**EXHIBIT 10.24**

 

 

**PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED ANDFILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN A CONFIDENTALTREATMENT REQUEST UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED.  THE SYMBOL “[REDACTED]” IN THISEXHIBIT INDICATES THAT INFORMATION HAS BEEN OMITTED.**

 

AIRCRAFT LEASE AGREEMENT

 

Dated as of December 5, 2003

 

 

BETWEEN

 

FRONTIER AIRLINES, INC.

 

as LESSEE

 

 

and

 

 

INTERNATIONAL LEASE FINANCE CORPORATION

 

as LESSOR

 

 

 

 

| Aircraft Make and Model:                     |   | New Airbus A319-111 |
|----------------------------------------------|--------|---------------------|
| Aircraft Manufacturer’s  Serial Number: |   | 2198                |
| Aircraft Registration  Mark:                 |   | Per Exhibit G  |
| Make and Model of Engines:                   |   | CFM56-5B5/P         |
| Serial Numbers of Engines:                   |   | Per Exhibit G  |

 

NEW AIRCRAFT NO. 1

 

----

 

TABLE OF CONTENTS

 
| **ARTICLE 1** | ** ** | **SUMMARY OF  TRANSACTION**                                               | ** ** | ** ** |
|--------------------|------------|---------------------------------------------------------------------------|------------|------------|
| ** **         | ** ** | ** **                                                                | ** ** | ** ** |
| **ARTICLE 2** | ** ** | **DEFINITIONS**                                                           | ** ** | ** ** |
| 2.1                | ** ** | **General Definitions**                                                   |       |       |
| 2.2                | ** ** | **Specific Definitions**                                                  |       |       |
|               | ** ** | ** **                                                                |       |       |
| **ARTICLE 3** | ** ** | **PLACE AND  DATE OF DELIVERY**                                           | ** ** | ** ** |
| 3.1                | ** ** | **Place of Delivery**                                                     |       |       |
| 3.2                | ** ** | **Scheduled Delivery Date**                                               |       |       |
| 3.3                | ** ** | **Delivery Subject to Manufacturer Delivery**                             |       |       |
| 3.4                | ** ** | **No LESSOR Liability**                                                   |       |       |
| 3.5                | ** ** | **Total Loss of Aircraft Prior to Delivery**                              |       |       |
| 3.6                | ** ** | **Cancellation for  Delay**                                               |       |       |
| 3.7                | ** ** | **Delay**                                                                 |       |       |
|               | ** ** | ** **                                                                |       |       |
| **ARTICLE 4** | ** ** | **LEASE TERM**                                                            | ** ** | ** ** |
| 4.1                | ** ** | **Lease Term**                                                            |       |       |
| 4.2                | ** ** | **“Expiration Date”**                                           |       |       |
| 4.3                | ** ** | **“Termination Date”**                                          |       |       |
|               | ** ** | ** **                                                                |       |       |
| **ARTICLE 5** | ** ** | **SECURITY  DEPOSIT, TRANSACTION FEE, RENT, RESERVES AND OTHER PAYMENTS** | ** ** | ** ** |
| 5.1                | ** ** | **Security Deposit**                                                      |       |       |
| 5.2                | ** ** | **[Redacted]**                                                            |       |       |
| 5.3                | ** ** | **Rent**                                                                  |       |       |
| 5.4                | ** ** | **Reserves**                                                              |       |       |
| 5.5                | ** ** | **[Redacted]**                                                            |       |       |
| 5.6                | ** ** | **LESSOR’s Bank  Account**                                           |       |       |
| 5.7                | ** ** | **Default Interest**                                                      |       |       |
| 5.8                | ** ** | **No  Deductions or Withholdings**                                        |       |       |
| 5.9                | ** ** | **Value Added Taxes**                                                     |       |       |
| 5.10               | ** ** | **Wire  Transfer Disbursement Report**                                    |       |       |
| 5.11               | ** ** | **Net Lease**                                                             |       |       |
| 5.12               | ** ** | **LESSOR  Performance of LESSEE Obligation**                              |       |       |
| 5.13               | ** ** | **Consideration  for Rent and Other Amounts**                             |       |       |

