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Exhibit 10.43    
    


        Pursuant
to 17 CFR 240.24b-2, confidential information (indicated by [***]) has been omitted and has been filed separately with the Securities and
Exchange Commission pursuant to a Confidential Treatment Application filed with the Commission. 


V2500®



GENERAL
TERMS OF SALE 


BETWEEN



IAE
INTERNATIONAL AERO ENGINES AG 


AND 


ATLANTIC
COAST AIRLINES 


Effective
September 30, 2004 


1







 
INDEX  



	Commencement
	

Recitals
	

CLAUSE 1	
 	

DEFINITIONS
	

CLAUSE 2	
 	

SALE OF FIRM SPARE ENGINES
	 	 	2.1	 	Intent
	 	 	2.2	 	Agreement to Purchase
	 	 	2.3	 	Type Approval and Changes in Specification
	 	 	2.4	 	Inspection and Acceptance
	 	 	2.5	 	Delivery, Shipping, Title and Risk of Loss or Damage
	 	 	2.6	 	Price
	 	 	2.7	 	Payment
	

CLAUSE 3	
 	

SPARE PARTS PROVISIONS
	 	 	3.1	 	Intent and Term
	 	 	3.2	 	ATA Standards
	 	 	3.3	 	Initial Provisioning
	 	 	3.4	 	Change in Initial Provisioning Data
	 	 	3.5	 	Stocking of Spare Parts
	 	 	3.6	 	Lead Times
	 	 	3.7	 	Ordering Procedure
	 	 	3.8	 	Modifications to Spare Parts
	 	 	3.9	 	Inspection
	 	 	3.10	 	Delivery and Packing
	 	 	3.11	 	Prices
	 	 	3.12	 	Payment
	 	 	3.13	 	Purchase by ACA from Others
	 	 	3.14	 	Special Tools, Ground Equipment and Consumable Stores
	 	 	3.15	 	Conflict
	

CLAUSE 4	
 	

WARRANTIES, GUARANTEES AND LIABILITIES
	

CLAUSE 5	
 	

PRODUCT SUPPORT SERVICES
	

CLAUSE 6	
 	

MISCELLANEOUS
	 	 	6.1	 	Delay in Delivery
	 	 	6.2	 	Patents
	 	 	6.3	 	Credit Reimbursement; Right of Setoff
	 	 	6.4	 	Non-Disclosure and Non-Use
	 	 	6.5	 	Taxes
	 	 	6.6	 	Amendment
	 	 	6.7	 	Assignment
	 	 	6.8	 	Exhibits
	 	 	6.9	 	Headings
	 	 	6.10	 	Law
	 	 	6.11	 	Notices
	 	 	6.12	 	Exclusion of Other Provisions and Previous Understandings
	 	 	6.13	 	Conditions Precedent
	 	 	6.14	 	Termination Events
	 	 	 	 	 



2







 

	

EXHIBIT A	
 	

 	
 	

CONTRACT SPECIFICATIONS
	

EXHIBIT B	
 	

 	
 	

SCHEDULES
	EXHIBIT B-1	 	 	 	AIRCRAFT DELIVERY SCHEDULE
	EXHIBIT B-2	 	 	 	FIRM SPARE ENGINES, PRICE, ESCALATION FORMULA AND DELIVERY
	

EXHIBIT C	
 	

 	
 	

PRODUCT SUPPORT PLAN
	

EXHIBIT D	
 	

 	
 	

WARRANTIES, GUARANTEES AND SERVICE POLICIES
	 	 	D-1	 	V2500 ENGINE AND PARTS SERVICE POLICY
	 	 	D-2	 	V2500 NACELLE AND PARTS SERVICE POLICY
	 	 	D-3	 	V2500 NON-INSTALLATION ITEMS WARRANTY
	 	 	D-4	 	V2500 SPECIFIC CONDITIONS FOR V2500 GUARANTEES
	 	 	D-5	 	V2500 RELIABILITY GUARANTEE
	 	 	D-6	 	V2500 FIRST RUN EXHAUST GAS TEMPERATURE GUARANTEE
	 	 	D-7	 	V2500 INFLIGHT SHUTDOWN GUARANTEE
	 	 	D-8	 	V2500 REMOTE SITE REMOVAL GUARANTEE
	 	 	D-9	 	V2500 DELAY AND CANCELLATION GUARANTEE
	 	 	D-10	 	V2500 FUEL CONSUMPTION RETENTION GUARANTEE
	 	 	D-11	 	V2500 OIL CONSUMPTION RETENTION GUARANTEE
	

EXHIBIT E	
 	

 	
 	

STANDARD TERMS OF BUSINESS FOR LEASE OF V2500-A5 ENGINES




3









   
THIS CONTRACT is made this 30 day of September 2004 


BETWEEN




	IAE INTERNATIONAL AERO ENGINES AG	 	a joint stock company organized and existing under the laws of Switzerland, with a place of business at 400 Main Street, M/S 121-10, East Hartford, Connecticut 06108, USA, (hereinafter called "IAE") and
	

ATLANTIC COAST AIRLINES	
 	

a corporation organized and existing under the laws of California, whose principal place of business is at 45200 Business Court, Dulles, Virginia, 20166, USA (hereinafter called "ACA").





WHEREAS:



	A.
	ACA
has decided to acquire new A320 family aircraft to be powered by IAE V2500-A5 Propulsion Systems, and



	B.
	IAE
is prepared to supply to ACA V2500-A5 engines, modules, spare parts, special tools, ground equipment and product support services for the support and operation of the
V2500-A5 Propulsion Systems. 





NOW
THEREFORE IT IS AGREED AS FOLLOWS: 



CLAUSE 1    DEFINITIONS    


In
this Contract unless the context otherwise requires:- 


	1.1
	"Acceptable
Data Point" shall have the meaning set forth in Clause II. F of Exhibit D-10.



	1.2
	"Aircraft"
shall mean:



	1.2.1
	the
fifteen (15) firm Airbus A319-100 aircraft powered by new V2524-A5 Engines (the "Firm Aircraft") in each case being acquired by ACA from the
Aircraft Manufacturer and being acquired for delivery in accordance with the schedule contained in Exhibit B-1 hereto.



	1.2.2
	the
fifty (50) option Airbus A320 series aircraft which may be acquired for delivery in accordance with the schedule contained in Exhibit B-1 hereto (the
"Option Aircraft"); the Option Aircraft may be Airbus A321-200 aircraft powered by new V2533-A5 Engines (the "Option A321 Aircraft"); Airbus A320-200 aircraft
powered by new V2527-A5 Engines (the "Option A320 Aircraft") or A319-100 aircraft powered by new V2524-A5 Engines (the "Option A319 Aircraft"); the Option A321
Aircraft; Option A320 Aircraft and the Option A319 Aircraft being collectively referred to as the "Option Aircraft."






	1.3
	"Airbus
Purchase Agreement" shall mean that certain Airbus A319/A320/A321 Purchase Agreement, dated April 1, 2004, between AVSA and ACA with respect to the Firm and Option
Aircraft.



	1.4
	"Aircraft
Manufacturer" or "Airbus" shall mean Airbus Industrie SAS, with its principal place of business at 1, Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France, together with
its successors and permitted assigns.



	1.5
	"AVSA"
shall mean AVSA, S.A.R.L., a subsidiary of the Aircraft Manufacturer.



	1.6
	"Basic
Contract Price" shall mean the basic price of each of the Firm Spare Engines and Option Spare Engines as specified in Exhibit B-2 to this Contract as
adjusted to reflect any discounts or 


4







 

credits
applicable to such Basic Contract Price under this Contract or any amendments or side letters thereto. 



	1.7
	"Certification
Authority" shall mean the regulatory authority referred to in Exhibit A responsible for the type certification of the Engine.



	1.8
	"Change
Order" shall mean a document authorizing the alteration of the Specification which Change Order must be agreed by the Parties, unless such Change Order exclusively addresses a
change in the then applicable Current Rules or does not adversely affect the Specification(s) (including, but not limited to, utility, durability, performance and weight), interchangeability,
intermixability, fuel burn, maintenance cost, and reliability of the Firm Spare Engines (or their component parts and materials) in the airframe, prices or dates of delivery of the Firm Spare Engines.



	1.9
	"Current
Rules" shall have the meaning set forth in Clause 2.3.4 of this Contract.



	1.10
	"Customer
Support Representative" shall have the meaning set forth in Clause 5 of this Contract.



	1.11
	"Engine(s)"
shall mean those V2500-A5 aero engines as described in the IAE Specifications sold by IAE for commercial aviation use, whether installed as new equipment in
the Aircraft by Airbus and delivered to ACA or delivered directly to ACA for use as a Firm Spare Engine.



	1.12
	"Estimated
Purchase Price" shall have the meaning set forth in Clause 2.7.7 of this Contract.



	1.13
	"Excusable
Delay" shall mean a delay in the performance of any obligation pursuant to the terms of this Contract (as such time may be extended pursuant to the provisions of this
Contract) by reason of any cause beyond the reasonable control of IAE or ACA, as applicable.



	1.14
	"Firm
Spare Engine(s)" shall mean those Engines defined in Clause 2.2.2 of this Contract.



	1.15
	"Inexcusable
Delay" shall have the meaning set forth in Clause 6.1.1 of this Contract.



	1.16
	"Information"
shall have the meaning set forth in Clause 6.4.1 of this Contract.



	1.17
	"Initial
Provisioning" shall mean the establishment by ACA of an initial stock of Spare Parts.



	1.18
	"Initial
Provisioning Data" shall mean information supplied by IAE to ACA for Initial Provisioning purposes.



	1.19
	"Initial
Provisioning Orders" shall mean orders for Spare Parts for Initial Provisioning purposes.



	1.20
	"Lead
Time" shall mean the period specified in the Spare Parts Catalog which represents the minimum time required between acceptance by IAE of an order by ACA for Supplies and
commencement of delivery of such Supplies.



	1.21
	"Leased
Aircraft" shall mean the four (4) aircraft comprising the Airbus A319-100 aircraft powered by new V2524-A5 Engines that are being leased from
C.I.T. Leasing Corporation ("CIT") by ACA (the "CIT Leased Aircraft") and the eight (8) Airbus A319-100 aircraft powered by new V2524-A5 Engines that are being leased
from International Lease Finance Corporation ("ILFC") by ACA (the "ILFC Leased Aircraft"), in each case being acquired by ACA from CIT and ILFC and being delivered in accordance with the schedule
contained in Exhibit B-1 hereto; the CIT Leased Aircraft and the ILFC Leased Aircraft being collectively referred to herein as the "Leased Aircraft."



	1.22
	"Non-Installation
Items" shall mean jigs, tools, handling and transportation equipment and all equipment whatsoever to be supplied pursuant to this Contract for use with
the Engines and not for installation on the Aircraft.



	1.23
	"Non-Terminating
Party" shall have the meaning set forth in Clause 6.14 of this Contract. 


5







 
	1.24
	"Option
Spare Engine(s)" shall mean those option spare Engines referenced in Exhibit B-1 of this Contract



	1.25
	"Other
Supplies" shall mean special tools and ground equipment.



	1.26
	"Overdue
Rate" shall mean [***].



	1.27
	"Party"
means either of IAE or ACA, and "Parties" means both IAE and ACA.



	1.28
	"Qualifying
Affiliate(s)" shall have the meaning set forth in Clause 6.7.1 of this Contract.



	1.29
	"Reorganization
Transaction" shall have the meaning set forth in Clause 6.7.1 of this Contract.



	1.30
	"Replacement
Spare Engine" shall have the meaning set forth in Clause 6.1.5 of this Contract.



	1.31
	"Replacement
Supplies" shall have the meaning set forth in Clause 6.1.3 of this Contract.



	1.32
	"Service
Bulletins" shall mean those service bulletins containing advice and instructions issued by IAE to ACA from time to time in respect of the Engines.



	1.33
	"Spare
Engines" shall mean any Firm Spare Engine and the V2524-A5 spare engine scheduled for delivery in May 2010, as set forth in Exhibit B-2,
in the event ACA acquires such spare engine from IAE.



	1.34
	"Spare
Parts" shall mean spare parts for Engines excluding the items listed in the Specification as being items supplied by ACA.



	1.35
	"Spare
Parts Catalog" shall mean the catalog published by IAE from time to time providing a description, Lead Time and price for Spare Parts, tools and Vendor Parts available for
purchase from IAE.



	1.36
	"Standard
Package Quantities" shall have meaning set forth in Clause 3.7.4 of this Contract.



	1.37
	"Specification"
shall mean the IAE Engine Specification Nos. IAE S22A5, IAE S24A5, IAE S27A5 and IAE S33A5 which form Exhibits A-1, A-2, A-3 and
A-4 to this Contract.



	1.38
	"Successor"
shall have the meaning set forth in Clause 6.7.1 of this Contract.



	1.39
	"Supplies"
shall mean the Firm Spare Engines, Engines, Non-Installation Items, Spare Parts and any other goods or services supplied pursuant to this Contract.



	1.40
	"Terminating
Party" shall have the meaning set forth in Clause 6.14 of this Contract.



	1.41
	"Termination
Event(s)" shall have the meaning set forth in Clause 6.14 of this Contract.



	1.42
	"Total
Quantity Required" shall have the meaning set forth in Clause 3.7.5 of this Contract.



	1.43
	"Value
Added Tax (VAT)" shall have the meaning set forth in Clause 6.5.2 of this Contract.



	1.44
	"Vendor
Parts" shall mean Spare Parts described in Initial Provisioning Data that are not manufactured pursuant to the detailed design and direction of IAE.



	1.45
	"Warranties"
shall have the meaning set forth in Clause 4.2 of this Contract. 




CLAUSE
2    SALE OF FIRM SPARE ENGINES    


2.1    Intent    



IAE
agrees to sell to ACA and ACA agrees to buy from IAE, the Firm Spare Engines, subject to and in accordance with the provisions of this Contract. 



6







 

2.2    Agreement to Purchase    



	2.2.1
	Pursuant
and subject to the terms of the Airbus Purchase Agreement, ACA has agreed to purchase from AVSA no less than fifteen (15) Firm Aircraft and to procure from AVSA no
less than fifty (50) options to purchase new Aircraft powered by new V2500-A5 Propulsion Systems for delivery according to the schedule set forth in Exhibit B-1
to this Contract.



	2.2.2
	Subject
to the terms of this Contract, ACA hereby places an order with IAE for the purchase of three (3) new V2524-A5 spare Engines (the
"Firm Spare Engines") for delivery according to the schedule set forth in Exhibit B-2 to this Contract. 




2.3    Type Approval and Changes in Specification    



	2.3.1
	The
Firm Spare Engines will be manufactured to the standards set forth in the Specification. After the date of this Contract the Firm Spare Engines may be varied from the standards
set forth in the Specification and other IAE manufacturing specifications from time to time by Change Orders in writing which shall set forth in detail:



	2.3.1.1
	The
changes to be made in the Firm Spare Engines, and



	2.3.1.2
	The
effect (if any) of such changes on the Specification (including but not limited to performance and weight), on interchangeability, intermixability, fuel burn, maintenance
cost, and reliability of the Firm Spare Engines in the airframe, on prices and on dates of delivery of the Firm Spare Engines. 









        Change
Orders shall not be binding on either Party until signed by IAE and ACA but upon being so signed shall constitute amendments to this Contract. 



	2.3.2
	IAE
may make any changes in the Firm Spare Engines which do not adversely affect the Specification, [***] the airframe, prices or dates of delivery of the
Firm Spare Engines. In the case of such permitted changes, a Change Order shall not be required or if issued shall not be binding until signed by IAE and ACA. IAE will provide reasonable prior
notification of all such changes to ACA prior to delivery. In the event [***].



	2.3.3
	At
the time of delivery of the Firm Spare Engines there is to be in existence a Type Approval Certificate for the Firm Spare Engines in accordance with the provisions of the
Specification.



	2.3.4
	The
Specification is intended, in part, to meet the requirements of the Certification Authority and the official interpretations of such requirements in existence at the date of
delivery (such requirements and interpretations being hereinafter referred to as "Current Rules"). At the date of delivery, the Firm Spare Engines will
incorporate all airworthiness directives applicable to the Engine issued by the Certification Authority prior to the date of delivery. Subject to Clause 2.3.2 above, the Parties agree that they
will execute an appropriate Change Order in respect of any change required to the Firm Spare Engines to enable such Firm Spare Engines to conform to the requirements of the Certification Authority and
the official interpretations of such requirements in force at the date of delivery of such Firm Spare Engines. Subject to Clause 2.3.5.2 and Exhibit B-2 Clause 1,
[***].



	2.3.5
	The
price of any Change Order is to be borne:



	2.3.5.1
	in
the case of [***]; and



	2.3.5.2
	in
any other case—by ACA.









	2.4
	Inspection and Acceptance



	2.4.1
	Conformance
of Firm Spare Engines to the Specification will be assured by IAE through the maintenance of procedures, systems and records approved by the Certification Authority. IAE 





7







 


will
cause an engine acceptance test final log and an Export Certificate of Airworthiness, in the event the Firm Spare Engine is delivered Ex Works Derby, England, or a Certificate of Airworthiness,
in the event the Firm Spare Engine is delivered Ex Works Connecticut, U.S.A., both to be issued and signed by personnel authorized for such purposes. 



	2.4.2
	Upon
delivery of the Firm Spare Engines pursuant to Clause 2.5.1 below and the issue of an Export Certificate of Airworthiness or Certificate of Airworthiness, as applicable,
and an engine acceptance test final log pursuant to Clause 2.4.1 above, ACA shall be deemed to have accepted the Firm Spare Engines and that the Firm Spare Engines conform to the Specification.
IAE shall, subject to the permission of the appropriate governmental authorities, arrange for ACA to have reasonable access to the appropriate premises in order to examine the Firm Spare Engines prior
to the issue of conformance documentation and to witness such Firm Spare Engine acceptance tests.



	2.4.3
	If
ACA is unable to accept, or otherwise hinders delivery as a result of an Excusable Delay, or if IAE, at ACA's written request, agrees to delay delivery of the Firm Spare Engines,
ACA may defer the delivery date of such Firm Spare Engine for a period not to exceed [***] from the original delivery date.



	2.4.4
	In
any of the cases specified in Clause 2.4.3 above, ACA shall pay to IAE such reasonable sum as IAE shall require in respect of storage, maintenance and insurance of those
Firm Spare Engines for the time of such delay.






	2.5
	Delivery, Shipping, Title and Risk of Loss or Damage



	2.5.1
	IAE
will deliver the Firm Spare Engines, at its option, either Ex Works (INCOTERMS 2000) Connecticut, U.S.A. or Ex Works (INCOTERMS 2000) Derby, England, in accordance with the
delivery schedule set out in Exhibit B-2 to this Contract. [***].



	2.5.2
	Upon
such delivery, title to and risk of loss of or damage to the Firm Spare Engines shall pass to ACA.



	2.5.3
	ACA
will notify IAE at least [***] weeks before the scheduled time for delivery of the Firm Spare Engines of its instructions as to shipping of the Firm
Spare Engines and airworthiness documentation and other Firm Spare Engine documentation.






	2.6
	Price



The
Purchase Price for each of the Firm Spare Engines, or any Option Spare Engines, shall be the Basic Contract Price, amended pursuant to Clause 2.3 above, and escalated in accordance with the
escalation formula contained in Exhibit B-2 to this Contract. 



	2.7
	Payment



	2.7.1
	ACA
will make payment in United States Dollars as follows:



	2.7.1.1
	Upon
signature of this Contract, to the extent that such amount has not already been paid by ACA, ACA shall pay to IAE a [***].



	2.7.1.2
	[***]
before the scheduled delivery of each of the Firm Spare Engine, ACA shall pay to IAE a further [***].



	2.7.1.3
	[***]
before the scheduled delivery of each of the Firm Spare Engines, ACA shall pay to IAE a further deposit of [***].



	2.7.1.4
	Immediately
prior to the delivery of each of the Firm Spare Engines, ACA shall pay to IAE the balance of the Purchase Price of such item.






	2.7.2
	IAE
shall have the right [***]. 





8







 



	2.7.3
	Except
as set forth in Clause 6.5.3, ACA undertakes that IAE shall receive the full amount of payments falling due under this Clause 2.7, without any withholding or
deduction whatsoever.



	2.7.4
	All
payments under this Clause 2.7 shall be made by cable or telegraphic transfer and shall be deposited not later than the due date of payment with: 






Fleet
Bank N.A.

175 Water Street

New York, NY 10038-4924

Account No. [***]

ABA No. 021200339 




or
as otherwise notified from time to time by IAE. 



	2.7.5
	For
the purpose of this Clause 2.7 "payment" shall only be deemed to have been made to the extent cleared or good value funds are received in the numbered IAE bank account
specified in Clause 2.7.4 above.



	2.7.6
	If
ACA fails to make any payment for any Supplies on or before the date when such payment is due, then, without prejudice to any of IAE's other rights, IAE will (a) be
entitled to charge interest on the overdue amount, at the Overdue Rate, from the date such payment was due to the date such payment is made and (b) [***].



	2.7.7
	For
the purpose of this Clause 2.7, the "Estimated Purchase Price" of any of the Firm Spare Engines shall be calculated in accordance with the following formula. 




P =
B [***] 


where: 



P
is the Estimated Purchase Price

B is the applicable Basic Contract Price

N is the year of scheduled delivery minus the year for which the Basic Contract Price is defined. 






CLAUSE
3    SPARE PARTS PROVISIONS    


	3.1
	Intent and Term



	3.1.1
	For
as long as ACA has one or more Aircraft in its fleet, IAE shall ensure that reasonably adequate supplies of Spare Parts are available for sale to ACA under this Contract.
[***]



	3.1.2
	For
so long as ACA has one or more Aircraft in its fleet, IAE will make available to ACA unused Vendor Parts for which direct supply arrangements between the manufacturers of such
Vendor Parts and ACA cannot be established. Except for the purposes of Initial Provisioning pursuant to Clause 3.3 below, ACA shall notify IAE in writing not less than
[***] months before scheduled delivery requested by ACA that ACA intends to purchase such Vendor Parts from IAE. [***] 






3.2    ATA Standards    



The
Parties shall comply with the requirements of ATA Specifications 2000 and 300, provided that the Parties shall be entitled to negotiate reasonable changes in those procedures or requirements of
the said specifications which, if complied with exactly, would result in an undue operating burden or unnecessary economic penalty. 



9







 

3.3    Initial Provisioning    



	3.3.1
	To
assist ACA's Initial Provisioning, IAE shall supply ACA with Initial Provisioning Data in accordance with ATA Specification 2000.



	3.3.2
	Details
of the format and precise nature of the said Initial Provisioning Data, including the applicable revision numbers of ATA Specification 2000, definition of Spare Parts
Categories, and Lead Times, and agreement on technical publications shall be agreed between the Parties at a preliminary meeting held for this purpose at a time and place to be agreed.



	3.3.3
	The
Initial Provisioning Data shall cover all Spare Parts, including agreed Vendor Parts, which in IAE's opinion may be reasonably required for ACA's operation of the Engines.



	3.3.4
	Before
ACA places Initial Provisioning Orders, a conference shall be held for the review of Initial Provisioning Data supplied by IAE under Clause 3.3.1 above. This
conference shall be held as soon as possible to ensure delivery of necessary Spare Parts as described in the Initial Provisioning Data before the first Leased Aircraft delivery and shall be attended
by the personnel of each party directly responsible for Initial Provisioning. 




3.4    Change In Initial Provisioning Data    



IAE
shall, free of charge, progressively and promptly revise Initial Provisioning Data in accordance with ATA Specification 2000 to take into account any changes which may materially affect
provisioning decisions. 




3.5    Stocking of Spare Parts    



Within
a reasonable time following IAE's request, ACA shall provide IAE with information reasonably required to enable IAE to plan and organize the manufacture and stocking of Spare Parts. 




3.6    Lead Times    



	3.6.1
	Spare
Parts for Initial Provisioning shall be delivered on or before the dates specified in ACA's orders, provided that such dates comply with lead times and do not call for
delivery more than [***] before the scheduled date of delivery of the first Leased Aircraft to ACA and provided further that delivery of the total Initial Provisioning quantity
shall be effected in line with ACA's fleet build up and Aircraft utilization.



	3.6.2
	Except
as herein provided, replenishment Spare Parts shall be delivered within the Lead Time specified in the IAE Spare Parts Catalog, except for certain major Spare Parts which
shall be designated in Initial Provisioning Data as being available at prices and lead times to be quoted upon request.



	3.6.3
	If
any order for replenishment Spare Parts calls for a quantity materially in excess of ACA's normal requirements, IAE shall nevertheless use commercially reasonable efforts to
complete such order, provided, however, that IAE shall have the right to notify ACA and may request a special delivery schedule. If ACA confirms that the full quantity ordered is required, delivery of
the order shall be effected at delivery dates as agreed by the Parties and the Lead Times provided by this Clause 3.6 shall not apply.



	3.6.4
	In
the events described in Clauses 3.6.4.1 through 3.6.4.3 below, IAE shall use commercially reasonable efforts to deliver Spare Parts, including certain major Spare Parts referred
to in Clause 3.6.2 above, within the time limits specified by ACA. IAE will provide notice of the action to be taken on such order within the following time periods from IAE's receipt of such
notice and based on the type of order:



	3.6.4.1
	AOG
(Aircraft on Ground) orders—within [***]; 






10







 


	3.6.4.2
	Critical
(imminent AOG or work stoppage)—within [***];



	3.6.4.3
	Expedite
(i.e., a requirement for Spare Parts that is less than published or quoted lead time)—within [***]. 





3.7    Ordering Procedure    



	3.7.1
	After
receipt of Initial Provisioning Data, ACA shall place its Initial Provisioning Orders in sufficient time to allow IAE to commence delivery prior to delivery of the first
Leased Aircraft. [***]



	3.7.2
	Subsequent
orders for Spare Parts shall be placed by ACA from time to time as ACA may deem appropriate. ACA shall endeavor to give IAE reasonable notice of any change in its
operation (including, but not limited to, changes in maintenance or overhaul arrangements) affecting its requirements of Spare Parts, including Vendor Parts.



	3.7.3
	IAE
shall promptly acknowledge receipt of each order for Spare Parts in accordance with ATA Specification 2000 procedure. Unless qualified, such acknowledgment, shall constitute an
acceptance of the order under the terms of this Contract.



	3.7.4
	If
IAE notifies ACA that certain low individual cost Spare Parts, such as bolts, nuts, washers and other similar items, are packed in standard package quantities (hereinafter called
"SPQs"), ACA's subsequent orders for such Spare Parts shall be for SPQs or multiples thereof.



	3.7.5
	Unless
ACA shall have specified "Total Quantity Required" on its orders, IAE shall be entitled to consider an order for inexpensive
Spare Parts complete if at least [***] of the quantity ordered is delivered [***]. For the purpose of this Clause the term "inexpensive" shall mean a
price listed in the IAE Spare Parts Catalog at less than Ten U.S. Dollars ($10) per unit, but shall be subject to change by IAE from time to time.



	3.7.6
	Not
later than the time of placing Initial Provisioning Orders, ACA shall provide IAE in writing with full shipping instructions applicable to both Initial Provisioning Orders and
to subsequent standard replenishment orders for Spare Parts to be placed by ACA. 




3.8    Modifications to Spare Parts    



	3.8.1
	IAE
shall be entitled to make modifications or changes to the Spare Parts ordered by ACA hereunder by issuance of a Service Bulletin. IAE shall promptly inform ACA by means of
Service Bulletins when such modified Spare Parts (or Spare Parts introduced by a repair scheme) will become available for supply hereunder. Notification of such availability shall be given to ACA
before delivery of the modified Spare Part.



	3.8.2
	Modified
Spare Parts shall be substituted for Spare Parts ordered unless the modifications stated in Service Bulletins are considered by ACA to be unacceptable and ACA so states in
writing to IAE within [***] of the transmittal date of a Service Bulletin, in which case ACA shall be entitled to place a single order for ACA's anticipated total requirement
of pre-modified Spare Parts, at a price to be agreed but in no event greater than the then current catalogue price and with a delivery schedule to be agreed.



	3.8.3
	IAE
may supply at the expense of ACA a modification of any Spare Part ordered by ACA (including any additional Spare Part needed to ensure performance, weight, utility, durability,
interchangeability and intermixability, fuel burn, maintenance cost, and reliability), provided that the said modification has received the approval of the Certification Authority and has been
evidenced by issuance of a Service Bulletin. The delivery of such Spare Parts shall begin on dates indicated by Service Bulletin. The delivery schedule shall be agreed at the time when orders for
modifications are accepted by IAE. 



11







 



	3.8.4
	If
Spare Parts required for incorporation of a modification are not ordered as a kit, ACA's orders must distinguish them from normal replacement Spare Parts in accordance with ATA
Specification 2000. 




3.9    Inspection    



	3.9.1
	Conformance
of Non-Installation Items will be assured by IAE through IAE conformance documentation. Conformance of Spare Parts will be assured by IAE through the
issuance of an FAA Form 8130 or JAA Form 1 or its equivalent.



	3.9.2
	Upon
the issue of conformance documentation or an FAA Form 8130 or JAA Form 1 or its equivalent, as applicable, in accordance with Clause 3.9.1 above and
delivery of the Non-Installation Items or Spare Parts to ACA, ACA shall be deemed to have accepted the Non-Installation Items and Spare Parts, as applicable, and that such
items conform to the applicable specification. 




3.10    Delivery and Packing    



	3.10.1
	IAE
shall deliver Spare Parts and Other Supplies Ex Works (INCOTERMS 2000), the point of manufacture. Shipping documents and invoices shall be in accordance with ATA Specification
2000.



	3.10.2
	Upon
such delivery, title to and risk of loss of or damage to the said Spare Parts and Other Supplies shall pass to ACA.



	3.10.3
	In
accordance with ATA Specification 2000 requirements, ACA shall advise IAE at time of order of its instructions as to the marking and shipping of the Spare Parts and Other
Supplies.



	3.10.4
	The
packaging of Spare Parts shall be in accordance with ATA Specification 300 Category 2 standard and shall be free of charge to ACA. 




3.11    Prices    



	3.11.1
	Prices
of all Spare Parts shall be quoted in U.S. Dollars, in the IAE Spare Parts Price Catalog, Initial Provisioning Data or in individual quotations. Such prices shall represent
net unit prices, Ex Works (INCOTERMS 2000), IAE point of manufacture according to Clause 3.10.1 above. 




Prices
and Lead Times in the IAE Spare Parts Price Catalog or individual quotation are valid for a time period as shown in the quotation, or if no such time period is so designated, for such time
period as listed in the IAE Spare Parts Catalog. 



	3.11.2
	Prices
applicable to each order placed by ACA hereunder shall be the prices in effect on the date IAE receives such order [***].



	3.11.3
	IAE
may adjust its prices for Spare Parts upon not less than [***] notice to ACA, except that prices for Spare Parts quoted in Initial Provisioning Data
shall be firm, provided that:



	3.11.3.1—
	Orders
are placed within [***] of ACA's receipt of Initial Provisioning Data, and



	3.11.3.2—
	Ordered
quantities are agreed by IAE, such agreement not to be unreasonably withheld by IAE, and



	3.11.3.3—
	Deliveries
are scheduled to be made prior to the scheduled date for delivery of the first Aircraft (as it was scheduled at the date of IAE's supply of Initial
Provisioning Data). 






If
for any reason [***]. 




12







 



	3.11.4
	On
request by ACA, prices of Spare Parts or other materials not included in the Spare Parts Price Catalog shall be quoted within a reasonable time by IAE. IAE will use commercially
reasonable efforts to quote such Spare Parts within [***]. 




3.12    Payment    



	3.12.1
	Payment
for [***] all invoices for all purchases under this Clause 3 shall be made by ACA to IAE within [***] after the date
of delivery and receipt of an invoice therefor.



	3.12.2
	Except
as provided in Clause 6.5.3, ACA undertakes that IAE shall receive payment in U.S. Dollars of the full amount of payments falling due under this Clause 3.12,
without any withholding or deduction whatsoever.



	3.12.3
	All
payments under this Clause 3.12 shall be made in immediately available funds by wire transfer to, and shall be deposited not later than the due date of payment, or the
next Business Day, if such payment due date is not a Business Day, with: 







Fleet
Bank N.A.

175 Water Street

New York, NY 10038-4924

Account No. [***]

ABA No. 021200339 





or
to another U.S. bank account as otherwise notified from time to time by IAE. 



	3.12.4
	Reserved.



	3.12.5
	Notwithstanding
Clause 3.12.1 above, payments for the undisputed portion of all invoices for all purchases shall be due from ACA upon delivery and receipt of an invoice
therefor, or at IAE's option prior to delivery of the purchased items upon the occurrence of any of the following events: (a) a receiver or trustee is appointed for any of ACA's property, or
(b) ACA is adjudicated or voluntarily becomes bankrupt under any bankruptcy or winding up laws or other similar legislation, or (c) ACA becomes insolvent or makes an assignment for the
benefit of creditors, or (d) a writ of execution is issued pursuant to a judgment rendered against ACA that results, or would result, in a material adverse change to the financial position of
ACA that would, or would be expected to have a material and adverse effect on ACA's ability to perform its payment obligations hereunder or (e) ACA is unable or refuses to make payment to IAE
in accordance with any of ACA's obligations to IAE.



	3.12.6
	If
ACA fails to make any payment for any Spare Parts or Other Supplies on or before the date when such payment is due, then, without prejudice to any other rights set forth herein
or under applicable law, IAE will be entitled to charge interest on the overdue amount, at the Overdue Rate, from the day following the date such payment was due to the date such payment is made. 




3.13    Purchase by ACA from Others    



	3.13.1
	Except
as explicitly provided in Clause 3.1.1 above, [***].



	3.13.2
	[***]



	3.13.2.1
	[***]



	3.13.2.2
	[***]



	3.13.2.3
	[***]






	3.13.3
	[***]



	3.13.3.1
	[***]



	3.13.3.2
	[***]



	3.13.3.3
	[***]








[***]




	3.13.4
	[***]




13













  



	3.13.5
	[***]



	3.13.6
	[***]





[***]



	3.15
	Conflict



In
the event of any conflict between the provisions of this Contract and the provisions of ATA Specifications 101, 2000 and 300, the provisions of this Contract shall prevail. 



	3.16
	Special Tools and Ground Equipment



By
mutual agreement, IAE may sell Other Supplies to ACA subject to the terms and conditions of this Contract, but the detailed procedures of this Contract with regard to Initial Provisioning, prices,
stocking and Lead Time shall not apply. Technical data for special tools and ground equipment shall be in accordance with ATA Specification 101. 




CLAUSE
4    WARRANTIES, GUARANTEES AND LIABILITIES    


	4.1
	IAE
warrants to ACA that, at the time of delivery, the Supplies sold hereunder will be free of defects in material, workmanship (including without limitation process of manufacture)
and will conform in all material respects to applicable specifications. IAE's liability and ACA's remedies under this warranty are limited to the repair or replacement, at IAE's election, of Supplies
or parts thereof returned to IAE at the factory of manufacture which are shown to [***]have been defective; provided, that the defect shall have been discovered by ACA and ACA
has provided IAE with written notice of such defect not later than [***]. Transportation charges for the return of Supplies to IAE pursuant to this Clause 4.1 and their
reshipment to ACA and the risk of loss thereof will be borne by IAE only if the Supplies are returned in accordance with reasonable written shipping instructions from IAE and reasonably judged by IAE
to be defective.



	4.2
	In
addition, IAE grants and ACA accepts the following:



	4.2.1
	V2500
Engine and Parts Service Policy



	4.2.2
	V2500
Nacelle and Parts Service Policy



	4.2.3
	V2500
Warranty for Special Tools and Ground Equipment



	4.2.4
	V2500
Guarantees—Specific Conditions



	4.2.5
	V2500
Reliability (Shop Visit) Guarantee



	4.2.6
	V2500
First Run Exhaust Gas Temperature Guarantee



	4.2.7
	V2500
Inflight Shutdown Guarantee



	4.2.8
	V2500
Remote Site Removal Guarantee



	4.2.9
	V2500
Delay and Cancellation Guarantee



	4.2.10
	V2500
Fuel Consumption Retention Guarantee



	4.2.11
	V2500
Oil Consumption Retention Guarantee 






The
Service Policies, Warranties and Guarantees referred to in this Clause 4.2 are hereinafter called the "Warranties". The above Service
Policies, Warranties and Guarantees together form Exhibit D to this Contract. 


	4.3
	The
Parties agree that those of the Warranties set out in Clauses 4.2.1 and 4.2.2 above shall apply to any equipment which falls within the type of equipment covered by those
Warranties, which are manufactured, supplied or inspected by IAE howsoever and whenever (whether before, on or after 


14







 

the
date first above written) acquired by ACA from whatsoever source including but not limited to any V2500 aero engines and any associated equipment therefor, and any parts for such engines and
associated equipment which form part of any aircraft. 



	4.4
	Except
as otherwise provided in this Contract, the Warranties are personal to ACA and the obligations of IAE thereunder shall only apply insofar as ACA owns and operates the Supplies
covered thereunder, provided that ACA may fully assign the Warranties in accordance with Clause 6.7.1.



	4.5
	ACA
shall inform any entity to whom it intends to sell, lease, loan or otherwise dispose of any of the Supplies or equipment referred to in Clause 4.3 above that such entity
may obtain from IAE a direct warranty agreement incorporating those of the Warranties set out in Clauses 4.2.1 and 4.2.2. In the event such entity desires to obtain from IAE the benefits of any
remaining Warranties, ACA shall also use its reasonable endeavors to ensure that such entity shall enter into a direct warranty agreement with IAE prior to delivery of any of the Supplies or such
equipment to such entity.



