3.15 Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
the Province of Ontario and the laws of Canada applicable thereto.
3.16 Entire Agreement
The term "Work' includes all work performed, including both fixed price work and
additional work requests. This Agreement constitutes the entire agreement
between parties. There are not and shall not be any verbal
statements, representations, warranties, undertakings or agreements between the
parties. This Agreement may not be altered or modified in any respect, expect by
written instrument signed by the two parties.
3.17 Confidentiality
The parties recognize that this estimate contains information that is
commercially sensitive and agree to keep the entire contents of this estimate
confidential and not to make any disclosures to any third persons other than (i)
to such party's professional advisors, including accountants, financial and
legal advisors, bankers or other lenders, (ii)
as may be required by law however in such instance, only to the extent required
by law, and (iii) with the prior written consent of both parties.

    

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

3.18 Flybe as Beneficiary
For good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Skyservice agrees that Flybe is an express beneficiary of,
and entitled to directly enforce against Skyservice, the provisions of Section
3.10 and 3.11 hereof.

We thank you for the opportunity of quoting on this project and should you
require any additional information, please do not hesitate to contact the
undersigned at any time.
Regards,
/s/ Mark Rinaldi
Mark Rinaldi
Director, Aircraft Maintenance Sales
Sky Service F.B.O. Inc. Phone: (905) 678-5844 Mobile: (416) 577-0078 Email: mark
rinaldi(skyservicebas corn

    

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

skyservice
Air travel Evolved.
Maintenance Proposal BOMDAS-0814-04R6

RENA!. It AIRWAYS
Dash 8-0400 — FAA to EASA Modifications
Estimated date of arrival:    TBD
Quotation No.:    BOMDAS-0814-04R6
Signature below represents Customer has read and understood all terms and
conditions set out in the proposal:
Accepted and Agreed for Purposes of Section 3.18: Flybe Limited

Accepted by:    Sky Service F.B.O. Inc
1111    If    I b.
 
[indy4094101v1republic_image1.jpg]

Per: /s/ S. Hammad
Name: S. Hammad
Title: CEO
Date: September 16, 2014

Per: /s/ Ethan J. Blank
Name: Ethan J. Blank
Title: Vice President, General Counsel
Date: September 16, 2014
Accepted by:    Republic Airways
Purchase Order Number

 
Per. /s/ Mark Rinaldi
Name: Mark Rinaldi
Title: Director, Aircraft Maintenance Sales
Acknowledged by:    Sky Service F.B4O, Inc

    

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

Per: /s/ Paul Weeks
Name: Paul Weeks
Title: Vice President of Central Region and Maintenance

    

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

Appendix B-5
Data and Records
[*]

 
Annex B-5-1

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

Appendix B-6
Ground Equipment
1.    Castor Lock Pin Assy, NLG (x1)
2.    MLG Ground Lock Pin (x2)
3.    MLG Door Ground Lock Pin (x2)
4.    NLG Door Ground Lock Pin (x1)
5.    Right Ice Protection Probe Cover (x1)
6.    Pilot Head Cover (x3)
7.    Alpha Vane Cover (x2)
8.    Engine Intake Cover (x2)
9.    Prop Restraint (x2)

 
Annex B-6-1

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

Appendix B-7
Interior Condition
[*]

ANNEX C

RETURN CONDITIONS
Each Item of Equipment (to the extent applicable) shall satisfy the following
conditions at redelivery the Aircraft as contemplated by Section 5:
[*]

 
Annex B-7-1

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

Appendix C-1
[*]

 
Annex C-1-1

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

Appendix C-2
CERTAIN AIRCRAFT DOCUMENTS

1.[*]

 
Annex C-2-1

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

Appendix C-3
Redelivery Adjustment Rate
[*]

 
Annex C-3-1

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

EXHIBIT A
FORM OF SUBLEASE SUPPLEMENT
SUBLEASE SUPPLEMENT NO. _____ (______)

