**Exhibit 10.3**

 

 

VGAA

WET LEASE& BLOCKED SPACE

HEADS OFAGREEMENT

 

*Between :*                                           **L-Air Holding Inc.,**

 

withregistered office at 130 King Street West, suite 3670, Toronto, Ontario,

Canada, M5X1B1, herewith represented by Mr. Alex Goldman, President;

further calledL-Air,

 

*And*                                                                          **VGAA N.V.,**

 

withregistered office at 400, Rue Leopold I, 1090 Brussels, herewith

represented byMr. H. Yeritsyan, President-Managing Director,

further calledVGAA,

 

*for and inconsideration of the mutual covenants contained in this agreement, partiesagree as follows :*

 

**1.**                                 **General Co-operation Principles**

 

1.1.                         SemiWet lease on Brussels-Yerevan routing

 

Subject to the appropriate governmentalapprovals, L-Air as the Lessor will operate on a wet lease basis flightsbetween Lyon – Yerevan – Brussels – Los Angeles and vice versa for and onbehalf of the VGAA as the Lessee.

 

1.2.                         Schedules

 

1.2.1.                Schedules of flights considered under1.1 and 1.2 are subject to :

a/      trafficrights to be arranged by L-Air on the whole route except for departure ex EVNwhich will be arranged by VGAA

b/      airportslots at all destinations

c/      allrelevant governmental, JAA and FAA approvals

 

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1.2.2.                Subject to art.1.3.1., the schedule has been agreed as follows :

 
| LYS-EVN |   | day 2 |   | departure 22h00        |   | arrival 03h00 |   |
|---------|--------|-------|--------|------------------------|--------|---------------|--------|
| EVN-BRU |   | day 3 |   | departure 05h00        |   | arrival 10h00 |   |
| BRU-LAX |   | day 3 |   | departure 12h00        |   | arrival 23h30 |   |
| LAX-BRU |   | day 4 |   | departure 02h00        |   | arrival 13h00 |   |
| BRU-EVN |   | day 4 |   | departure 15h00        |   | arrival 20h00 |   |
| EVN-LYS |   | day 4 |   | departure   02h00 |   | arrival 03h00 |   |

 

2.                                  **Semi Wet Lease**

 

2.1.                         Aircraft– Operation – Capacity

 

L-Air will operate on a wet lease basis underit’s Belgian Operating Licence – Air Operator’s Certificate the flightsconsidered under article 1.1 with Airbus A340-300 aircraft, offering a maximumcapacity of 10 first class seats, 30 business seats and 225 economy seats.  L-Air has the right to replace the airbusA340-300 aircraft with any other aircraft, whether or not operated by L-Air, providingthis aircraft offers the same cargo and pax capacity, suitable to perform thecontracted flights.

 

2.2                            Trafficrights

 

The whole route will be operated under L-Airflight number under traffic rights of 3rd and 4th freedomof Armenian to be negotiated and obtained by VGAA under bilateral agreementbetween the Belgian and Armenian Government.

 

1.3                            Aircraftcapacity

 

All pax seats and cargo capacity on the wholeroute is exclusively reserved for VGAA.

 

1.4.                         Remuneration,costs and expenses

 

1.4.1.                VGAA will pay L-Air for the wet leaseoperation per rotation the amount of $360.000 USD – each rotation.  VGAA certifies to pay each flight rotationlatest one week before flight departure

This rotation rate has been calculated basedon the following parameters :

- EVN fuel rate :     $350,- per ton

- USD 1- / EUR 0.94

An increase of the cost of one of bothparameters with more than 5% will increase the cost of the flight accordingly.

2.4.2.                L-Air will bear all costs and expensesfor the aircraft in respect of the operation considered under article 1.1.herewith, excluding the following that will be born by VGAA :

 

a/ all cargo handling charges at Brussels,Yerevan, Lyon and Los Angeles airport;

 

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b/ all other costs such as pax handling,catering, approach, government taxes etc. are to be paid by L-Air.

 

2.                                  **Governmental approvals**

 

2.1.                         Flights considered herewithwill be operated by L-Air under Operating Licence – Air Operator’s Certificateof L-Air, to be issued by the Belgian Civil Aviation Authorities and withapproval of the U.S. Civil Aviation Authorities (FAA/DoT).

 

2.2.                         Flights will be operated underL-Air flight number under traffic rights of 3rd and 4thfreedom of L-Air pursuant to the bilateral agreement between the Belgian and USGovernment.

 

3.                                  **Flight departure**

 

The first flight departure is foreseen forthe second of April 2003.  L-Air has tomake sure that all flight authorisations are obtained before that date.

 

4.                                  **Technical problems**

 

In case the aircraft cannot fly due to atechnical problem, L-Air is obliged to replace the aircraft and to make surethat all passengers arrive at final destination at the latest 24 hours afterthe programmed arrival.  All costscaused by this delay, such as extra meals, hotel accommodations for thepassengers etc, will be paid by L-Air.

 

5.                                  **Bank guarantee**

 

VGAA will open a bank guarantee in name ofL-Air of 250.000 USD, validity date latest 15 days before the first flightdeparture.

 

6.                                  **Execution and Termination**

 

This agreement shall become effective onJanuary 28th 2003, and shall supersede any existing arrangementsbetween parties, covering the same subject and shall continue in force untilterminated by either party giving to the other party three months written noticeby registered letter with return signed receipt.

 

If either party should at any time default inobserving or performing any of the terms and conditions stated in thisagreement or should become bankrupt, or enter into any arrangement with itscreditors or go into liquidation, or suffer any of its goods to be taken inexecution, or if a receiver or trustee or all or substantial part or parts ofits property be appointed or applied for, this agreement may immediately becancelled by the other party.

 

7.                                  **Event of Default**

 

If any party under this agreement breachesany of the provisions of this agreement by any of the contracting parties,defaulting party will be given by the non-

 

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defaulting party a period of maximum 30(thirty) days after written notice of the default by the non-defaulting party,upon the choice of the non-defaulting party, in order to enable the defaultingparty to remedy to the default.  Ifafter this maximum of 30 (thirty) days, the default is not remedied, thisagreement shall be automatically terminated upon expiration of this period.

 

**8.****                                 Miscellaneous**

 

8.1.                         This agreement, qualified as‘heads of agreement’, is to be considered as basic understanding between theparties, in execution whereof detailed agreements and arrangements will be madein respect of the clear understanding between parties involved.

8.2.                         Any of the provisions of thisagreements, which should conflict with any other agreements or arrangement assigned or orally agreed upon between the parties to this agreement, shallprevail to the provisions or arrangements of the other agreements.

8.3.                         If any or more of theprovisions contained in this agreement will be illegal, unenforceable, or forany reason not to be held valid, this will not affect any other provision ofthis agreement and the agreements related hereto.

8.4.                         This agreement shall in allrespects be governed by and construed in accordance with the laws of theKingdom of Belgium.

8.5.                         Any dispute concerning validity,the interpretation or the performance of this agreement shall be finallysettled by the competent courts of the Kingdom of Belgium

 

In witness whereof it is agreed upon in goodfaith in Brussels, January 29th 2003-01-28

 

 
| For and behalf of         | For and behalf of |
|---------------------------|-------------------|
|                      |              |
|                      |              |
| L-AIR   Holding Inc. | VGAA N.V.         |

 

 

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