	4.6
	The
Parties agree that the intent of the Warranties provided in Clause 4.2 is to provide specified benefits or remedies to ACA as a result of specified events. It is not the
intent, however, to duplicate benefits or remedies provided to ACA by IAE or another source (i.e., another equipment manufacturer or lessor) as a result of the same event or cause. Therefore,
notwithstanding the terms of the Warranties, if the terms of the Warranties should make duplicate benefits available to ACA from IAE or any third party, ACA may elect to receive the benefits under the
Warranties or under any other applicable guarantee, sales warranty, service policy or any special benefit of any kind as a result of the same event, but—to the degree ACA would enjoy
duplication of remedies—not both.



	4.7
	[***]



	4.8
	The
Parties agree that this Clause 4 has been the subject of discussion and negotiation, is fully understood by the Parties and the price of the Supplies and other mutual
agreements of the Parties set forth in this Contract are arrived at in consideration of:



	4.8.1
	the
express Warranties of IAE and ACA's rights thereunder; and



	4.8.2
	[***].






	4.9
	In
consideration for the benefits provided by IAE to ACA, including the Warranties set out in Clauses 4.2.1 and 4.2.2, ACA agrees [***]. 



CLAUSE
5    PRODUCT SUPPORT SERVICES    


	5.1
	IAE
will make available to ACA the Product Support Services described in Exhibit C to this Contract. Except when identified in such Exhibit C as being at additional cost
or as requiring separate contractual arrangements, such Product Support Services shall be supplied at no additional charge to ACA and subject to the provisions of this Contract. IAE may delegate the
performance of product support services to an affiliated company or any of IAE's current shareholders, including Pratt & Whitney, Rolls-Royce plc, MTU Aero Engines of Germany and Japanese Aero
Engines Corporation, or any of their affiliates or wholly-owned subsidiaries, or any future shareholder of IAE, although no such delegation will relieve IAE of its primary responsibility for the
performance of the same.



	5.2
	ACA
will provide to the IAE Customer Support Representative working at its facility, free of charge:



	(a)
	reasonable,
secure office accommodation including furniture and office equipment;



	(b)
	access
to telephone and facsimile; 





15







 



	(c)
	access
to such first-aid and emergency assistance as is customarily provided to ACA's own employees; and



	(d)
	[***]. 




ACA
further agrees that such customer support representative(s) will be entitled to all reasonable working benefits allowed pursuant to normal IAE practice, including but not limited to, leaves of
absence relating to vacation, holiday and sick time. IAE Customer Support representatives located throughout North America who are fully trained on all facets of V2500-A5 engine line
maintenance will be available to assist ACA as required when ACA's IAE Customer Support Representative is not available on site at ACA. 




CLAUSE
6    MISCELLANEOUS    


	6.1
	Delay in Delivery



	6.1.1
	If
IAE is hindered or prevented from delivering any of the Supplies within the time for delivery specified in this Contract (as such time may be extended pursuant to the provisions
of this Contract) by reason of an Excusable Delay, the time for delivery shall be extended by a period equal to the period for which delivery shall have been so hindered or prevented by such Excusable
Delay. Any other circumstance in which IAE is hindered or prevented from delivering any Supplies within the time for delivery specified in the Contract (as such time may be extended pursuant to the
provisions of this Contract) by reason of any cause other than an Excusable Delay shall be deemed an "Inexcusable Delay". 







Should
IAE delay delivery of any Firm Spare Engine by virtue of an Excusable Delay beyond the time for delivery specified in this Contract for a period of [***] or more, ACA
shall be entitled to refuse to take delivery of such item and shall be relieved of any future obligation to take delivery of such item from IAE on giving IAE notice in writing within
[***] after the expiration of such period of [***]. Should IAE delay delivery of any Firm Spare Engine by virtue of an Inexcusable Delay beyond the time
for delivery specified in this Contract for a period of [***] or more, ACA shall be entitled to refuse to take delivery of such item and shall be relieved of any future
obligation to take delivery of such item from IAE on giving IAE notice in writing within [***] after the expiration of such period of [***]. Upon
receipt of any such notice IAE shall be free from any obligation in respect of such item except that, if ACA refuses to take delivery as permitted hereunder of the last Firm Spare Engine to be
delivered to ACA, IAE shall refund to ACA any deposits made in respect of the purchase price of such delayed Firm Spare Engine. Where IAE must refund deposits to ACA due to delay as specified in this
Clause 6.1.1, and IAE has not provided a lease as set forth in clause 6.1.5 below, then IAE shall [***]. 



	6.1.2
	If,
by reason of any of the causes embraced by Clause 6.1.1 above, IAE is hindered or prevented from delivering any goods (which are the same as and include the Supplies) to
purchasers (including ACA) then IAE shall have the right to allocate in good faith such goods, as they become available, at its own discretion among all such purchasers [***]
and provided further, no such allocation will relieve IAE of any liability for delay in delivery of any Supplies to ACA resulting from such allocation.



	6.1.3
	Should
IAE delay delivery of any item of Supplies (other than Firm Spare Engines) beyond the time for delivery specified in this Contract (as such time may be extended pursuant to
the provisions of this Contract) as a result of an Excusable or Inexcusable Delay, then ACA may acquire any such Supplies from a source other than IAE ("Replacement
Supplies"), as provided for in Section 3 above. If ACA acquires Replacement Supplies pursuant to this section 6.1.3, ACA will have the right to notify IAE of its
cancellation of any pending order from IAE for the same Supplies without penalty. [***]. 



16







 



	6.1.4
	In
the event of an Excusable Delay, all prices of Supplies stated in the Contract subject to escalation shall be escalated at [***] calculated in accordance
with the IAE Escalation Formula set forth in Exhibit B-2 to this Contract from (a) the original scheduled delivery month for such Supplies in effect prior to the occurrence
of the Excusable Delay to (b) the actual delivery month of such Supplies. In the event of an Inexcusable Delay, all prices of Supplies stated in the Contract subject to escalation shall not be
subject to any additional escalation from (a) the original scheduled delivery month in effect prior to the occurrence of the Inexcusable Delay to (b) the actual delivery month of such
Supplies.



	6.1.5
	Should
IAE delay delivery of a Firm Spare Engine beyond the time of delivery specified in this Contract as a result of either an Excusable or Inexcusable Delay and if all of ACA's
V2500-A5 spare engines are being utilized to support the Firm Aircraft or are undergoing shop visits, IAE shall station a dedicated V2500-A5 lease engine of the same model type
and thrust as the delayed Firm Spare Engine ("Replacement Spare Engine") in the region of ACA's main base, Dulles, Virginia, to enable ACA to lease such
engine should ACA require an additional spare Engine to maintain the integrity of its flight schedule. For such a lease IAE will [***], however ACA will pay IAE's then
published provisioned hourly and cyclic charges associated with such lease engine. The form and structure of the engine lease described hereby shall be in the general form of the Standard Terms of
Business for Lease of V2500 Engines (the "STOBL") attached as Exhibit E, except that a security deposit shall not be required as provided for in Clause 10 of the STOBL. If
IAE fails to lease a Replacement Spare Engine to ACA pursuant to this section 6.1.5, then IAE shall promptly reimburse ACA for the amount of the [***] of any Engine
acquired by ACA in excess of the [***] if IAE had provided a Replacement Spare Engine.



	6.1.6
	[***]






	6.2
	Intellectual Property



	6.2.1
	IAE
shall, subject to the conditions set out in this Clause and as the sole liability of IAE with respect to the claims of intellectual property infringement described in this
Clause 6.2, indemnify, release, defend, and hold ACA (and its affiliates and their respective officers, directors, shareholders, members, employees, contractors and representatives) harmless
from and against any damages, costs, losses, liabilities, penalties, and expenses, including reasonable legal expenses resulting from or arising out of or in connection with any claim that the use of
any of the Supplies (or of any component, part, process, technical data, technology or software installed therein or supplied therewith) by ACA within any country in which at the date of such claim
the benefits of Article 27 of the Convention on International Civil Aviation of 7th December 1944 (The Chicago Convention) apply, infringes any patent, design, or model duly granted or
registered, or any copyright, [***], provided, however, that IAE shall not be liable to ACA for any consequential damage or any loss of use of Supplies or of the Aircraft in
which the Supplies may be incorporated arising as a result directly or indirectly of any such claim.



	6.2.2
	ACA
will give prompt notice in writing to IAE of any such claim whereupon IAE shall have the right at its own expense to assume the defense of or to dispose of or to settle such
claim in its sole discretion, [***]. ACA will give IAE all reasonable assistance (at IAE's expense) to defend such claim.



	6.2.3
	IAE
shall have the right to substitute for any allegedly infringing Supplies substantially equivalent non-infringing supplies, [***]. 





17







 



	6.2.4
	In
the event that the use of the Supplies is enjoined, IAE shall promptly, at its expense and option, either:



	6.2.4.1
	substitute
substantially equivalent non-infringing Supplies;



	6.2.4.2
	procure
for ACA the right to continue using the Supplies; or



	6.2.4.3
	modify
the Supplies as to make them non-infringing.






	6.2.5
	The
indemnity contained in Clause 6.2.1 above shall not apply to claims for infringement to the extent (i) Supplies are manufactured to the specific design
instructions of ACA; (ii) due to the manner or method in which any of the Supplies is installed in the Aircraft (except to the degree such installation is performed in accordance with IAE's
instructions) or (iii) any combination of any of the Supplies with any item or items other than Supplies.






	6.3
	Damages for Aircraft and/or Spare Engine Cancellations [***]



	6.3.1
	Damages







If
ACA (i) fails to take delivery of any of the Firm Aircraft or Firm Spare Engines pursuant to the schedule set forth in Exhibit B-1 hereto (as such may be modified or
supplemented pursuant to the terms of the Contract) or (ii) defers or delays (other than an Excusable or Inexcusable Delay) the delivery of any such Firm Aircraft or Firm Spare Engine in a
manner not permitted hereunder for a total period in [***] with respect to any such Aircraft or Spare Engine, [***]. 


Furthermore,
IAE and ACA agree [***]. 


	6.3.2
	[***]






[***].





	6.4
	Non-Disclosure and Non-Use



	6.4.1
	Subject
to Clause 6.4.3 below, both Parties agree not to disclose to any third party (other than professional advisers of such Party who agree to abide in advance by the
non-disclosure requirements set forth in this Clause 6.4) any Information which either Party acquires directly or indirectly from the other Party and agree not to use the same other
than for the purpose for which it was disclosed without the written approval of the other Party. The expression "Information" in this
Clause 6.4.1 includes but is not limited to all proprietary oral or written information, data, reports, drawings and specifications, and all provisions of this Contract.



	6.4.2
	Both
Parties shall be responsible for the observance of the provisions of Clause 6.4.1 above by its employees.



	6.4.3
	The
provisions of Clause 6.4.1 above shall not apply to information which is or becomes generally known in the aero engine industry nor shall the provisions of
Clause 6.4.1 above prevent any necessary disclosure of information to enable ACA itself to operate, maintain or overhaul Supplies or to the extent disclosure is (i) required by
applicable law, or (ii) advised by a Party's legal counsel in response to the requirements of applicable law.



	6.4.4
	ACA
shall be responsible for obtaining any required authorization including any import licenses, exchange permits or any other governmental authorizations required in connection
with the transactions contemplated under this Contract. IAE shall be responsible for obtaining any export licenses required in connection with transactions contemplated under this Contract. ACA shall
restrict disclosure of all information and data furnished under this Contract in obtaining such licenses, permits, or authorizations. ACA shall only ship the Supplies and information and data
furnished under this Contract to those destinations permitted under such 





18







 


licenses,
permits, or authorizations, and shall obtain necessary approvals to ship supplies to ACA's maintenance facilities. 



	6.4.5
	In
the event that any of the Information as described in Clause 6.4.1 is required to be disclosed by either Party through a valid governmental, judicial or regulatory agency
order, or as a result of compliance with any law, the Party of whom such disclosure is required agrees to advise the other Party of the need for disclosure (in advance of such disclosure when
possible) and to limit the disclosure to only those portions of the Information specifically required to be disclosed by such order, and to maintain the confidentiality of as much of the Information
as legally possible.






	6.5
	Taxes



	6.5.1
	Subject
to Clause 6.5.2 below, IAE shall pay all imposts, duties, fees, taxes and other like charges [***] in connection with the Supplies prior to
their delivery.



	6.5.2
	All
amounts stated to be payable by ACA pursuant to this Contract exclude any value added tax, sales tax or taxes on turnover. [***] To ensure so far as
possible that ACA is not charged with European Community value added tax ("VAT"), ACA will within 30 days of signature hereof, inform IAE of its
VAT Code (if any) for inclusion on IAE's invoices.



	6.5.3
	Except
as otherwise set forth in this Section 6.5 and except for taxes imposed on or with respect to the gross or net income, receipts, conduct of business, minimum tax,
profits, gains, capital or net worth of IAE (including but not limited to [***].



	6.5.4
	IAE
will be responsible for any interest, penalties or fines imposed upon ACA because of IAE's failure to file any information return after requested in writing by ACA to do so or
should any representations made by IAE in this Contract or any documents required in this clause 6.5 prove to be false or misleading.



	6.5.5
	IAE
represents that all amounts payable by ACA under this Contract are, at the time of the execution of this Contract and will continue throughout the term of this Contract, to be
considered as income effectively connected with IAE's United States trade or business. Prior to receiving any payment under this Contract, IAE shall furnish ACA with a properly-completed IRS
Form W-8ECI, or other applicable form, evidencing its complete exemption from United States federal withholding taxes on any and all payments made. If for any reason ACA is required
by law to withhold taxes from any amounts payable under this Contract, IAE will receive such amounts payable net of such withholding.



	6.5.6
	If
this Agreement calls for the delivery of any of the Supplies in a jurisdiction that will result in the imposition of a sales tax or any other tax that ACA is required to pay
pursuant to this Agreement, upon ACA's written request the Parties will cooperate [***] to arrange for the sale to take place in a tax favorable jurisdiction, so as to avoid
the imposition of such tax, and if such arrangement cannot be reasonably achieved, then ACA may upon written notice to IAE [***].






	6.6
	Amendment



This
Contract shall not be amended in any way other than by written agreement by the Parties on or after the date of this Contract, which agreement is expressly stated to amend this Contract. 



	6.7
	Assignment



	6.7.1
	Except
as provided under Clause 5 above and further in this Clause 6.7, neither Party may assign any of its rights or obligations hereunder without the written consent
of the other Party (except that IAE may assign its rights to receive money hereunder). Any assignment made in violation of this Clause 6.7 shall be null and void. Notwithstanding the above, ACA
may, 





19







 


without
the consent of IAE assign this Agreement or any of its rights or obligations hereunder to any Qualifying Affiliate. A "Qualifying Affiliate"
shall mean an affiliate of ACA in which ACA either ([***]. In addition, ACA shall be permitted to consolidate with or merge into any other person, or sell, convey, lease, or
otherwise transfer all or substantially all of its assets as an entirety (whether in one transaction or a series of transactions) to any person (a "Reorganization
Transaction"), if the person formed by such consolidation or surviving such merger, or the person who acquires by sale, conveyance, transfer, or lease all or substantially all
of ACA's assets as an entirety (the "Successor") and the Successor, if other than ACA, executes and delivers to IAE an agreement, in form and substance
reasonably satisfactory to IAE, containing an assumption by the Successor of the due and punctual performance and observance of ACA's obligations under this Agreement. 



	6.7.2
	Before
tender of delivery of any Firm Spare Engine by IAE, ACA may assign (or create a security interest in) the right of ACA to purchase any Firm Spare Engine to a person or entity
that provides debt, equity or lease financing for the purchase of any Firm Spare Engine (or any trustee or agent for such a person or entity), pursuant to documentation in a form customarily accepted
by IAE. In the event of such an assignment ACA will continue to enjoy the service life policy and guarantees otherwise set forth herein except to the extent modified by the express terms of such
assignment.



	6.7.3
	Upon
or after delivery of any Firm Spare Engine by IAE, ACA may assign (or create a security interest in) its rights and obligations to any Firm Spare Engine to any person or entity
providing debt, equity or lease financing with respect to such Firm Spare Engine (or any trustee or agent for such a person or entity), pursuant to a purchase agreement assignment in a form
customarily accepted by IAE.



	6.7.4
	No
assignment (or creation of a security interest) pursuant to Clauses 6.7.2 or 6.7.3 shall have the effect of releasing Buyer from any obligation or liability under the
Contract save to the extent of actual performance of ACA's obligations under the Contract by any such assignee.



	6.7.5
	Nothing
contained herein shall require the consent or approval of IAE or preclude ACA from assigning or creating a security interest in any Supplies (except Firm Spare Engines)
either before, upon or after delivery of such Supplies to ACA, to any person or entity providing debt or equity financing with respect to such Supplies (or any trustee or agent for such a person or
entity).






	6.8
	Exhibits



In
the event of any unresolved conflict or discrepancy between the Exhibits (which are hereby expressly made a part of this Contract) and Clauses of this Contract then the Clauses shall prevail. 



	6.9
	Headings



The
Clause headings and the Index do not form a part of this Contract and shall not govern or affect the interpretation of this Contract. 



	6.10
	Law



This
Contract shall be subject to and interpreted and construed in accordance with the laws of the State of New York, United States of America
(excluding its conflicts of law provisions). The Parties agree to exclude the application of the United Nations Convention on Contracts for the International Sale of Goods (1980). 



	6.11
	Notices



All
notices and requests required or authorized hereunder will be given in writing either by personal delivery to a responsible officer of the Party to whom the same is given or by commercial 



20







 

courier
(with proof of delivery) at the addresses set forth below. The date on which any such notice or request is so personally delivered, or if such notice or request is given by commercial courier,
the date on which it is received (as evidenced by the proof of delivery supplied by the server or courier), will be deemed to be the effective date of such notice or request. 



IAE
will be addressed at: 



IAE
International Aero Engines AG

400 Main Street, M/S 121-10

East Hartford, Connecticut, 06108, U.S.A.

Facsimile: (860) 565-5220

Attention: Business Director and Chief Legal Officer 




ACA
will be addressed at: 



Atlantic
Coast Airlines

45200 Business Court

Dulles, Virginia 20166

Facsimile: (703) 650-6294

Attention: CFO 


With
a copy to: 


Atlantic
Coast Airlines

45200 Business Court

Dulles, Virginia 20166

Facsimile: (703) 650-6201

Attention: General Counsel 


and



Atlantic
Coast Airlines

45200 Business Court

Dulles, Virginia 20166

Facsimile: (703) 650-6180

Attention: Controller 





Either
Party may, from time to time, designate for itself another address or another person to whose attention such notice is sent. 



	6.12
	Exclusion of Other Provisions and Previous Understandings



	6.12.1
	This
Contract contains the only provisions governing the sale and purchase of the Supplies and shall apply to the exclusion of any other provisions on or attached to or otherwise
forming part of any order form of ACA or IAE, or any acknowledgment or acceptance by IAE or ACA, or of any other document which may be issued by either Party relating to the sale and purchase of the
Supplies.



	6.12.2
	The
Parties agree that neither of them have placed any reliance whatsoever on any representations, agreements, statements or understandings made prior to the signature of this
Contract, whether orally or in writing, relating to the Supplies, other than those expressly incorporated in this Contract, which has been negotiated on the basis that its provisions represent their
entire agreement relating to the Supplies and shall supersede all such representations, agreements, statements and understandings.



	6.12.3
	Notwithstanding
any contrary language upon a purchase order or invoice relating to this transaction, no terms which may be on or attached to either Party's purchase order or
invoice 





21







 


will
have effect (other than with respect to clerical terms such as quantity), it being understood that such purchase orders or invoices will be used for internal control purposes only. 




	6.13
	Termination Events



Any
of the following shall constitute a "Termination Event" under this Contract and any Party responsible for a Termination Event shall be a
"Terminating Party" while the other Party will be a "Non-Terminating Party"): 


	(i)
	A
Party commences any case, proceeding or other action with respect to such Party or its property in any jurisdiction relating to bankruptcy, insolvency, reorganization,
dissolution, liquidation, winding-up, or relief from, or with respect to, or readjustment of, debts or obligations; or



	(ii)
	A
Party seeks the appointment of a receiver, trustee, custodian or other similar official for such Party for all or substantially all of its assets, or such Party makes
a general assignment for the benefit of its creditors; or



	(iii)
	A
Party otherwise becomes the object of any case, proceeding or action of the type referred to in the preceding clauses (i) or (ii) which remains
unstayed, undismissed or undischarged for a period of [***] days; or



	(iv)
	An
action is commenced against a Party seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its
assets which remains unstayed, undismissed or undischarged for a period of [***] days; or



	(v)
	A
continuing event of default (taking into account any applicable grace period) by a Party on any payment of principal or interest on any indebtedness hereunder or in
the payment of any guarantee obligation hereunder or an acceleration of all of a Party's obligations under any IAE financing agreement with ACA for the Aircraft, and such default or acceleration is
(x) in an aggregate amount exceeding [***] and (y) not the subject of a good faith dispute between the parties. 




In
the event of the occurrence of a Termination Event, the Terminating Party shall be deemed to be in material breach of this Contract, and the Non-Terminating Party shall at its option
have the right to resort to any remedy under applicable law, including, without limitation, the right by written notice, effective immediately, to terminate this Contract; provided that, no such
notice need be delivered, and this Contract shall automatically terminate upon the occurrence of a Termination Event specified in sub-Clause (i), (ii) or (iii). 



22







 

IN
WITNESS WHEREOF the Parties have caused this Contract to be signed on their behalf by the hands of their authorized officers the day and year first before written: 



	For IAE International Aero Engines AG	 	 	 
	 	 	By:	 
	 	 	 	

	 	 	Name:	 
	 	 	 	

	 	 	Title:	 
	 	 	 	

	

In the presence of	
 	

 	

 
	 	 	 	

	

For Atlantic Coast Airlines	
 	

 	

 
	 	 	By:	 
	 	 	 	

	 	 	Name:	 
	 	 	 	

	 	 	Title:	 
	 	 	 	

	

In the presence of	
 	

 	

 
	 	 	 	





23








   EXHIBIT A  


 V2500 TURBOFAN ENGINE MODEL SPECIFICATIONS  


24







 
EXHIBIT A-1  


 Model V2522 - A5 Specification  


 V2500 TURBOFAN ENGINE MODEL SPECIFICATION  



	FAA Commercial Type Certificate E4ONE	 	Model V2522 - A5

Spec. No. IAE S22A5/2




SEA LEVEL STATIC RATINGS

(See General Notes)  



	 
	 	Net

Thrust

lb

	Take-off Rating (5 min)	 	[***]
	Maximum Continuous Rating	 	[***]





DESCRIPTION



        Type—Dual
rotor, axial flow, high bypass turbofan, single-stage fan, four-stage low compressor, ten-stage high pressure compressor, annular combustor,
two-stage high pressure turbine, five-stage low pressure turbine. 


        Installation
Drawing No. 4W6199. The Engine Installation Drawing shows the Engine envelope and provides dimensions and data for the engine installation interfaces. 


FUEL
AND OIL 



        Fuel—Specification:    MIL-T-5624,
MIL-T-83133 or ASTM-D-1655

Oil—Specification:    MIL-L-23699 Type II

Oil Consumption: Maximum (as measured over a 10-hour period) [***] U.S. gal/hr 


STANDARD EQUIPMENT

(Included in Engine Price)  


 FUEL SYSTEM AND CONTROL SYSTEM COMPRISING:  


        LP/HP Fuel Pump, Fuel Filter Element, Fuel Temperature Sensor, Fuel Diverter/Back to Tank Valve, Fuel Distribution Valve, P2T2 Probe, Relay Box, Electronic Engine
Control, Dedicated Generator, P4.9 Sensors and Manifold, Woodward Governor Company Fuel Metering Unit, Fuel Supply Pipe. 


IGNITION SYSTEM COMPRISING:  


        Ignition Exciter, Igniter Plug, Ignition Lead (2 each). 


AIR SYSTEM COMPRISING:  


        No. 4 Bearing Compartment Heat Exchanger, HP/LP Active Clearance Control Valve, Active Clearance Control Valve Actuator, LP Compressor Bleed Valve Master
Actuator, LP Compressor Bleed Valve Slave Actuator, Variable Stator Vane Actuator, HP Compressor Bleed Valves, HP Compressor Bleed Valve Solenoids. 


25







 


ENGINE INDICATING SYSTEM COMPRISING:  


Exhaust
Gas Temperature (EGT) Thermocouples, EGT Harness and Junction Box. 


OIL SYSTEM COMPRISING:  


Oil
Tank, Air Cooled Oil Cooler, Fuel Cooled Oil Cooler, Pressure Oil Filter Element, Air Cooled Oil Cooler Modulating Valve, Scavenge Oil Filter Housing Assembly and Element, No. 4 Bearing
Compartment Scavenge Valve, No. 4 Bearing Scavenge Pressure Transducer, IDG Fuel Cooled Oil Cooler. 


MISCELLANEOUS:  


Electrical
EEC Harnesses—Fan and Core, Nose Spinner, PART—Drains, if intertwined with Engine parts, Airframe Accessory Mounting Pads and Drives, PART—Brackets on
Working Flanges for attachment of Aircraft Equipment and EBU, PART—IDG Piping, where intertwined with Engine Parts. 


ADDITIONAL EQUIPMENT  


Available at No Additional Cost 


Enhanced
Engine Condition Monitoring Instrumentation. 


GENERAL NOTES  


The
specified Sea Level Static Ratings are ideal and are based on U.S. Standard Atmosphere 1962 conditions, the specified fuel and oil, an ideal inlet pressure recovery, no fan or compressor air bleed
or load on accessory drives, a mixed exhaust system having no internal pressure losses and with a mixed primary nozzle velocity coefficient equal to 1.0. 


Take-off
rating is the maximum thrust certified for take-off operation. Take-off thrust is available at and below ISA + 40°C
(72°F) ambient temperatures. 


Maximum
Continuous Rating is the maximum thrust certified for continuous operation. The specified thrust is available at and below ISA + 10°C (18°F) ambient
temperature. 


Maximum
Climb Rating is the maximum thrust approved for normal climb operation. 


Maximum
Cruise Rating is the maximum thrust approved for normal cruise operation. 


Unless
otherwise specified, engines will be supplied with the STANDARD EQUIPMENT listed. 


26








   EXHIBIT A-2  


 Model V2524-A5 Specification  


 V2500 TURBOFAN ENGINE MODEL SPECIFICATION  



	FAA Commercial Type Certificate E4ONE	 	Model V2524—A5

Spec. No. IAE S24A5/2




SEA LEVEL STATIC RATINGS

(See General Notes)  



	 
	 	Net

Thrust

lb
	 	 

	Take-off Rating (5 min)	 	[***]	 	 
	Maximum Continuous Rating	 	[***]	 	 





DESCRIPTION



Type—Dual
rotor, axial flow, high bypass turbofan, single-stage fan, four-stage low compressor, ten-stage high pressure compressor, annular combustor,
two-stage high pressure turbine, five-stage low pressure turbine. 


Installation
Drawing No. 4W6199. The Engine Installation Drawing shows the Engine envelope and provides dimensions and data for the engine installation interfaces. 


FUEL
AND OIL 



	Fuel—Specification:	MIL-T-5624, MIL-T-83133 or ASTM-D-1655
	Oil—Specification:	MIL-L-23699 Type II
	Oil Consumption:	Maximum (as measured over a 10-hour period) [***] U.S. gal/hr




STANDARD EQUIPMENT

(Included in Engine Price)  


 FUEL SYSTEM AND CONTROL SYSTEM COMPRISING:  


LP/HP
Fuel Pump, Fuel Filter Element, Fuel Temperature Sensor, Fuel Diverter/Back to Tank Valve, Fuel Distribution Valve, P2T2 Probe, Relay Box, Electronic Engine Control, Dedicated Generator, P4.9
Sensors and Manifold, Woodward Governor Company Fuel Metering Unit, Fuel Supply Pipe. 


IGNITION SYSTEM COMPRISING:  


Ignition
Exciter, Igniter Plug, Ignition Lead (2 each). 


AIR SYSTEM COMPRISING:  


No. 4
Bearing Compartment Heat Exchanger, HP/LP Active Clearance Control Valve, Active Clearance Control Valve Actuator, LP Compressor Bleed Valve Master Actuator, LP Compressor Bleed Valve
Slave Actuator, Variable Stator Vane Actuator, HP Compressor Bleed Valves, HP Compressor Bleed Valve Solenoids. 


ENGINE INDICATING SYSTEM COMPRISING:  


Exhaust
Gas Temperature (EGT) Thermocouples, EGT Harness and Junction Box. 


27







 
OIL SYSTEM COMPRISING:  


Oil
Tank, Air Cooled Oil Cooler, Fuel Cooled Oil Cooler, Pressure Oil Filter Element, Air Cooled Oil Cooler Modulating Valve, Scavenge Oil Filter Housing Assembly and Element, No. 4 Bearing
Compartment Scavenge Valve, No. 4 Bearing Scavenge Pressure Transducer, IDG Fuel Cooled Oil Cooler. 


MISCELLANEOUS:  


Electrical
EEC Harnesses—Fan and Core, Nose Spinner, PART—Drains, if intertwined with Engine parts, Airframe Accessory Mounting Pads and Drives, PART—Brackets on
Working Flanges for attachment of Aircraft Equipment and EBU, PART—IDG Piping, where intertwined with Engine Parts. 


ADDITIONAL EQUIPMENT  


Available at No Additional Cost 


Enhanced
Engine Condition Monitoring Instrumentation 


GENERAL NOTES  


The
specified Sea Level Static Ratings are ideal and are based on U.S. Standard Atmosphere 1962 conditions, the specified fuel and oil, an ideal inlet pressure recovery, no fan or compressor air bleed
or load on accessory drives, a mixed exhaust system having no internal pressure losses and with a mixed primary nozzle velocity coefficient equal to 1.0. 


Take-off
rating is the maximum thrust certified for take-off operation. Take-off thrust is available at and below ISA + 40°C
(72°F) ambient temperatures. 


Maximum
Continuous Rating is the maximum thrust certified for continuous operation. The specified thrust is available at and below ISA + 10°C (18°F) ambient
temperature. 


Maximum
Climb Rating is the maximum thrust approved for normal climb operation. 


Maximum
Cruise Rating is the maximum thrust approved for normal cruise operation. 


Unless
otherwise specified, engines will be supplied with the STANDARD EQUIPMENT listed. 


28








   EXHIBIT A-3  


 Model V2527-A5 Specification  


 V2500 TURBOFAN ENGINE MODEL SPECIFICATION  



	FAA Commercial Type Certificate E4ONE	 	Model V2527-A5

Spec. No. IAE S27A5/2




SEA LEVEL STATIC RATINGS

(See General Notes)  



	 
	 	Net Thrust lb

	Take-off Rating (5 min)	 	[***]
	Maximum Continuous Rating	 	[***]





DESCRIPTION



Type—Dual
rotor, axial flow, high bypass turbofan, single-stage fan, four-stage low compressor, ten-stage high pressure compressor, annular combustor,
two-stage high pressure turbine, five-stage low pressure turbine. 


Installation
Drawing No. 4W6199. The Engine Installation Drawing shows the Engine envelope and provides dimensions and data for the engine installation interfaces. 


FUEL
AND OIL 


Fuel—Specification:    MIL-T-5624,
MIL-T-83133 or ASTM-D-1655 


Oil—Specification:    MIL-L-23699
Type II 


Oil
Consumption:    Maximum (as measured over a 10-hour period) [***] U.S. gal/hr 


STANDARD EQUIPMENT

(Included in Engine Price)  


FUEL SYSTEM AND CONTROL SYSTEM COMPRISING:  



LP/HP
Fuel Pump, Fuel Filter Element, Fuel Temperature Sensor, Fuel Diverter/Back to Tank Valve, Fuel Distribution Valve, P2T2 Probe, Relay Box, Electronic Engine Control, Dedicated Generator, P4.9
Sensors and Manifold, Woodward Governor Company Fuel Metering Unit, Fuel Supply Pipe. 


IGNITION SYSTEM COMPRISING:  


Ignition
Exciter, Igniter Plug, Ignition Lead (2 each). 


AIR SYSTEM COMPRISING:  


No. 4
Bearing Compartment Heat Exchanger, HP/LP Active Clearance Control Valve, Active Clearance Control Valve Actuator, LP Compressor Bleed Valve Master Actuator, LP Compressor Bleed Valve
Slave Actuator, Variable Stator Vane Actuator, HP Compressor Bleed Valves, HP Compressor Bleed Valve Solenoids. 


ENGINE INDICATING SYSTEM COMPRISING:  



Exhaust
Gas Temperature (EGT) Thermocouples, EGT Harness and Junction Box. 


29







 
OIL SYSTEM COMPRISING:  


Oil
Tank, Air Cooled Oil Cooler, Fuel Cooled Oil Cooler, Pressure Oil Filter Element, Air Cooled Oil Cooler Modulating Valve, Scavenge Oil Filter Housing Assembly and Element, No. 4 Bearing
Compartment Scavenge Valve, No. 4 Bearing Scavenge Pressure Transducer, IDG Fuel Cooled Oil Cooler. 


MISCELLANEOUS:  


Electrical
EEC Harnesses—Fan and Core, Nose Spinner, PART—Drains, if intertwined with Engine parts, Airframe Accessory Mounting Pads and Drives, PART—Brackets on
Working Flanges for attachment of Aircraft Equipment and EBU, PART—IDG Piping, where intertwined with Engine Parts. 


ADDITIONAL EQUIPMENT  


Available
at No Additional Cost 


Enhanced
Engine Condition Monitoring Instrumentation 


GENERAL NOTES  


The
specified Sea Level Static Ratings are ideal and are based on U.S. Standard Atmosphere 1962 conditions, the specified fuel and oil, an ideal inlet pressure recovery, no fan or compressor air bleed
or load on accessory drives, a mixed exhaust system having no internal pressure losses and with a mixed primary nozzle velocity coefficient equal to 1.0. 



Take-off
rating is the maximum thrust certified for take-off operation. Take-off thrust is available at and below ISA + 31°C
(56°F) ambient temperatures. 


Maximum
Continuous Rating is the maximum thrust certified for continuous operation. The specified thrust is available at and below ISA + 10°C (18°F) ambient
temperature. 


Maximum
Climb Rating is the maximum thrust approved for normal climb operation. 


Maximum
Cruise Rating is the maximum thrust approved for normal cruise operation. 



Unless
otherwise specified, engines will be supplied with the STANDARD EQUIPMENT listed. 


30








   EXHIBIT A-4  


 Model V2533—A5 Specification  


 V2500 TURBOFAN ENGINE MODEL SPECIFICATION  



	FAA Commercial Type Certificate E4ONE	 	Model V2533—A5

Spec. No. IAE S33A5/2




SEA LEVEL STATIC RATINGS

(See General Notes)  



	 
	 	Net Thrust lb

	Take-off Rating (5 min)	 	[***]
	Maximum Continuous Rating	 	[***]





DESCRIPTION



Type—Dual
rotor, axial flow, high bypass turbofan, single-stage fan, four-stage low compressor, ten-stage high pressure compressor, annular combustor,
two-stage high pressure turbine, five-stage low pressure turbine. 


Installation
Drawing No. 4W6199. The Engine Installation Drawing shows the Engine envelope and provides dimensions and data for the engine installation interfaces. 


FUEL
AND OIL 


Fuel—Specification:    MIL-T-5624,
MIL-T-83133 or ASTM-D-1655 


Oil—Specification:    MIL-L-23699
Type II 


Oil
Consumption:    Maximum (as measured over a 10-hour period) [***] U.S. gal/hr 


STANDARD EQUIPMENT

(Included in Engine Price)  


FUEL SYSTEM AND CONTROL SYSTEM COMPRISING:  



LP/HP
Fuel Pump, Fuel Filter Element, Fuel Temperature Sensor, Fuel Diverter/Back to Tank Valve, Fuel Distribution Valve, P2T2 Probe, Relay Box, Electronic Engine Control, Dedicated Generator, P4.9
Sensors and Manifold, Woodward Governor Company Fuel Metering Unit, Fuel Supply Pipe. 


IGNITION SYSTEM COMPRISING:  


Ignition
Exciter, Igniter Plug, Ignition Lead (2 each). 


AIR SYSTEM COMPRISING:  


No. 4
Bearing Compartment Heat Exchanger, HP/LP Active Clearance Control Valve, Active Clearance Control Valve Actuator, LP Compressor Bleed Valve Master Actuator, LP Compressor Bleed Valve
Slave Actuator, Variable Stator Vane Actuator, HP Compressor Bleed Valves, HP Compressor Bleed Valve Solenoids. 


ENGINE INDICATING SYSTEM COMPRISING:  



Exhaust
Gas Temperature (EGT) Thermocouples, EGT Harness and Junction Box. 


31







 
OIL SYSTEM COMPRISING:  


Oil
Tank, Air Cooled Oil Cooler, Fuel Cooled Oil Cooler, Pressure Oil Filter Element, Air Cooled Oil Cooler Modulating Valve, Scavenge Oil Filter Housing Assembly and Element, No. 4 Bearing
Compartment Scavenge Valve, No. 4 Bearing Scavenge Pressure Transducer, IDG Fuel Cooled Oil Cooler. 