SUBLEASE SUPPLEMENT NO. [__] (_____), dated [_________], between REPUBLIC
AIRLINE INC. (“Sublessor”), and FLYBE LIMITED, a _____________ (“Sublessee”).
Sublessor and Sublessee have heretofore entered into that certain Master
Sublease Agreement, dated as of _________, 2014 (herein called the “Sublease,”
and the defined terms therein being hereinafter used with the same meanings).
The Sublease provides for the execution and delivery from time to time of
Sublease Supplements for the purpose of leasing certain Aircraft and Spare
Engines from time to time under the Sublease as and when delivered by Sublessor
to Sublessee in accordance with the terms thereof.
The Sublease relates to the Airframe, Engines and Propellers described below.
NOW, THEREFORE, in consideration of the premises and other good and sufficient
consideration, Sublessor and Sublessee hereby agree as follows:
Sublessor hereby delivers and Subleases to Sublessee under the Sublease and
Sublessee hereby accepts and Subleases from Sublessor under the Sublease the
following described Bombardier Inc. DHC-8-402 aircraft (collectively, the
“Aircraft”), which Aircraft as of the date hereof consists of the following
components [TO MODIFY FOR SPARE ENGINES]:
(1)    Airframe: Bombardier Inc. DHC-8-402 airframe bearing manufacturer’s
serial number ______ and registration mark ______ , which is certified by the
Aviation Authority to transport at least eight (8) persons, including crew, or
goods in excess of 2750 kilograms;
(2)    Engines: two (2) engines identified as Pratt & Whitney Canada model
PW150A aircraft engines bearing, respectively, manufacturer’s serial numbers
PCE-FA__________ and PCE-FA__________ (each such engine being a jet propulsion
aircraft engine which has at least 1750 lb. of thrust or its equivalent and at
least 550 rated take-off shaft horsepower or its equivalent); and
(3)    Propellers: two (2) propellers identified as Dowty Aerospace model
R408/6-123-F/17 aircraft propellers bearing, respectively, manufacturer’s serial
numbers DAP _____ and DAP ______ (each such propeller being capable of absorbing
750 or more rated takeoff shaft horsepower).
The Delivery Date of the Aircraft is the date of this Sublease Supplement set
forth in the opening paragraph hereof, and the Term for the Aircraft shall
commence on the Delivery Date.
Sublessee hereby confirms its agreement to pay Sublessor Basic Rent in respect
of the Aircraft throughout the Term therefor in accordance with Section 3 of the
Sublease.

    Exhibit A-1

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

Sublessee certifies that the representations and warranties contained in the
Operative Documents are correct in all material respects as though made on and
as of the date hereof, except to the extent that such representations and
warranties relate solely to an earlier date (in which case such representations
and warranties were correct on and as of such earlier date).
Sublessee hereby confirms to Sublessor that Sublessee has accepted the Aircraft
for all purposes hereof and of the Sublease subject to Section 4(l) thereof;
provided, however, that nothing contained herein or in the Sublease shall in any
way diminish or otherwise affect any right Sublessee or Sublessor may have with
respect to the Aircraft against any manufacturer thereof, or any subcontractor
or supplier of any such manufacturer.
Certain technical data in respect of the Aircraft is set forth in Schedule 1
hereto. The technical specifications for the Aircraft as of the Delivery Date
thereof are set forth in Schedule 2 hereto.
All of the terms and provisions of the Sublease are hereby incorporated by
reference in this Sublease Supplement with the same force and effect as if fully
set forth herein.
This Sublease Supplement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument. To the extent, if any, that this Sublease Supplement constitutes
chattel paper (as such term is defined in the Uniform Commercial Code as in
effect in any jurisdiction), no security interest in this Sublease Supplement
may be created through the transfer or possession of any counterpart other than
the original counterpart, which shall be identified as the counterpart
containing the receipt therefor executed by the Sublessor on the signature
page hereof.
[This space intentionally left blank]

    Exhibit A-2

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

IN WITNESS WHEREOF, Sublessor and Sublessee have caused this Sublease Supplement
to be duly executed on the day and year first above written.
 
REPUBLIC AIRLINES INC., as Sublessor 

 
By:        
Name:
Title:
 
FLYBE LIMITED,
as Sublessee 

 
By:        
Name:
Title:

    Exhibit A-3

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

Receipt of this original counterpart of the foregoing Sublease Supplement is
hereby acknowledged on the ___ day of _______________, 2012.
 