MISCELLANEOUS:  


Electrical
EEC Harnesses—Fan and Core, Nose Spinner, PART—Drains, if intertwined with Engine parts, Airframe Accessory Mounting Pads and Drives, PART—Brackets on
Working Flanges for attachment of Aircraft Equipment and EBU, PART—IDG Piping, where intertwined with Engine Parts. 


ADDITIONAL EQUIPMENT  


Available
at No Additional Cost 


Enhanced
Engine Condition Monitoring Instrumentation 


GENERAL NOTES  


The
specified Sea Level Static Ratings are ideal and are based on U.S. Standard Atmosphere 1962 conditions, the specified fuel and oil, an ideal inlet pressure recovery, no fan or compressor air bleed
or load on accessory drives, a mixed exhaust system having no internal pressure losses and with a mixed primary nozzle velocity coefficient equal to 1.0. 



Take-off
rating is the maximum thrust certified for take-off operation. Take-off thrust is available at and below ISA + 15°C
(27°F) ambient temperatures. 


Maximum
Continuous Rating is the maximum thrust certified for continuous operation. The specified thrust is available at and below ISA + 10°C (18°F) ambient
temperature. 


Maximum
Climb Rating is the maximum thrust approved for normal climb operation. 


Maximum
Cruise Rating is the maximum thrust approved for normal cruise operation. 



Unless
otherwise specified, engines will be supplied with the STANDARD EQUIPMENT listed. 


32








   EXHIBIT B 


SCHEDULES



ATLANTIC
COAST AIRLINES DELIVERY SCHEDULE 


33







 
EXHIBIT B-1 


AIRCRAFT
DELIVERY SCHEDULE FOR ATLANTIC COAST AIRLINES 


CIT
Leased Aircraft

A319 Firm Aircraft powered by V2524-A5 Propulsion Systems 



	Quantity
 
	 	Delivery Date

	1	 	[***]
	1	 	[***]
	1	 	[***]
	1	 	[***]





ILFC
Leased Aircraft

A319 Firm Aircraft powered by V2524-A5 Propulsion Systems 



	Quantity
 
	 	Delivery Date

	2	 	[***]
	2	 	[***]
	2	 	[***]
	2	 	[***]





A319
Firm Aircraft powered by V2524-A5 Propulsion Systems 



	Quantity
 
	 	Delivery Date

	1	 	[***]
	2	 	[***]
	2	 	[***]
	2	 	[***]
	1	 	[***]
	2	 	[***]
	2	 	[***]
	2	 	[***]
	1	 	[***]





Option Aircraft  


        ACA has the right under the Airbus Purchase Agreement to purchase up to fifty (50) Option Aircraft which may be A319 Aircraft powered by
V2524-A5 Propulsion Systems or V2522-A5 Propulsion Systems, A320 Aircraft powered by V2527-A5 Propulsion Systems, A321 Aircraft powered by V2533-A5
Propulsion Systems or any combination thereof, provided all such Option Aircraft are purchased and delivered prior to [***] subject to delays that may arise in such delivery as
contemplated in the Aircraft Purchase Agreement. As of the date of this Agreement ACA has exercised its option to
purchase the first Option Aircraft (to be powered by V2524-A5 Propulsion Systems), which is now scheduled for delivery in [***]. 


34








   EXHIBIT B-2  


 FIRM SPARE ENGINES, PRICE,  


 ESCALATION FORMULA AND DELIVERY  


 Spare Engine Delivery Schedule for Atlantic Coast Airlines  



	Quantity
 
	 	Model
	 	Delivery Date
	 	Base Price
	 	([***]$)

	2	 	V2524-A5	 	[***]	 	[***]	 	 
	1	 	V2524-A5	 	[***]	 	[***]	 	 
	1*	 	V2524-A5	 	[***]	 	[***]	 	 





[***]



        The
unit base price in July 2003 dollars of a new spare engine, for delivery ex works IAE point of manufacture prior to December 31, 2008 is set out below: 



	V2522-A5	 	 	 	 	 	[***]	 	 
	V2524-A5	 	 	 	 	 	[***]	 	 
	V2527-A5	 	 	 	 	 	[***]	 	 
	V2533-A5	 	 	 	 	 	[***]	 	 





        IAE
acknowledges and agrees that to the extent the Aircraft delivery schedule under Exhibit B-1 is amended to reflect any and all revised delivery months for Aircraft,
or the cancellation of the delivery of Aircraft, as applicable, as agreed between ACA and AVSA, ACA and IAE will meet within a reasonable time period thereafter to discuss any reasonable changes as
mutually agreed that are required to be made under Exhibit B-2 to the Spare Engine Delivery Schedule for the delivery dates of Firm Spare Engines listed thereunder. 


IAE ESCALATION FORMULA  


	1.
	Any
unit base price or other sum expressed to be subject to escalation from a base month to a month of delivery or other date of determination in accordance with the IAE Escalation
Formula will be subject to escalation in accordance with the following formula: 






	 	 	Pi	 	=	 	(Pb + F) x CPI where:
	

 	
 	

Pi	
 	

=	
 	

the invoiced purchase price or escalated sum rounded to the nearest U.S. Dollar
	

 	
 	

Pb	
 	

=	
 	

unit base price or other sum
	

 	
 	

F	
 	

=	
 	

[***] (N) (Pb), rounded to the nearest U.S. Dollar
	

 	
 	

N	
 	

=	
 	

The calendar year of scheduled engine delivery or other date of determination, minus [***]
	

 	
 	

CPI	
 	

=	
 	

[***])
	

 	
 	

L	
 	

=	
 	

Labor Ratio defined below
	

 	
 	

M	
 	

=	
 	

Material Ratio defined below





The
IAE Composite Price Index (CPI) is the sum [***] Ratio and [***] Ratio, with the sum rounded to the nearest ten thousandth. 


The
quarterly value published for the Employment Cost Index will be deemed to apply to each month of the quarter. 



35







 

The
Labor Ratio is the "Employment Cost Index (ECI) Wages and Salaries for Aircraft Manufacturing, SIC Code 3721" as published by the Bureau of Labor Statistics, U.S. Department of Labor for the
arithmetic average of the fifth, sixth and seventh months (rounded to the nearest tenth) preceding the month of scheduled delivery; divided by the value of SIC Code 3721 for the arithmetic average of
the fifth, sixth and seventh months (rounded to the nearest tenth) preceding the base month. 


The
Material Ratio is the "Producer Price Indexes, Industrial Commodities", as published by the Bureau of Labor Statistics, U.S. Department of Labor, for the arithmetic average of the fifth, sixth and
seventh months (rounded to the nearest tenth) preceding the month of scheduled delivery; divided by the value for Industrial Commodities for the arithmetic average of the fifth, sixth and seventh
months (rounded to the nearest tenth) preceding the base month. 



	2.
	If
the U.S. Department of Labor changes the base year for determination of the Index values as defined above or revises the methodology used for the determination of the values to be
used to determine the CPI or, for any reason, has not released values needed to determine the CPI, IAE, in its sole discretion, shall select a substitute for such values from data published by the
Bureau of Labor Statistics or otherwise make revisions to the escalation formula such that the escalation will as closely as possible approximate the result that would have been attained by continuing
the use of the original escalation formula and values as they may have fluctuated during the applicable time period.



	3.
	The
invoiced purchase price or final escalated sum, which in no event shall be less than the unit base price, shall be the final price or final escalated sum. 


36








   EXHIBIT C  


 PRODUCT SUPPORT PLAN  


37







 
 PRODUCT SUPPORT  


 FOR THE  


 V2500 ENGINE  


 IAE INTERNATIONAL AERO ENGINES AG  


 



Issue No. 7  


38







 
TABLE OF CONTENTS  



	1.	 	INTRODUCTION	 	40
	

2.	
 	

CUSTOMER SUPPORT	
 	

40
	 	 	2.1    Customer Support Manager	 	40
	 	 	2.2    Customer Support Representatives	 	41
	 	 	2.3    Customer Training	 	41
	 	 	2.4    Engine Maintenance Management	 	43
	 	 	2.5    Operations Monitoring	 	43
	 	 	2.6    Special Programs	 	 
	

3.	
 	

BUSINESS SUPPORT	
 	

44
	 	 	3.1    Engine Warranty Services	 	44
	 	 	3.2    Maintenance Center Support	 	44
	 	 	3.3    Maintenance Facilities Planning Service	 	45
	 	 	3.4    Engine Reliability and Economic Forecasts	 	45
	 	 	3.5    Logistics Support Studies	 	45
	 	 	3.6    Lease Engine Program	 	45
	

4.	
 	

TECHNICAL SERVICES	
 	

46
	 	 	4.1    Technical Services	 	46
	 	 	4.2    Powerplant Maintenance	 	47
	 	 	4.3    Customer Performance	 	48
	 	 	4.4    Diagnostic Systems	 	48
	 	 	4.5    Human Factors	 	49
	 	 	4.6    Flight Operations	 	49
	 	 	4.7    Repair Services	 	50
	 	 	4.8    Tooling and Support Equipment Services	 	50
	 	 	4.9    Product Support Technical Publications	 	51
	

5.	
 	

SPARE PARTS	
 	

53
	 	 	5.1    Spare Parts Support	 	53




39









   
1.0    INTRODUCTION    



IAE
International Aero Engines AG (IAE) will make the following support personnel and services available to the V2500 engine customer: Flight Operations, Customer Performance, Customer Support
Representatives, Customer Maintenance Support, Technical Services, Powerplant Maintenance, Service Data Analysis, Human Factors, Repair Services, Warranty Administration, Maintenance Facilities
Planning, Tooling and Support Equipment Services, Product Support Technical Publications, Customer Training, Spare Parts Support and Maintenance Center Support. In general, these services are provided
at no charge to V2500 customers, however, some specific customized services as noted in the descriptions below, may be purchased from IAE. 


To
make these support services readily available to you, our customer, in the most efficient manner, the Customer Support Group has been established and assigned primary responsibility within IAE for
customer liaison. A Customer Support Manager is assigned to maintain direct liaison with each individual Customer. A description of the various product support services available to each customer
follows. 


IAE
reserves the right to withdraw or modify the services described herein at any time at its sole discretion. No such withdrawal or modification shall diminish the level of services and support which
the Customer may otherwise be entitled to receive with respect to V2500 engines for which an acceptable order has been placed with IAE or with respect to aircraft with installed V2500 engines for
which a firm and unconditional order has been placed with the aircraft manufacturer, prior to the announcement of any such withdrawal or modification. 




2.0    CUSTOMER SUPPORT    


        2.1    CUSTOMER SUPPORT MANAGER    




The
Customer Support Manager provides a direct liaison between the airline customer's Engineering, Maintenance, Operations, Logistics, Commercial and Financial organizations and the corresponding
functions within IAE. The Customer Support Manager assigned to each airline is responsible for coordinating and monitoring the effort of the Product Support Department functional organization to
achieve timely and responsive support for the airline. 


The
Customer Support Manager provides the following specific services to the airline customer: 


	•
	Readiness
Program and planning prior to EIS



	•
	Technical
recommendations and information.



	•
	Engine
Maintenance Management Plans



	•
	Refurbishment,
Modification and Conversion program planning assistance.



	•
	Coordination
of customer repair, maintenance and logistics requirements with the appropriate Product Support functional groups.



	•
	Assist
with critical engine warranty/service policy claims. 






The
Customer Support Manager will represent the airline customer in IAE internal discussions to ensure that the best interests of the customer and IAE are considered when making recommendations to
initiate a program, implement a change or improvement in the V2500 engine. 




40







 





        2.2    CUSTOMER SUPPORT REPRESENTATIVES    




IAE
Customer Support Representatives provide the following services to the airline customer: 



	•
	24
Hour Support



	•
	Maintenance
Action Recommendations



	•
	Daily
Reporting on Engine Technical Situations



	•
	On-The-Job
Training



	•
	Service
Policy Preparation Assistance



	•
	Prompt
Communication with IAE 



        2.2.1    Engine Maintenance Support Service:    




Customer
Support Representatives assist airline customer personnel in the necessary preparation for engine operation and maintenance. The Representative, teamed with a Customer Support Manager will
work closely with the airplane manufacturer's support team particularly during the initial period of aircraft operation. Representatives are in frequent contact with the IAE offices on technical
matters. Information and guidance received from the home office is transmitted promptly to the airline which allows the airline to share in all related industry experience. 



The
practice permits immediate use of the most effective procedures and avoidance of unsuccessful techniques. The IAE office contact ensures that IAE Representatives know, in detail, the latest and
most effective engine maintenance procedures and equipment being used for maintenance and overhaul of V2500 engines. They offer technical information and recommendations to airline personnel on all
aspects of maintenance, repair, assembly, balancing, testing, and spare parts support of IAE. 





        2.2.2    On The Job Training:    




Customer
Support Representatives will conduct on-the-job training for the airline's maintenance personnel. This training continues until the maintenance personnel have achieved
the necessary level of proficiency. Training of new maintenance personnel will be conducted on a continuing basis. 





        2.2.3    Service Policy Administration:    




Customer
Support Representatives will provide administrative and technical assistance in the application of the IAE Engine and Parts Service Policy to ensure expeditious and accurate processing of
airline customer claims. 






        2.3    Customer Training:    




2.3.1
IAE Customer Training offers airline customers the following support: 



	•
	Technical
Training at Purpose Built Facilities



	•
	On-site
Technical Training



	•
	Technical
Training Consulting Service



	•
	Training
Aids and Materials 





        2.3.2    Training Program:    




The
IAE Customer Training Center has an experienced full-time training staff which conducts formal training programs in English for airline customers' maintenance, training 





41







 



and
engineering personnel. The standard training programs are designed to prepare customer personnel, prior to the delivery of the first aircraft, to operate and maintain the installed engines.
Standard courses in engine operation, line maintenance, modular maintenance, performance and trouble-shooting are also available throughout the production life of the engine. The courses utilize the
latest teaching technology, training aids and student handouts. IAE Customer Support will coordinate the scheduling of specific courses as required. Training at the Customer Training Center is
provided to a limit of [***]. The following is the curriculum of standard courses available. On-site technical training, technical training consulting services and
customized courses may be provided upon customer request and subject to separate contractual arrangements. 





        2.3.3    General V2500 Familiarization:    




This
two day course is designed for experienced gas turbine personnel who will be responsible for planning, provisioning and maintenance of the V2500 engine. This course is also designed to
appropriately familiarize key staff, supervisory and operations planning personnel and flight crews. Discussions are concentrated in the following subject areas: 


	•
	Engine
construction features internal and external hardware.



	•
	Engine
systems operation, major components accessibility for removal/replacement.



	•
	Operational
procedures



	•
	Performance
characteristics



	•
	Maintenance
concepts, repair and replacement requirements and special tooling. 










The
course is normally conducted in preparation for fleet introductory discussions in the provisioning of spares and tooling, training and line maintenance areas to acquaint the customer with the
engine, its systems, operations and procedures. 





        2.3.4    Line Maintenance and Troubleshooting:    




This
course is designed for key line maintenance and troubleshooting personnel who have not received previous formal training on the V2500 engine. The classroom phases provide the student with the
information essential for timely completion of line maintenance activities and the procedures for effective troubleshooting and correction of malfunctions in the V2500 engine systems and the
engine/airframe interfaces. Classroom and shop training are provided for in the following areas: 


	•
	Engine
Description



	•
	Systems
Operation



	•
	Applied
Performance



	•
	Ground
Operations



	•
	Troubleshooting
Procedures



	•
	Practical
Phase Line Maintenance Tasks 








        Additional
courses are available in Borescope utilization and Engine Conditioning Monitoring (ECM) 


42







 

        2.3.5    V2500 Familiarization and Modular Maintenance:    




Provides
experienced heavy maintenance personnel with engine modular disassembly and assembly training. The training is concentrated in the following subject areas: 


	•
	Engine
Description Overview



	•
	Engine
Systems Overview



	•
	Heavy
Maintenance Tasks *



	•
	Course
duration and "hands-on" coverage are contingent on the availability of an engine and required tooling. 






        2.4    ENGINE MAINTENANCE MANAGEMENT    




Planning
documents, tailored for individual operators, are developed to serve as Engine Maintenance Management Program criteria and should reflect the FAA requirements under which Atlantic Coast
Airlines will operate. These are directed toward the objective of ensuring cost-effective operation with acceptable post-repair test performance, providing engine reliability
to achieve maximum time between shop visits, and minimizing the adverse effects to operation of inflight shutdowns and delays/cancellations. Through the institution of specific maintenance
recommendations, proper engine performance, durability, and hot section parts lives can be achieved. 




        2.4.1    Operations Monitoring:    




The
following information is available to the airline customer from the IAE Product Information Process (IP) 2 Group: 





        2.4.2    Operation Experience Reports:    




IAE
maintains V2500 Service Data System (SDS) data base from which selected engine operations and reliability summary reports will be developed and made available on a scheduled basis to each airline
customer. Data reported by IAE Customer Support Representatives serve as input to this data base. This computerized data maintenance and retrieval system will permit: 


	•
	A
pooling and exchange of service experience for the benefit of the entire airline industry.



	•
	A
common statistical base.



	•
	The
selective querying of computer data files for answers to customer inquiries.



	•
	In
addition to providing operations, reliability and VIS reports, SDS serves in-house programs directed at improving engine design and enhancing overall customer
support, including spare parts provisioning and warranty administration. 






        2.5    SPECIAL PROGRAMS    



        2.5.1    Engine Hardware Retrofit:    




Engine
Retrofits are carried out to provide modification of engine hardware configuration when required on delivered engines. This involves assisting in the marshaling of hardware, special tools,
manpower and the scheduling of engine and material to modification sites. 





        2.5.2    Controlled Service Use Programs and Material:    




IAE
shall assume responsibility for the planning, sourcing, scheduling and delivery of Controlled Service Use material, warranty replacement material, service campaign 





43







 



material
and program support material subject to the terms of special contracts with customers. 


Urgent
customer shipments, both inbound and outbound, are monitored, traced, routed and expedited as required. The receipt and movement of customer owned material returned to IAE is carefully
controlled, thus assuring an accurate accounting at all times. 






3.0    BUSINESS SUPPORT    The Business Support Group is dedicated to providing prompt and accurate assistance to you, our V2500
airline customer. This Group provides the following categories of assistance and support to the V2500 airline customer: 



	•
	Engine
Warranty Services



	•
	Maintenance
Support



	•
	Lease
Engine Program



	•
	Engine
Reliability and Economic Forecasts



	•
	Logistic
Support Studies 




        3.1    ENGINE WARRANTY SERVICES    




Engine
Warranty Services will provide the following support for the V2500 engine airline customer: 


	•
	Prompt
administration of claims concerning Engine Warranty, Service Policy, other support programs and Guarantee Plans.



	•
	Investigation
of part condition and part failure.



	•
	Material
provisioning administration for Controlled Service Use programs and other material support. 




        3.1.1    Prompt Administration:    




Each
airline customer is assigned a Warranty Analyst whose job is to provide individual attention and obtain prompt and effective settlements of Warranty and Service Policy claims. A typical claim
properly submitted is generally settled, including issuance of applicable credit memo, within [***]. Experience generated by much of the data derived from such claims can
enable IAE to monitor trends in operating experience and to address and often eliminate potential problems. 





        3.1.2    Investigation and Reports:    




Parts
returned to IAE pursuant to the terms of the Service Policy are investigated in appropriate detail to analyze and evaluate part condition and cause of part failure. A report of findings is
prepared and forwarded to the airline customer and to all IAE departments involved. In the case of Vendor Parts, the vendor is promptly informed. Where relevant, reports will include recommendations
to preclude repetition of the problem. 






        3.2    MAINTENANCE CENTER SUPPORT    




IAE
has arranged for the establishment of Maintenance Centers which are available to accomplish repairs, modifications and conversions, as well as the complete overhaul of the V2500 engine subject to
IAE's standard terms and conditions for such work. 


Through
the use of the IAE established Maintenance Centers and their capabilities, an operator can minimize or eliminate the need for investment in engine support areas 




44







 





depending
on the level of maintenance he elects the Maintenance Center to perform. Savings in specific engine support areas, such as spare parts inventory, maintenance and test tooling, support
equipment and test facilities, can be demonstrated. Use of Maintenance Centers can also minimize the need for off-wing maintenance and test personnel with their associated overhead. 





        3.3    MAINTENANCE FACILITIES PLANNING SERVICE    




Maintenance
Facilities Planning Service offers the following support to IAE customer: 


	•
	General
Maintenance Facility Planning Publications



	•
	Customized
Facility Plans



	•
	Maintenance
Facility and Test Cell Planning Consultation Services 






Maintenance
Facilities Planning Service provides general and customized facility planning data and consultation services. Facility Planning Manuals for the V2500 engine will present the maintenance
tasks, facility equipment and typical departments floor plans showing arrangement of equipment required to accomplish the tasks for all levels of maintenance. The Facility Equipment Manual is a
catalog of standard facility equipment such as lathes, process tanks, hoists, cranes, etc., which is suitable for use in the maintenance and testing of IAE engines. 


Customized
facility planning services and consulting services are offered subject to separate contractual arrangements. Customized facility plans are developed to meet the requirements of customers'
specific fleet sizes, activities and growth plans. The plans identify floor space, facility equipment, utilities and manpower requirements. On-site surveys are conducted as a part of
customized plan development to determine the adaptability of existing facilities and equipment for the desired maintenance program. These plans provide floor plan layouts to show recommended locations
for work stations, major equipment, marshaling and storage areas, workflow patterns, and structural and utility requirements to accommodate all the engine models that are maintained in the customer's
shop. The Maintenance Facilities Planning Service also provides consultant services which are specifically related to the development of engine test cells, and the adaptation of existing maintenance
facilities to accommodate expanding production requirements and/or new or additional IAE models. 





        3.4    ENGINE RELIABILITY AND ECONOMIC FORECASTS    




Engine
reliability and economic forecasts in the forms of predicted shop visit rates and maintenance costs can be provided to reflect the airline customers' operating characteristics. Additionally,
various analyses can be conducted to establish life probability profiles of critical engine parts, and to determine optimum part configuration and engine operating procedures. 





        3.5    LOGISTICS SUPPORT STUDIES    




As
required, logistics studies are conducted to assist in the planning of engine operational support. Such studies may include spare engine and spare module requirements forecasts, level of
maintenance analyses, engine type economic evaluations and life cycle cost estimates. 





        3.6    LEASE ENGINE PROGRAM    




An
engine lease program will be made available to V2500 Airline Customers subject to IAE's standard terms and conditions of lease. Pool spares will be stationed at selected locations to assure
emergency protection against aircraft-on-ground (AOG) situations or to provide supplemental support during "zero spares" conditions. Lease engine availability will be subject 




45







 


to
prior demand; however, the program logistics will be continually reviewed to assure the most effective deployment of available pool engines. 





4.0    TECHNICAL SERVICES    



        4.1    TECHNICAL SERVICES    




The
Technical Services Group provides the following categories of technical support to the airline customer: 


	•
	Technical
Services



	•
	Powerplant
Maintenance



	•
	Customer
Performance



	•
	Diagnostic
Systems



	•
	Human
Factors



	•
	Flight
Operations



	•
	Repair
Services



	•
	Tooling
and Support Equipment Services



	•
	Technical
Publications 




Technical
Services is responsible for the overall technical support to the customers. The following services are provided: 


	•
	Technical
Problem Identification/Corrective Action Implementation



	•
	Technical
Communication



	•
	Engine
Conversion Program Definition and Management



	•
	Engine
Upgrade and Commonality Studies



	•
	Engine
Incident Investigation Assistance 




Technical
information supplied through IAE Customer Support Representatives, Customer Support Managers, customer correspondence and direct meetings with airlines' representatives permits assessment of
the factors involved in technical problems and their impact on engine reliability and operating costs. Resolution of these problems is coordinated with responsible groups within IAE and the necessary
corrective action is defined. In certain situations the corrective action involves the
establishment of Service Evaluation programs for proposed modifications, and the establishment of warranty assistance programs in conjunction with the IAE Warranty Administration Group. Technical
Services will assist customers in the implementation of recommended corrective action and improvements principally through official IAE technical communications, and direct customer contact. 




        4.1.1    Technical Communications:    




Technical
Services is responsible for the release of technical communications. Primary communication modes involves release of limits and procedures through engine and maintenance manual revisions and
the requirements associated with engine upgrade and/or conversion, durability and performance improvements, and problem resolution through Service Bulletins is provided by All Operator Letters and/or
wires or direct technical written response to individual customer inquiries. 





46













  



        4.1.2    Engine Conversion Programs:    



Technical
Services defines minimum configuration levels for conversion of service engine models. They serve to assist the customer with the implementation of conversion programs into existing fleets
by providing preliminary planning cost estimates and technical planning information regarding tooling, material and instructional requirements. Conversion programs are monitored for problem areas and
Technical Services initiates and implements corrective action as may be necessary. 




        4.1.3    Engine Incident Investigation Assistance:    



Assistance
is provided to an airline in conducting engine incident investigations in responding to the requirements of the appropriate Airworthiness authority. 




        4.1.4    Line Maintenance and Troubleshooting:    



Line
Maintenance and Troubleshooting Seminars can be conducted at the IAE Training Center with the objective of improving line maintenance effectiveness fleetwide. Specialized training on V2500 line
maintenance and troubleshooting can be provided through on-site workshops by special contractual arrangement. 


Troubleshooting
support is provided primarily through powerplant troubleshooting procedures which are published in IAE and airframe manufacturer's manuals. When an airline encounters an engine problem
and corrective action taken has not been effective, more direct support in troubleshooting and maintenance can also be provided to the customer's line maintenance personnel. Instructions on V2500
powerplant troubleshooting and maintenance can also be provided to customer's line maintenance personnel. 




        4.1.5    Airline Shop Maintenance:    



Reviews
of shop practices and procedures of individual airlines can be conducted to determine the most efficient and cost-effective methods for maintenance and repair of the V2500 in the
environment in which the airline must maintain that engine. 





        4.2    POWERPLANT MAINTENANCE    



Powerplant
Maintenance covers responsibility for maximizing engine maintainability, establishing maintenance concepts and requirements and providing maintenance support plant for IAE. This group
provided the following services: 



	•
	Definition
of Maintenance Tasks and Resource Requirements



	•
	Planning
Guides 




Powerplant
Maintenance conducts design reviews and comprehensive maintenance analysis of new engine designs and engine design changes to maximize engine maintainability consistent with performance,
reliability, durability and life cycle cost considerations. Maintenance concepts, requirements and tasks are established to minimize maintenance costs. This group represents the customer's
maintainability interests in internal IAE operations and upon request will assist the customer in resolving specific maintenance task problems. 


        4.2.1    Progressive Maintenance Planning:    



Powerplant
Maintenance also provides Planning Guides based upon Maintenance Task Analysis. The guides present engine maintenance requirements, their subordinate tasks and the required resources to
accomplish on-aircraft engine maintenance and the off-aircraft repair of engines by modular section/build group replacement. Maintenance requirements are also presented for the
refurbishment of modular section/build group by parts replacement, the 




47







 


complete
repair of parts, the refurbishment of accessory components and for engine testing. The data in the Planning Guides is presented in a manner that is primarily intended to assist new operators
by providing a phased introduction of new engines into their shops and to capitalize on the design maintainability features for the engine when they are developing their maintenance plans. 


Powerplant
Maintenance Engineering will assist new operators in planning a gradual, technically feasible, and economically acceptable expansion from line maintenance of installed engines through the
complete repair of parts and accessory components. 





        4.3    CUSTOMER PERFORMANCE    



Customer
Performance provides for the following types of technical assistance to the airline customer: 



	•
	Engine
Performance Analysis Computer Programs for Test Cell Use



	•
	Test
Cell Correlation Analysis and Correction Factors



	•
	Engine
Stability Procedures and Problem Analysis 





Although
much of the above support is provided in the form of procedures, data and recommendations in various publications, the group also answers inquiries of a performance nature which are forwarded
to IAE by individual customers. 


ENGINE
PERFORMANCE ANALYSIS 


Technical
support is provided in a number of areas related to operational suitability including the development of the test requirements and performance limits for the Adjustment and Test Section of
the Engine Manual. Computer programs that will assist the operator in analyzing engine performance using test cell data can be provided subject to IAE then current standard license fees and Terms and
Conditions. 


        4.3.1    Test Cell Correlation:    



Technical
assistance is provided to the customer for developing appropriate corrections to be used for specific test configurations at customer owned test cell facilities. Reports are provided
presenting correlation analyses and IAE recommended test cell corrections which permit comparison of the performance of customer tested engines with the respective Engine Manual limits and guarantee
plan requirements. 




        4.3.2    Engine Stability:    



Technical
support is provided to ensure that engine stability and starting reliability are maintained. Service evaluation programs for proposed improvements are initiated and monitored to determine
their effectiveness. In addition, problems relating to engine control systems which impact engine stability and performance are analyzed. 





        4.4    DIAGNOSTIC SYSTEMS    



Diagnostic
Systems is responsible for the technical support of customer acquisition of inflight engine data and the assessment of engine performance through the use of that data. Diagnostic Systems
personnel provide the following services: 



	•
	Guidance
to help customers define their engine monitoring system requirements.



	•
	Development
of hardware specifications and computer programs (by separate contractual arrangement) to satisfy engine diagnostic requirements.



	•
	Coordination
of all IAE airborne diagnostic support activity. 




48







 





        4.4.1    Guidance In Defining Engine Monitoring systems Requirements:    



Diagnostic
Systems can provide consultation services to assist the customer in defining his engine condition and performance monitoring requirements and in selection of appropriate hardware and
software systems to meet those requirements and options between the customer, airframe manufacturer, and Airborne Integrated Data System (AIDS) manufacturer. 




        4.4.2    Development and Coordination    



Diagnostic
Systems personnel can develop hardware specification and make computer software available to accomplish Engine Condition Monitoring (ECM) and performance analysis of engine modules using
AIDS data. Engine condition monitoring procedures, of both the manual and computerized variety can also be developed and provided in support of the customer's selected method of engine condition
monitoring. Computer software will be provided to the customer subject to IAE's then current standard license fees and Terms and Conditions. 


Diagnostic
Systems personnel also coordinate activities of cognizant functional groups at IAE to provide engine related information to the customer, airframe manufacturer, and AIDS equipment vendor
during the planning, installation, and operation of AIDS. 






        4.5    HUMAN FACTORS    



Human
Factors supplies data on task time and skill requirements necessary for accomplishing maintenance procedures. 


Task
data provided includes estimates of the man-hours, elapsed time and job skills necessary to accomplish maintenance tasks as described in IAE's Manual and Service Bulletins. Data is
supplied for "on" and "off" aircraft maintenance tasks up to modular disassembly/assembly. Additional selected task data can be supplied on disassembly/assembly to the piece part level and on parts
repair. In addition, the group can help solve problems related to skill requirements, body dimensions, or excessive man-hours encountered in accomplishing maintenance tasks. 




        4.6    FLIGHT OPERATIONS    



Flight
Operations provides the airline customer with the following technical assistance concerning installed engine operations: 



	•
	Introduction
of new equipment



	•
	Problem
resolution and assistance with in-service equipment



	•
	Contractual
commitment and development program support



	•
	Publication
of engine operations literature and performance aids 





        4.6.1    New Equipment:    



In
accordance with customer needs, Flight Operations can provide on-site assistance in the training of operations personnel and help in solving engine operational problems that might arise
during the initial commercial service period. Such assistance can include participation in initial delivery flights, engine operational reviews, and flight crew training activity. 




        4.6.2    Problem Resolution—In-Service Equipment:    



In
accordance with a mutually agreed upon plan, Flight Operations can perform cockpit observations to identify or resolve engine operating problems and to assess installed engine performance. 




49







 




        4.6.3    Contractual Support and Development Programs:    



As
required, Flight Operations can assist in evaluating installed engine performance relative to contractual commitments and engine improvements which have an impact on engine operations. 




        4.6.4    Publication Support:    



Flight
Operations is responsible for the issuance of Propulsion System Operating Instructions and correspondence pertaining to inflight engine operations. Such material is coordinated with the
airframe manufacturers as required. Special Presentations and Reports are also issued, as required, to support the activity described above. 





        4.7    REPAIR SERVICES    



Repair
Services provides the following support to the airline customers: 



	•
	Coordinated
Repair Development Activity



	•
	Customer
Assistance on Repair Procedures and Techniques



	•
	Qualification
of Repair Sources



	•
	Repair
Workshops



	•
	Repair
Development List 




        4.7.1    Coordination of Repair Development:    



Repair
Services provide direct contact with all sources that initiate repair schemes. The Group coordinates with representatives of Engineering and Support Services disciplines in identifying repair
needs, evaluating various repair options and establishing repair development procedures and schedules. The Group participates in setting repair evaluation and approval requirements. When the repair is
approved and substantiating data is documented, Repair Services releases the repair to the Engine Manual. 




        4.7.2    Technical Assistance:    



Repair
Services provides daily communications with airline customers via technical responses to inquiries direct from the airline or through our Customer Support Representative office at the airline
facility. In addition, Repair Services make periodic visits to airline repair facilities to discuss new repairs under development, answer specific questions posed by the particular facility and review
actual parts awaiting a repair/scrap decision. Occasionally, Repair Services make special visits to customer facilities to assist in training customer personnel in accomplishing particularly complex
repairs. 




        4.7.3    Qualification of Repair Sources:    



Repair
Services coordinates the qualification of repair sources for repairs proprietary to IAE or to an outside repair agency. They also perform a review of the qualifications of repair sources for
critical, nonproprietary repairs for which a source demonstration is deemed necessary. The group participates in negotiation of the legal and business agreements associated with these qualification
programs. 





        4.8    TOOLING AND SUPPORT EQUIPMENT SERVICES    




The
Tooling and Support Equipment Services Group assists the customer by providing the following services: 


	•
	Support
Equipment Manufacturing/Procurement Documentation 




50







 


	•
	Engine
Accessory Test Equipment and Engine Transportation Equipment Specifications



	•
	Support
Equipment Logistics Planning Assistance 




        4.8.1    Support Equipment Documentation:    



The
tooling and Support Equipment Services Group designs the special support equipment required to disassemble, assemble, inspect, repair and test IAE engines. Special support equipment design
drawings and Support Equipment Master Data Sheets, which describe how to use the support equipment, are supplied to customers in the form of 35mm aperture cards. Support equipment designs are kept
current with engine growth, and tool Bulletins are issued to customers as part of continuing configuration management service. Updated Design and Master Data Sheets Aperture Cards and Tool Bulletins
are periodically distributed to all IAE customers. 




        4.8.2    Engine Accessory Test Equipment and Engine Transportation Equipment Requirements:    



Engine
accessory test equipment and engine transportation equipment general requirements and specifications are defined and made available to IAE customers. If requested, the Tooling and Support
Equipment Group will assist customers in the definition of engine accessory test and engine transportation equipment required for specific IAE needs. 




        4.8.3    Support Equipment Logistics Planning Assistance:    



The
Tooling and Support Equipment Group will provide, at the customer's request, special support equipment lists which reflect the customer's unique requirements such as mix of engine models and
desired level of maintenance to aid in support equipment requirements planning. 





        4.9    TECHNICAL PUBLICATIONS    



IAE
and its subcontractors produce publications and maintenance information as described below to support the maintenance and modification requirements of the airline customer. The publications are
prepared in general accordance with Air Transport Association of America (ATA) Specification No. 100. The necessary quantities of manuals and media options will be available subject to IAE's
current terms and conditions. 


        4.9.1    On-Wing Maintenance Data:    



IAE
supplies the airplane manufacturer with all the necessary information required to perform "On-Aircraft" engine maintenance, troubleshooting, and servicing. This information is
developed through close coordination between the airplane manufacturer and IAE and is integrated by the airplane manufacturer into his maintenance publications. 




        4.9.2    Technical Publications:    



Listed
and described below are the publications that will be made available to support the airline customer's maintenance program: 




        4.9.3    Engine Manual    



The
Engine Manual is a document which will be structured in accordance with ATA 100 section 2-13-0 with JEMTOSS applied in accordance with
section 2-13-14. Potential customer applications will be applied. The manual will provide in one place the technical data requirements for information needed to maintain
the engine and the maximum potential number of parts that could, regardless of design responsibility, remain with the engine when it is removed from the airplane. 




51







 


Additionally
the manual includes coverage of interrelated parts (e.g. thrust reverser, cowlings, mounts, etc.) that can stay with the airplane when the engine is removed or can be removed for
maintenance purpose in lieu of individual component maintenance manuals. 




        4.9.4    Standard Practices Manual    



The
Standard Practices Manual supplements the Engine Manual by providing, in a single document, all IAE recommended or approved general procedures covering general torques, riveting, lockwiring,
cleaning policy, inspection policy standard repairs, etc., and marking of parts. 




        4.9.5    Illustrated Parts Catalog    



The
Illustrated Parts Catalog will be structured in accordance with ATA 2-14-0 and is a document which is used in conjunction with the Engine Manual for the identification and
requisitioning of parts and assemblies. Its ATA structure is to be compatible with the Engine Manual Structure. Additionally the manual includes coverage of interrelated parts (e.g. thrust reverser,
cowlings, mounts, etc.) that can stay with the airplane when the engine is removed or can be removed for maintenance purpose in lieu of individual component maintenance manuals. 




        4.9.6    IAE Proprietary Component Maintenance Manuals    



These
manuals will be structured in accordance with ATA 2-5-0 and will cover data for chapters other than 71, 72, and 78. 




        4.9.7    Subcontractor Component Maintenance Manuals    



These
manuals will be structured in accordance with ATA 2-5-0 and are prepared directly by the accessory manufacturers. All accessory data is subject to IAE prepublication
review and approval. 




        4.9.8    Engine and Nacelle Service Bulletins    



Each
Engine and Nacelle Service Bulletin will be produced in accordance with ATA 100 specification requirements. Service Bulletins provide coverage for those configuration advancements and
on-time inspections that affect the engine portion of the Propulsion System and the Nacelle. Each Service Bulletin will cover planning information, accomplishment instructions and material
information. 




        4.9.9    Operating Instructions    



Engine
operating instructions are presented in the form of General Operating Instructions supplemented by V2500 Specific Engine Operating Instructions which provide operating information, procedures,
operating curves and engine limits. 




        4.9.10    Facilities Planning and Facility Equipment Manuals    



The
Facilities Planning Manual outlines the requirements for engine/component overhaul, maintenance, and test facilities in terms of basic operations, processes, time studies and equipment. The
Facility Equipment Manual lists and describes the facility equipment used for engine maintenance, overhaul and repair. 




        4.9.11    Support Equipment Numerical Index    



The
Indexes, prepared for each major engine model, provide a listing, in numeric sequence, by maintenance level, of all IAE ground support equipment required to maintain and overhaul the engine. The
Listings are cross-indexed to the applicable engine dash model and to the chapter and section of the Engine Manual. 




52







 




        4.9.12    Publications Index    



This
index contains a listing of available technical manuals covering components of the V2500 Nacelle, along with information about the latest revision number and date for each publication listed. 




        4.9.13    Service Bulletin Index    



This
index consists of two major sections: V2500 Engine Service Bulletins and V2500 Nacelle Service Bulletins. The index will be in a format and on a revision schedule as determined by IAE. 




        4.9.14    Vital Statistics Logbook    



The
VSL provides the following information for each production engine, in an electronic readable format. 




	•
	Identification
of major engine and nacelle components by part number, serial number and ATA—location.



	•
	Engine
Test Acceptance Certificate.



	•
	List
of all incorporated serialized parts by part number, serial number and ATA—Location. This list also includes an Industry Item List to identify specific
parts by part number, serial number and ATA—Location which the airline customer may choose to monitor during the engine operational life. The parts listed represent approximately 80% of
engine total value.



	•
	List
of all incorporated life limited parts by part number, serial number and ATA—location.



	•
	List
of all Service Bulletins that were incorporated during initial build of each new engine.



	•
	List
of 22 Fan Blade moment weights, identifying initial position, radial wt., tangential wt. and axial wt.



	•
	List
of all saleable pick level engine parts. 






        4.9.15    Revision Services:    



Regular,
temporary, and "as required" revisions to technical publications will be made during the service life of IAE equipment. IAE's current standard is one hundred and twenty (120) days. The
utilization of advanced techniques and equipment provides the airline customer with expedited revision service. 




        4.9.16    Distribution Media Options:    



The
primary medium for available IAE technical publications is CD-ROM. Other media options such as two side or one-sided paper copy of reproducible quality will be available
for procurement at established prices. 





5.0.    SPARE PARTS    


        5.1    SPARE PARTS SUPPORT    



The
Spare Parts Group provides the following categories of spare parts support to airline customers: 



	•
	Individual
Customer Account Representatives 




53







 


	•
	Provisioning



	•
	Planning



	•
	Order
Administration



	•
	Spare
Parts Inventory



	•
	Effective
Expedite Service



	•
	Worldwide
Distribution 





        5.1.1    Account Representative:    



An
Account Representative is assigned to each customer using IAE equipment. This representative provides individualized attention for effective spare parts order administration, and is the customer's
interface on all matters pertaining to new part planning and procurement. Each representative is responsible for monitoring each assigned customer's requirements and providing effective administrative
support. The Account Representatives are thoroughly familiar with each customer's spare parts ordering policies and procedures and are responsible for ensuring that all customer new parts orders are
processed in an effective manner. 




        5.1.2    Spare Parts Provisioning Planning:    



Prior
to delivery of the first Atlantic Coast Airlines aircraft to an airline customer, preplanning discussions will be held to determine the aircraft/engine program, and engine spare parts
provisioning and order plans. Mutually agreed upon provisioning target dates are then established and on-time completion tracked by the Customer Account Representative with the assistance
of logistics specialists in Spare Parts Provisioning and Inventory Management. Meetings are held with airline customers at a mutually agreeable time to review suggested spare parts provisioning lists
prepared by spare parts Provisioning. These lists are designed to support each customer's particular fleet size, route structure and maintenance and overhaul program. 




        5.1.3    Order Administration:    



IAE
subscribes to the general principles of Air Transport Association of America (ATA) Specification No. 2000, Integrated Data Processing—Supply. The procedures of Air Transport
Association of America (ATA) Specification No. 200 may be used for Initial Provisioning (Chapter II), Order Administration (either Chapter III or Chapter VI), or Invoicing (Chapter IV). 


The
lead time for replenishment spare parts is identified in the IAE spare Parts Price Catalog. Initial provisioning spare parts orders should be placed at least [***] prior to
required delivery, while conversions and major modifications require full manufacturing lead times. 


The
action to be taken on emergency requests will be answered as follows: 


	•
	Aircraft-On-Ground
(AOG)—within four hours (in these instances every effort is made to ship immediately).



	•
	Critical
(Imminent Aircraft-On-Ground (AOG) or Work Stoppage)—Within [***].



	•
	Stock
Outage—Within [***] (these items are shipped as per customer request). 




        5.1.4    Spare Parts Inventory:    



To
ensure availability of spare parts in accordance with published lead time, spare parts provisioning maintains a modern, comprehensive requirements planning and inventory 




54







 


management
system which is responsive to changes in customer demand, special support programs and engineering design. Organized on an engine model basis, this system is intended to maintain part
availability for delivery to customers consistent with published lead times. 


A
majority of parts in the spare parts inventory are continually controlled by an Automatic Forecasting and Ordering System. Those parts which do not lend themselves to automatic control due to
supercedure, unusual usage or conversion requirements are under the direct manual control of Spares Planning personnel. As additional protection against changes in production lead time or unpredicted
demand, certain raw materials are also inventoried. Successful inventory management is keyed to accurate requirements planning. In support of the requirements planning effort, a wide ranging data
retrieval and analysis program is offered. This program concerns itself both with the customer logistics and technical considerations as follows: 




	•
	Forecasts
of life limited parts requirements are requested and received semi-annually from major customers.



	•
	Engine
technical conferences are held frequently within IAE to assess the impact of technical problems on parts.



	•
	For
a selected group of parts a provisioning conference system is offered which considers actual part inventory change, including usage and receipts, as reported monthly by
participating customers. 






        5.1.5    Packaging    



All
material is packaged in general compliance with Air Transport Association of America (ATA) Specification No. 300. 




        5.1.6    World Airline Supplier's Guide:    



IAE
subscribes to the supply objectives set forth in the World Airlines Supplier's Guide published by the Air Transport Association of America (ATA). 


IAE
requires that its proprietary component vendors also perform in compliance with the precepts of the World Airline Suppliers' Guide. 




55












   EXHIBIT D  


 WARRANTIES, GUARANTEES AND SERVICE POLICIES  


56







 
EXHIBIT D-1  


 V2500 ENGINE AND PARTS SERVICE POLICY  


57







 
IAE  


 INTERNATIONAL AERO ENGINES AG  


 V2500 ENGINE AND PARTS SERVICE POLICY  


58







 
IAE  


 INTERNATIONAL AERO ENGINES AG  


 V2500 ENGINE AND PARTS SERVICE POLICY  


This
Engine and Parts Service Policy ("Service Policy") is a statement of the terms and conditions under which IAE International Aero Engines AG ("IAE") will grant the Operators of new V2500 Engines
certain Credit Allowances and adjustments in the event that Parts of such Engines suffer Failure in Commercial Aviation Use, or in the event that a Parts Life Limit is established or reduced. This
Service Policy becomes effective for the Operator's first new purchased or leased V2500 Engine. 



	This Service Policy is divided into seven sections:
	

Section I	
 	

describes the Credit Allowances which will be granted should the Engine suffer a Failure.
	

Section II	
 	

describes the Credit Allowances which will be granted should a Primary Part suffer a Failure.
	

Section III	
 	

lists the Class Life for those Primary Parts for which Credit Allowances will be granted.
	

Section IV	
 	

describes the Credit Allowances which will be granted should the establishment or reduction of a Parts Life Limit be mandated.
	

Section V	
 	

describes the Credit Allowances and adjustments which will be granted should IAE declare a Campaign Change.
	

Section VI	
 	

contains the definitions of certain words and terms used throughout this Service Policy. These words and terms are identified in the text of this Service Policy by the use of initial capital letters for such words and terms.
	

Section VII	
 	

contains the general conditions governing the application of this Service Policy.





59









  


	I.
	ENGINE
FAILURE CREDIT ALLOWANCES 



        A.    First Run Engine, Module and Part    




	1.
	A
First Run Engine is an Engine with no more than [***] a First Run Module is a Module with no more [***] and a First Run Part is a Part
with [***] operating in a First Run Engine or a First Run Module.



	2.
	If
a First Run Part suffers Direct Damage or a Part suffers Resultant Damage and provided that the Part causing such Resultant Damage is a First Run Part, IAE will grant to the
Operator:



	a.
	A
[***] percent Parts Credit Allowance for any Part Scrapped, or



	b.
	A
[***] percent Labor Credit Allowance for any Part Repaired (if ACA and IAE mutually agree that such Part should be repaired). 








[***].




	3.
	If
such Damage of a First Run Part or damage to a Part as a result of Resultant Damage as provided for in Clause 2 above requires the removal of the Engine or a Module from the
Aircraft, IAE will, in addition to Subparagraph A.2 above, grant to the Operator:



	a.
	A
[***] percent Labor Credit Allowance for disassembly, reassembly and necessary testing of the Engine or Module requiring Reconditioning as a result of such
Damage of the First Run Part or Part, as applicable, and



	b.
	A
[***] percent Parts Credit Allowance for those Expendable Parts required in the Reconditioning of the Engine or Module.






	4.
	If
such Damage of a First Run Part or damage to a Part as a result of Resultant Damage as provided in Clause 2 requires the removal of the Engine or a Module from the Aircraft,
IAE will arrange, upon request by the Operator, to Recondition the Engine or Module or accomplish the Parts Repair at no charge to the Operator rather than providing the above Credit Allowances. Such
work will be accomplished at a V2500 Maintenance Center designated by IAE. Transportation charges to and from the Maintenance Center shall be paid by the Operator. 





        B.    Extended First Run Engine, Module and Part    




	1.
	An
Extended First Run Engine is an Engine with [***], an Extended Run Module is a Module with more than [***] whichever comes first,
Module Time, and an Extended First Run Part is a Part [***] operating in an Extended First Run Engine or an extended First Run Module.



	2.
	If
an Extended First Run Part suffers Direct Damage or a Part suffers Resultant Damage and provided such Part causing Resultant Damage is an Extended First Run Part, IAE will grant to
the Operator:



	a.
	A
pro rata Parts Credit Allowance for any Part Scrapped, or



	b.
	A
pro rata Labor Credit Allowance for any Part Repaired. 










[***]




If
the Extended First Run Part or Part that suffers Resultant Damage caused by an Extended First Run Part is a Primary Part (Section III), the pro rata Credit Allowances will be based on
l00 percent through [***], Engine Time which then decreases [***], 





60







 






Engine
Time, or, l00 percent to [***] which then decreases [***] percent at the end of its Class Life (Section III), whichever is greater. 



If
the Extended First Run Part or Part that suffers Resultant Damage caused by an Extended First Run Part is not a Primary Part, the pro rata Credit Allowances will be based on l00 percent
through [***], Engine Time which then decrease, [***]. 



	3.
	If
such Damage of an Extended First Run Part or Part that suffers Resultant Damage caused by an Extended First Run Part requires the removal of the Engine or a Module from the
Aircraft, IAE will, in addition to Subparagraph B.2. above, grant to the Operator:



	a.
	A
pro rata Labor Credit Allowance for disassembly, reassembly and necessary testing of the Engine or Module requiring Reconditioning as a result of such Damage of the Extended First
Run Part or Part, and



	b.
	A
pro rata Parts Credit Allowance for those Expendable Parts required in the Reconditioning of the Engine or Module. 










The
pro rata Credit Allowances will be based on [***], Engine Time, which then decreases [***], Engine Time. 




	Note:
	Section VI,
Paragraph D. contains the formulas to be used for computing the Credit Allowances described above. 




        C.    Engine or Module Failure Credit Allowances Illustration    



	Note:
	The  Primary Parts Credit Allowances Illustration (Section II, Paragraph B) is also applicable to the Credit Allowances
which are based on Parts Time as described in Section I, Subparagraph B.2.






	II.
	PRIMARY
PARTS CREDIT ALLOWANCE 



        A.    Primary Parts Other Than First Run Parts or Extended First Run Parts    




	1.
	Primary
Parts are limited to those Parts listed in Section III while such Parts are within the Class Life indicated in Section III.



	2.
	The
Primary Parts Credit Allowances described in Subparagraph A.3 below will be based on l00 percent to [***] which then decreases
[***] at the end of the applicable hourly Class Life.



	3.
	If
a Primary Part suffers Direct Damage or a Part suffers Resultant Damage and provided such Part causing the Resultant Damage is a Primary Part, IAE will grant to the Operator:



	a.
	A
Parts Credit Allowance for any Part Scrapped, or



	b.
	A
Labor Credit Allowance for any Part Repaired in accordance with a Parts Repair designated in writing by IAE as being eligible for a Credit Allowance under this Section II,
Paragraph A. 










In
the event the Part Scrapped or Repaired as a result of Resultant Damage is a Repaired Part or used Part, IAE will grant to the Operator a pro rata Parts Credit Allowance for any such Part Scrapped
or Repaired, taking into consideration the hours and cycles used on such Part. 




	Note:
	Section VI,
Paragraph D. contains the formulas to be used for computing the Credit Allowances described above. 



61







 





        B.    Primary Parts Credit Allowances Illustration    


	III
	IDENTIFICATION
OF PRIMARY PARTS 



The
following Parts are defined as Primary Parts while such Parts are within the Class Life indicated. Class Life is the period, expressed in either hours or Parts Time or number of Parts Cycles
during which IAE will grant Credit Allowances for Primary Parts which suffer Direct Damage or Parts that suffer Resultant Damage caused by Primary Parts, or for which a Parts Life Limit is established
or reduced. 



CLASS A (4,000 HOURS PARTS TIME)



 Cold Section Rotating Parts  


LP
Compressor Inlet Cone—Spinner

LP Compressor lst Stage Blade—Fan

LP Compressor lst Stage Blade Annulus Fillers

LP Compressor 2nd Stage Blade

Radial Drive Bevel Gear

Tower Shaft

HP Compressor 3 through l2th Stage Blades

HP Compressor Front and Rear Rotating Airseals

LP Turbine Shaft Coupling Nut 


 Cold Section Static Parts  


Fan
Splitter Fairing

LP Compressor Stage 2 Inlet and Exhaust Stator Assembly

HP Compressor Stage 3 to Stage 6 Variable Stator Assembly

Fan Aerodynamic OGV's

HP Compressor Stage 6 to ll Stator Assembly

HP Compressor Exit Stator 



 Hot Section Rotating Parts  


HP
Turbine Stage l and 2 Blade

HP Turbine Gage Spacer

HP Turbine Lock Nut

LP Turbine Stage 3 to 7 Blades

LP Turbine Lock Nut 


 Hot Section Static Parts  


Fuel
Injector

Combustion Chamber Assembly

HPT First Stage Cooling Duct Assembly (TOBI Duct)

HPT lst and 2nd Stage Nozzle Guide Vane Assembly

HPT lst and 2nd Stage Outer Airseal Assembly

HP to LP Turbine Transition Duct (Inner & Outer)

LPT Stage 3 to 7 Nozzle Guide Vane Assembly

LPT Stage 3 to 7 Outer Airseal Assembly 



62







 




 Main and Angle Gearbox  



Gearshafts
and Bearings

Lay Shaft

All Accessory Drive Shafts

Gearbox Oil Pumps (Pressure and Scavenge) 



CLASS B (8,000 HOURS PARTS TIME)



Fan
Case Assembly (Includes Intermediate Case)

HP Compressor Front Casings (Split Casings)

HP Compressor Rear Casings

Diffuser Case

HP Turbine Case

LP Turbine Case

Turbine Exhaust Case

Main Gearbox Casing

Oil Tank 



CLASS C (20,000 HOURS PARTS TIME FOR DAMAGE

20,000 PARTS CYCLES FOR LIFE LIMIT REDUCTION)



Fan
Disk

LPC Drum

HPC 3 to 8 Drum

HPC 9 to 12 Drum

HP Turbine Stage l and 2 Disks

HP Turbine Spacer Disk

HP Turbine Stage l Front Rotating Airseal

HP Turbine 2nd Stage Disk Rear Seal

LP Turbine Stage 3-7 Disks

LP Turbine Stage 3-7 Rotating Airseals

Shafts 



	IV
	PARTS
LIFE LIMIT ALLOWANCES 



        A.    A Parts Life Limit is as defined in Section VI (S).    



        B.    Credit Allowances    




	l.
	Class A
and Class B Primary Parts 







If
a Parts Life Limit is established which results in Part Scrappage at [***] for a Class A Primary Part or [***] a Class B Primary Part,
IAE will grant for each such Primary Part Scrapped as a result thereof, a Parts
Credit Allowance based on l00 percent [***] which then decreases [***] at the end of [***]. 



	2.
	Class C
Primary Parts 





If
a Parts Life Limit is established for a Class C Primary Part which results in Part Scrappage in less than [***], IAE will grant for each such Primary Part Scrapped as
a result thereof, a Parts Credit Allowance based on l00 percent at l (One) total Parts Cycle which then decreases, pro rata, to [***]. 





63







 



In
addition, IAE will grant a similarly calculated Labor Credit Allowance and Parts Credit Allowance for the labor and Expendable Parts which are solely related to the removal and replacement of such
Class C Primary Parts and is additional to other maintenance being performed on the Engine or Module. 




	Note:
	Section VI, Paragraph D. contains the formulas to be used for computing the Credit Allowances described above. 




        C.    Parts Life Limit Credit Allowances Illustrations    


	V
	CAMPAIGN
CHANGE CREDIT ALLOWANCES AND ADJUSTMENTS



	A.
	A
Campaign Change is an IAE program, so designated in writing, for the Reoperation, replacement, addition or deletion of a Part(s). IAE will grant the Credit Allowances and Adjustments
specified in this Section V to the Operator when Campaign Change recommendations are complied with by the Operator.



	B.
	Standard
Allowances



	l.
	A
[***] percent Parts Credit Allowance to pay for the replacement, addition or deletion of Parts specified in the Campaign Change for installed Parts or
serviceable shelf stock Parts which are Scrapped[***], or less total Parts Time.



	2.
	A
pro rata Parts Credit Allowance to pay for the replacement, addition or deletion of Parts specified in the Campaign Change for installed Parts or serviceable shelf stock Parts which
are Scrapped with [***], total Parts Time but less than [***], total Parts Time. The pro rata Parts Credit Allowance will be based on l00 percent
through [***], total Parts Time which then decreases [***], total Parts Time.



	3.
	A
[***] percent Parts Credit Allowance to pay for the replacement, addition or deletion of Parts specified in the Campaign Change for installed Parts or
serviceable shelf stock Parts which are Scrapped with more than [***], total Parts Time.



	4.
	A
[***] percent Labor Credit Allowance for Reoperation of installed Parts or serviceable shelf stock Parts with [***], or less total
Parts Time which are Reoperated in accordance with the Campaign Change.



	5.
	A
pro rata Labor Credit Allowance for Reoperation of installed Parts or serviceable shelf stock Parts with more than [***], total Parts Time but less than
[***], total Parts Time which are Reoperated in accordance with the Campaign Change. The pro rata Labor Credit Allowance will be based on l00 percent through
[***], total Parts Time which then decreases [***] percent at [***], total Parts Time.



	6.
	A
[***] percent Labor Credit Allowance for Reoperation of installed Parts or serviceable shelf stock Parts with [***], total Parts Time
which are Reoperated in accordance with the Campaign Change.



	7.
	A
[***] percent Labor Credit Allowance for disassembly and reassembly of the Engine or Module, if the disassembly of the Engine or Module is recommended by IAE
for accomplishment of the Campaign Change and such disassembly is performed solely for the purpose of accomplishing the Campaign Change.


 



	Note:
	Section VI, Paragraph D. contains the formulas to be used for computing the Credit Allowances described above. 





64







 





        C.    Campaign Change Credit Allowances Illustration    



	Note:
	The Labor Credit Allowance for Engine or Module disassembly and reassembly remains at a constant [***]. 




        D.    Optional Credit Allowances and Adjustments    




	1.
	Should
IAE declare a Campaign Change, the Operator may propose an alternative means of complying with a Campaign Change by submitting such alternate means to IAE for certain credits
and adjustments (the "Credit Allowances and Adjustments"). IAE shall then reasonably determine the eligibility of such alternative means. If IAE reasonably determines that such alternate means is not
acceptable, IAE will grant to the Operator the credit allowances and adjustments described in clauses V (A), (B) and (C) above. If IAE reasonably determines that such alternate means is
acceptable, IAE will grant to the Operator Credit Allowances and Adjustments, such as, but not necessarily limited to:



	a.
	No
Charge material.



	b.
	Specially
priced material.



	c.
	Single
credit settlements for the Operator's fleet.



	d.
	Fixed
Credit Allowance support for each Engine. 







65

















  




	2.
	These
optional Credit Allowances and Adjustments may be provided:



	a.
	Instead
of the standard Credit Allowances of Section V, Paragraph B,



	b.
	In
addition to the standard Credit Allowances of Section V, Paragraph B, or



	c.
	As
a portion of the standard Credit Allowances of Section V, Paragraph B.






	3.
	In
no event shall the worth of the Credit Allowances to the Operator referenced in Clause 2 above, as reasonably determined by IAE, be less than the amount that would have been
granted to the Operator as a standard Campaign Change Credit Allowance, per Section V, Paragraph B. In considering the use of these optional Credit Allowances and adjustments, IAE will
act in a commercially reasonable manner to minimize the financial and administrative impact on the Operator.







	VI
	DEFINITIONS



	A.
	CAMPAIGN CHANGE is an IAE program, so designated in writing, for the Reoperation, replacement, addition or deletion of Part(s) and is
characterized by the granting of certain Credit Allowances to the Operator when such program recommendations are complied with by the Operator.



	B.
	CLASS LIFE is the period, expressed in either hours of Part Time or number of Parts Cycles, during which IAE will grant Credit
Allowances for Primary Parts which suffer Direct Damage or Resultant Damage, or for which a Parts Life Limit is established or reduced.



	C.
	COMMERCIAL AVIATION USE is the operation of Engines in Aircraft used for commercial, corporate or private transport purposes (including
in conjunction with the U.S. Civil Reserve Air Fleet or successor or analogous programs).



	D.
	CREDIT ALLOWANCES



	1.
	PARTS CREDIT ALLOWANCE is an amount determined in accordance with the following formulas:



	a.
	[***]
percent Parts Credit Allowance = P



	b.
	[***]
percent Parts Credit Allowance = P/2



	c.
	Pro
rata Parts Credit Allowance =



	(1)
	For
a Primary Part which suffers Direct or Resultant Damage, or a Class A or Class B Primary Part for which a Parts Life Limit is established: 



















[***] 



	(2)
	For
a Class C Primary Part for which a Parts Life Limit is established, [***]: 











[***]




	(3)
	For
replacement, addition or deletion of a Part because of a Campaign Change, when such a Part has more than [***], Parts Time but less than
[***], Parts Time: 









[***] 




	d.
	Extended
First Run Parts Credit Allowance = 









[***]





	2.
	LABOR CREDIT ALLOWANCE is an amount determined in accordance with the following formulas, except that in no event shall the amount to be
granted for repair of 




66







 



Parts
exceed the amount of the Parts Credit Allowance which would have been granted if the Part had been Scrapped: 


	a.
	[***]
percent Labor Credit Allowance = H × R



	b.
	[***]
percent Labor Credit Allowance = H/2 × R



	c.
	Pro
rata Labor Credit Allowance =



	(1)
	For
a Primary Part which suffers Direct or Resultant Damage, or a Class A or Class B Primary Part for which a Parts Life Limit is established: 













[***]




	(2)
	For
a Class C Primary Part for which a Parts Life Limit is established which is less than 20,000 total Parts Cycles: 









[***] 



	(3)
	For
replacement, addition or deletion of a Part because of a Campaign Change, which such a Part has more than [***] Parts Time but less than
[***] Parts Time: 











[***]





	d.
	Extended
First Run Labor Credit Allowance = 









[***]





	3.
	The
variables used in calculating the above allowances are defined as: 






	

 	

P=a.	
 	

For a Part Scrapped because of Direct Damage, Resultant Damage or a Parts Life Limit being established, the IAE catalog price of the specific Part number Scrapped and escalated as required at the time of either the Engine removal or Part removal,
whichever occurs sooner, or
	

 	

b.	
 	

For replacement, addition or deletion of a Part because of a Campaign Change, the IAE catalog price of the replacement Part specified in the Campaign Change current at the time of replacement.
	

 	

T=a.	
 	

For a Primary Part which has suffered Direct Damage or Resultant Damage, the actual Parts Time on the Part minus [***]
	

 	

b.	
 	

For a Class A or Class B Primary Part for which a Parts Life Limit is established, the actual Parts Time on the Part [***], or the Parts Life Limit minus [***], whichever is greater, or
	

 	

c.	
 	

For replacement, addition or deletion of a Part because of a Campaign Change, when such a Part has more than [***], Parts Time but less than [***], Parts Time, the actual Parts Time on the Part.
	

 	

C=   	
 	

For a Class C Primary Part for which a Parts Life Limit is established which is less than [***] Total Parts Cycles, the greater of either:
	

 	

 	
 	

a.	
 	

The actual Parts Cycles on the Part minus l cycle, or
	

 	

 	
 	

b.	
 	

The new Parts Life Limit minus l Cycle.




67







 



	Lt
	=  Either:



	a.
	For
a Primary Part which has suffered Direct Damage or Resultant Damage, the hours indicated in Section III minus [***] or



	b.
	For
a Class A or Class B Primary Part for which a Parts Life Limit is established, the hours indicated in Section III minus [***].






	Lc
	=  For
a Class C Primary Part for which a Parts Life Limit is established, [***].



	H=
	The
man-hours reasonably required to accomplish the work as reasonably agreed to by IAE.



	R=
	The
labor rate, expressed in U.S. Dollars per hour, which will be determined as follows:



	a.
	If
the labor is performed at the Operator's facility, or its subcontractor's facility, the labor rate will be the greater of the Operator's labor rate or the subcontractor's labor
rate, as reasonably agreed to by ACA and IAE, or



	b.
	If
the labor is performed by IAE, the labor rate will be the then-current labor rate of IAE.






	
E
	=
 Actual Engine Time since new on an Extended First Run Engine.







	E.
	DIRECT DAMAGE is the damage suffered by a Part itself upon its Failure.



	F.
	ECONOMICALLY REPAIRABLE shall generally mean that the cost of the repair as reasonably determined by IAE, exclusive of modification and
transportation costs, will be equal to or less than [***] percent of the IAE catalog price of the Part at the time the repair is considered, or, shall be as otherwise
reasonably determined by IAE.



	G.
	ENGINE(S) means those V2500 Engine(s), as described by IAE Specifications, sold by IAE for Commercial Aviation Use, whether installed as
new equipment in aircraft by the manufacturer thereof and delivered to the Operator, or installed as new equipment in the Leased Aircraft or delivered directly to the Operator from IAE for use as a
spare Engine. An Engine which has been converted or upgraded in accordance with IAE instructions shall continue to qualify for Credit Allowances and Adjustments under the provisions of this Service
Policy.



	H.
	ENGINE OR MODULE TIME is the total number of flight hours or cycles as applicable of operation of an Engine or a Module.



	I.
	EXPENDABLE PARTS means those nonreusable Parts, as determined by IAE, which are required to be replaced during inspection or
Reconditioning, regardless of the condition of the Part.



	J.
	EXTENDED FIRST RUN ENGINE OR MODULE is an Engine or Module with more than [***], Engine or Module Time but not
more than [***], Engine or Module Time.



	K.
	EXTENDED FIRST RUN PART means a Part with [***] (or cycles, whichever comes first), or less Parts Time operating
in an Extended First Run Engine.



	L.
	FAILURE (FAILED) is the non-negligent breakage, injury or malfunction of a Part rendering it unserviceable and incapable of
continued operation without corrective action.



	M.
	FIRST RUN ENGINE OR FIRST RUN MODULE is an Engine or Module with 3,000 hours (or cycles, whichever comes first), or less Engine
or Module Time. 



68







 



	N.
	FIRST RUN PART is an Engine Part with [***] hours (or cycles, whichever comes first), or less Parts Time
operating in a First Run Engine.



	O.
	MODULE(S) means any one or more of the following assemblies of Parts: 






Fan
Assembly and Low Pressure Compressor Assembly

High Pressure Compressor Assembly

High Pressure Turbine Assembly

Low Pressure Turbine Assembly

Main gearbox

Any other Assembly of Parts so designated by IAE 




	P.
	OPERATOR is the owner of one or more Engines operated for Commercial Aviation Use, and the lessee if such Engine(s) is the subject of a
lease.



	Q.
	PART(S) means Engine parts delivered to the Operator as original equipment in an Engine or Engine parts sold and delivered by IAE to the
Operator as new spare parts in support of an Engine, including all new IAE approved Engine parts manufactured by IAE's authorized vendors.



	R.
	PARTS CYCLE(S) means the aggregate total number of times a Part completes an Aircraft takeoff and landing cycle, including extra
throttle transients such as touch and go landings and takeoffs, whether or not thrust reverser is used on landing.



	S.
	PARTS LIFE LIMIT is the maximum allowable total Parts Time or total Parts Cycles for specific Parts, including Reoperation if
applicable, as established by IAE or by the United States Federal Aviation Administration. Parts Life Limits are published in the Time Limits Section (Chapter 05) of the applicable V2500 Series
Engine Manual.



	T.
	PARTS REPAIR means the IAE designated restoration of Failed Parts to functional serviceable status, excluding repair of normal wear and
tear as mutually determined by IAE and ACA.



	U.
	PARTS TIME is the total number of flight hours or cycles of operation of a Part.



	V.
	PRIMARY PART(S) are limited to those Parts listed in Section III while such Parts are within the Class Life indicated in
Section III.



	W.
	RECONDITIONING means the restoration of an Engine or Module allowing substitution of new or serviceable used Parts, to the extent
necessary for continued operation of the Engine or Module as a serviceable unit. When such Reconditioning is performed by IAE or per IAE's direction, the Parts Time or Parts Cycles, as applicable, of
the replaced Part shall, for the purpose of this Service Policy, be applicable to the substituted new or serviceable used Part. Said replaced Part shall become the property of IAE upon such
replacement, and IAE will ensure that no such replaced Part shall have a life remaining less than that ascribed to the Part replaced prior to such restoration, unless otherwise agreed by IAE and ACA.



	X.
	REOPERATION is the alteration to or modification of a Part.



	Y.
	RESULTANT DAMAGE is the damage suffered by a Part because of the Failure of a Part within the same Engine.



	Z.
	SCRAPPED PARTS (SCRAP, SCRAPPED, SCRAPPAGE) shall mean those Parts mutually determined by IAE and ACA to be unserviceable and not
Economically Repairable. The Operator shall cause such Parts to be mutilated or disposed of in such a manner as to preclude any possible further use as an Engine Part. 



69







 




	VII
	GENERAL
CONDITIONS 




        The
following general conditions govern the application of this Service Policy: 



	A.
	Records and Audit



The
Operator shall maintain adequate records for the administration of this Service Policy and shall permit IAE to audit such records at reasonable intervals. 



	B.
	Scrapping of Parts



	1.
	Scrappage
Verification 







Any
Part for which a Parts Credit Allowance is requested shall be verified as Scrapped prior to the issuance of the Parts Credit Allowance. Verification of Scrappage shall occur as follows: 


	a.
	At
the Operator's, or its subcontractor's, facility. Such verification shall be accomplished by the IAE Field Representative.



	b.
	At
IAE, provided that IAE concurs that the Part is to be scrapped. Sufficient information to identify the Part, the Engine from which the Part was removed, and the reason for its
return shall be provided.






	2.
	Return
of Parts 





IAE,
at its sole option, may require the Operator to return to IAE any Part for which a Parts Credit Allowance is requested. Such return shall be a condition for the issuance of a Parts Credit
Allowance. 



	3.
	Transportation
Expenses 







Transportation
expenses shall be at the expense of the Operator if such Parts are shipped to and from IAE for examination and verification; except that IAE shall pay the expense if such Parts are
shipped at the request of IAE. 



	4.
	Title 





Title
to such Parts returned to IAE shall vest in IAE: 


	a.
	Upon
determination by IAE that the Operator is eligible for a Parts Credit Allowance. If it is determined that the Parts are scrapped Parts but are not eligible for Service Policy
coverage, the Operator will be notified of the decision and the Parts returned at the Operator's expense if the Operator so requests; otherwise, the Parts will be disposed of by IAE without any type
of adjustment, or



	b.
	Upon
shipment, when such Parts are determined to be Scrap at the Operator's facility and are shipped to IAE at the request of IAE.







	C.
	Repairability Requirements





The
Operator shall set aside and exclude from the operation of this Service Policy for a period of [***] any Part for which IAE states it has, or plans to initiate, an active
program to achieve a repair, corrective Reoperation or Parts Life Limit extension. In the event IAE has not released a repair procedure, corrective Reoperation, or Parts Life Limit extension by the
expiration of this [***] period, such Part shall be retained by the Operator and excluded from the operation of this Service Policy for additional periods beyond the expiration
of said [***] period only if agreed to by the Operator. 




70







 



	D.
	Exclusions from Service Policy




This
Service Policy will not apply to any Engine, Module or Part if it has been determined [***] that said Engine, Module or Part has Failed because it: 


	1.
	Has
not been properly installed or maintained in accordance with the reasonable written operating and maintenance instructions (which take into account ACA's operational needs) issued
by IAE and the Aircraft Manufacturer, which instructions are consistent with and do not contradict the maintenance program for the Aircraft and the Engines developed and agreed to by ACA in accordance
with Federal Aviation Administration requirements; or



	2.
	Has
been used contrary to the operating and maintenance instructions or recommendations authorized or issued by IAE (including, but not limited to, the Maintenance Management Plan and
the Interactive Electronic Technical Manual) or the Aircraft Manufacturer (including, but not limited to, the Maintenance Planning Document) and current at the time, or



	3.
	Has
been repaired or altered other than by or pursuant to the instructions of an IAE designated V2500 Maintenance Center in such a way as to impair its safety, operation or efficiency,
or



	4.
	Has
been subjected to:



	a.
	Misuse,
malicious acts, neglect, or accident, or



	b.
	Ingestion
of foreign material, or






	5.
	Has
been affected in any way by a part not defined as a Part, [***], or



	6.
	Has
been affected in any way by occurrences not associated with ordinary use, such as, but not limited to, acts of God, acts of war, rebellion, seizure or other belligerent acts, in
each case, to the extent that such events can be reasonably determined to have contributed to the Failure of the Engine, Modules, or Parts.






	E.
	Payment Options



IAE,
at its option may grant any Parts Credit Allowance as either a credit to the Operator's account with IAE or as a Part replacement. 



	F.
	Presentation of Claims





Any
request for a Credit Allowance must be presented to IAE not later than [***] after the removal from service for Failure of the Engine or Part for which the Credit Allowance
is requested. IAE will respond in writing to any such request within [***] of ACA's presentation of such request. If IAE disallows the request, written notification will be
provided to the Operator. The Operator shall have [***] from such notification to request a reconsideration of the request for Credit Allowance. IAE shall have the right to
refuse any request for a Credit Allowance which is not submitted within the stated time periods. 




71







 

	G.
	General Administration



On
matters concerning this Service Policy, the Operator is requested to address all correspondence to: 



IAE
International Aero Engines AG

400 Main Street

Mail Stop 121-10

East Hartford, CT 06108 


Attention:  Warranty
Administration 




	H.
	Limitation of Liability



	1.
	Except
as set forth in the Contract, the express provisions of this Service Policy set forth the maximum liability of IAE with respect to any claims relating to this Service Policy. In
the event of any conflict or inconsistency between the express provisions of this Service Policy and any Illustrations contained herein, the express provisions of this Service Policy shall govern.



	2.
	Except
to the extent that the Credit Allowances and adjustments expressly set forth in this Service Policy exceed the limitations of the corresponding portions of any warranties or
representations included in any sales agreements, the provisions of this Service Policy do not modify, enlarge or extend in any manner the conditions governing the sale of its Engines and Parts by
IAE.



	3.
	IAE
reserves the right to change or retract this Service Policy at any time at its sole discretion. Notwithstanding the foregoing, no such retraction or change shall diminish the
benefits which the Operator may be entitled to receive with respect to Engines for which an acceptable order has been placed with IAE or with respect to aircraft with installed Engines for which a
firm unconditional order has been placed with the aircraft manufacturer prior to the announcement of any such retraction or change. 