REPUBLIC AIRLINE INC.,
as Sublessor 

 
By:        
Name:
Title:

    Exhibit A-4

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

SCHEDULE 1 TO SUBLEASE SUPPLEMENT
[INSERT TECHNICAL DATA]
The following summarizes the condition of the Aircraft on the Delivery Date for
purposes of clause (3) of Annex C to the Sublease:

Airframe Serial Number: [______]
Flight Hours since new (TSN): [______]
Flight Hours since Systems, Structural, Zonal and CPCP Major

Inspection (TSO): [______]
APU Serial Number: [______]
APU Hours since new (TSN): [______]
APU Hours since APU Overhaul (TSR): [______]

Landing Gear:
Nose Landing Gear Assembly Serial Number: [______]
Flight Cycles since new (CSN): [______]
Flight Cycles since Landing Gear Overhaul (CSO): [______]
Main Landing Gear Assembly #1 Serial Number: [______]
Flight Cycles since new (CSN): [______]
Flight Cycles since Landing Gear Overhaul (CSO): [______]
Main Landing Gear Assembly #2 Serial Number: [______]
Flight Cycles since new (CSN): [______]
Flight Cycles since Landing Gear Overhaul (CSO): [______]
Flight Cycles operated by Landing Gear Safe-Life Components: see Schedule 2

    Schedule 1-1

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

Propellers:
Propeller #1 Serial Number: [______]
Propeller Flight Hours since new (TSN): [______]
Propeller Flight Hours since Propeller Overhaul (TSO): [______]
Propeller #2 Serial Number: [______]
Propeller Flight Hours since new (TSN): [______]
Propeller Flight Hours since Propeller Overhaul (TSO): [______]

    Schedule 1-2

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

SCHEDULE 2 TO SUBLEASE SUPPLEMENT
TECHNICAL SPECIFICATIONS
[EXCEL FILE TO BE ATTACHED IN CLOSING SET]

 
Schedule 2-1

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

EXHIBIT B
AGREED VALUE SCHEDULE

[*]

EXHIBIT C
INSURANCE
(“Section 10”)

(a)    Aviation Legal Liability and Property Damage Insurance.
(1)    Except as provided in clause (2) of this Section 10(a), and subject to
self-insurance to the extent permitted by Section 10(d), Sublessee will carry or
cause to be carried with respect to each Item of Equipment at its or any
Permitted Sublessee’s expense (i) comprehensive airline legal liability
(including, without limitation, passenger, bodily injury, war risk, hijacking
and related perils liability, products and property damage liability) insurance
(exclusive of manufacturer’s product liability insurance) and (ii) cargo
liability insurance (A) in an amount, per occurrence, and in the annual
aggregate for products legal liability and third party was risks not less than
the greater of (x) the amounts of comprehensive airline liability insurance from
time to time applicable to aircraft and engines owned or Subleased, and operated
by Sublessee (or, if a Permitted Sublease is then in effect, by Permitted
Sublessee) of the same type as the Items of Equipment and (y) [*] (the “Minimum
Liability Insurance Amount”), (B) without limiting the requirement that
Sublessee maintain passenger, bodily injury, war risk, hijacking and related
perils liability, products and property damage liability insurance as provided
above, of the type and covering the same risks as from time to time applicable
to aircraft and engines owned or Subleased and operated by Sublessee of the same
type as the Items of Equipment and such coverage shall be in substantially
similar form as is customarily obtained in the worldwide aviation market by
similarly situated carriers operating similar aircraft and engines to the Items
of Equipment on similar routes, and (C) which is maintained in effect with
insurers of nationally or internationally recognized reputation and
responsibility; provided, however, that Sublessee need not maintain such cargo
liability insurance, or may maintain such cargo liability insurance in an amount
per occurrence less than the Minimum Liability Insurance Amount, so long as the
amount of cargo liability insurance, if any, maintained with respect to the
Items of Equipment is not less than the cargo liability insurance, if any,
maintained for other aircraft and engines of the same model as the Items of
Equipment owned or Subleased and operated by Sublessee.
(2)    During any period that an Airframe, Engine, Propeller or Spare Engine, as
the case may be, is on the ground and not in operation, Sublessee may carry or
cause to be carried as to such non-operating property, in lieu of the insurance
required by Section 10(a), and subject to the self-insurance to the extent
permitted by Section 10(d), insurance by insurers of nationally