72












   EXHIBIT D-2  


 V2500 NACELLE AND PARTS SERVICE POLICY  


73







 
IAE  


 INTERNATIONAL AERO ENGINES AG  


 V2500 NACELLE AND PARTS SERVICE POLICY  


74







 
IAE  


 INTERNATIONAL AERO ENGINES AG  


 V2500 NACELLE AND PARTS SERVICE POLICY  


        This Nacelle and Parts Service Policy (Service Policy) is a statement of the terms and conditions under which IAE International Aero Engines AG ("IAE") will grant
the Operators of its V2500 Nacelles certain Allowances and adjustments in the event that Parts of such Nacelles suffer Failure in service. 


        This
Service Policy is divided into four sections: 



	Section I	describes the Allowances and adjustments which will be granted should the Nacelle or Part(s) suffer a Failure.
	

Section II	

describes the Allowances and adjustments which will be granted when IAE declares a Campaign Change.
	

Section III	

contains the definitions of certain words and terms used throughout this Service Policy. These words and terms are identified in the text of this Service Policy by the use of initial capital letters for such words and terms.
	

Section IV	

contains the general conditions governing the application of this Service Policy.





75









  


	I
	ALLOWANCES
AND ADJUSTMENTS



	A.
	First Run Nacelle and First Run Nacelle Part



	1.
	A
First Run Nacelle is a Nacelle with no more than 6,000 hours Nacelle Time and a First Run Nacelle Part is a Part with no more than 6,000 hours Parts Time operating in a
First Run Nacelle.



	2.
	If
a First Run Nacelle Part suffers Direct Damage or Resultant Damage, and provided that the Part causing Resultant Damage is also a First Run Nacelle Part:



	a.
	IAE
will grant to the Operator:



	(1)
	A
[***] percent Parts Credit Allowance for any such First Run Nacelle Part Scrapped, and



	(2)
	A
[***] percent Labor Allowance for Parts Repair of any First Run Nacelle Part requiring Parts Repair.






	b.
	If
such Damage of a First Run Nacelle Part causes the removal of the Nacelle from the Aircraft, IAE will, in addition to Subparagraph a. above, grant to the Operator:



	(1)
	A
[***] percent Labor Allowance for disassembly, reassembly and necessary testing of the Nacelle requiring Reconditioning as a result of such Damage of the
First Run Nacelle Part, and



	(2)
	A
[***] percent Parts Credit Allowance for those Expendable Parts required in the Reconditioning of the Nacelle.






	c.
	If
such Damage of a First Run Nacelle Part causes the removal of the Nacelle from the Aircraft, IAE will arrange, upon request by the Operator, to Recondition the Nacelle or accomplish
the Parts Repair at no charge to the Operator rather than providing the above Allowances. Such work will be accomplished at a V2500 Maintenance Center designated by IAE. Transportation charges to and
from the Maintenance Center shall be paid by the operator.









	B.
	Primary Part



	1.
	A
Primary Part is a Part other than a First Run Nacelle Part but having not more than [***] Parts Time.



	2.
	Primary
Parts not eligible for those Allowances granted to First Run Nacelle Parts are eligible for Allowances under this Section I, Paragraph B, provided that the
Primary Part suffers Direct Damage or Resultant Damage and provided that the Part causing Resultant Damage is also a Primary Part.



	3.
	IAE
will grant to the Operator a Parts Credit Allowance for such a Primary Part Scrapped or a Labor Allowance for such a Primary Part for which a Parts Repair is designated in writing
by IAE as being eligible for adjustment under this Section I, Paragraph B. Such Allowance will be based on [***] percent to [***] Parts
Time which then decreases, pro rata, to [***] percent at [***].









	II
	CAMPAIGN
CHANGE ALLOWANCES AND ADJUSTMENTS



	A.
	A
Campaign Change is an IAE program, so designated in writing, for the Reoperation, replacement, addition, or deletion of a Part(s). IAE will grant the Allowances and adjustments
specified in this Section II to the Operator when Campaign Change recommendations are complied with by the Operator. 





76







 



	B.
	Standard Allowances



	1.
	A
[***] percent Parts Credit Allowance to pay for the replacement, addition or deletion of Parts specified in the Campaign Change for installed or serviceable
shelf stock Nacelle Parts which are Scrapped with [***] total Parts Time.



	2.
	A
[***] percent Parts Credit Allowance to pay for the replacement, addition or deletion of Parts specified in the Campaign Change for installed or serviceable
shelf stock Nacelle Parts which are Scrapped with [***].



	3.
	A
[***] percent Labor Allowance for Reoperation of installed or serviceable shelf stock Nacelle Parts with [***], which are Reoperated
in accordance with the Campaign Change.



	4.
	A
[***] percent Labor Allowance for Reoperation of installed or serviceable shelf stock Nacelle Parts with [***], which are Reoperated
in accordance with the Campaign Change.



	5.
	A
[***] percent Labor Allowance for disassembly and reassembly of the Nacelle, if the disassembly is recommended by IAE for accomplishment of the Campaign
Change and such disassembly is performed solely for the purpose of accomplishing the Campaign Change.






	C.
	Optional Allowances and Adjustments



	1.
	Should
IAE declare a Campaign Change, the Operator may propose an alternative means of complying with a Campaign Change by submitting such alternate means to IAE for certain credits
and adjustments (the "Credit Allowance and Adjustments"). IAE shall then reasonably determine the eligibility of such alternative means. If IAE reasonably determines that such alternate means is not
acceptable, IAE will grant to the Operator the credit allowances and adjustments described in clauses II (A), (B) and (C) above. If IAE reasonably determines that such alternate means is
acceptable, IAE will grant to the Operator Credit Allowances and Adjustments, such as, but not necessarily limited to:



	a.
	No
charge material



	b.
	Specially
priced material



	c.
	Single
payment settlements for the Operators' fleet



	d.
	Fixed
allowance support for each Nacelle.






	2.
	These
optional allowances and adjustments will be provided either:



	a.
	Instead
of the standard Allowances of Paragraph B.,



	b.
	In
addition to the standard Allowances of Paragraph B., or



	c.
	As
a portion of the standard Allowances of Paragraph B.






	3.
	In
no event shall the worth to the Operator, as reasonably determined by IAE, be less than the amount that would have been granted to the Operator as a standard Campaign Change
Allowance, per Paragraph B. In considering the use of these optional allowances and adjustments, IAE will attempt to minimize the financial and administrative impact on the Operator. 






77







 




	III
	DEFINITIONS



	A.
	ALLOWANCES



	1.
	PARTS CREDIT ALLOWANCE is an amount determined in accordance with the following formula:



	a.
	[***]
percent Parts Credit Allowance = P



	b.
	[***]
percent Parts Credit Allowance = P/2



	c.
	Pro
rata Parts Credit Allowance = [***]






	2.
	LABOR ALLOWANCE is an amount determined in accordance with the following formulas, except that in no event shall the amount to be
granted for repair of Parts exceed the amount of the Parts Credit Allowance which would have been granted if the Part had been Scrapped. 












	 	 	a.	 	[***] percent Labor Allowance =	H × R
	

 	
 	

b.	
 	

[***] percent Labor Allowance =	

H × R

2
	

 	
 	

c.	
 	

Pro rata Labor Allowance =	

[***]






	3.
	The
variables used in calculating the above Allowances are defined as: 








	 	 	P =	for a Part Scrapped because of Direct Damage or Resultant Damage, the IAE commercial price of the Part Scrapped current at the time of either the Nacelle removal or Part removal, whichever occurs sooner, or
	

 	
 	

 	

for replacement of Parts because of a Campaign Change, the IAE price of the replacement Part specified in the Campaign Change current at the time of notification to the Operator of the Campaign Change.
	

 	
 	

T =	

actual Parts Time hours on a Part which has suffered Direct Damage or Resultant Damage or the Parts Life Limit as established for the Part.
	

 	
 	

H =	

the man-hours required to accomplish the work as established in writing by IAE.
	

 	
 	

R =	

the labor rate, expressed in dollars per hour, which will be determined as follows:








	a.
	If
the labor is performed at the Operator's facility, or its subcontractor's facility, the labor rate will be the greater of the Operator's labor rate or the subcontractor's labor
rate, where the labor rates were determined in accordance with IAE Form XIAE380 and provided to the Operator in writing, or



	b.
	If
the labor is performed at a V2500 Maintenance Center designated by IAE, the labor rate will be the then current labor rate at that Center.








	B.
	CAMPAIGN CHANGE is an IAE program, so designated in writing, for the Reoperation, replacement, addition or deletion of a Part(s) and is
characterized by the granting of certain Allowances to the Operator when such recommendations are complied with by the Operator.



	C.
	COMMERCIAL AVIATION USE is the operation of Nacelles in Aircraft used for commercial, corporate or private transport purposes (including
in conjunction with the U.S. Civil Reserve Air Fleet or successor or analogous programs).



	D.
	DIRECT DAMAGE is the damage suffered by a Part itself upon its Failure. 



78







 



	E.
	ECONOMICALLY REPAIRABLE shall generally mean that the cost of the repair as determined by IAE exclusive of modification and
transportation costs, will be equal to or less than [***].



	F.
	EXPENDABLE PARTS means those nonreusable Parts, as determined by IAE, which are required to be replaced during inspection or
Reconditioning, regardless of the condition of the Part.



	G.
	FAILURE (FAILED) is the non-negligent breakage, injury, malfunction of a Part rendering it unserviceable and incapable of
continued operation without corrective action.



	H.
	FIRST RUN NACELLE is a Nacelle with 6,000 hours or less Nacelle Time.



	I.
	FIRST RUN NACELLE PART is a Nacelle Part with 6,000 hours or less Parts Time operating in a First Run Nacelle.



	J.
	NACELLE(S) means V2500 nacelle(s) and thrust reverser, as described in IAE Specifications referenced below, as such Specifications may
be revised from time to time, sold by IAE for Commercial Aviation Use, whether installed as new equipment in aircraft by the manufacturer thereof and delivered to the Operator or delivered directly to
the Operator from IAE for use as a spare nacelle. A Nacelle which has been converted or upgraded in accordance with IAE instructions shall continue to qualify for Allowances and adjustments under the
provisions of this Service Policy. 







	Model No.
 
	 	Specification No.
	 	Specification Date

	V2500	 	IAE-0004	 	1988






	K.
	NACELLE TIME is the total number of flight hours of operation of a Nacelle.



	L.
	OPERATOR is the owner of one or more Nacelles operated for Commercial Aviation use, and the lessee if such Nacelle(s) is the subject of
a lease.



	M.
	PART(S) means Nacelle parts delivered to the Operator as original equipment in a Nacelle or Nacelle parts sold and delivered by IAE to
the Operator as new spare parts in support of a Nacelle.



	N.
	PARTS LIFE LIMIT is the maximum allowable Parts Time, for specific Parts as established by IAE or by the Federal Aviation Administration
in an Airworthiness Directive.



	O.
	PARTS REPAIR means the IAE designated restoration of Failed Parts to functional serviceable status, excluding repair of normal wear and
tear, as mutually determined by IAE and ACA.



	P.
	PARTS TIME is the total number of flight hours of operation of a Part.



	Q.
	PRIMARY PART means a Part of a Nacelle other than a First Run Nacelle Part but not having more than [***].



	R.
	RECONDITIONING means the restoration of a Nacelle allowing substitution of new or serviceable used Parts, to the extent necessary for
continued operation of the Nacelle as a serviceable unit. When such Reconditioning is performed by IAE designated V2500 Maintenance Center, the Parts Time, of the replaced Part shall, for the purpose
of this Service Policy, be applicable to the substituted new or serviceable used Part. Said replaced Part shall become the property of IAE.



	S.
	REOPERATION is the alternation to or modification of a Part. 



79







 



	T.
	RESULTANT DAMAGE is the damage suffered by a Part because of the Failure of another Part within the same Nacelle.



	U.
	SCRAPPED PARTS (SCRAP, SCRAPPED, SCRAPPAGE) shall mean those Parts mutually determined by IAE and ACA to be unserviceable and not
Economically Repairable. The Operator shall cause such Parts to be mutilated or disposed of in such a manner as to preclude any possible further use as a Nacelle Part.






	IV
	GENERAL
CONDITIONS 



The
following general conditions govern the application of this Service Policy: 


	A.
	Records and Audit



The
Operator shall maintain adequate records for the administration of this Service Policy and shall permit IAE to audit such records at reasonable intervals. 



	B.
	Scrapping of Parts



	1.
	Scrappage
Verification 









Any
Part for which a Parts Credit Allowance is requested shall be verified as Scrapped prior to the issuance of the Allowance. Verification of Scrappage shall occur as Follows: 


	a.
	At
the Operator's, or its subcontractor's, facility. Such verification shall be accomplished by the IAE Field Representative.



	b.
	At
a V2500 Maintenance Center designated by IAE, provided that IAE concurs that the Part is to be Scrapped. Sufficient information to identify the Nacelle from which the Part was
removed, and the reason for its return shall be provided.







	2.
	Return
of Parts 




IAE,
at its sole option, may require the Operator to return to IAE any Part for which a Parts Credit Allowance is requested. Such return shall be a condition for the issuance of a Parts Credit
Allowance. 



	3.
	Transportation
Expenses 





Transportation
expenses shall be at the expense of the Operator if such Parts are shipped to and from a V2500 Maintenance Center designated by IAE for examination and verification; except, that IAE
shall pay the expense of transport of such Parts as are shipped at the request of IAE. 



	4.
	Title 



Title
to such Parts returned to IAE shall vest in IAE. 


	a.
	Upon
determination by IAE that the Operator is eligible for a Parts Credit Allowance. If it is determined that the Parts are scrapped Parts but are not eligible for Service Policy
coverage, the Operator will be notified of the decision and the Parts returned at the Operator's expense if the Operator so requests; otherwise, the Parts will be disposed of by IAE without any type
of adjustment, or



	b.
	Upon
shipment, when such Parts are determined to be Scrap at the Operator's facility and are shipped to IAE at the request of IAE.






	C.
	Repairability Requirements







The
Operator shall set aside and exclude from the operation of this Service Policy for a period of [***] any Part for which IAE states it has, or plans to initiate, an active
program to 




80







 


achieve
a repair, corrective Reoperation or Parts Life Limit extension. In the event IAE has not released a repair procedure, corrective Reoperation, or Parts Life Limit extension by the expiration of
this [***] period, such Part shall be retained by the Operator and excluded from the operation of this Service Policy for additional periods beyond the expiration of said
[***] period only if agreed to by the Operator. 



	D.
	Exclusions from Service Policy





This
Service Policy will not apply to any Nacelle, or Part if [***] said Nacelle or Part has Failed because it: 


	1.
	Has
not been properly installed or maintained accordance with the reasonable written operating and maintenance instructions (which take into account ACA's operational needs) issued by
IAE and the Aircraft Manufacturer, which instructions are consistent with and do not contradict the maintenance program for the Aircraft and the Engines developed and agreed to by ACA in accordance
with Federal Aviation Administration requirements.



	2.
	Has
been used contrary to the operating and maintenance instructions or recommendations authorized or issued by IAE (including, but not limited to, the Maintenance Management Plan and
the Interactive Electronic Technical Manual) or the Aircraft Manufacturer (including, but not limited to, the Maintenance Planning Document) and current at the time, or



	3.
	Has
been repaired or altered outside any V2500 Maintenance Center in such a way as to impair its safety, operation or efficiency, or



	4.
	Has
been subjected to:



	a.
	Misuse,
malicious acts, neglect, or accident, or



	b.
	Ingestion
of foreign material, or






	5.
	Has
been affected in any way by a part not defined as a Part, replacement for a Vendor Part, Expendable Part herein or a consumable, or



	6.
	Has
been affected in any way by occurrences not associated with ordinary use, such as, but not limited to, acts of war, acts of God, rebellion, seizure or other belligerent acts in
each case, to the extent that such events can be reasonably determined to have contributed to the Failure of the Nacelle or Parts.






	E.
	Payment Options




IAE
at its option may grant any Parts Credit Allowance as either a credit to the Operator's account or as a Part replacement. 



	F.
	Presentation of Claims



Any
request for an Allowance must be presented to IAE not later than [***] after the removal from service for Failure of the Nacelle or Part for which the Allowance is
requested. IAE will respond in writing to any such request within [***] of ACA's presentation of such request. If IAE disallows the request, written notification will be
provided to the Operator. The Operator shall have [***] from such notification to request a reconsideration of the request for Allowance. IAE shall have the right to refuse any
request for a Credit Allowance which is not submitted within the stated time periods. 




81







 



	G.
	Duration of Service Policy





This
Service Policy will normally cease to apply to all Parts in any Nacelle that is more than ten years old as measured from the date of shipment of the Nacelle from the factory. This Service Policy
shall, however, continue to be applicable to individual Nacelles after the expiration of the ten year period on a year to year basis so that the Operator may continue to receive the benefits of the
Service Policy on the Parts in these Nacelles. 



	H.
	General Administration





On
matters concerning this Service Policy, the Operator is requested to address all correspondence to: 



IAE
International Aero Engines AG

400 Main Street

Mail Stop 121-10

East Hartford, CT 06108 


Attention:
Warranty Administration 




	I.
	Limitation of Liability



	1.
	The
express provisions of this Service Policy set forth the maximum liability of IAE with respect to any claims relating to this Service Policy.



	2.
	Except
to the extent that the Allowances and adjustments expressly set forth in this Service Policy may exceed the limitations of the corresponding portions of any warranties or
representations included in any sales agreements, the provisions of this Service Policy do not modify, enlarge or extend in any manner the conditions governing the sale of its Nacelles and Parts by
IAE.



	3.
	IAE
reserves the right to change or retract this Service Policy at any time at its sole discretion. No such retraction or change shall diminish the benefits which the Operator may be
entitled to receive with respect to Nacelles for which an acceptable order has been placed with IAE or with respect to aircraft with installed Nacelles for which firm orders have been placed or
options obtained with the aircraft manufacturer prior to the announcement of any such retraction or change. 






82












   EXHIBIT D-3  


 V2500 WARRANTY FOR SPECIAL TOOLS AND GROUND EQUIPMENT  


	1.
	If
a defect in material or workmanship becomes apparent in any item of special tooling and ground equipment within one year from the date of receipt of such item by the Operator, then
IAE will either, as it may in its sole discretion, determine to promptly repair or exchange such item free of charge.



	2.
	The
obligations of IAE under this Warranty are subject to the following terms and conditions.



	2.1
	The
defect must not be due to misuse, negligence of anyone other than IAE, malicious acts, accident or misapplication.



	2.2
	The
defect in such item shall not have arisen because such item was used, maintained, modified, stored or handled other than in a manner approved by IAE or the applicable
manufacturers.



	2.3
	Any
claim under this Warranty shall be made in writing to IAE within [***] of the discovery of the defect and the defective item shall be made available or
sent (at IAE's expense, provided such item is judged to be defective by IAE and such item is returned in accordance with the reasonable written instructions provided to ACA by IAE) to IAE for
inspection as it may require.






	3.
	IAE
shall not be liable for any incidental, consequential or resultant loss or damage howsoever occurring, nor for labor costs involved in removal or replacement of parts. 


83







 
EXHIBIT D-4  


 V2500 GUARANTEES—SPECIFIC CONDITIONS  


	A.
	The
Guaranteed Rates set forth Exhibits D-5 through D-11 are all predicated on the following specific conditions (the "Specific Conditions") for the Firm
Aircraft, Firm Spare Engines, Option Aircraft and Leased Aircraft. For purposes of the Guarantees set forth in Exhibits D-5 through D-11, the Firm Aircraft, Firm Spare Engines,
the Option Aircraft and Leased Aircraft are referred to collectively, as the "Aircraft"):



	1.
	A
fleet average flight cycle of [***] hours;



	2.
	Thrust
levels which are derated to a fleet average [***] for Takeoff relative to full Takeoff ratings;



	3.
	A
fleet average Aircraft utilization equal to or less than [***] per year;



	4.
	An
Aircraft delivery schedule in respect of the Aircraft and Firm Spare Engines as described in the Contract to which this Guarantee is attached and such Aircraft being operated and
maintained by or on behalf of ACA or by or on behalf of its sublessee with a maintenance program approved by the applicable aviation authority;



	5.
	Installed
Engines being purchased at the thrust ratings contemplated in Exhibit B to the Contract;



	6.
	A
fleet average ambient temperature at Takeoff of [***] Celsius; and



	7.
	The
installed Engines and Firm Spare Engines being maintained in accordance with the reasonable written operating and maintenance instructions (which take into account ACA's
operational needs) issued by IAE and the Aircraft Manufacturer, which instructions are consistent with and do not contradict the maintenance program for the Aircraft and the Engines developed and
agreed to by ACA in accordance with Federal Aviation Administration requirements.






	B.
	IAE
reserves the right to make [***] appropriate adjustments [***] to the Guaranteed Rate(s) if (a) there is a variation from the
conditions upon which the Guaranteed Rate(s) is predicated; (b) there is a discontinuation of operation (other than due to lease expiration) by ACA of any Engine or any V2500 powered Aircraft
subsequent to delivery to ACA or (c) ACA acquires Option Aircraft and/or Option Spare Engines. [***]



	C.
	The
intent of the Guarantees is to provide specified benefits to ACA as a result of the failure of Eligible Engines to achieve the reliability level stipulated in the Guarantees. It is
not the intent, however, to duplicate benefits provided to ACA under any other applicable guarantee, sales warranty, service policy, or any special benefit of any kind as a result of the same failure.
Therefore, the terms and conditions of the Guarantees notwithstanding, if the terms of the Guarantees should make duplicate benefits available to ACA from IAE or any third party, ACA may elect to
receive the benefits under the specific guarantee or under any of the other benefits described in the Guarantee, but not both. 


84








   EXHIBIT D-5  


 V2500 RELIABILITY (SHOP VISIT) GUARANTEE  


	I
	INTRODUCTION




IAE
guarantees ACA that by the end of the [***] year period commencing with ACA's commercial operation of the first Aircraft powered by V2500 Engines, the cumulative Engine
Shop Visit Rate will not exceed a Guaranteed Rate of [***] per 1000 Eligible Engine flight hours. Under this Guarantee, if the cumulative Engine Shop Visit Rate is determined
to exceed the Guaranteed Rate, IAE's will credit ACA's account with IAE a fixed amount of [***] U.S. Dollars for each Eligible Engine Shop Visit determined to have been in
excess of the Guaranteed Rate. 



	II
	GUARANTEE




        A.    Period of Guarantee    




The
Period of Guarantee will start on the date ACA initiates commercial operation of its first Aircraft powered by Eligible Engines and will terminate for each Eligible Engine originally installed on
the Aircraft in accordance with the schedule set forth in Clause D of Exhibit D-4 ("Period of Guarantee"). 





        B.    Eligible Engines    




The
Engines that will be Eligible under this Guarantee shall be the Engines which have been acquired pursuant to the Contract to which this Guarantee is attached or contract for delivery of the
Aircraft, and shall (as a matter of clarification) also include for purposes of this Guarantee, the Leased Aircraft. The eligibility of the installed Engines and Firm Spare Engines under this
Guarantee is contingent upon such Engines and Firm Spare Engines being maintained in accordance with the reasonable written operating and maintenance instructions (which take into account ACA's
operational needs) issued by IAE and the Aircraft Manufacturer, which instructions are consistent with and do not contradict the maintenance program for the Aircraft and the Engines developed and
agreed to by ACA in accordance with Federal Aviation Administration requirements. 





        C.    Eligible Shop Visits    




"Eligible Shop Visits" shall comprise shop visits for Eligible Engines which are necessary for the following reasons: 


	1.
	a
Failure of a Part in such Eligible Engines;



	2.
	non-negligent
ingestion of foreign objects such as birds, ice, hail or runway gravel, where such ingestion occurs when an active Foreign Object Damage prevention program is
in operation. Such active Foreign Object Damage prevention program shall be FAA approved or an equivalent to an FAA approved program and include, but not be limited to, animal nuisance control and
runway sweeping;



	3.
	an
Airworthiness Directive issued by the Certification Authority based on the certification rules in effect as of the date of delivery of each Aircraft for each Engine;



	4.
	maintenance
as recommended by IAE; or



	5.
	performance
degradation beyond Engine Manual limits as determined following prudent consultation with IAE's technical representative. 




85







 





        D.    Reporting of Engine Shop Visits and Engine Flight Hours    




Eligible
Shop Visits shall be reported to IAE by ACA within [***] after the date of such Shop Visit with information as may be required to confirm the eligibility of the Shop
Visit. The supplied information shall be verified by an authorized IAE Representative before submission. Should it be necessary for the IAE Representative to disqualify a reported Shop Visit,
supporting information will be furnished. ACA shall have the right to provide additional information for IAE's consideration in an effort to qualify such event as eligible. 



Flight
hours accumulated by Eligible Aircraft shall be reported to IAE by ACA after each yearly anniversary of the commencement of the Period of Guarantee in an electronic format reasonably agreed to
by IAE. 


ACA's
failure to provide data will not invalidate the coverage provided by this Guarantee if data can be accurately recreated unless the data was specifically requested by IAE and ACA failed to
provide the information in a timely manner. 





        E.    Credit Allowance Calculation    




A
fixed credit [***] U.S. Dollars will be granted by IAE for each Eligible Engine Shop Visit determined as calculated below to be in excess of the Guaranteed Rate during the
Period of Guarantee. An annual calculation will be made by IAE (with ACA having the right to audit such calculation upon request) no later than [***] after each yearly
anniversary of the commencement of the Period of Guarantee provided that the necessary Engine Shop Visit records and Eligible Engine flight hour information have been reported to IAE. 


Each
annual calculation will be made using data that will be cumulative from the start of the Period of Guarantee. An interim credit will be granted, if then available, following the annual
calculations for the second year and each subsequent year of the Period of Guarantee. If subsequent annual calculations show that on a cumulative basis, a previous interim credit (or portion thereof)
was in excess of that due under this Guarantee, such excess amount shall be subject to repayment which will be effected by IAE
issuing a debit against ACA's account with IAE. Credits and debits will be applied to ACA's account with IAE not later than [***] following a calculation for the second year
and each subsequent year of the Period of Guarantee, as applicable. 


Credit
Allowance = (AR-GR) × [***] U.S. Dollars 


where:



AR =  Total
Eligible Engine Shop Visits during the period of the calculation. 



GR =  [***] × total
Engine flight hours accumulated on Eligible Engines during the period of the calculation. 




	III
	DEFINITIONS
AND GENERAL CONDITIONS 



All
of the Definitions and General Conditions of the V2500 Engine and Parts Service Policy shall apply to this Guarantee. In the case of conflict between the Definitions and General Conditions of the
V2500 Engine and Parts Service Policy and the terms and conditions of this Guarantee, this Guarantee shall govern. Engines and Engine Shop Visits excluded by the General Conditions of the Policy shall
be excluded from this Guarantee, except that Engine Shop Visits resulting from ingestion of birds, hailstones or runway gravel shall be included as Eligible under this Guarantee. 



86








   EXHIBIT D-6 


V2500
FIRST RUN EXHAUST GAS TEMPERATURE GUARANTEE 


	I
	INTRODUCTION




IAE
guarantees ACA that during the Period of Guarantee for each Eligible Engine, the maximum stabilized takeoff exhaust gas temperature will not exceed the Certified Limit, as defined in the Engine
Manual, for such Eligible Engine. Under this Guarantee if it is confirmed that the Certified Limit has been exceeded, IAE's sole obligation will be to credit ACA's account with IAE in the fixed amount
of [***] USD for each event plus any costs incurred in establishing calibration as specified in Section II.D below. For the purpose of this Guarantee, the Certified
Limit is exceeded if the Engine will not achieve the specified engine pressure ratio for takeoff thrust without exceeding the Certified Limit for its Exhaust Gas Temperature. 



	II
	GUARANTEE




        A.    Period of Guarantee    




The
Period of Guarantee for each Eligible Engine will start on the date ACA initiates commercial operation of its first Aircraft powered by Eligible Engines and will terminate for each Eligible Engine
originally installed on the Aircraft in accordance with the schedule set forth in Clause D of Exhibit D-4 ("Period of Guarantee"). 





        B.    Eligible Engines    




The
Engines that will be Eligible under this Guarantee shall be the Engines which have been acquired pursuant to the Contract to which this Guarantee is attached or contract for delivery of the
Aircraft, and shall (as a matter of clarification) also include for purposes of this Guarantee, the Leased Aircraft. The eligibility of the installed Engines and Firm Spare Engines under this
Guarantee is contingent upon such Engines and Firm Spare Engines being maintained in accordance with the reasonable written operating and maintenance instructions (which take into account ACA's
operational needs) issued by IAE and the Aircraft Manufacturer, which instructions are consistent with and do not contradict the maintenance program for the Aircraft and the Engines developed and
agreed to by ACA in accordance with Federal Aviation Administration requirements. 





        C.    Restoration of Installed Engine    




If
during the Period of Guarantee, the maximum stabilized takeoff exhaust gas temperature of an Eligible Engine installed in an Aircraft operated by ACA approaches the Certified Limit, ACA shall
undertake on-wing Engine maintenance reasonably recommended by IAE, with technical assistance provided by IAE, to restore the performance of that Engine. 





        D.    Calibration of Removed Engine    




If
the exhaust gas temperature exceeds the Certified Limit and the performance of an installed Eligible Engine cannot be restored by the maintenance recommended under Section II,
Paragraph C, ACA shall promptly remove such Engine from the Aircraft and dispatch it at its cost for calibration in an IAE reasonably designated test cell. [***] 





        E.    Reporting of Excess EGT Exceedance Engine Removals    




Excess
EGT Exceedance Engine Removals shall be reported to IAE by ACA within [***] after the date of such excess engine removal with information as may be required to determine
the eligibility of the excess engine removal. The supplied information shall be verified by an authorized IAE Representative before submission. Should it be necessary for 




87







 


the
IAE Representative to disqualify a reported excess engine removal, supporting information will be furnished. This guarantee shall only be administered where such information is provided to IAE by
ACA in a timely manner. 


ACA's
failure to provide data will not invalidate the coverage provided by this Guarantee if data can be accurately recreated unless the data was specifically requested by IAE and ACA failed to
provide the information in a timely manner. 





        F.    Credit Allowance Calculation    




A
fixed credit of [***] U.S. Dollars will be granted by IAE for each event not meeting the requirements set forth in Section I of this guarantee and as verified by
Section II, Paragraph E. above. 




	III
	DEFINITIONS
AND GENERAL CONDITIONS 



All
of the Definitions and General Conditions of the V2500 Engine and Parts Service Policy shall apply to this Guarantee. In the case of conflict between the Definitions and General Conditions of the
V2500 Engine and Parts Service Policy and the terms and conditions of this Guarantee, this Guarantee shall govern. Engines excluded by the General Conditions of the Policy shall be excluded from this
Guarantee. 



88








   EXHIBIT D-7 


V2500
INFLIGHT SHUTDOWN GUARANTEE 


	I
	INTRODUCTION




IAE
guarantees ACA that by the end of the ten (10) year period commencing with ACA's commercial operation of the first Aircraft powered by V2500 Engines, the cumulative Engine Inflight Shutdown
Rate will not exceed a Guaranteed Rate of [***] per 1000 Eligible Engine flight hours. Under this Guarantee, if the cumulative Eligible Inflight Shutdown Rate is determined to
have exceeded the Guaranteed Rate over the Period of Guarantee, IAE's sole obligation will be to credit ACA's account with IAE a fixed amount of [***] U.S. Dollars for each
Eligible Inflight Shutdown determined to have been in excess of the Guaranteed Rate. 



	II
	GUARANTEE




        A.    Period of Guarantee    




The
Period of Guarantee will start on the date ACA initiates commercial operation of its first Aircraft powered by Eligible Engines and will terminate for each Eligible Engine originally installed on
the Aircraft in accordance with the schedule set forth in Clause D of Exhibit D-4 ("Period of Guarantee"). 





        B.    Eligible Engines    




The
Engines that will be Eligible under this Guarantee shall be the Engines which have been acquired pursuant to the Contract to which this Guarantee is attached or contract for delivery of the
Aircraft, and shall (as a matter of clarification) also include for purposes of this Guarantee, the Leased Aircraft. The eligibility of the installed Engines and Firm Spare Engines under this
Guarantee is contingent upon such Engines and Firm Spare Engines being maintained in accordance with the reasonable written operating and maintenance instructions (which take into account ACA's
operational needs) issued by IAE and the Aircraft Manufacturer, which instructions are consistent with and do not contradict the maintenance program for the Aircraft and the Engines developed and
agreed to by ACA in accordance with Federal Aviation Administration requirements. 





        C.    Eligible Inflight Shutdowns    




Eligible
Inflight Shutdowns shall comprise the inflight shutdown of an Eligible Engine during a flight which is determined to have been caused by a Failure of a Part of such Engine. Multiple inflight
shutdowns of the same Engine during the same flight leg for the same problem will be counted as one Eligible Inflight Shutdown. A subsequent inflight shutdown on a subsequent flight leg for the same
problem where corrective action has not been attempted will be excluded. 





        D.    Reporting of Eligible Inflight Shutdowns and Eligible Engine Flight Hours    




Eligible
Inflight Shutdowns shall be reported to IAE by ACA within [***] after the date of such Inflight Shutdown with information as may be needed to confirm the eligibility
of the Inflight Shutdown. The supplied information shall be verified by an authorized IAE Representative before submission. Should it be necessary for the IAE Representative to disqualify a reported
Inflight Shutdown, IAE will notify ACA of such intent and supporting information will be furnished. ACA shall have the right to provide additional information for IAE's consideration in an effort to
qualify such event as eligible. 




89







 


Eligible
Engine Flight Hours accumulated by Eligible Aircraft shall be reported to IAE by ACA on the anniversary of the delivery of the first Aircraft and annually thereafter in an electronic form
reasonably agreed to by IAE. 


ACA's
failure to provide data will not invalidate the coverage provided by this Guarantee if data can be accurately recreated unless the data was specifically requested by IAE and ACA failed to
provide the information in a timely manner. 





        E.    Credit Allowance Calculation    




A
fixed credit of [***] U.S. Dollars will be granted by IAE for each Eligible Inflight Shutdown determined as calculated below to be in excess of the Guaranteed Rate during the
Period of Guarantee. An annual calculation will be made by IAE (with ACA having the right to audit such calculation upon request) no later than [***] after each yearly
anniversary of the commencement of the Period of Guarantee provided that the necessary Inflight Shutdown records and Eligible Engine flight hour information have been reported to IAE. 


Each
annual calculation will be made using data that will be cumulative from the start of the Period of Guarantee. An interim credit will be granted, if then available, following the annual
calculations for the second year and each subsequent year of the Period of Guarantee. If subsequent annual calculations show that on a cumulative basis, a previous interim credit (or portion thereof)
was in excess of that due under this Guarantee, such excess amount shall be subject to repayment which will be effected by IAE issuing a debit against ACA's account with IAE. Credits and debits will
be applied to ACA's account with IAE not later than [***] following a calculation for the second year and each subsequent year of the Period of Guarantee, as applicable. 




	The Credit Allowance = (AI-GI) × [***] U.S. Dollars
	

Where:	
 	

 
	

AI	
 	

=	
 	

Total Eligible Inflight Shutdowns during the period of the calculation;
	

GI	
 	

=	
 	

([***]/1,000) × total Engine flight hours accumulated on Eligible Engines during the period of the calculation.





	III
	DEFINITIONS
AND GENERAL CONDITIONS 





All
of the Definitions and General Conditions of the V2500 Engine and Parts Service Policy shall apply to this Guarantee. In the case of conflict between the Definitions and General Conditions of the
V2500 Engine and Parts Service Policy and the terms and conditions of this Guarantee, this Guarantee shall govern. Engines and Inflight Shutdowns excluded by the General Conditions of the Policy shall
be excluded from this Guarantee. 



90








   EXHIBIT D-8 


V2500
REMOTE SITE REMOVAL GUARANTEE 


	I
	INTRODUCTION




IAE
guarantees ACA that by the end of [***] year period commencing with ACA's commercial operation of the first Aircraft powered by V2500 Engines, the cumulative Remote Site
Removal Rate will not exceed a Guaranteed Rate of [***] per 1000 Eligible Engine flight hours. Under this Guarantee, if the cumulative Eligible Remote Site Removal Rate is
determined to have exceeded the Guaranteed Rate over the Period of Guarantee, IAE's sole obligation will be to credit ACA's account with IAE a fixed amount of [***] U.S.
Dollars for each Eligible Remote Site Removal determined to have been in excess of the Guaranteed Rate. 



	II
	GUARANTEE




        A.    Period of Guarantee    




The
Period of Guarantee will start on the date ACA initiates commercial operation of its first Aircraft powered by Eligible Engines and will terminate for each Eligible Engine originally installed on
the Aircraft in accordance with the schedule set forth in Clause D of Exhibit D-4 ("Period of Guarantee"). 





        B.    Eligible Engines    




The
Engines that will be Eligible under this Guarantee shall be the Engines which have been acquired pursuant to the Contract to which this Guarantee is attached or contract for delivery of the
Aircraft, and shall (as a matter of clarification) also include for purposes of this Guarantee, the Leased Aircraft. The eligibility of the installed Engines and Firm Spare Engines under this
Guarantee is contingent upon such Engines and Firm Spare Engines being maintained in accordance with the reasonable written operating and maintenance instructions (which take into account ACA's
operational needs) issued by IAE and the Aircraft Manufacturer, which instructions are consistent with and do not contradict the maintenance program for the Aircraft and the Engines developed and
agreed to by ACA in accordance with Federal Aviation Administration requirements. 





        C.    Eligible Remote Site Removals    




Eligible
Remote Site Removals shall be the unplanned removals of an Eligible Engine from an Aircraft at a location, other than ACA's main base, at which there is no serviceable V2500 Engine, which
removal is determined to have been caused by a Failure of a Part of such Engine. 





        D.    Reporting of Eligible Remote Site Removals and Eligible Engine Flight Hours    




Eligible
Remote Site Removals shall be reported to IAE by ACA [***] after the date of such Remote Site Removal with information as may be required to confirm the eligibility of
the Remote Site Removal. The supplied information shall be verified by an authorized IAE Representative before submission. Should it be necessary for the IAE Representative to disqualify a reported
Remote Site Removal, supporting information will be furnished. ACA shall have the right to provide additional information for IAE's consideration in an effort to qualify such event as eligible. 


Eligible
Engine Flight Hours accumulated by Eligible Aircraft shall be reported to IAE by ACA after each yearly anniversary of the commencement of the Period of Guarantee in an electronic format
reasonably agreed to by IAE. 




91







 





ACA's
failure to provide data will not invalidate the coverage provided by this Guarantee if data can be accurately recreated unless the data was specifically requested by IAE and ACA failed to
provide the information in a timely manner. 





        E.    Credit Allowance Calculation    




A
fixed credit of [***] U.S. Dollars will be granted by IAE for each Eligible Remote Site Removal determined as calculated below to be in excess of the Guaranteed Rate during
the Period of Guarantee. An annual calculation will be made by IAE (with ACA having the right to audit such calculation upon request) no later than [***] after each yearly
anniversary of the commencement of the Period of Guarantee provided that the necessary Remote Site Removal records and Eligible Engine flight hour information have been reported to IAE. 


Each
annual calculation will be made using data that will be cumulative from the start of the Period of Guarantee. An interim credit will be granted, if then available, following the annual
calculations for the second year and each subsequent year of the Period of Guarantee. If subsequent annual calculations show that on a cumulative basis, a previous interim credit (or portion thereof)
was in excess of the Guarantee Rate, such excess amount shall be subject to repayment which will be effected by IAE issuing a debit against ACA's account with IAE. Credits and debits will be applied
to ACA's account with IAE not later than [***] following a calculation for the second year and each subsequent year of the Guarantee Period, as applicable. 


Credit
Allowance = (CRSR-RSR) × [***] U.S. Dollars where: 


CRSR =
Total Eligible Remote Site Removals during the period of the calculation. 


RSR     =
[***]/1000) × total Engine flight hours accumulated on Eligible Engines during the period of the calculation. 




	III
	DEFINITIONS
AND GENERAL CONDITIONS 



All
of the Definitions and General Conditions of the V2500 Engine and Parts Service Policy shall apply to this Guarantee. In the case of conflict between the Definitions and General Conditions of the
V2500 Engine and Parts Service Policy and the terms and conditions of this Guarantee, this Guarantee shall govern. Remote Site Removals excluded by the General Conditions of the Policy shall be
excluded from this Guarantee. 



92








   EXHIBIT D-9  


 DELAY & CANCELLATION GUARANTEE  


	I
	INTRODUCTION




IAE
guarantees ACA that by the end of [***] year period commencing with ACA's commercial operation of the first Aircraft powered by V2500 Engines, the cumulative Engine-caused
Delay and Cancellation Rate will not exceed a Guaranteed Rate of [***] per 100 Aircraft departures. Under this Guarantee, if the cumulative Engine-caused Delay and Cancellation
Rate is determined to have exceeded the Guaranteed Rate over the Period of Guarantee, IAE's sole obligation will be to credit ACA's account with IAE an amount of [***] U.S.
Dollars for each excess Eligible Delay and Cancellation determined to have been in excess of the Guaranteed Rate. 



	II
	GUARANTEE




        A.    Period of Guarantee    




The
Period of Guarantee will start on the date ACA initiates commercial operation of its first Aircraft powered by Eligible Engines and will terminate for each Eligible Engine originally installed on
the Aircraft in accordance with the schedule set forth in Clause D of Exhibit D-4 ("Period of Guarantee"). 





        B.    Eligible Engines    




The
Engines that will be Eligible under this Guarantee shall be the Engines which have been acquired pursuant to the Contract to which this Guarantee is attached or contract for delivery of the
Aircraft, and shall (as a matter of clarification) also include for purposes of this Guarantee, the Leased Aircraft. The eligibility of the installed Engines and Firm Spare Engines under this
Guarantee is contingent upon such Engines and Firm Spare Engines being maintained in accordance with the reasonable written operating and maintenance instructions (which take into account ACA's
operational needs) issued by IAE and the Aircraft Manufacturer, which instructions are consistent with and do not contradict the maintenance program for the Aircraft and the Engines developed and
agreed to by ACA in accordance with Federal Aviation Administration requirements. 





        C.    Eligible Delay    




An
Eligible Delay shall occur when a Failure of a Part in an Eligible Engine installed in an Aircraft is demonstrated to [***] be the primary cause of a delay in the final
Departure of that Aircraft by more than fifteen minutes after its programmed Departure in either of the following instances: 


	1)
	an
originating flight departing later than its scheduled Departure time; or



	2)
	a
through flight or a turnaround flight remaining on the ground longer than its scheduled ground time. 





        D.    Eligible Cancellation    




A
single Cancellation shall occur when a Failure of a Part in an Eligible Engine installed in an Aircraft is the primary cause of the elimination of a Departure in the following instance: cancellation
of any flight leg; provided, however, cancellation of subsequent flight legs for the same cause shall not constitute an Eligible Cancellation. 



A
Departure which is cancelled after an Eligible Delay shall be an Eligible Cancellation not an Eligible Delay. 




93







 





Consecutive
Delays and Cancellations for the same problem because corrective action that could have been taken in a reasonable manner had not been taken will be excluded unless ACA is prevented from
taking corrective action due to a failure of IAE to reasonably provide technical support. 





        E.    Departure    




A
Departure comprises the movement of an Aircraft from the blocks for the purpose of an intended scheduled commercial revenue flight, provided that there can be only one Departure for each intended
flight leg. 





        F.    Reporting of Eligible Delays and Cancellations and Aircraft Departures    




Eligible
Delays and Cancellations shall be reported to IAE by ACA within [***] after the date of such Delay and Cancellation with information as may be needed to confirm the
Eligibility of the Delay and Cancellation. The supplied information shall be verified by an authorized IAE Representative before submission. Should it be necessary for the IAE Representative to
disqualify a reported Delay and Cancellation, IAE will (with ACA having the right to audit such calculation upon request) notify ACA of such intent, and supporting information will be furnished. ACA
shall have the right to provide additional information for IAE's consideration in an effort to qualify such event as eligible. 


Departures
accumulated by Eligible Engines shall be reported to IAE by ACA after each yearly anniversary of the commencement of the Period of Guarantee in an electronic format to be reasonably agreed
to by IAE. 


ACA's
failure to provide data will not invalidate the coverage provided by this Guarantee if data can be accurately recreated unless the data was specifically requested by IAE and ACA failed to
provide the information in a timely manner. 





        G.    Credit Allowance Calculation    




A
fixed credit of [***] U.S. Dollars will be granted by IAE for each Eligible Delay and Eligible Cancellation determined as calculated below to be in excess of the Guaranteed
Rate during the Period of Guarantee. An annual calculation will be made by IAE (with ACA having the right to audit such calculation upon request) no later than [***] after each
yearly anniversary of the commencement of the Period of Guarantee provided that the necessary records of Delays, Cancellations and Departures have been reported to IAE. 


Each
annual calculation will be made using data that will be cumulative from the start of the Period of Guarantee. An interim credit will be granted, if then available, following the annual
calculations for the second year and each subsequent year of the Period of Guarantee. If subsequent annual calculations show that on a cumulative basis, a previous interim credit (or portion thereof)
was in excess of the Guarantee Rate, such excess amount shall be subject to repayment which will be effected by IAE issuing a debit against ACA's account with IAE. Credits and debits will be applied
to ACA's account with IAE not later than [***] following a calculation for the second year and each subsequent year of the Period of Guarantee, as applicable. 


Credit
Allowance = (ADC-GDC) × [***] U.S. Dollars 


Where:



ADC =  Total
qualifying actual Engine Caused Delays and Cancellations claimed and accepted as eligible during the applicable period of the calculation. 




94







 


GDC =  [***]/100) × total
Departures accumulated on Eligible Engines during the applicable period of calculation. 




	III
	DEFINITIONS
AND GENERAL CONDITIONS 



All
of the Definitions and General Conditions of the V2500 Engine and Parts Service Policy shall apply to this Guarantee. In the case of conflict between the Definitions and General Conditions of the
V2500 Engine and Parts Service Policy and the terms and conditions of this Guarantee, this Guarantee shall govern. Engines and Delays and Cancellation excluded by the General Conditions of the Policy
shall be excluded from this Guarantee. In order to constitute an eligible Delay and Cancellation, the Aircraft must have been on the ground for a sufficient period of time to enable effective
troubleshooting and corrective action. 



95








   EXHIBIT D-10  


 V2500 FUEL CONSUMPTION RETENTION GUARANTEE  


	I
	INTRODUCTION




IAE
guarantees ACA that at the end of the [***] year period commencing with ACA's commercial operation of the first Aircraft powered by V2500 Engines, the fleet average cruise
fuel consumption for Eligible Engines at the time of commencement of commercial operation will not have increased by more than a Guaranteed Margin of [***] Under this
Guarantee, if the cumulative fleet average cruise fuel consumption for Eligible Engines exceeds the Guaranteed Margin at the end of the Guarantee Period, IAE's sole obligation will be to credit ACA's
account with IAE an amount in respect of excess fuel consumed. 



	II
	GUARANTEE




        A.    Period of Guarantee    




The
Period of Guarantee shall start on the date ACA initiates commercial operation of its first Aircraft powered by Eligible Engines and will terminate for each Eligible Engine originally installed on
the Aircraft in accordance with the schedule set forth in Clause D of Exhibit D-4 ("Period of Guarantee"). 





        B.    Anniversary Date    




The
Anniversary Date for administration of this guarantee is each anniversary of the start of the guarantee period. 





        C.    Period of Calculation    




The
Period of Calculation for administration of this guarantee is the year preceding each Anniversary Date. 





        D.    Eligible Engines    




The
Engines that will be Eligible under this Guarantee shall be the Engines which have been acquired pursuant to the Contract to which this Guarantee is attached or contract for delivery of the
Aircraft, and shall (as a matter of clarification) also include for purposes of this Guarantee, the Leased Aircraft. The eligibility of the installed Engines and Firm Spare Engines under this
Guarantee is contingent upon such Engines and Firm Spare Engines being maintained in accordance with the reasonable written operating and maintenance instructions (which take into account ACA's
operational needs) issued by IAE and the Aircraft Manufacturer, which instructions are consistent with and do not contradict the maintenance program for the Aircraft and the Engines developed and
agreed to by ACA in accordance with Federal Aviation Administration requirements. 





        E.    Fuel Consumption Measurement    




The
inflight data required for administration of this Guarantee will be obtained by ACA during steady state cruise conditions using methods which shall be mutually agreed between ACA and IAE prior to
entry into service of the first Aircraft and may include, at ACA's option, ECM data recordings and the ECM II software available from IAE (requires the ECM sales order option from Airbus). 



Provided
that: 


	a)
	the
fuel consumption data for any Eligible Engine on which the engine parameters indicate a possible malfunction (including associated Aircraft systems), other than normal 




96







 



gas
path deterioration, that is subsequently confirmed by maintenance action will not be considered acceptable data, and 



	b)
	data
which is obviously inaccurate under normal engine monitoring practices will not be considered acceptable data; this type of data will be rejected unless ACA validity checks have
established that Total Air Temperature, Fuel Flow Aircraft and Engine Bleed Systems and other Aircraft parameters are within normal operating ranges. 







The
data to be recorded will be that normally recorded for Engine Condition Monitoring purposes and will include the following: 


Altitude

Mach Number

Total Air Temperature (TAT)

Indicated Airspeed (IAS)

Engine Pressure Ratio (EPR)

Fuel Flow

Low Compressor Rotor Speed (N1)

High Compressor Rotor Speed (N2)

Exhaust Gas Temperature (EGT)

Bleed Air Configuration



Engine
Fuel Flow measurements will be referred to in the Standard Engine Fuel Flow-Engine Pressure Ratio Relationship which will be defined for installed Engines by the Aircraft
manufacturer during the Aircraft flight test certification program. 






        F.    Base Fuel Flow    




The
Base Fuel Flow shall be the initial fuel flow level of each Eligible Engine on commencement of its commercial service. This shall be the average of the cruise fuel flow values for the first ten
Acceptable Data Points, which are data points which are not manifestly aberrant, recorded for each Eligible Engine. Base Fuel Flow is represented as a percentage deviation from the Standard Engine
Fuel Flow-Engine Pressure Ratio Relationship. 





        G.    Cruise Fuel Flow    




The
Cruise Fuel Flow shall be the average of the cruise fuel flow values for ten Acceptable Data Points, which are data points which are not manifestly aberrant, for each installed Eligible Engine at
any time after that Engine's Base Fuel Flow is established. Cruise Fuel Flow will also be expressed as a percent deviation from the Standard Engine Fuel Flow-Engine Pressure Ratio
Relationship. 





        H.    Engine Cruise Fuel Flow Deterioration    




The
Cruise Fuel Flow Deterioration for an Eligible Engine shall be the difference between its Cruise Fuel Flow and the Base Fuel Flow expressed in percentage points. 





        I.    Fleet Average Cruise Fuel Consumption Deterioration    




The
Fleet Average Cruise Fuel Consumption Deterioration shall be the cumulative average of the Cruise Fuel Flow Deterioration for all installed Eligible Engines at the Anniversary Date. This is to be
reported to IAE at each Anniversary Date. 




97







 





        J.    Operational Data    




ACA
shall provide the following data to IAE as indicated during the Period of the Guarantee at each Anniversary Date: 



	1.
	Total
quantity of fuel consumed by Eligible Engines during the Period of Calculation (U.S. Gallons).



	2.
	Average
cost of fuel to ACA for the Period of Calculation (U.S. Dollars per U.S. Gallon.



	3.
	Individual
Eligible Engine operating hours for the Period of Calculation identified by engine serial number.



	4.
	Engine
maintenance action information, as requested. 








ACA's
failure to provide data will not invalidate the coverage provided by this Guarantee if data can be accurately recreated unless the data was specifically requested by IAE and ACA failed to
provide the information in a timely manner. 






        K.    Excess Fuel Consumption Credit Calculation    




If
at the end of each Period of Calculation the Fleet Average Fuel Consumption Deterioration exceeds the Guaranteed Margin, IAE will grant ACA a credit in respect to excess fuel consumption calculated
in accordance with the following formula: 



C =  (D-GM)%
YHF 


where: 


C =
the amount of the credit in U.S. dollars 


D
= the Fleet Average Fuel Consumption Deterioration 


GM
= the Guaranteed Margin 


Y =  average
cruise fuel flow of new Eligible Engines expressed in U.S. gallons per hour at the time of commencement of commercial operation for each such Eligible Engine 


H =  the
total of all flight hours flown by ACA's Eligible Engines during the Period of Calculation 



F =  The
average net cost to ACA in U.S. Dollars per U.S. Gallon (after deduction of subsidies or government or other allowances received by ACA), of aviation fuel consumed by ACA
during the Period of Calculation. 





If
subsequent annual calculations show that on a cumulative basis, a previous credit (or portion thereof) was in excess of that due under this Guarantee, such excess amount shall be subject to
repayment which will be effected by IAE issuing a debit against ACA's account with IAE. At ACA's option, the Credit Calculation may be made using the ECM Trend Monitoring Program. In such an event,
the above-referenced reporting requirements will be satisfied through provision by ACA of the necessary reporting data as part of the ECM Trend Monitoring Program and will be provided to IAE on a
regular basis. 



	III
	DEFINITIONS
AND GENERAL CONDITIONS 



All
of the Definitions and General Conditions of the V2500 Engine and Parts Service Policy shall apply to this Guarantee. In the case of conflict between the Definitions and General Conditions of the
V2500 Engine and Parts Service Policy and the terms and conditions of this Guarantee, this Guarantee shall govern. Engines excluded by the General Conditions of the policy shall be excluded from this
Guarantee. 



98








   EXHIBIT D-11  


 V2500 OIL CONSUMPTION RETENTION GUARANTEE  


	I
	INTRODUCTION




IAE
guarantees ACA that by the end of the Period of Guarantee, the fleet average oil consumption will not exceed a cumulative average of [***] quart per Engine Flight Hour.
Under this Guarantee, if the cumulative average oil consumption exceeds the guaranteed rate of [***] quart per Engine Flight Hour, IAE will credit ACA's account with an amount
in respect of the excess oil consumed. 



	II
	GUARANTEE




        A.    Period of Guarantee    




The
Period of Guarantee will start on the date ACA initiates commercial operation of its first Aircraft powered by Eligible Engines and will terminate for each Eligible Engine originally installed on
the Aircraft in accordance with the schedule set forth in Clause D of Exhibit D-4 ("Period of Guarantee"). 





        B.    Eligible Engines    




The
Engines that will be Eligible under this Guarantee shall be the Engines which have been acquired pursuant to the Contract to which this Guarantee is attached or contract for delivery of the
Aircraft, and shall (as a matter of clarification) also include for purposes of this Guarantee, the Leased Aircraft. The eligibility of the installed Engines and Firm Spare Engines under this
Guarantee is contingent upon such Engines and Firm Spare Engines being maintained in accordance with the reasonable written operating and maintenance instructions (which take into account ACA's
operational needs) issued by IAE and the Aircraft Manufacturer, which instructions are consistent with and do not contradict the maintenance program for the Aircraft and the Engines developed and
agreed to by ACA in accordance with Federal Aviation Administration requirements. 





        C.    Reporting of Oil Consumption    




Eligible
Engine oil consumption shall be reported to IAE by ACA in January of each year for the preceding year in a mutually agreed upon electronic format. Each such form shall be verified by an
authorized IAE representative before submission. 


ACA's
failure to provide data will not invalidate the coverage provided by this Guarantee if data can be accurately recreated unless the data was specifically requested by IAE and ACA failed to
provide the information in a timely manner. 





        D.    Credit Allowance Calculation    




As
part of the credit allowance calculation, ACA must provide all maintenance logs which support the quantity of oil consumed for all ACA flights. An annual calculation will be made by IAE (with ACA
having the right to audit such calculation upon request) no later than [***] after each yearly anniversary of the commencement of the Period of Guarantee provided that the
necessary maintenance logs and Eligible Engine flight hour information have been reported to IAE. 


Each
annual calculation will be made using data that will be cumulative from the start of the Period of Guarantee. An interim credit will be granted, if then available, following the annual
calculations for the second year and each subsequent year of the Period of Guarantee. If subsequent annual calculations show that on a cumulative basis, a previous interim credit (or 




99







 





portion
thereof) was excessive, such excess amount shall be subject to repayment which will be effected by IAE issuing a debit against ACA's account with IAE. Credits and debits will be applied to
ACA's account with IAE not later than [***] following a calculation for the second year and each subsequent year of the Period of Guarantee, as applicable. 




	 	 	Credit Allowance = (AR-GR) X Oil Costs
	

 	
 	

where:	
 	

 	
 	

 
	

 	
 	

AR	
 	

=	
 	

Actual oil consumption per Engine Flight Hour
	

 	
 	

GR	
 	

=	
 	

[***] quart per Engine Flight Hour
	

 	
 	

Oil Cost	
 	

=	
 	

all reasonable and customary Eligible Engine oil consumption costs incurred by ACA during the Period of the guarantee, as agreed between ACA and IAE.




	III
	DEFINITIONS
AND GENERAL CONDITIONS 



All
of the Definitions and General Conditions of the V2500 Engine and Parts Service Policy shall apply to this Guarantee. In the case of conflict between the Definitions and General Conditions of the
Service Policy and the terms and conditions of this Guarantee, this Guarantee shall govern. 



100









  



	[LOGO]	 	International

Aero Engines
 





September 30,
2004 


Mr. Steven
Westberg

Vice President Business Development

Atlantic Coast Airlines

45200 Business Court

Dulles, Virginia 20166 



	Subject:	 	Side Letter No. 1 to the V2500-A5 General Terms of Sale between IAE International Aero Engines AG and Atlantic Coast Airlines ("ACA") dated September 30, 2004





Dear
Mr. Westberg: 


        We
refer to the V2500-A5 General Terms of Sale bearing reference marks O:ACA/GTA dated September 30, 2004 between IAE International Aero Engines AG ("IAE") and
Atlantic Coast Airlines ("ACA"), such contract being hereinafter referred to as the "Contract." Unless expressly stated to the contrary, and to the extent possible, terms used in this Side Letter
No. 1 shall have the same meaning given to them in the Contract. 


        This
Side Letter No. 1 provides for certain financial assistance from IAE to ACA in support of the integration of the Firm Aircraft and Leased Aircraft into its fleet. IAE and ACA
agree that this Side Letter No. 1 constitutes an integral, nonseverable part of the Contract, that the provisions of the Contract are incorporated herein by reference, and that this Letter
Agreement will be governed by the provisions of the Contract except that if the Contract and this Side Letter have provisions that are inconsistent, the provisions of this Side Letter will prevail. 


1.    Confirmation of Agreement to Acquire Aircraft and Engines    


        1.1    Confirmation of Agreement to Purchase Aircraft    



ACA
confirms to IAE that ACA has entered into a purchase agreement with the Aircraft Manufacturer to purchase the fifteen (15) Firm Aircraft and has notified the Aircraft Manufacturer such
aircraft should be equipped with V2500-A5 Propulsion Systems for delivery in accordance with the schedule set forth in Exhibit B-1 to the Contract. Furthermore, ACA
confirms that ACA has procured from the Aircraft Manufacturer the option to purchase up to fifty (50) Option Aircraft to be equipped with V2500-A5 Propulsion Systems for delivery in
accordance with the schedule set forth in Exhibit B-1 to the Contract. 




        1.2    Agreement to Purchase Spare Engines    



Subject
to Clauses 6.7.2 and 6.7.3 of the Contract, ACA agrees to purchase three (3) new Firm Spare Engines from IAE, in accordance with the delivery schedule set forth in
Exhibit B-2 to the Contract, to support the Firm Aircraft and Leased Aircraft. In the event ACA desires to acquire Option Spare Engines to support Option Aircraft, IAE agrees to
sell ACA such Option Spare Engines provided ACA has provided IAE with twelve (12) months prior written notice of the desired delivery date and required thrust rating of such Option Spare
Engine. 


ACA
agrees to purchase a storage bag and transportation stand from IAE for delivery with each Firm Spare Engine and Option Spare Engine purchased from IAE. The additional price for each such storage
bag and engine transportation stand is U.S.$[***]. [***]. 



1







 





2.    Fleet Introductory Assistance Credit    



	2.1
	To
assist ACA with introducing A319-100 Aircraft into its fleet, IAE will credit ACA's account with IAE in the amount of U.S.[***] per Aircraft for
each Firm and Option V2522-A5 powered A319-100 Aircraft.



	2.2
	To
assist ACA with introducing A319-100 Aircraft into its fleet, IAE will credit ACA's account with IAE in the amount of U.S.[***] per Aircraft for
each Firm and Option V2524-A5 powered A319-100 Aircraft.



	2.3
	To
assist ACA with introducing A320-200 Aircraft into its fleet, IAE will credit ACA's account with IAE in the amount of U.S.[***] per Aircraft for
each Firm and Option V2527-A5 powered A320-200 Aircraft.



	2.4
	To
assist ACA with introducing A321-200 Aircraft into its fleet, IAE will credit ACA's account with IAE in the amount of U.S.[***] per Aircraft for
each Firm and Option V2533-A5 powered A321-200 Aircraft.



	2.5
	Each
such credit set forth in Clauses 2.1, 2.2, 2.3 and 2.4 above is subject to escalation, in accordance with the IAE Escalation Formula set forth in Exhibit B-2
to the Contract, from the base month of [***] to the earlier of (a) the date set forth in Exhibit B of the Contract as the scheduled delivery date of the
corresponding Aircraft (as such may be varied pursuant to the terms of the Contract) or (b) the actual delivery date of the corresponding Aircraft unless otherwise provided for herein.



	2.6
	Each
of the credits set forth in Clauses 2.1, 2.2, 2.3 and 2.4 above will be issued upon delivery to, and acceptance by, ACA of the corresponding Aircraft.



	2.7
	IAE
hereby consents to the assignment by ACA of part or all of the credits offered under Clauses 2.1, 2.2, 2.3 and 2.4 above to Airbus, to be applied toward the payment for the
Propulsion Systems for the corresponding Aircraft. Unless ACA notifies IAE in writing to the contrary at least [***] days prior to delivery of each applicable Aircraft, IAE
will assume that ACA has requested that IAE so assign such credits to Airbus. In the event any credit, or portion thereof, under this Clause 2 is assigned to Airbus, ACA agrees that the credit
shall not vest with Airbus until delivery to, and acceptance by, ACA of the respective Aircraft. Alternatively, upon ACA's written notice to IAE at least [***] days prior to
delivery of each applicable Aircraft, all or part of each such credit described in Clauses 2.1, 2.2, 2.3 and 2.4 above may be used by ACA towards the purchase of V2500 Spare Parts, tooling and/or
services from IAE.






	3.
	[***]



	3.1
	[***].



	3.2
	[***]
set forth in Clause 3.1 above [***].



	3.3
	[***]
set forth in Clause 3.1 above [***].



	3.4
	In
consideration of [***] a standard terms of business lease for a V2500 Engine ("STOBL") in the form set forth in Exhibit E to the
Contract with IAE. [***] under this Side Letter No. 1 [***] in the STOBL, and to the extent [***] this Side Letter
No. 1 and the STOBL, [***].






	4.
	[***]



	4.1
	[***].



	4.2
	[***]
set forth in Clause 4.1 above [***]. 





2







 



	4.3
	[***]
set forth in Clause 4.1 above [***].



	4.4
	[***]
set forth in Clause 4.1 above [***] set forth in Clause 4.1. [***] contemplated under
Section 3.4 above.






	5.
	[***]



	5.1
	[***].



	5.2
	[***].



	5.3
	[***]
described in Clauses 5.1 and 5.2 above [***].






	6.
	[***]




[***]




	7.
	Spare
Engine Payment Terms 



Clause 2.7
of the Contract shall be amended and restated as follows: 


	"2.7
	Payment



	2.7.1
	ACA
will make payment in United States Dollars as follows:



	2.7.1.1
	Upon
signature of this Contract, to the extent that such amount has not already been paid by Atlantic Coast Airlines, Atlantic Coast Airlines shall pay to IAE a
[***] deposit of [***] of the Estimated Purchase Price of the [***] firm spare engine purchased by ACA from IAE in accordance
with the delivery schedule set forth in Exhibit B-1 to the Contract ("First Firm Spare Engine").



	2.7.1.2
	[***]
before the scheduled delivery of the First Firm Spare Engine or any option spare engine, Atlantic Coast Airlines shall pay to IAE a further
[***] deposit of [***] of the Estimated Purchase Price of such spare engine.



	2.7.1.3
	[***]
before the scheduled delivery of the First Firm Spare Engine or any Option Spare Engine, Atlantic Coast Airlines shall pay to IAE a
[***] deposit of [***] of the Estimated Purchase Price of such spare engine.



	2.7.1.4
	Immediately
prior to the delivery of each of the First Firm Spare Engine or any Option Spare Engine, Atlantic Coast Airlines shall pay to IAE the balance of the Purchase Price of
such spare engine[***].









	2.7.2
	Reserved.



	2.7.3.
	Subject
to Clause 6.5.3 of the Contract, ACA undertakes that IAE shall receive the full amount of payments falling due under this Clause 2.7, without any withholding
or deduction whatsoever.



	2.7.4
	Reserved.



	2.7.5
	All
payments under this Clause 2.7 shall be made in immediately available funds by wire transfer and shall be deposited not later than the due date of payment or next
Business Day, if such date of payment is not a Business Day with: 







Fleet
Bank N.A.

175 Water Street

New York, NY 10038-4924

Account No. [***]

ABA No. 021200339 






3







 







or
to such other U.S. bank account as otherwise notified from time to time by IAE. 



	2.7.6
	Reserved.



	2.7.7
	If
ACA fails to make any payment for the first Firm Spare Engine or any Option Spare Engine on or before the date when such payment is due, then, without prejudice to any of IAE's
other rights, IAE will (a) be entitled to charge interest on the overdue amount, at the Overdue Rate, from the date such payment was due to the date such payment is made and
(b) [***].



	2.7.8
	For
the purpose of this Clause 2.7, the "Estimated Purchase Price" of any of the Purchased Items shall be calculated in accordance with the following formula. 





P =
B × [***] 


where:




P
is the Estimated Purchase Price 


B
is the applicable Basic Contract Price, net of any applicable discounts or credits. 



N
is the year of scheduled delivery minus the year for which the Basic Contract Price is defined. 






8.    Engine Condition Monitoring Assistance    



Engine
Condition Monitoring Instrumentation is an engine order option for installed Engines and is listed as "Additional Equipment" in the engine specifications set forth in Exhibit A to the
Contract. If ACA selects this option, then, to assist ACA in establishing V2500 Engine Condition Monitoring ("ECM") capability, and subject to the compatibility of ACA's computer hardware, IAE will
provide [***] to ACA such Engine Condition Monitoring Instrumentation and software to be fitted to the Engines originally installed on the Leased Aircraft, Firm Aircraft and
the Firm or Option Spare Engines. 




9.    Fleet Hour Agreement    



IAE
and ACA agree to enter into non-exclusive good faith negotiations prior to or following the execution of this Side Letter to reach mutually agreeable Fleet Hour Agreement ("FHA") terms
to address, among other things, FHA coverage for the Leased Aircraft, lessor return conditions and variable lease terms. Any FHA must be completed by no later than [***]
following the effective date of the Contract. 




10.    Delays and Cancellations Under Aircraft Purchase Agreement    



	A.
	Excusable
Delay 





IAE
acknowledges and agrees to the following: 


	(1)
	under
the Aircraft Purchase Agreement, ACA and AVSA S.A.R.L. ("AVSA") contemplate events whereby AVSA, the Aircraft Manufacturer, any
subcontractors of the Aircraft Manufacturer, or any affiliate of the foregoing (collectively the "Airbus Group") may be hindered or prevented from
delivering an Aircraft in accordance with the schedule set forth in Exhibit B-1 to this Contract, or otherwise fail to perform its obligations under the Aircraft Purchase Agreement
due to causes reasonably beyond Airbus Group's control ("Airbus Excusable Delay"), including, but not limited to (provided that in each case such event
is due to causes reasonably beyond Airbus Group's control): (i) acts of God or the public enemy, natural disasters, fires, floods, storms beyond ordinary strength, explosions or earthquakes;
epidemics or quarantine restrictions; serious accidents; total or constructive total loss; any law, decision, regulation, directive or other act of any 




4







 



government
or of the Council of the European Community or the Commission of the European Community or of any national, Federal, State, municipal or other governmental department, commission, board,
bureau, agency, court or instrumentality, domestic or foreign; governmental priorities, regulations or orders affecting allocation of materials, facilities or a completed Aircraft; war, civil war or
warlike operations, terrorism, insurrection or riots; failure of transportation; strikes or labor troubles causing cessation, slow down or interruption of work; delay in obtaining any airworthiness or
type certification after due and timely diligence; inability after due and timely diligence to procure materials, accessories, equipment or parts; or failure of a subcontractor or a supplier of any
component, equipment, accessory or part installed in an Aircraft (not including the Propulsion System or equipment furnished by ACA) to furnish materials, components, accessories, equipment or parts;
(ii) any delay caused by ACA; and (iii) delay in delivery or otherwise in the performance of the Aircraft Purchase Agreement by AVSA due to any delay in or failure of the delivery of, or
any other event or circumstance relating to, the Propulsion Systems or equipment furnished by ACA. Notwithstanding the foregoing, Airbus Excusable Delay will not include any delay occasioned by Airbus
Group's fault or negligence; 



	(2)
	if
any Aircraft delivery is delayed as a result of an Airbus Excusable Delay for a period of more than [***] after the last day of the scheduled Aircraft
delivery month, (or, if in the reasonable judgment of AVSA such Delay is expected to extend for a period of more than [***] after the last day of the scheduled Aircraft
delivery month), then ACA may terminate the Aircraft Purchase Agreement with respect to the affected Aircraft, by giving written notice to AVSA within thirty (30) days after the expiration of
such [***] period or, within thirty (30) days of AVSA's notice informing ACA that such Airbus Excusable Delay is expected to extend for a period of more than
[***] after the last day of the scheduled Aircraft delivery month, as the case may be. However, ACA is not entitled to terminate the Aircraft Purchase Agreement pursuant to
this clause if the Airbus Excusable Delay is caused by ACA;



	(3)
	if
any Aircraft delivery is delayed as a result of an Airbus Excusable Delay for a period of more than [***] after the last day of the scheduled Aircraft
delivery month, [***] for a period of more than [***] after the last day of the scheduled Aircraft delivery month, as the case may be. However,
[***];



	(4)
	any
or all of the events described under paragraphs (1) through (3) above may affect ACA's ability to accept delivery of an Aircraft pursuant to the delivery schedule
set forth under Exhibit B-1 to this Contract, and if any of such events occur, [***]; and



	(5)
	the
provisions of Clause 2 of this Contract and Side Letter No. 1 notwithstanding, in the event of an Airbus Excusable Delay [***].






	B.
	Total
Loss 





IAE
acknowledges and agrees to the following: 


	(1)
	if
prior to the delivery of an Aircraft, such Aircraft is lost, destroyed or in the reasonable opinion of AVSA is damaged beyond economic repair [***]
("Aircraft Total Loss"), AVSA will provide written notice to this effect which will include (or, if such information only becomes available to AVSA
after such notice is sent, as soon after the issue of the notice as such information becomes available to AVSA) [***] that an aircraft to replace the Aircraft may be delivered
to ACA, and the scheduled Aircraft delivery month set forth in Exhibit B-1 to this Contract will be extended as specified in AVSA's notice to accommodate the delivery of the
replacement aircraft; provided, however, that, if the 




5







 



scheduled
Aircraft delivery month is extended to a month exceeding [***] after the last day of the original scheduled Aircraft delivery month, then the Aircraft Purchase
Agreement will terminate with respect to said Aircraft unless (i) ACA notifies AVSA within [***] that it desires AVSA to provide a replacement aircraft during the month
quoted in AVSA's notice and (ii) ACA and AVSA execute an amendment to the Aircraft Purchase Agreement recording the variation in the scheduled Aircraft delivery month. Upon such amendment to
the Aircraft Purchase Agreement, ACA is entitled to amend the scheduled Aircraft delivery month under Exhibit B-1 to this Contract as applicable; 



	(2)
	notwithstanding
paragraph (1) above, AVSA is not required to manufacture and deliver a replacement aircraft if such manufacture would require the reactivation of AVSA's
production line for the model or series of aircraft that includes the Aircraft;



	(3)
	any
or all of the events described under paragraphs (1) and (2) above may affect ACA's ability to accept delivery of an Aircraft pursuant to the delivery schedule set
forth under Exhibit B-1 to this Contract, and if any of such events occur, ACA is authorized to amend the Aircraft delivery schedule under Exhibit B-1 to reflect
the revised delivery month for such Aircraft, or the cancellation of the delivery of such Aircraft, as applicable, as agreed between ACA and AVSA; and



	(4)
	the
provisions of Clause 2 of this Contract and Side Letter No. 1 notwithstanding, in the event of a Aircraft Total Loss of an Aircraft under paragraph (1) above
(provided that ACA elects to take delivery of a replacement Aircraft), all applicable credits stated in the Contract to be subject to escalation will be escalated [***]
calculated in accordance with the IAE Escalation Formula set forth in Exhibit B-2 to this Contract, from (a) the original scheduled Aircraft delivery month for such Aircraft
in effect prior to the occurrence of such Aircraft Total Loss to (b) the actual delivery month of the aircraft replacing such Aircraft.