    Exhibit B-1

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

or internationally recognized reputation and responsibility otherwise conforming
with the provisions of Section 10(a) except that (A) the amounts of coverage
shall not be required to exceed the amounts of comprehensive airline liability
insurance from time to time applicable to property owned or Subleased by
Sublessee of the same type as such non-operating property and which is on the
ground and not in operation; and (B) the scope of the risks covered and the type
of insurance shall be the same as from time to time shall be applicable to
aircraft owned or Subleased by Sublessee of the same type as such non-operating
property and which is on the ground and not in operation and such coverage shall
be in substantially similar form as customarily are obtained by similarly
situated carriers in such circumstances in the worldwide aviation market.
(b)    Insurance Against Loss or Damage to the Aircraft.
(1)    Except as provided in clause (2) of this Section 10(b), and subject to
the provisions of Section 10(d) permitting self-insurance, Sublessee shall
maintain or cause to be maintained in effect, at its or any Permitted
Sublessee’s expense, with insurers of nationally or internationally recognized
reputation and responsibility, all-risk aircraft hull insurance (including
aircraft hull war risk, hijacking and related perils) covering each Aircraft and
all risk spares/property damage insurance covering Engines, Propellers, Spare
Engines and Parts while removed from an Aircraft; provided that such insurance
shall at all times while an Item of Equipment is subject to this Sublease be for
an amount (taking into account self-insurance to the extent permitted by
Section 10(d)) not less than the Agreed Value for such Item of Equipment;
provided further, that, subject to compliance with Section 10(d), such all-risk
spares/property damage insurance covering Engines, Propellers, Spare Engines and
Parts removed from an Airframe or an airframe or (in the case of Parts) an
Engine, Propeller or Spare Engine replaced by similar Parts need be obtained
only to the extent available at reasonable cost (as reasonably determined by
Sublessee). In the case of a loss with respect to an engine (other than an
Engine or Spare Engine) or propeller (other than a Propeller) installed on an
Airframe in circumstances which do not constitute an Event of Loss with respect
to such Airframe, Sublessor shall promptly remit any payment made to it of any
insurance proceeds in respect of such loss to Sublessee; provided that no Event
of Default of the type described in Section 13(a), (b), (m) or (n) hereof has
occurred and is continuing, or any other third party that is entitled to receive
such proceeds.
All insured losses will be adjusted by Sublessee with the insurers; provided,
however, that in the event an Event of Default under the Sublease has occurred
and is continuing, all losses will continue to be adjusted by the Named
Insured(s) with the insurers but no loss settlement/finalization of insurance
proceeds will be concluded without the prior written consent of Sublessor. As
between Sublessor and Sublessee, it is agreed that all insurance payments
received as the result of the occurrence of an Event of Loss will be applied as
follows:
(x)    if such payments are received with respect to an Airframe (or an Airframe
and the Engines and Propellers installed thereon) or a Spare Engine (where
Sublessee has elected not to replace such Spare Engine with an Acceptable
Alternate Engine pursuant to Section 9(b)), so much of such payments remaining,
after reimbursement of Sublessor, Head Lessor, the Trustee and the Owner
Participant for reasonable costs and expenses, as shall not exceed the Agreed
Value for such Aircraft or Spare Engine, as the case may be, and the

 
Exhibit C-1

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

other amounts payable pursuant to Section 9(a) or 9(b), as the case may be,
shall be applied in reduction of Sublessee’s obligation to pay such Agreed Value
for such Aircraft or Spare Engine and other amounts payable pursuant to Section
9(a) or 9(b), if not already paid by Sublessee, or, if already paid by
Sublessee, shall be applied to reimburse Sublessee for its payment of such
Agreed Value and such other amounts payable, and the balance, if any, of such
payments remaining thereafter will be paid over to, or retained by, Sublessee
(or if directed by Sublessee, any Permitted Sublessee); and
(y)    if such payments are received with respect to an Engine, Spare Engine
(where Sublessee has elected to replace such Spare Engine with an Acceptable
Alternate Engine pursuant to Section 9(b)) or a Propeller under the
circumstances contemplated by Section 9(b), so much of such payments remaining
after reimbursement of Sublessor Head Lessor, the Trustee and the Owner
Participant for reasonable costs and expenses, shall be paid over to, or
retained by, Sublessee (or if directed by Sublessee, any Permitted Sublessee);
provided that Sublessee shall have fully performed or concurrently therewith
will fully perform the terms of Section 9(b) hereof with respect to the Event of
Loss for which such payments are made and no Event of Default of the type
described in Section 13(a), (b), (m), (n) or (o) shall have occurred and be
continuing.
As between Sublessor and Sublessee, the insurance payments for any property
damage loss to an Item of Equipment not constituting an Event of Loss with
respect thereto will be applied in payment for repairs or for replacement
property in accordance with the terms of Sections 7 and 8, if not already paid
for by Sublessee (or any Permitted Sublessee), and any balance (or if already
paid for by Sublessee (or any Permitted Sublessee), all such insurance proceeds)
remaining after compliance with such Sections with respect to such loss shall be
paid to Sublessee (or any Permitted Sublessee if directed by Sublessee).
(2)    During any period that an Item of Equipment is on the ground and not in
operation, Sublessee may carry or cause to be carried, in lieu of the insurance
required by clause (1) above, and subject to self-insurance to the extent
permitted by Section 10(d), insurance otherwise conforming with the provisions
of said clause (1) except that the scope of the risks and the type of insurance
shall be the same as from time to time applicable to aircraft and engines owned
or Subleased by Sublessee (or, if a Permitted Sublease is then in effect, by
Permitted Sublessee) of the same type as such Item of Equipment similarly on the
ground and not in operation; provided that, subject to self-insurance to the
extent permitted by Section 10(d), Sublessee shall maintain insurance against
risk of loss or damage to each Item of Equipment in an amount at least equal to
the Agreed Value for such Item of Equipment during such period that such Item of
Equipment is on the ground and not in operation.
(c)    Reports, etc. Sublessee will furnish, or cause to be furnished, to
Sublessor, Head Lessor, and the Owner Participant, on or before the Delivery
Date for an Item of Equipment and on each annual anniversary date of Sublessee’s
applicable insurance, an undertaking, signed by Sublessee’s regular insurance
broker or any other independent firm of insurance brokers reasonably acceptable
to Sublessor which brokers may be in the regular employ of Sublessee (the
“Insurance Brokers”), describing in reasonable detail the hull and liability
insurance (and property insurance