	C.
	Inexcusable
Delay 



IAE
acknowledges and agrees to the following: 


	(1)
	under
the Aircraft Purchase Agreement, ACA and AVSA contemplate events whereby an Aircraft is not ready for delivery within [***] days after the last day of
the scheduled Aircraft delivery month and such delay is not a result of an Airbus Excusable Delay, Total Loss [***]. Such an event will be termed an
"Airbus Inexcusable Delay";



	(2)
	if
an Airbus Inexcusable Delay occurs, AVSA will promptly, after the removal of the cause of the Airbus Inexcusable Delay, resume performance of its obligations under the Aircraft
Purchase Agreement and notify ACA of the revised scheduled Aircraft delivery month;



	(3)
	if,
as a result of an Airbus Inexcusable Delay, (i) delivery of the Aircraft does not occur within [***] after the last day of the scheduled Aircraft
delivery month or (ii) in AVSA's reasonable judgment such Airbus Inexcusable Delay is expected to result in delivery of the affected Aircraft after such [***], ACA will
then have the right exercisable by written notice to AVSA to require from AVSA a renegotiation of the scheduled Aircraft delivery month for the affected Aircraft, provided that such notice is given,
(a) in the case of (i) above, within thirty (30) days following the expiration of the [***] or, (b) in the case of (ii) above, within thirty
(30) days following AVSA's notice that such Airbus Inexcusable Delay is expected to extend beyond such [***];



	(4)
	if,
as a result of an Airbus Inexcusable Delay, delivery does not occur within [***] after the last day of the scheduled Aircraft delivery month and ACA and
AVSA have not 




6







 



renegotiated
the scheduled Aircraft delivery month pursuant to paragraph (3) above, or, [***] after the last day of the scheduled Aircraft delivery month, then ACA will
have the right exercisable by written notice to AVSA, given within [***] following expiration of such [***] or within [***] of
AVSA's notice informing ACA that such Airbus Inexcusable Delay is expected to extend for a period of more than [***] after the last day of the scheduled Aircraft delivery
month, as the case may be, to terminate the Aircraft Purchase Agreement in respect of the affected Aircraft; 



	(5)
	if,
as a result of an Airbus Inexcusable Delay, delivery does not occur within [***] after the last day of the scheduled Aircraft delivery month and ACA and
AVSA have not renegotiated the scheduled Aircraft delivery month pursuant to paragraph (3) above, or, [***] after the last day of the scheduled Aircraft delivery month,
then both ACA and AVSA will each have the right exercisable by written notice to the other party, given [***] of after the last day of the scheduled Aircraft delivery month, as
the case may be, to terminate the Aircraft Purchase Agreement in respect of the affected Aircraft. However, notwithstanding the foregoing, [***];



	(6)
	any
or all of the events described under paragraphs (1) through (5) above may affect ACA's ability to accept delivery of an Aircraft pursuant to the delivery schedule
set forth under Exhibit B-1 to this Contract, and if any of such events occur, ACA is authorized to amend the Aircraft delivery schedule under Exhibit B-1 to
reflect the revised delivery month for such Aircraft, or the cancellation of the delivery of such Aircraft, as applicable, as agreed between ACA and AVSA; and



	(7)
	the
provisions of Clause 2 of this Contract and Side Letter No. 1 notwithstanding, in the event of an Airbus Inexcusable Delay, [***], in
accordance with the IAE Escalation Formula set forth in Exhibit B-2 to this Contract, without regard to the actual delivery month; provided that [***].






	D.
	BFE
Delay



	(1)
	Under
the Aircraft Purchase Agreement, ACA requires AVSA to provide for the installation of Buyer Furnished Equipment (BFE) on the Aircraft. IAE acknowledges that any delay or failure
by ACA to furnish the BFE in a serviceable condition at the delivery date requested by AVSA pursuant to the Aircraft Purchase Agreement may cause delay in the performance of any act to be performed by
AVSA and thus delay delivery of the Aircraft. IAE further acknowledges and agrees that such a delay may affect ACA's ability to accept delivery of an Aircraft pursuant to the delivery schedule set
forth under Exhibit B-1 to this Contract, and ACA is authorized to amend the Aircraft delivery schedule under Exhibit B-1 to reflect the revised delivery month
for such Aircraft, as agreed between ACA and AVSA.



	(2)
	The
provisions of Clause 2 of this Contract and Side Letter No. 1 notwithstanding, in the event of such a delay or failure described above,
[***], in accordance with the IAE Escalation Formula set forth in Exhibit B-2 to this Contract; provided that [***].






	E.
	Short-Term
Delays



	(1)
	The
provisions of Clause 2 of this Contract and Side Letter No. 1 notwithstanding, IAE acknowledges and agrees that all applicable credits will be adjusted to the
scheduled delivery month of the Aircraft without regard to the actual delivery month, if, after ACA's receipt of at least [***] days' written notice from AVSA of the
anticipated date on which the Aircraft is ready for delivery, as required under the Aircraft Purchase Agreement, an Aircraft is not ready for delivery within the scheduled Aircraft delivery month due
to a delay in, or the extension of, time required to successfully complete the applicable 






7







 



technical
acceptance process developed by AVSA when such delay or extension is (i) either (x) due to the technical noncompliance of the Aircraft that is not due to an Airbus Excusable
Delay or (y) due to any other delay that, but for the passage of time, would be an Airbus Inexcusable Delay, (ii) [***] and (iii) is not otherwise
addressed between ACA and AVSA to ensure timely Aircraft delivery. 



	(2)
	IAE
further acknowledges and agrees that such a failure for the Aircraft to successfully complete the technical acceptance process may affect ACA's ability to accept delivery of an
Aircraft pursuant to the delivery schedule set forth under Exhibit B-1 to this Contract, and ACA is authorized to amend the Aircraft delivery schedule under
Exhibit B-1 to reflect the revised delivery month for such Aircraft, as agreed between ACA and AVSA.






	F.
	[***]



	(1)
	IAE
acknowledges that [***].



	(2)
	IAE
further acknowledges and agrees that [***].



	(3)
	The
provisions of Clause 2 of this Contract and Side Letter No. 1 notwithstanding, in the event [***].






	G.
	[***] 



IAE
acknowledges and agrees to the following: 


	(1)
	[***];



	(2)
	[***];



	(3)
	if
[***];



	(4)
	if
[***];



	(5)
	[***];
and



	(6)
	The
provisions of Clause 2 of this Contract and Side Letter No. 1 notwithstanding, in the event [***].






	H.
	Excessive
Delays 





IAE
acknowledges and agrees to the following: 


	(1)
	if
(a) ACA terminates the Aircraft Purchase Agreement with respect to [***]; and



	(2)
	if
ACA exercises its rights described above for [***] will affect ACA's ability to accept delivery of such Aircraft pursuant to the delivery schedule set forth
under Exhibit B-1 to this Contract, and ACA is authorized to amend the Aircraft delivery schedule under Exhibit B-1 to reflect the revised delivery month for such
Aircraft, or the cancellation of the delivery of such Aircraft, as applicable, as agreed between ACA and AVSA.






	I.
	Seller
Default 





IAE
acknowledges and agrees to the following: 


	(1)
	under
the Aircraft Purchase Agreement, each of the following constitutes [***];



	(2)
	if
[***];



	(3)
	if
[***].






	J.
	IAE
acknowledges and agrees that [***].






	11.
	[***].



	12.
	V2500
[***] Guarantee 


8








 
	I
	INTRODUCTION 



[***]
(as defined below), [***] set forth in Clause D below. 



	II
	GUARANTEE



	A.
	Period
of Guarantee 







The
Period of Guarantee will start for each [***] on the date ACA initiates commercial operation of the Aircraft powered by such [***] and will
terminate for each such Engine on the [***] set ("Period of Guarantee"). 



	B.
	[***] 



The
Engines that will be Eligible under this Guarantee shall be the Firm Spare Engines and the engines originally delivered on the Firm Aircraft, the Leased Aircraft, [***],
and all of which have been acquired pursuant to the Contract to which this Guarantee is attached or contract for delivery of the Firm Aircraft. The Engines that will be Eligible under this Guarantee
shall be the Engines which have been acquired pursuant to the Contract to which this Guarantee is attached or contract for delivery of the Aircraft, and shall (as a matter of clarification) also
include for purposes of this Guarantee, the Leased Aircraft. The eligibility of the installed Engines and Firm Spare Engines under this Guarantee is contingent upon such Engines and Firm Spare Engines
being maintained in accordance with the reasonable written operating and maintenance instructions [***] issued by IAE and the Aircraft Manufacturer,
[***]. 



	C.
	[***]






[***].




	D.
	Guarantee






At
the time of [***], calculated as follows: 


[***].



Where:



[***]. 


The
above calculation will be evaluated, [***] at the time of [***]. 


This
[***] is subject to the specific guarantee conditions for Aircraft powered by [***] set forth in Exhibit D-4 to the Contract
titled 'V2500 Guarantees—Specific Conditions'. Credits issued by IAE to ACA in respect of this guarantee shall be used solely toward [***]. 


[***].





	III
	DEFINITIONS,
GENERAL CONDITIONS AND CONFIDENTIALITY 





All
of the Definitions and General Conditions of the V2500 Engine and Parts Service Policy shall apply to this Guarantee. In the case of conflict between the Definitions and General Conditions of the
V2500 Engine and Parts Service Policy and the terms and conditions of this Guarantee, this Guarantee shall govern. Engines and Engine Shop Visits excluded by the General Conditions of the Policy shall
be excluded from this Guarantee except that [***]. 


This
Guarantee is strictly personal to ACA and neither the content nor the existence of this Guarantee is to be disclosed to any third party or persons whomsoever without the express prior written
approval of IAE. 


Except
as expressly amended by this Side Letter No. 1, all provisions of the Contract remain in full force and effect. 



9







 



	Yours faithfully,

for IAE INTERNATIONAL AERO ENGINES AG	 	Agreed and accepted on behalf of:

ATLANTIC COAST AIRLINES
	

By	
 	

	
 	

By	
 	


	

Title	
 	

	
 	

Title	
 	


	

Date	
 	

	
 	

Date	
 	






10







 
APPENDIX 1  


	1.
	MSR
for each month shall be calculated from MSRb as follows: 



MSR =
MSRb ([***] 



Lo 



Where:



MSR
and MSRb are the escalated and base values of the rate requiring escalation; 


Base
Month shall mean [***] 



Lo =  the
"Employment Cost Index (ECI) Wages and Salaries for Aircraft Manufacturing, SIC Code 3721W" published by the Bureau of Labor Statistics, U.S. Department of Labor for the
arithmetic average of the fifth, sixth and seventh months (rounded to the nearest tenth) preceding the Base Month. 



L =  the
"Employment Cost Index (ECI) Wages and Salaries for Aircraft Manufacturing, SIC Code 3721W" published by the Bureau of Labor Statistics, U.S. Department of Labor for the
arithmetic average of the fifth, sixth and seventh months (rounded to the nearest tenth) preceding the month for which the charge is being calculated. 


M  =  the
IAE Spare Price Index, calculated by IAE for the month for which the charge is being calculated. This Index is the engine set price of the gas path airfoils as
published in the IAE spares catalog effective in the month for which the charge is being calculated divided by the engine set price of the gas path airfoils as published in the IAE spares catalog
effective in the year 2003. 




	2.
	The
values of the factors                    [***] 


Lo




respectively,
shall be determined to the nearest fourth decimal place. If the fifth decimal is five or more, the fourth decimal place shall be raised to the next higher number. 



	3.
	If
the U.S. Department of Labor ceases to publish the above statistic or modifies the basis of their calculation, then IAE may substitute any officially recognized and substantially
equivalent statistic.



	4.
	If
the application of the above formula would result in an MSR for the month, which is lower than MSRb, MSR for the month will be set equal to MSRb. 


11









   
[LOGO] 


September 30,
2004 


Mr. Steven
Westberg

Vice President Business Development

Atlantic Coast Airlines

45200 Business Court

Dulles, Virginia 20166 



	Subject:	 	Side Letter No. 2 to the V2500-A5 General Terms of Sale between IAE International Aero Engines AG and Atlantic Coast Airlines ("ACA") dated September 30, 2004





Gentlemen:



We
refer to the V2500-A5 General Terms of Sale bearing reference marks O:ACA/GTA dated September 30, 2004 between IAE International Aero Engines AG ("IAE") and Atlantic Coast
Airlines ("ACA"), such contract being hereinafter referred to as the "Contract." Unless expressly stated to the contrary, and to the extent possible, terms used in this Side Letter No. 2 shall
have the same meaning given to them in the Contract. 


This
Side Letter No. 2 provides for certain enhanced support for the Firm Aircraft. IAE and ACA agree that this Side Letter No. 2 constitutes an integral, nonseverable part of the
Contract, that the provisions of the Contract are incorporated herein by reference, and that this Side Letter will be
governed by the provisions of the Contract except that if the Contract and this Side Letter have provisions that are inconsistent, the provisions of this Side Letter will prevail. 


1.    V2500 Engine and Parts Service Policy    



IAE
agrees to expand the coverage for the Firm Spare Engines and the V2500-A5 Engines installed on the Firm Aircraft and Leased Aircraft under the V2500 Engine and Parts Service Policy set
forth in Exhibit D-1 to the Contract. In agreeing to do so, all references in the V2500 Engine and Parts Service Policy to "[***]" shall be replaced by
[***] and all references to "[***]" shall be replaced by [***]. 




2.    Customer Support    



	2.1
	Customer
Support Manager 





IAE
will assign, [***], a V2500-A5 customer support manager for ACA who will coordinate the business and technical support services needed to support the
V2500-A5 Engines at ACA [***]. 



	2.2
	Customer
Support Representative 



IAE
will, [***], assign to ACA a customer support representative to assist ACA on site in preparing for V2500-A5 Engine operation. Such representation will be
provided to ACA commencing immediately and continuing thereafter until and [***]. 



	2.3
	Additional
Customer Support Representative Network 





The
network of Pratt & Whitney, Rolls-Royce and other IAE customer support representatives located at ACA's destinations will be fully trained on all facets of V2500-A5 Engine line
maintenance and will be available [***] to assist ACA as required. 



	2.4
	Customer
Training 





IAE
will provide ACA [***] formal training programs covering courses in engine operation, line maintenance, borescope inspection and troubleshooting, for mutually agreed
numbers of 




1







 


ACA
personnel (but in no case less than an amount reasonably sufficient to allow ACA to maintain its V2500-A5 powered fleet) at the IAE Customer Training Center in Derby, England for a
period of [***] from initial entry into service of V2500-A5 powered aircraft in ACA's fleet ("EIS"). If IAE establishes a training facility capable of providing
some or a substantial part of such training in the United States, then IAE will, upon ACA's request, make training at that facility available to ACA personnel. Further, IAE will endeavor, upon ACA's
request, to provide on-site training [***] where on-site training is appropriate; provided ACA has available to it a V2500 engine adequate for such
training. 



	2.5
	Technical
Publications 




IAE
shall provide to ACA [***], the technical publications and maintenance information listed in Exhibit A ([***]), in the quantities set forth
next to each publication, to support the maintenance requirements of ACA. 



	2.6
	Emergency
Engine Lease Pool Support 





IAE
has established a worldwide pool of V2500-A5 emergency spare engines for lease to operators of V2500-A5 powered aircraft experiencing unforeseen operational emergencies.
This emergency spare engine pool will be available to ACA, if required, under IAE's Standard Terms of Business for Lease of V2500-A5 Engines as attached as Exhibit E to
the Contract, provided that ACA acquires V2500-A5 Spare Engines as otherwise provided in the Contract. 





Except
as expressly amended by this Side Letter No. 2, all provisions of the Contract remain in full force and effect. 



	Yours faithfully,

for IAE INTERNATIONAL AERO ENGINES AG	 	Agreed and accepted on behalf of:

ATLANTIC COAST AIRLINES
	

By	

 	
 	

By	

 
	 	
	 	 	

	

Title	

 	
 	

Title	

 
	 	
	 	 	

	

Date	

 	
 	

Date	

 
	 	
	 	 	





2







 
EXHIBIT A  



	Publication

Reference/Format
	 	Publication Title and Contents
	 	Revision

Frequency
	 	Quantity

	CDROM-V2500-1IA	 	Engine Overhaul Data

E-V2500-1IA—Engine Manual

T-V2500-1IA—Time Limits Manual

CMM-EHC-V2500-1IA—CMM Electrical Harnesses

CMM-FN-V2500-1IA—CMM Fuel Nozzles

CMM-MECH-V2500-1IA—CMM Miscellaneous Mechanical

CMM-THD-V2500-1IA—CMM Tubes, Hoses & Ducts

PCI-V2500-1IA—Overhaul Processes & Consumables Index

SPP-V2500-1IA—Standard Practices & Processes Manual

S-V2500-1IA—Illustrated Parts Catalogue IPC (V2500-A1)

S-V2500-2IA—IPC (V2500-A5-2530) (Lucas FMU)

S-V2500-2IB—IPC (V2500-A5-2530) (Woodward FMU)

S-V2500-5IA—IPC(V2500-A5-2533) (Lucas FMU)

S-V2500-5IB—IPC (V2500-A5-2533) (Woodward FMU)

S-V2500-6IA—IPC (V2500-A5-2522/2524) (Lucas FMU)

S-V2500-6IB—IPC (V2500-A5-2522/2524) (Woodward FMU)

S-V2500-7IA—IPC (V2500-A5-2527) (Lucas FMU)

S-V2500-7IB—IPC (V2500-A5-2527) (Woodward FMU)

Service Bulletin Index & All Service Bulletins	 	Triannual	 	[***]
	
CDROM-V2500-NAC-1IA	
 	
Nacelle Data

CMM-CN-V2500-3IA—NCMM- Common Nozzle

CMM-AM-V2500-3IA—NCMM- Aft Engine Mount

CMM-FM-V2500-3IA—NCMM- Fwd Engine Mount

CMM-TC-V2500-3IA—NCMM- Tail Cone Assembly

CMM-TR-V2500-3IA—NCMM- Thrust Reverser

CMM-FC-V2500-3IA—NCMM- Fan Cowl Doors

CMM-AIC-V2500-3IA—NCMM- Air Intake Cowl

PSR-V2500-3IA—PP Structural Repair Manual	
 	

Triannual	
 	

[***]
	
CDROM-V2500-ANC	
 	
V2500 Miscellaneous Manuals

ITE-V2500-1IA—Illustrated Tools & Equipment Manual

FE-V2500-IIA—Facilities Equipment Manual

SEI-V2500-1IA—Support Equipment Numerical Index

FP-V2500-1IA—Facilities Planning Manual

A1/A5/D5 WIRING LISTS	
 	

As required	
 	

[***]
	
TPI / Email	
 	
Technical Publications Index	
 	

Triannual	
 	

N/.A
	
OI -1IA / Paper	
 	
Operating Instructions	
 	

As required	
 	

[***]
	
SBs / Email	
 	
Engine and Nacelle Service Bulletins	
 	

As required	
 	

N/A
	
SBMR / Email	
 	
Service Bulletins Monthly Reports	
 	

Monthly	
 	

N/A





REMARKS:  



	•
	For
a purchase of 1-10 new aircraft a maximum of [***] CDROMs will be offered, plus [***] CDROM for
[***] additional aircraft. 



3













   
[LOGO] 


December 3,
2004 


Mr. Steven
Westberg

Vice President Business Development

Independence Air, Inc.

(f/k/a Atlantic Coast Airlines)

45200 Business Court

Dulles, Virginia 20166 



	Subject:	 	Side Letter No. 3 to the V2500-A5 General Terms of Sale between IAE International Aero Engines AG and Atlantic Coast Airlines ("ACA") dated September 30, 2004





Gentlemen:



We
refer to the V2500-A5 General Terms of Sale bearing reference marks O:ACA/GTA dated September 30, 2004 between IAE International Aero Engines AG ("IAE") and Atlantic Coast
Airlines (now known as Independence Air, Inc., and referred to herein as "ACA"), such contract being hereinafter referred to as the "Contract." Unless expressly stated to the contrary, and to
the extent possible, terms used in this Side Letter No. 3 shall have the same meaning given to them in the Contract. 



This
Side Letter No. 3 amends certain provisions of the Contract as set forth below. 


	1.
	The
terms with respect to those certain [***] Credits set forth in Clause of Side Letter No. 1 to the Contract are amended as follows.



	(a)
	The
last two sentences of Clause are removed in their entirety and replaced as follows: 







[***]




	(b)
	The
last two sentences of Clause [***] are removed in their entirety and replaced as follows: 



"Such
additional credit will be issued upon delivery and acceptance by ACA of the [***] Firm Aircraft." 




	2.
	Clause 3.4
of Side Letter No. 1 to the Contract shall not go into effect upon effectiveness of the Contract and the side letters thereto, and shall only go into effect
following mutual agreement of the parties in writing. Until such time, if any, as there is such mutual agreement, the following provision shall replace such Clause 3.4 in its entirety: 




"[***]
a standard terms of business lease for a V2500 Engine ("STOBL") in the form set forth in Exhibit E to the Contract with IAE.
[***] under this Side Letter No. 1 [***] in the STOBL, and [***] this Side Letter No. 1 and the STOBL,
[***]." 





This
Side Letter No. 3, as well as the Contract to which it applies, shall not constitute part of the V2500 Finance Letter Agreement, which V2500 Finance Letter Agreement shall be a separate
and independent contract of financial accommodation. 


1







 

Except
as expressly amended by this Side Letter No. 3, all provisions of the Contract remain in full force and effect. 



	Yours faithfully,

for IAE INTERNATIONAL AERO ENGINES AG	 	Agreed and accepted on behalf of:

INDEPENDENCE AIR, INC.

(formerly known as Atlantic Coast Airlines)
	

By	

 	
 	

By	

 
	 	
	 	 	

	

Title	

 	
 	

Title	

 
	 	
	 	 	

	

Date	

 	
 	

Date	

 
	 	
	 	 	





2








   STANDARD TERMS  


 OF BUSINESS  


 FOR LEASE OF  


 V2500® ENGINES  


 BETWEEN  


 IAE INTERNATIONAL AERO ENGINES AG  


 AND  


 ATLANTIC COAST AIRLINES  


1







 
INDEX  



	RECITALS	 	 
	

CLAUSE 1	
 	

DEFINITIONS
	

CLAUSE 2	
 	

PREVIOUS UNDERSTANDINGS AND EXCLUSION OF OTHER PROVISIONS
	

CLAUSE 3	
 	

FORMATION OF CONTRACTS
	

CLAUSE 4	
 	

DELIVERY
	

CLAUSE 5	
 	

PERIOD OF LEASE
	

CLAUSE 6	
 	

RE-DELIVERY TO THE LESSOR
	

CLAUSE 7	
 	

DELAY
	

CLAUSE 8	
 	

TITLE AND RISK OF LOSS OR DAMAGE
	

CLAUSE 9	
 	

COVENANTS OF THE LESSEE
	

CLAUSE 10	
 	

SECURITY DEPOSIT AND CHARGES
	

CLAUSE 11	
 	

PAYMENT
	

CLAUSE 12	
 	

PATENTS
	

CLAUSE 13	
 	

WARRANTY
	

CLAUSE 14	
 	

ADDITIONAL LEVIES
	

CLAUSE 15	
 	

INSURANCE
	

CLAUSE 16	
 	

TERMINATION
	

CLAUSE 17	
 	

NON-ASSIGNMENT
	

CLAUSE 18	
 	

DURATION
	

CLAUSE 19	
 	

HEADINGS
	

CLAUSE 20	
 	

EXHIBITS
	

CLAUSE 21	
 	

NOTICES
	

CLAUSE 22	
 	

AMENDMENT
	

CLAUSE 23	
 	

LAW; FORUM; WAIVER OF TRIAL BY JURY
	

CLAUSE 24	
 	

NEGATION OF WAIVER
	

CLAUSE 25	
 	

CONSTRUCTION OF THIS AGREEMENT
	

CLAUSE 26	
 	

COUNTERPARTS
	



EXHIBIT A	

 	



RESPONSE FROM LESSOR
	

EXHIBIT B	
 	

ACCEPTANCE OF LESSOR'S OFFER
	

EXHIBIT C	
 	

INSURANCE REQUIREMENTS
	

EXHIBIT D	
 	

ACCEPTANCE CERTIFICATE




2








   STANDARD TERMS OF BUSINESS FOR  


 LEASE OF V2500® ENGINES  


THIS
AGREEMENT is made this 30th day of September 2004 


BETWEEN




	

IAE INTERNATIONAL AERO ENGINES AG	
 	

a joint stock company organized and existing under the laws of Switzerland, with a place of business at IAE Building, 400 Main Street, M/S 121-10, East Hartford, Connecticut, 06108, USA, (hereinafter variously called "IAE" and "Lessor");
and
	

ATLANTIC COAST AIRLINES	
 	

a corporation organized and existing under the laws of California, with a principal place of business at 45200 Business Court, Dulles, Virginia 20166, USA (hereinafter called the "Lessee") of the other part.





WHEREAS:



The
Lessee has decided to operate Airbus A320 family aircraft to be powered by IAE V2500® Propulsion Systems, and the Lessee may from time to time wish to lease IAE V2500® aero
engines, or other items relating to IAE V2500 aero engines, from the Lessor in support of such operation. The parties wish to record their agreement in respect of such leases. 


NOW
THEREFORE IT IS AGREED AS FOLLOWS: 


CLAUSE
1 DEFINITIONS 


        In
this Agreement unless the context otherwise requires: 



	1.1
	"Agreed
Value" shall mean the amount necessary, minus any reserves paid by Lessee, to procure a replacement item of Supplies in a similar condition as the Supplies, but in no event
shall mean an amount greater than the price IAE would charge at such time for a new replacement Engine of the same thrust type.



	1.2
	"Contract"
shall mean a contract in writing made between the Lessor and the Lessee for the lease of Supplies under this Agreement, which is formed in accordance with Clause 3
below.



	1.3
	"Delivery
Date" shall mean the calendar date on which the Supplies are provided to the Lessee in accordance with Clause 3 below.



	1.4
	"FAA"
shall mean the Federal Aviation Administration of the United States of America or any successor organization.



	1.5
	"GTA"
means the General Terms Agreement entered into between Lessor and Lessee as of September 30, 2004.



	1.6
	"Lease"
shall mean a lease of Supplies which shall commence upon the date of delivery of the Supplies to the Lessee and end upon re-delivery of the Supplies to the Lessor
in accordance with Clauses 4 and 6, respectively, below.



	1.7
	"OEM"
shall mean the original equipment manufacturer of the Supplies, as applicable.



	1.8
	"Period
of Lease" shall mean the time from delivery of the Supplies to the Lessee pursuant to Clause 4 and the re-delivery of the Supplies to the Lessor pursuant to
Clause 6. 



3







 



	1.9
	"Rental
Period" shall mean each thirty (30) day period, or part thereof, during the Period of Lease.



	1.10
	"Supplies"
shall mean IAE V2500 aero engines leased hereunder and any other items supplied in connection therewith, including an Engine Storage Bag and Transportation Stand



	1.11
	"Total
Loss" means any of the following in relation to the Supplies and "Total Loss Date" means the date set forth in parenthesis after each Total Loss:



	(a)
	destruction,
damage beyond economic repair or being rendered permanently unfit for normal use for any reason (the date such event occurs or, if not known, the date on which the
Supplies were last heard of);



	(b)
	constructive,
compromised, arranged or agreed total loss (the earlier of the date on which the loss is agreed or compromised by the insurers);



	(c)
	requisition
of title, confiscation, forfeiture or any compulsory acquisition of title or other similar event (the date on which the same takes effect);



	(d)
	sequestration,
detention, seizure or any similar event for more than ninety (90) consecutive days (the earlier of the date on which insurers make payment on the basis of a
total loss or the date of expiration of such period);



	(e)
	requisition
for use for more than one hundred eighty (180) consecutive days, except for requisition by the United States Government or a foreign government (the earlier of the
date on which the insurers make payment on the basis of a total loss or the date of expiration of such period);



	(f)
	in
the case of an Engine that is installed on another airframe that has a reciprocal waiver, but is claimed by the airframe owner/lienor anyway in a manner that impairs IAE's title to
such Engine (the date on which the same takes effect); or



	(g)
	any
sale of the Engine installed on an Aircraft Lessee subleases to a third party in connection with the bankruptcy of such sublessee, whether by an administrator, trustee or court
(the date on which the sale occurs). 







CLAUSE
2 PREVIOUS UNDERSTANDINGS AND EXCLUSION OF OTHER PROVISIONS 



	2.1
	This
Agreement, as it may be amended from time to time, and Contracts made hereunder contain the only provisions governing the lease of Supplies and shall apply to the exclusion of
any other provisions on or attached to or otherwise forming part of any other document which may be issued by either party relating to the lease of Supplies. Notwithstanding the foregoing, in the
event that this Agreement contains any terms or conditions in contradiction of those contained in the GTA, the terms of the GTA, and the side letters thereto, will control.



	2.2
	The
parties agree that neither of them have placed any reliance whatsoever on any representations, agreements, statements or understandings made prior to the signature of this
Agreement whether orally or in writing relating to the lease of Supplies other than those expressly incorporated in this Agreement which has been negotiated on the basis that its provisions and
Contracts made hereunder represent their entire agreement relating to the lease of Supplies and shall supersede all such representations, agreements, statements and understandings. 




CLAUSE
3 FORMATION OF CONTRACTS 



	3.1
	If
the Lessee has an operational need for equipment corresponding to Supplies, it may request that the Lessor provide Supplies to the Lessee under a Lease. Such notification shall be
in writing but, if circumstances require, may be by telephone and subsequently confirmed by 



4







 


facsimile,
electronic mail or courier as soon thereafter as possible. Such notification should be directed to: 







Manager,
V2500 Lease Engine Program

Rolls Royce Capital Limited

G-3 Moor Lane (Mail Code ML-19)

Derby, DE24 8BJ

England

Telephone 44-1332-248318

Telefax 44-1332-290838

(or the IAE Customer Support Representative for Atlantic Coast Airlines). 




	3.2
	Following
such notification, and if Supplies are available, the Lessor shall promptly respond to the Lessee by facsimile, electronic mail or registered letter in the form attached
hereto as Exhibit A. Such a response shall constitute an offer valid for acceptance for the period of time stipulated in Exhibit A.



	3.3
	The
Lessee can accept an offer made pursuant to sub-clause 3.2 above by facsimile, electronic mail or courier letter in the form attached hereto as
Exhibit B. 




CLAUSE
4 DELIVERY 



	4.1
	Lessee
shall provide Lessor with an insurance certificate evidencing the insurance policies required by Clause 15 below are in force in respect to the Supplies and an insurance
broker's undertaking in relation to such certificate, both of which shall be in form and substance reflecting the coverages described in Exhibit C.



	4.2
	Lessee
represents and warrants that it will not install any Supplies on an Aircraft it does not own unless prior to such installation Lessee has obtained from such aircraft's owner,
and others who have a property interest, direct or indirect in such Aircraft ("Owner"), its agreement that Owner will not assert a lien or any other property interest in the Supplies, whether or not
such Supplies are then installed upon such Aircraft, and that it will put the Owner and other parties who have a direct or indirect property interest in such Aircraft on notice that IAE, or its
sublessor, own such Supplies.



	4.3
	The
Supplies are to be leased in serviceable condition and with complete and accurate maintenance records in accordance with the forms set forth on
www.V2500.com/support/lease_forms.shtm and otherwise in "as is, where is" condition. [***] under this paragraph 4.3.



	4.4
	If
(i) the condition precedent specified in paragraph 4.1 above is not satisfied within seven (7) days of the Delivery Date, or (ii) as a result of any
delay beyond the reasonable control of Lessor, Lessor fails to deliver the Supplies within thirty (30) days of the Delivery Date as specified pursuant to Clause 3 above (or such other
period as the parties may agree in writing), then:



	(a)
	in
any case, Lessor will not be responsible for any losses, including loss of profit, costs or expenses incurred by Lessee; and



	(b)
	in
the cases specified in sub-clause 4.4 (i) above, Lessor will be entitled to immediately terminate the Contract by giving notice in writing to the other
party; and



	(c)
	in
the case specified in sub-clause 4.4 (ii) above, either party will be entitled to immediately terminate the Contract by giving notice to the other party,
and upon such termination, neither party will have any further obligation to the other as a result of the Contract or such termination. 






5







 





CLAUSE
5 PERIOD OF LEASE 



Each
Lease shall commence upon the date of delivery of the Supplies to the Lessee in accordance with Clause 4 above and shall terminate upon re-delivery of the Supplies to the
Lessor in accordance with Clause 6 below in the condition required by the Contract and this Agreement, including, without limitation, the requirements of Clause 9 below. In the event
that the Supplies are not in such condition, the Period of Lease will be automatically extended until such non-compliance is rectified by Lessee pursuant to Clause 9 below. In any
event, the Period of Lease will not be less than fourteen (14) days. 




CLAUSE
6 RE-DELIVERY TO THE LESSOR 



	6.1
	The
Lessee shall re-deliver Supplies C.I.P. (INCOTERMS 2000) to the location specified by the Lessor in its response referred to in sub-clause 3.2 above
at the time specified in sub-clause 6.2 below. Lessor shall use reasonable commercial efforts to specify a U.S. location in its response referred to in
sub-clause 3.2 above.



	6.2
	Unless
otherwise agreed in writing, the Lessee shall re-deliver the Supplies, or cause the Supplies to be re-delivered, to Lessor not later than the time set
forth in the Lessor's Response. Notwithstanding the foregoing, the Lessor shall have the right to recall the Supplies earlier without any penalty or liability, provided IAE shall not discriminate
against ACA as to IAE's other customers and, the Lessee shall re-deliver the Supplies to Lessor in accordance with the terms of Sub-Clause 6.1 as follows: 





Unless
amended by agreement in writing, the Lessee shall re-deliver the Supplies not later than the earlier of: 


	6.2.1
	twenty-one
(21) days after arrival with the Lessee of an item of the Lessee's corresponding equipment in a serviceable condition, provided that Lessee will
promptly transport such item to its base upon its being made available; or



	6.2.2
	twenty-one
(21) days after any other alleviation of the Lessee's emergency situation. 





CLAUSE
7 DELAY 



The
Lessor shall be under no liability to the Lessee for any delay in complying with its obligations hereunder arising from: 


	7.1
	fires
or strikes beyond the reasonable control of the Lessor; or



	7.2
	any
other cause beyond the reasonable control of the Lessor. 




CLAUSE
8 TITLE AND RISK OF LOSS OR DAMAGE 



	8.1
	Except
as otherwise specifically provided herein, as between the Lessor and the Lessee, title to the Supplies shall remain in the Lessor but the Lessee shall bear all risk of loss of
or damage to the Supplies during the Period of Lease.



	8.2
	The
Lessee shall take all reasonable actions, as may be requested by Lessor, and Lessor shall reimburse Lessee for all expenses incurred in connection therewith, to establish and
protect the proprietary interests of the Lessor in the Supplies under applicable law, including the execution of documents and making of filings and registrations. Lessee further agrees to not allow
any lien to attach to the Supplies by or through Lessee. Lessee will install, upon Lessor's request, a reasonably sized metal placard bearing a legend stating the ownership of the Supplies, provided
that Lessor provides Lessee with all material and all necessary engineering authorization to install such placard. 



6







 





CLAUSE
9 COVENANTS OF THE LESSEE 



The
Lessee shall: 


	9.1
	Within
fifteen (15) working days of delivery of the Supplies, send to the Lessor an executed acceptance certificate as set forth in Exhibit D hereto; and



	9.2
	Inspect
the Supplies, and records relating thereto, upon receipt and provide the Lessor with the complete list of any defects recorded during inspections and full particulars of the
corrective action taken; and



	9.3
	Operate
the Supplies only in the course of the Lessee's regular commercial business and in accordance with the operating procedures set forth in the Aircraft Flight Operations Manual
and as specified by the OEM; and



	9.4
	Inform
Lessor of the operating procedures to which the aircraft with the Supplies installed was operated and inform Lessor in writing no later than ten (10) business days after
the end of each calendar month or part thereof during the Period of Lease of (a) the number of flight hours and flight cycles flown in such calendar month or part thereof; (b) full
details of any material damage to or defect in the Supplies; and (c) details of the location, operation, condition and maintenance of the Supplies pursuant to the "Monthly Report' form set
forth at the IAE Support/Lease Web Site; and



	9.5
	Allow
the Lessor reasonable rights of inspections of the Supplies; and



	9.6
	At
its own expense, maintain the Supplies on-wing in accordance with Lessee's FAA approved maintenance program. In connection with redelivery of the Supplies ensure that
maintenance actions per the applicable end of lease documents on the IAE Support/Lease Web Site (as of the date of lease inception) are accomplished prior to redelivery as per the requirements of the
Aircraft Maintenance Manual and the V2500 Maintenance Manual; and



	9.7
	Not
permit any changes, modifications, alterations or additions to be made in or to any of the Supplies unless it has first secured the written consent of the Lessor; and



	9.8
	Not
carry out, or allow to be carried out, any repair, maintenance or overhaul work on the Supplies by any person other than those expressly approved by the FAA; and



	9.9
	Maintain,
and make available to the Lessor upon request, records of inspections performed, engine discrepancies and work carried out in the form of engine unit and accessory changes
to the Supplies, while in the use or possession of the Lessee, including part numbers, serial numbers and time since overhaul; and



	9.10
	Ensure
that the Supplies which are not installed on an aircraft are properly and safely transported and/or stored in accordance with the Aircraft Maintenance Manual, the V2500 Engine
Manual and as specified by the OEM; and



	9.11
	Reserved



	9.12
	On
removal of the Supplies from the aircraft in which they are installed, the Lessee will forward to the Lessor a copy of Inflight Performance Monitoring Logs or a reasonable
alternative form of record covering the period the Supplies are in the use or possession of the Lessee. Failure to carry out this requirement shall entitle the Lessor to carry out a Performance Test,
as defined in the V2500 Engine Manual, at the expense of the Lessee; and



	9.13
	Prior
to the return of Supplies to the Lessor, the Lessee shall, at its own expense, conduct a post-use inspection, place all equipment in working condition, provide FAA
and other certificates of serviceability for the Supplies in accordance with the Lessor's designation, and conduct long term preservation procedures as recommended by the OEM, which
[***]. In the 



7







 


event
the Lessee does not provide such certification and preservation, the Lessor shall have such certification and preservation accomplished subsequent to the return of Supplies at Lessee's expense;
and 



	9.14
	Not
later than the date for re-delivery specified in Clause 6 above, return the Supplies to the Lessor in substantially the same condition as when supplied by the
Lessor to the Lessee, but taking into account normal wear and tear resulting from normal commercial operation; and



	9.15
	Upon
re-delivery of Supplies provide the Lessor with:



	(a)
	a
complete list of all Flight Log or Technical Log entries against the Engine together with full particulars of the corrective maintenance action taken; and



	(b)
	[***].
Lessee shall give prior written notice of such inspection to Lessor and, if requested by Lessor, shall permit up to two (2) of Lessor's
representatives to be present at such inspection; and



	(c)
	a
Form FAA 8130-3 and a valid serviceability tag; and



	(d)
	a
complete list of all FAA Airworthiness Directives which apply to the Supplies, identifying which mandatory orders and directives have been complied with and the dates by which any
remaining such orders must be complied with; and



	(e)
	the
Supplies in the same ETOPS modification standard as when delivered to the Lessee; and



	(f)
	written
confirmation that the Lessor's post-lease checks and procedures, as advised to the Lessee, have been complied with; and



	(g)
	the
Engine log book, if applicable, updated in the same manner as it was provided to the Lessee.






	9.16
	Accept
liability for all risk and expense arising out of the operation, use, possession or control of the Supplies during the Period of Lease for such Supplies which arises due to
causes outside the reasonable control of the Lessor including, but not limited to, failures of Supplies which:



	9.16.1
	have
not been operated in accordance with the procedures laid down in the Aircraft Maintenance Manual or as directed by the OEM: or



	9.16.2
	have
been subject to misuse, negligence or accident; or



	9.16.3
	have
not been properly transported, stored, installed, maintained, utilized or packed for transport in accordance with the then current recommendations of the OEM, provided that
[***]; or



	9.16.4
	have
suffered damage due to the ingestion of a foreign body; or



	9.16.5
	have
suffered primary breakdown or deterioration of any constituent component which was not acquired by the Lessee from the Lessor or through channels specifically approved in
writing by the Lessor. 






Should
the Supplies require repair or overhaul for any such causes, such repair or overhaul shall be performed by the Lessee, or by the Lessor at the expense of the Lessee, in accordance with
sub-clause 10.2.2 below, provided that Lessor agrees to review in good faith possible reserve contributions to assist Lessee in the repair or replacement of such Engine for the
events described in the foregoing clause. In the event the repair or replacement of such Supplies results in a demonstrable increase in the expected run time of such Supplies, then Lessor shall, to
the extent sufficient and appropriate reserves exist with respect to such 




8







 


Supplies,
contribute such reserves to the cost incurred by Lessee for adding such additional life to the Supplies. 



	9.17
	Indemnify
the Lessor, and the Lessor's shareholders, officers, and employees against all actions, costs, claims, and demands which may be brought against the Lessor in connection
with or resulting from the operation, possession, management, maintenance or control of the Supplies by or on behalf of the Lessee which actions, costs, claims, and demands are based upon the
retention of interest in or title to the Supplies by the Lessor.



	9.18
	Ensure
that the Supplies do not by or through Lessee become the subject of any lien, charge, encumbrance, defect or other impediment of the same or any other kind, and indemnify the
Lessor against all costs, expenses and damages which the Lessor may incur or suffer by reason of the Lessee failing to carry out its obligations under this sub-clause. 




CLAUSE
10 SECURITY DEPOSIT AND CHARGES 



	10.1
	IAE
reserves the right to require Lessee to provide to Lessor a security deposit [***] in the event Lessee has failed to timely meet any payment obligation
hereunder or in the event Lessee has previously redelivered Supplies that fail to meet redelivery conditions. The security deposit will be held by the Lessor during the Period of Lease and for a
reasonable period thereafter as needed by the Lessor to ascertain Lessee's compliance with the terms and conditions of the Contract; provided, that Lessor shall return to Lessee within
[***] any undisputed portion of the security deposit. The security deposit may be applied by the Lessor, at its sole discretion, to remedy any non-performance by
Lessee of its obligations thereunder, without prejudice to any other remedies that the Lessor may have. Lessee will provide to Lessor, within [***] days, any such amount of the
security deposit that has been so applied by Lessor. Subject to Lessee's full compliance with its obligations under the Contract, the security deposit shall be refunded after Lessor has had reasonable
opportunity to verify Lessee's fulfillment of the terms and conditions of the Contract.



	10.2
	The
Lessee shall pay the following charges to the Lessor in respect of each Lease:



	10.2.1
	An
amount calculated on a daily basis together with a charge for each running hour and, where applicable, a charge in respect of each take-off during the Period of
Lease, all being in accordance with IAE's published provisioned rates for lessees. 






9













  




	10.2.2
	Amounts
in respect of work carried out by or for the Lessor pursuant to sub-clauses 9.12, 9.13 and 9.16 above at the Lessor's rates current at the time of carrying out
the work.






	10.3
	The
Period of Lease will be divided into thirty (30) day Rental Periods beginning on the Delivery Date. Lessee will pay to Lessor an amount equal to the daily lease rate
multiplied by thirty (30) days, in advance, on the first day of each Rental Period. Such amount shall be applied against the outstanding daily lease charges actually accrued during the
following Rental Period, or part thereof. In the event that the following Rental Period is less than thirty (30) days, Lessor will refund to Lessee any amounts remaining at the rate of the
daily lease rate times the number of days remaining unused; provided however, that Lessor shall have the right to deduct from such refundable amounts any amounts owing by Lessee to Lessor under this
Agreement.



	10.4
	The
charges under sub-clause 10.2.1 above shall be indicated to the Lessee annually and shall hold good for periods of lease during the calendar year of indication
(except that such changes shall not affect the charges for leases already commenced). In any event, the charges for each Lease will be set out in the response referred to in
sub-clause 3.2 above.



	10.5
	Unless
otherwise agreed in writing prior to the commencement of the Period of Lease, Lessee's obligation to pay the daily lease charges and the hourly usage charges will be absolute
during the Period of Lease irrespective of any contingency whatsoever, including, but not limited to:



	10.5.1
	any
set-off, counterclaim, recoupement, defense or other right which any party hereto may have against any other;



	10.5.2
	[***];



	10.5.3
	[***];



	10.5.4
	any
lack or invalidity of, or any other defect in, any related documentation or the registration of any related documentation or the Supplies under the laws of any country;



	10.5.5
	subject
to Clause 10.5.10, the Total Loss of, or any damage to, the Supplies and/or the aircraft on which they are installed;



	10.5.6
	any
insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceedings by or against Lessor or Lessee;



	10.5.7
	any
invalidity or unenforceability or lack of due authorization of or other defect in this Agreement or any other of the documents involved in the transaction of which this
Agreement forms part;



	10.5.8
	any
other cause outside of Lessor's reasonable control which, but for this provision, would, or might, have the effect of terminating, frustrating or in any way affecting any
obligation of the Lessee hereunder; it being the declared intention of the parties that the provisions of this Clause and the obligations of the Lessee to pay the daily lease charges, hourly usage
charges and a termination sum in accordance with Clause 16 below, and any other amounts provided hereunder will survive any frustration and that, save as expressly provided in this Agreement,
no moneys payable hereunder by the Lessee to Lessor will in any event or circumstances be repayable to the Lessee.



	10.5.9
	If
the Supplies become a Total Loss, then the daily lease charges will cease to accrue from the date on which Lessor receives the required amount in accordance with
Clause 15. 






10







 





        CLAUSE
11 PAYMENT 



Unless
otherwise agreed in writing: 


	11.1
	All
payments shall be made in United States Dollars and the Lessee undertakes that the Lessor shall receive, in the IAE bank account specified in Clause 11.3 below, the full
amount of payments falling due under this Agreement without any withholding, set off or deductions whatsoever.



	11.2
	Except
for the daily lease charge which shall be payable in accordance with the provisions of sub-clause 10.3 above, the amounts referred to in
sub-clause 10.2.1 shall be calculated for each Rental Period and payment shall be due not later than thirty (30) days after the end of such Rental Period. The Lessee shall
promptly supply the information required under sub-clause 9.4 for each completed Rental Period, or part thereof, within ten (10) business days after the end of such Rental
Period and Lessor shall provide to Lessee invoices based on such information and calculated in accordance with sub-clause 10.2.1. Failure by Lessee to provide the information
required under sub-clause 9.4, shall not release Lessee from its obligations to make payment to Lessor for each Rental Period's operations before the thirtieth (30th) day after the
end of such Rental Period. Amounts arising under sub-clause 10.2.2 shall be due and payable within ten (10) days of invoice date.



	11.3
	All
payments shall be made by wire transfer and shall be deposited not later than the due date for payment, unless such due date is not a business day, in which case payment will be
due on the immediately subsequent business day, with the following bank for the account of IAE: 






Fleet
Bank N.A.

175 Water Street

New York, NY 10038-4924

Account No. [***]

ABA No. 021200339 




	11.4
	For
the purposes of this Clause 11 "payment" shall only be deemed to have been made to the extent immediately available funds are received in the IAE bank account specified in
Clause 11.3 above.



	11.5
	Lessee
will pay interest on sums not paid on the due date (after any applicable grace period under this Agreement) from the date the payment should have been made until the date such
payment is actually made, at a rate per annum equal to [***]. [***] to this Clause 11.5 [***]. 




CLAUSE
12 INTELLECTUAL PROPERTY 



	12.1
	Lessor
shall, subject to the conditions set out in this Clause and as the sole liability of IAE with respect to claims of intellectual property infringement described in this
Clause 12, indemnify, defend and hold Lessee and its affiliates and their respective officers, directors, shareholders, members, employees, contractors and representatives, harmless against any
damages, costs, losses, liabilities, penalties, and expenses including legal expenses resulting from or arising out of or in connection with any claim that the use of any of the Supplies, or any
component, part, process, technical data, technology or software used in connection with or installed therein by Lessee within any country in which at the date of such claim the benefits of
Article 27 of the Convention on International Civil Aviation of 7th December 1944 (The Chicago Convention) apply, infringes any patent, design, or model duly granted or registered or any
copyright; provided, however, that Lessor shall not be liable to Lessee for any consequential damage or any loss of use of the Supplies or of the Aircraft in which the Supplies may be incorporated
arising as a result directly or indirectly of any such claim. 



11







 



	12.2
	Lessee
will give prompt notice in writing to Lessor of any such claim, whereupon Lessor shall have the right at its own expense to assume the defense of or to dispose of or to settle
such claim in its sole discretion but only in a way that does not materially limit, hinder, or increase the cost in any way of Lessee's use of the Supplies, and Lessee will give Lessor all reasonable
assistance at Lessor's expense and not knowingly by any act do anything which directly prejudices Lessor in this connection.



	12.3
	Lessor
shall have the right to substitute for any allegedly infringing Supplies substantially equivalent non-infringing supplies, but only in a way that does not
materially limit, hinder, or increase the cost in any way of Lessee's use of the Supplies.



	12.4
	In
the event that the use of the Supplies is enjoined, Lessor shall promptly, at its expense, either:



	12.4.1
	[***];
or



	12.4.2
	[***];
or



	12.4.3
	[***].






	12.5
	The
indemnity contained in Clause 12.1 above shall not apply to claims for infringement in respect of (i) Supplies manufactured to the specific design instructions of
Lessee; and (ii) the manner or method in which any of the Supplies is installed in the Aircraft; or (iii) any combination of any of the Supplies with any item or items other than
Supplies. 




CLAUSE
13 WARRANTY 



	13.1
	The
Supplies are to be leased in serviceable condition and with complete and accurate maintenance records, and otherwise in "as is, where is" condition. If the Supplies are not
supplied in a serviceable condition on the Delivery Date, then:



	13.1.1
	the
Lessor will at its expense, and in its sole discretion either repair or replace such unserviceable Supplies; or



	13.1.2
	if
serviceable Supplies are not available as a replacement and the unserviceable Supplies cannot be promptly repaired, the Lessee shall have the right to terminate the Contract for
those Supplies and return such unserviceable Supplies pursuant to Clause 6 above.



	13.1.3
	If
during the Period of Lease the Supplies become unserviceable as a result of normal wear and tear notwithstanding Clause 9.6 and 6.2.1, Lessee may terminate the Contract
for those Supplies and return such unserviceable Supplies pursuant to Clause 6 above.






	13.3
	The
Lessor will at its expense, and in its sole discretion either repair or replace such unserviceable Supplies.



	13.4
	The
Lessee accepts that the warranties granted to the Lessee under sub-clause 13.1 above together with the express remedies provided to the Lessee in respect of
Supplies in accordance with this Agreement are expressly in lieu of, and the Lessee hereby waives, all other remedies, conditions and warranties, express or implied, including without limitation ANY
IMPLIED WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR USE, and all other obligations and liabilities whatsoever of the Lessor and of the Lessor's shareholders, if any, whether in
contract or in tort or otherwise, for any defect, deficiency, failure, malfunctioning or failure to function of any item of the Supplies or of any other item of whatever nature manufactured or
supplied or inspected by the Lessor or the Lessor's shareholders, if any, howsoever and whenever acquired by the Lessee from whatever sources and the Lessee agrees that neither the Lessor nor the
Lessor's shareholders shall be 



12







 


liable
to the Lessee upon any claim therefore, whether in contract or in tort or otherwise, except as expressly provided in the said warranties. 





CLAUSE
14 ADDITIONAL LEVIES 



	14.1
	Subject
to sub-clause 14.2 below, the Lessor shall pay all imposts, duties, fees, taxes and other like charges in connection with the Supplies prior to their
delivery.



	14.2
	All
amounts stated to be payable by the Lessee pursuant to this Agreement, and any Contracts made hereunder, exclude any value added tax, sales tax or taxes on turnover. In the event
that the supply of goods and services under this Agreement, or a Contract made hereunder, is subject to any such value added tax, sales tax or tax on turnover, such tax will be borne by the Lessee.



	14.3
	The
Lessee shall pay all other imposts, duties, fees, taxes and other like charges by whomsoever levied. Lessee will bear no responsibility for any Lessor income taxes or taxes in
the nature of an income tax. 






CLAUSE
15 INSURANCE 



	15.1
	The
Lessee shall maintain in force, in form and substance consistent with the requirements of Exhibit C, an All Risk and War Risk Material Damage Insurance policy in respect
of risk of loss of or damage to the Supplies during the Period of Lease in an amount sufficient to cover the Agreed Value as indicated in the response referred to in sub-clause 3.2
above. Such policy shall include a Breach of Warranty Clause for one hundred percent (100%) of the amount referred to above. Such policy shall also include the Lessor as both additional insured and
loss payee as its interests may appear.



	15.2
	In
addition to the policy referred to in sub-clause 15.1 above, the Lessee shall maintain in force a legal liability insurance policy including contractual
liability coverage in an amount not less than [***]. Such policy shall include the Lessor as additional insured as its interests may appear.



	15.3
	Prior
to the Delivery Date, and at such other time as the Lessor may reasonably request, Lessee will provide, within fourteen (14) days of such request, an insurance
certificate (and where appropriate certificate of reinsurance) substantially in the form set forth in Exhibit C hereto, evidencing that the policies referred to in sub-clauses 15.1
and 15.2 are in force and that the interests of the Lessor are covered as required by this Clause 15. The policies shall in any event provide that they may not be canceled or materially
modified without twenty-eight (28) days prior written notice from the insurer, but with respect to the War Risk and allied perils coverage, seven (7) days, or such other period as may
from time to time be customarily obtainable in the industry. The Lessor shall not be liable for any premiums under the policies.



	15.4
	In
the event of a Total Loss, Lessee will immediately notify Lessor thereof. In the event of such Total Loss, Lessee will either (i) pay Lessor, within
[***] of such Total Loss, the Agreed Value of such Supplies together with all other payments owing hereunder until the date of such payment of the Agreed Value, and the Period
of Lease will terminate upon payment of such amount, or (ii) provide to Lessor unencumbered title free and clear of all security interests of any kind to a replacement Engine, and such
replacement Engine will (a) be free and clear of all security interests of any kind or description, (b) be in airworthy condition and of the same or improved model, service bulletin and
modification status and having a fair market value at least equal to the lost Engine, (c) have no greater hours and cycles since new than the lost Engine and (d) not have been operated
and not have any modules that have been operated at a higher thrust rating than the lost Engine. 



13







 



	15.5
	Notwithstanding
anything to the contrary in this clause 15 or in Exhibit C hereto, the terms of the insurance (and insurance certificates and brokers' reports) required
by this Agreement shall be consistent with general practice in the U.S. and/or London aviation insurance markets (and neither more nor less shall be required), provided that the monetary amounts of
coverage set forth in this clause 15 are maintained, and that all the other terms of this clause 15 and Exhibit C are maintained insofar as they are consistent with general
practice in the U.S. and/or London aviation insurance markets. 




CLAUSE
16 TERMINATION 



	16.1
	The
Lessor shall, without prejudice to any other rights or remedies, have the right exercisable on giving written notice to the Lessee, to terminate this Agreement, and any Contract
made hereunder, in the event that:



	16.1.1
	the
Lessee commits a breach of any of its obligations under this Agreement or under a Contract and fails to rectify such breach within thirty (30) days of its actual receipt
of notice of its occurrence; or



	16.1.2
	the
insurance coverage required pursuant to Clause 15 above is not maintained; or



	16.1.3
	the
Lessee:



	(a)
	enters
into liquidation, wind up or bankruptcy proceedings (as debtor), whether compulsory or voluntarily (otherwise than for the purpose of amalgamation or reconstruction) and if
involuntary, such proceedings remain in force unstayed, undismissed and unvacated for at least a sixty (60) day period; or



	(b)
	applies
for, or suffers for more than a sixty (60) day period, a receiver of Lessee or substantially all of its assets to be appointed and not dismissed; or



	(c)
	any
event occurs in the state where Lessee carries on its business, which is analogous to any of the foregoing.









	16.2
	If
any of the above events in Clause 16.1 (each an "Event of Default") has occurred, Lessor may at its option (and without prejudice to any of its other rights under this
Agreement or at law) at any time thereafter:



	16.2.1
	by
notice to the Lessee immediately terminate the Period of Lease; and/or



	16.2.2
	proceed
by court action to enforce performance of this Agreement and/or to recover damages for the breach of this Agreement; and/or



	16.2.3
	take
possession of the Supplies, for which purpose Lessor may enter any premises belonging to or in the occupation of or under the control of Lessee where the Supplies may be
located and Lessor is hereby irrevocably, by way of security for the Lessee's obligations under this Agreement, appointed attorney for the Lessee in causing the re-delivery of the Supplies
and will have all the powers and authorizations necessary for taking that action.






	16.3
	Upon
termination of the Period of Lease under Clause 16.2 above, Lessee will pay to Lessor such sum or sums (by way of agreed compensation for loss of bargain and not as a
penalty) as will equal the aggregate of:



	16.3.1
	all
losses, costs and expenses reasonably incurred by Lessor arising out of such termination including but without limitation any amounts incurred in recovering possession of the
Supplies and carrying out any work necessary to bring the Supplies up to the condition required by Clauses 9.14, 9.15 and 13 above; 






14







 


	16.3.2
	all
amounts of daily lease charges, hourly usage charges and other sums due to Lessor at the date of such termination; and



	16.3.3
	a
sum equal to all amounts of daily lease charges, hourly usage charges and other sums under this Agreement which would have fallen due to Lessor thereunder after the date of such
termination and during the Period of Lease but for such termination, [***]. 





CLAUSE
17 NON-ASSIGNMENT 



The
Lessee shall not assign any of its rights or obligations under this Agreement, or any Contract made hereunder, or sublease any of the Supplies, without the prior written consent of the Lessor. Any
purported assignment of this Agreement or any Contract, or any sub-lease of the Supplies in violation of this Clause shall be null and void. 




CLAUSE
18 DURATION 



This
Agreement shall continue in force for a period of five (5) years from the date first set forth above, and be automatically renewed on a yearly basis thereafter, unless terminated by either
party on ninety (90) days prior written notice or terminated in accordance with Clause 16 above. 




CLAUSE
19 HEADINGS 



The
Clause headings and the Index do not form a part of this Agreement and shall not govern or affect the interpretation of this Agreement. 




CLAUSE
20 EXHIBITS 



In
the event of any conflict or discrepancy between the Exhibits forming part of this Agreement and any other part of the Agreement, then this Agreement shall prevail. 




CLAUSE
21 NOTICES 



Any
notice to be served pursuant to this Agreement, or any Contract made hereunder, is to be sent by registered post, internationally recognized courier, or (other than for notices regarding claims of
breach or default) facsimile: 



In
the case of the Lessor to: 




IAE
International Aero Engines AG

IAE Building

400 Main Street,

East Hartford, Connecticut 06108 USA 


Attention:
Chief Legal Officer 


Facsimile
No. 860-565-5220 





In
the case of the Lessee to: 




Atlantic
Coast Airlines

45200 Business Court

Dulles, Virginia 20166

Facsimile: (703) 650-6294

Attention: CFO 





15







 



With
a copy to:

Atlantic Coast Airlines

45200 Business Court

Dulles, Virginia 20166

Facsimile: (703) 650-6201

Attention: General Counsel 


and



Atlantic
Coast Airlines

45200 Business Court

Dulles, Virginia 20166

Facsimile: (703) 650-6294

Attention: Comptroller 




or
in each case to such other place of business as may be notified from time-to-time by the receiving party. Any notice given otherwise than in accordance with this
Clause 21 shall be ineffective. No notice given under this Agreement will be effective until it is actually received by the receiving party. 





CLAUSE
22 AMENDMENT 




This
Agreement, and Contracts made hereunder, shall not be amended in any way other than by agreement in writing executed by the parties hereto after the date of this Agreement, or the Contract as the
case may be, which is expressly stated to amend this Agreement, or the Contract as the case may be. 





CLAUSE
23 LAW; FORUM 



	23.1
	This
Agreement shall be governed by and interpreted in accordance with the substantive laws of New York (U.S.A.), without regard to the choice or conflict of law rules. The parties
hereby agree to exclude application of the United Nations Convention on Contracts for the International Sale of Goods.



	23.2
	Subject
to the provisions of sub-clause 23.3 below, the parties agree that in the event any dispute arises out of this Agreement, any action or claim shall be
brought in any state or federal court of general jurisdiction in New York, New York. Each party hereto irrevocably and unconditionally submits to the jurisdiction of such courts, and, to the fullest
extent permitted by applicable law, irrevocably waives by way of motion or otherwise, as a defense, in any such action or claim: (i) that it is not personally subject to the jurisdiction of the
above-named courts; (ii) that the action or claim is brought in an inconvenient forum; (iii) that the venue of the action or claim is improper; (iv) that this Agreement or the
subject matter hereof may not be enforced in or by such courts; and (v) any defense of sovereign immunity. The parties agree that a final judgment obtained in respect of any action or claim
referred to in this sub-clause shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any manner as provided by applicable law.



	23.3
	Notwithstanding
the submission to such jurisdiction provided in sub-clause 23.2 above, nothing in this Agreement shall limit, or be construed as limiting, the
right of the Lessor to take proceedings against the Lessee in any other court of competent jurisdiction, in any country chosen by the Lessor. 




CLAUSE
24 NEGATION OF WAIVER 



Failure
of either party at any time to enforce any of the provisions of this Agreement, or any Contract formed hereunder, shall not be construed as a waiver by such party of such provisions or 



16







 

in
any way affect the validity of this Agreement, any Contract made hereunder, or any part thereof. 




CLAUSE
25 CONSTRUCTION OF THIS AGREEMENT 



Any
provision of this Agreement, or any Contract made hereunder, 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. 




CLAUSE
26 COUNTERPARTS 



This
Agreement may be executed in any number of counterparts and all of such counterparts taken together will be deemed to constitute one and the same instrument. 




IN
WITNESS hereof the parties hereto have caused this Agreement to be signed on their behalf by the hands of their authorized officers the day and year first above written. 



	For IAE INTERNATIONAL

AERO ENGINES AG	 	Agreed and Accepted

ATLANTIC COAST AIRLINES
	

	
 	


	Name	 	Name
	

	
 	


	Title	 	Title
	

	
 	


	Date	 	Date




17








   EXHIBIT A  


 FORM OF RESPONSE FROM LESSOR  


To:
The Lessee 



Reference
your request dated . . . . . . . . for an emergency lease of an IAE V2500® aero engine. Lessor agrees to lease to Lessee the IAE V2500 aero engine described below pursuant to the
provisions of the Standard Terms of Business for Lease of V2500 Engines dated            (a copy of which is in your possession) and the details included in this response. IAE agrees to hold
this
V2500 aero engine available for twenty-four (24) hours from the date of this response pending written acceptance by Lessee. 



	1.	 	The engine specifics are as follows:
	

 	
 	

Engine Make	
 	

V2500®
	 	 	Engine Model	 	 
	 	 	Engine Serial Number	 	 
	 	 	Rated Horsepower	 	750 or more
	

3.	
 	

The date of availability Ex Works (INCOTERMS 2000) is . . . . . . .
	

4.	
 	

The delivery point will be Ex Works (INCOTERMS 2000) . . . . . . .
	

5.	
 	

The charges are:
	

 	
 	

5.1	
 	

per day;
	 	 	5.2	 	per take-off; and
	 	 	5.3	 	per running hour.
	

6.	
 	

The period of lease is . . . . . . days
	

7.	
 	

The re-delivery point will be CIP (INCOTERMS 2000) . . . . .
	

8.	
 	

The Agreed Value is . . . . . . . . . .
	

9.	
 	

There are no/the following special conditions:






	

Regards,

For IAE INTERNATIONAL AERO ENGINES AG	
 	

 
	

	
 	


	Name	 	Date
	

	
 	


	Title	 	 




18








   EXHIBIT B  


 FORM OF ACCEPTANCE OF LEASE  



	To:	 	Lessor
	Subject:	 	Emergency Lease of Engine No.





        Lessee
agrees to lease from Lessor the IAE V2500® aero engine described in Lessor's Response dated . . . . . . . . . . pursuant to the Standard Terms of Business for Lease of
V2500 Engines dated . . . . . . . . . which we have in our possession and the details set forth in Lessor's Response dated . . . . . . . . . . 



	

Agreed to and accepted on behalf of:	
 	

 
	

ATLANTIC COAST AIRLINES	
 	

 
	

	
 	

 
	Name	 	 
	

	
 	

 
	Title	 	 
	

	
 	

 
	Date	 	 




19








   EXHIBIT C 


Form
of Certificate of Insurance 



	To:	 	IAE International Aero Engines AG

400 Main Street, M/S 121-10

East Hartford, Connecticut 06108, USA and
	

 	
 	
IAE INSURANCE BROKER

Care of 400 Main Street, M/S 121-10

East Hartford, Connecticut 06108, USA.





Reference
[    •        •    ] 


THIS IS TO CERTIFY that as Insurance Brokers we have effected insurance with UNDERWRITERS and CERTAIN INSURANCE COMPANIES on behalf of  



	[    •	 	•    ]        





covering
their fleet of aircraft against the following risks and up to the limits stated whilst operating anywhere in the World, but in respect of War and Allied Perils described below, excluding
[    •        •    ]. 


	1.
	All
Risks of loss or damage to the aircraft for values as agreed on each aircraft.



	2.
	All
Risks of loss or damage to aircraft spares including engines for values as declared by the Insured subject to a limit of [    •    
    •    ] any one occurrence BUT a maximum of [    •        •    ]
any one sending.



	3.
	Loss
or damage to the aircraft (including confiscation by the government of the country of registration) and aircraft spares including engines caused by War and Allied Perils for
values and limits as in 1. and 2. above. Spares coverage for War and Civil War Risks shall only apply whilst the interest is in transit by air or sea.
[    •    This policy contains an annual aggregate limit for claims hereon in respect of the Insured's fleet of aircraft
[including/excluding] spares of
[    •        •    ]    •    ].



	4.
	Comprehensive
Legal Liability covering bodily injury/property damage/personal injury (inclusive of liability to third parties and passengers, and for baggage and cargo and mail) up to
a combined single limit of not less than [    •        •    ] any one accident/occurrence and in the aggregate
in respect of products liability (but personal injury limited to US$[***] any one offence and in the aggregate) War and Allied Perils are also covered.



	5.
	To
pay Deductibles imposed under 1 and 2 above as applicable but only to pay the excess of [                        ] each and every
loss up to a further
[            ] each and every loss and subject to the aggregate limit on Insurers liability over the period of the policy of
[                        ] in
respect of all aircraft and engines covered under the policy. 



The
policies referred to above are for a period which expires at midnight on [    •        •    ], Local
Standard Time. 


It
is further certified that the Insurers have been advised of the attachment of the following Equipment to the insurance coverage as evidenced above:- 



Equipment:-


[Engine
description], Manufacturer's Serial Number [            ]

Agreed Value US$[            ]. 



20







 




Effective Date:


[    •        •    ].



The
Equipment is the subject of the following Contract(s):-


V2500®
Standard Terms of Business for Lease of Engines IAE International Aero Engines A.G.("IAE") and [                        ] dated
[    ]. 


And
the Contract Party is (Contract Parties are):-

IAE International Aero Engines AG and

ATLANTIC COAST AIRLINES 


AND in addition, in respect of Legal Liability Insurances: 


and
the shareholders, subsidiaries, directors, officers, agents, employees and indemnitees of the Contract Party(ies). 




And,
in respect thereof, from the Effective Date and whilst the Equipment is the insurance
responsibility of [    •        •    ], Insurers have agreed the following Endorsements:- 


It
is noted that the Contract Party(ies) has an interest in respect of the Equipment under the  Contract(s).
Accordingly, with respect to losses occurring during the period from the Effective Date
until the expiry of the Insurance or until the expiry or agreed termination of the Contract(s) or until the obligations under the  Contract(s) are
terminated by any action of the Insured or the Contract Party(ies), whichever shall
first occur, in respect of the said interest of the Contract Party(ies), and in consideration of the Additional Premium, it is confirmed that the
Insurance afforded by the Policy is in full force and effect and it is further agreed that the following provisions are specifically endorsed to the Policy: 


	1.
	Under the Hull, Hull War and Aircraft Spares Insurances



	1.1
	In
respect of any claim on Equipment that becomes payable on the basis of a Total Loss, settlement (net of any relevant Policy Deductible) shall be made to, or to the order of the
Contract Party(ies). In the respect of any other claim settlement (net of any relevant Policy Deductible) shall be made with such party(ies) as may be necessary to repair the Equipment unless
otherwise agreed after the consultation between the Insurers and the Insured and, where necessary under the terms of the Contract(s), the Contract Party(ies). 







Such
payments shall only be made provided they are in compliance with all applicable laws and regulations. 



	1.2
	Insurers
shall be entitled to the benefit of salvage in respect of any property for which a claims settlement has been made.






	2.
	Under the Legal Liability Insurance



	2.1
	Subject
to the provisions of this Endorsement, the Insurance shall operate in all respects as if a separate Policy had been issued covering each party insured hereunder, but this
provision shall not operate to include any claim howsoever arising in respect of loss or damage to the Equipment insured under the Hull or Spares Insurance of the Insured. Notwithstanding the
foregoing the total liability of Insurers in respect of any and all Insureds shall not exceed the limits of liability stated in the Policy.



	2.2
	The
Insurance provided hereunder shall be primary and without right of contribution from any other insurance which may be available to the Contract Party(ies). 





21







 



	2.3
	This
Endorsement does not provide coverage for the Contract Party(ies) with respect to claims arising out of their legal liability as
manufacturer, repairer, or servicing agent of the Equipment.






	3.
	Under ALL Insurances



	3.1
	The  Contract Party(ies) is included as Additional Insured(s).



	3.2
	The
cover afforded to each Contract Party by the Policy(ies) in accordance with this Endorsement shall not be invalidated by any act or
omission (including misrepresentation and non-disclosure) of any other person or party which results in a breach of any term, condition or warranty of the Policy(ies) PROVIDED THAT the  Contract Party so
protected has not caused, contributed to or knowingly condoned the said act or omission.



	3.3
	The
provisions of this Endorsement apply to the Contract Party(ies) solely in their capacity as lessor(s) in the identified  Contract(s) and not in any other
capacity. Knowledge that any Contract Party may have or acquire or
actions that it may take or fail to take in that other capacity (pursuant to any other contract or otherwise) shall not be considered as invalidating the cover afforded by this Endorsement.



	3.4
	The
Contract Party(ies) shall have no responsibility for premium and Insurers shall waive any right of set-off or
counterclaim against the Contract Party(ies) except in respect of outstanding premium in respect of the  Equipment.



	3.5
	Upon
payment of any loss or claim to or on behalf of any Contract Party(ies), Insurers shall, to the extent and in respect of such
payment, be thereupon subrogated to all legal and equitable rights of the Contract Party(ies) indemnified hereby (but not against any  Contract Party).
Insurers shall not exercise such rights without the consent of those indemnified, such consent not to be unreasonably withheld. At the
expense of Insurers, such Contract Party(ies) shall do all things reasonably necessary to assist the Insurers to exercise said rights.



	3.6
	Except
in respect of any provision for Cancellation or Automatic Termination specified in the Policy(ies) or any endorsement thereof, cover provided by this Endorsement may only be
cancelled or materially altered in a manner adverse to the Contract Party(ies) by the giving of not less than thirty (30) days notice in writing
to the appointed broker (seven (7) days or such lesser period as may be customarily available in respect of War and Allied Perils). Notice shall be deemed to commence from the date such notice
is given by the Insurers. Such notice will NOT, however, be given at normal expiry date of the Policy or any endorsement. 






EXCEPT
AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS OF THIS ENDORSEMENT:- 


	1.
	THE
CONTRACT PARTY(IES) IS (ARE) COVERED BY THE POLICY(IES)) SUBJECT TO ALL TERMS, CONDITIONS, LIMITATIONS, WARRANTIES, EXCLUSIONS AND CANCELLATION PROVISIONS THEREOF.



	2.
	THE
POLICY(IES) SHALL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN THE CONTRACT(S) WHICH PURPORT TO SERVE AS AN ENDORSEMENT OR AMENDMENT TO THE POLICY(IES). 




In
addition in respect of the Contract(s) we have agreed to include the following special provisions:- 


Under the Hull, Hull War and Aircraft Spares Insurances


Insurers
have agreed to include a 50/50 Claim Funding arrangement in accordance with AVS.103. 


The
Insurance shall include the Equipment for the Agreed Value while fitted to or forming part of an aircraft owned or operated by the Insured in addition to the agreed value of such an aircraft. 


22







 



Under the Hull Insurance


        A
deductible of [    •        •    ] is applicable in respect of the Equipment (other than its
total loss, constructive total loss, or arranged total loss). 


Under the Spares Insurance


A
deductible of [    •        •    ] each claim is applicable but engine damage arising whilst undergoing test
running shall be subject to the deductible of [    •        •    ] each loss. 


[*Reinsurance


In
respect of Reinsurance to include the following "Cut Through Clause": 


"The
Reinsurers hereby agree (at the request and with the agreement of the Reinsured) that, in the event of any valid claim arising hereunder, the Reinsurers shall, in lieu of payment to the Reinsured
its successors in interest and assigns, pay to the person named as loss payee under the original insurance
effected by the Insured that portion of any loss in respect of the Equipment for which the Reinsurers would otherwise be liable to pay the Reinsured (subject to proof of loss), it being understood and
agreed that any such payment shall fully discharge and release Reinsurers from any and all further liability in connection with such claim. 


The
Reinsurers reserve the right to set off against any claim payable hereunder in accordance with this clause any outstanding premiums due on the reinsurance in respect of the Equipment. 


Payment
shall be made under the reinsurance notwithstanding any bankruptcy, insolvency, liquidation or dissolution of the Reinsured and/or that the Reinsured has made no payment under the original
insurance policies. 


It
is a condition that the provisions of this clause shall not operate in contravention of the laws, statutes or decrees of the Government of the country of domicile of the Reinsured."*] 


SUBJECT
TO POLICY TERMS CONDITIONS LIMITATIONS AND EXCLUSIONS. 


23








   EXHIBIT D  



	To:	 	IAE International Aero Engines AG

400 Main Street, M/S 121-10

East Hartford, Connecticut 06108 USA





Reference
is made to the Contract created by the Offer to Lease made by Lessor to Atlantic Coast Airlines ["Atlantic Coast Airlines"] dated
[    ] and the Acceptance of the Offer to Lease given by ['SHORTNAME'] to Lessor dated [    ]
("Contract") between Lessor and ["SHORTNAME"], regarding IAE International Aero Engines AG  
[*                        *] Engine, Manufacturer's Serial Number 
[*    
*] ("Engine"). 


The
Lessee hereby certifies that: 


	1.
	On
[*    *], 20[* *] at  [*            *]
[*    *] time the Lessee accepted delivery of the Engine and that
pursuant to the terms of the Contract, the Lessee confirms that the Engine is and will henceforward be subject to all the terms and conditions contained in the Contract.



	2.
	The
Lessee confirms that the Engine is on the date of this Certificate in good working order and repair without defects or inherent vice in condition, design, operation or fitness for
use and that it conforms to the Lessee's requirement.



	3.
	No
Event of Default (as defined in the IAE Standard Terms of Lease for V2500 Engines between IAE and [SHORTNAME]
dated                        ) has occurred and is
continuing at the date of this Certificate.



	4.
	The
Lessee hereby confirms that all the parts listed in the relevant contract specification for the Engine were installed on the Engine at delivery. 



SIGNED the [* *] day of [*
            ] 20[ *]


For
and on behalf of
 ATLANTIC COAST AIRLINES


24











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Exhibit 10.43