 
Exhibit C-2

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

for detached Engines, Propellers, Spare Engines and Parts) then carried and
maintained with respect to such Item of Equipment and stating the opinion of
such firm that the insurance complies with the terms of this Sublease; provided,
that all information contained in the foregoing undertaking shall be subject to
the terms and conditions of Section 12(i) of the Additional Agreement. Sublessee
will cause such Insurance Broker to agree to advise Sublessor, Head Lessor, the
Trustee and the Owner Participant in writing at least thirty (30) days (seven
(7) days in the case of war-risk and allied perils coverage), prior to the
cancellation or material adverse change of any insurance maintained pursuant to
this Section 10; provided that if the notice period specified above is not
reasonably obtainable, the Insurance Broker shall provide for as long a period
of prior notice as shall then be reasonably obtainable. In addition, Sublessee
will also cause such Insurance Broker to deliver to Head Lessor, Sublessor, the
Trustee and the Owner Participant on or prior to the date of expiration of any
insurance policy referenced in a previously delivered certificate of insurance,
a new certificate of insurance, substantially in the same form as delivered by
Sublessee to such parties on the relevant Delivery Date except for such changes
in the report or the coverage consistent with the terms hereof. In the event
that Sublessee or any Permitted Sublessee shall fail to maintain or cause to be
maintained insurance as herein provided, Sublessor may at its sole option, but
shall be under no duty to, provide such insurance and, in such event, Sublessee
shall, upon demand, reimburse Sublessor as Supplemental Rent, for the cost
thereof to Sublessor; provided, however, that no exercise by Sublessor of said
option shall affect the provisions of this Sublease, including the provisions of
Section 13(g).
(d)    Self-Insurance. Sublessee may self-insure by way of deductible, premium
adjustment or franchise provisions or otherwise (including, with respect to
insurance maintained pursuant to Section 10(b), insuring for an amount that is
less than the Agreed Value of the relevant Item of Equipment) the risks required
to be insured against pursuant to this Section 10 under a program applicable to
all aircraft (whether owned or Subleased) in Sublessee’s fleet, but in no case
shall the amount of self-insurance in regard to Section 10 exceed for any
occurrence [*] per Aircraft and [*] per Spare Engine or [*] in the case of
off-wing engine test runs (the “Maximum Deductible Amount”).
(e)    Terms of Policies. Any policies of insurance carried in accordance with
Section 10(a) or Section 10(b) and any policies taken out in substitution or
replacement for any of such policies (A) with respect to Section 10(a) only,
shall be amended to name the Additional Insureds as additional insureds, (B) may
provide for the self-insurance to the extent permitted in Section 10(d),
(C) shall provide that if the insurers cancel such insurance for any reason
whatever or if any material change is made in such insurance which adversely
affects the interest of any Additional Insured, or such insurance shall lapse
for non-payment of premium, such cancellation, lapse or change shall not be
effective as to any Additional Insured for thirty (30) days (seven (7) days in
the case of war-risk and allied perils coverage) after issuance to the
Additional Insureds of written notice by such insurers of such cancellation,
lapse or change; (D) shall provide that in respect of the respective interests
of each Additional Insured in such policies the insurance shall not be
invalidated by any action or inaction of Sublessee (or, if any Permitted
Sublease is then in effect, any Permitted Sublessee) or any other Person and
shall insure respective interests of the Additional Insureds, as they appear,
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by Sublessee (or, if any Permitted Sublease is then
in effect, any Permitted

 
Exhibit C-3

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

Sublessee), (E) with respect to Section 10(a) only, shall be primary without
right of contribution from any other insurance which is carried by any
Additional Insured, (F) with respect to Section 10(a) only, shall expressly
provide that all of the provisions thereof, except the limits of liability,
shall operate in the same manner as if there were a separate policy covering
each insured, (G) shall waive any right of the insurers to any set-off or
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of any Additional Insured, and (H)  with respect to
Section 10(b), shall name Head Lessor as loss payee up to the Agreed Value of
the relevant Item of Equipment and provide that (i) in the event of a loss
involving such Item of Equipment for which proceeds are in excess of [*] for an
Aircraft or [*] for a Spare Engine, which shall be the “Loss Payable Threshold”,
the proceeds in respect of such loss up to an amount equal to the Agreed Value
for such Item of Equipment shall be payable to Sublessor (except in the case of
a loss with respect to an Engine installed on an airframe other than the
Airframe, in which case Sublessee (or any Permitted Sublessee) shall arrange for
any payment of insurance proceeds in respect of such loss to be held for the
account of Head Lessor whether such payment is made to Sublessee (or any
Permitted Sublessee) or any third party), it being understood and agreed that in
the case of any payment to Sublessor or Head Lessor otherwise than in respect of
an Event of Loss, Sublessor shall, upon receipt of evidence reasonably
satisfactory to it that the damages giving rise to such payment shall have been
repaired or that such payment shall then be required to pay for repairs then
being made, pay (or, if applicable, request Head Lessor to pay) the amount of
such payment (and all earnings thereon) to Sublessee or its order and (ii) the
entire amount of any loss for which proceeds not exceeding such Loss Payable
Threshold, or the amount of any proceeds of any loss in excess of the Agreed
Value for such Item of Equipment, shall be paid to Sublessee or its order,
unless an Event of Default shall have occurred and be continuing and the
insurers have been notified thereof by Sublessor.
(f)    Tail Insurance. Sublessee shall effect and maintain products legal
insurance in respect of an Item of Equipment after the Term Expiration Date with
respect to the liability policy referred to in Section 10(a) for a maximum
period of two (2) years or until the next major check (whichever occurs earlier)
two (2) years, and such insurance shall name each Additional Insured as
additional insureds.
(g)    Additional Insurance. Sublessee (and any Permitted Sublessee) may at its
own expense carry insurance with respect to its interest in respect of each Item
of Equipment in amounts in excess of that required to be maintained by this
Section 10; each of the Owner Participant and Sublessor may carry for its own
account at its sole cost and expense insurance with respect to its interest in
respect of each Item of Equipment; provided that such insurance does not prevent
Sublessee (or any Permitted Sublessee) from carrying the insurance required or
permitted by this Section 10 or materially affect the cost or coverage thereof.
(h)    Application of Payments During Existence of Specified Default or an Event
of Default. Any amount referred to in Section 10 hereof payable to or retained
by Sublessee (or any Permitted Sublessee) shall not be paid to or retained by
Sublessee (or any Permitted Sublessee) if at the time of such payment or
retention a Specified Default or an Event of Default has occurred and is
continuing, but shall be held by or paid over to Sublessor (or if directed by
Sublessor, to Head Lessor) as security for the obligations of Sublessee under
this Sublease and, if Sublessor declares

 
Exhibit C-4

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this Sublease to be in default pursuant to Section 14 hereof (or, in the case of
an Event of Default described in Section 13(m) or 13(n), this Sublease is deemed
to be declared in default), may be applied against Sublessee’s obligations
hereunder as and when due. At such time as there shall not be continuing any
such Specified Default or Event of Default, such amount shall be paid to
Sublessee to the extent not previously applied in accordance with the preceding
sentence.
(i)    AVN67B. Sublessee shall provide, or shall ensure that its Insurance
Broker provides, insurance certificates evidencing insurance required to be
maintained pursuant to this Sublease. Where the provisions of AVN67B (or any
replacement endorsement) are in conflict or inconsistent with the insurance
provisions of this Sublease, then AVN67B (or any replacement endorsement) shall
prevail.

 
Exhibit C-5