 

ii

----

 
| **ARTICLE 6**  | ** ** | **INVOLVEMENT WITH  AIRCRAFT MANUFACTURER**                                      | ** ** | ** ** |
|---------------------|------------|----------------------------------------------------------------------------------|------------|------------|
| 6.1                 | ** ** | **LESSEE  Selection of Aircraft**                                                |       |       |
| 6.2                 | ** ** | **Participation Agreement**                                                      |       |       |
| 6.3                 | ** ** | **Procurement of BFE**                                                           |       |       |
| 6.4                 | ** ** | **LESSEE  Inspection of Aircraft**                                               |       |       |
| 6.5                 | ** ** | **Aircraft at Delivery**                                                         |       |       |
| 6.6                 | ** ** | **Delivery  of the Aircraft to LESSEE**                                          |       |       |
| 6.7                 | ** ** | **LESSEE Acceptance  of Aircraft**                                               |       |       |
|                | ** ** | ** **                                                                       |       |       |
| **ARTICLE 7**  | ** ** | **PRE-DELIVERY,  DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS** | ** ** | ** ** |
| 7.1                 | ** ** | **Pre-Delivery  Requirements**                                                   |       |       |
| 7.2                 | ** ** | **LESSOR’s Pre-Delivery  Requirements**                                     |       |       |
| 7.3                 | ** ** | **Delivery Requirements**                                                        |       |       |
| 7.4                 | ** ** | **Post-Delivery Requirements**                                                   |       |       |
|                | ** ** | ** **                                                                       |       |       |
| **ARTICLE 8**  | ** ** | **DISCLAIMERS**                                                                  | ** ** | ** ** |
| 8.1                 | ** ** | **“As Is,  Where Is”**                                                 |       |       |
| 8.2                 | ** ** | **Waiver of Warranty of  Description**                                           |       |       |
| 8.3                 | ** ** | **LESSEE  Waiver**                                                               |       |       |
| 8.4                 | ** ** | **Conclusive  Proof**                                                            |       |       |
| 8.5                 | ** ** | **No LESSOR Liability for  Losses**                                              |       |       |
| 8.6                 | ** ** | **No Liability to  Repair or Replace**                                           |       |       |
| 8.7                 | ** ** | **No Waiver**                                                                    |       |       |
|                | ** ** | ** **                                                                       |       |       |
| **ARTICLE 9**  | ** ** | **MANUFACTURERS’ AND  VENDORS’ WARRANTIES**                            | ** ** | ** ** |
| 9.1                 | ** ** | **Warranties**                                                                   |       |       |
| 9.2                 | ** ** | **Non-Assignable  Warranties**                                                   |       |       |
| 9.3                 | ** ** | **Reassignment**                                                                 |       |       |
| 9.4                 | ** ** | **Warranty  Claims**                                                             |       |       |
|                | ** ** | ** **                                                                       |       |       |
| **ARTICLE 10** | ** ** | **OPERATION OF AIRCRAFT**                                                        | ** ** | ** ** |
| 10.1                | ** ** | **Costs  of Operation**                                                          |       |       |
| 10.2                | ** ** | **Compliance  with Laws**                                                        |       |       |
| 10.3                | ** ** | **Training**                                                                     |       |       |
| 10.4                | ** ** | **No Violation of  Insurance Policies**                                          |       |       |
| 10.5                | ** ** | **Flight  Charges**                                                              |       |       |
|                | ** ** | ** **                                                                       |       |       |
| **ARTICLE 11** | ** ** | **SUBLEASES**                                                                    | ** ** | ** ** |
| 11.1                | ** ** | **No Sublease without  LESSOR Consent**                                          |       |       |
| 11.2                | ** ** | **LESSOR  Costs**                                                                |       |       |
| 11.3                | ** ** | **Any  Approved Sublease**                                                       |       |       |

 

iii

----

 
| 11.4                | ** ** | **Assignment of  Sublease**                    |       |       |
|---------------------|------------|------------------------------------------------|------------|------------|
| 11.5                | ** ** | **Wet Leases**                                 |       |       |
| 11.6                | ** ** | **Continued  Responsibility of LESSEE**        |       |       |
|                | ** ** | ** **                                     |       |       |
| **ARTICLE 12** | ** ** | **MAINTENANCE  OF AIRCRAFT**                   | ** ** | ** ** |
| 12.1                | ** ** | **General Obligation**                         |       |       |
| 12.2                | ** ** | **Specific Obligations**                       |       |       |
| 12.3                | ** ** | **Replacement of Parts**                       |       |       |
| 12.4                | ** ** | **Removal of Engines**                         |       |       |
| 12.5                | ** ** | **Pooling of  Engines and Parts**              |       |       |
| 12.6                | ** ** | **Installation  of Engines on Other aircraft** |       |       |
| 12.7                | ** ** | **Engine Thrust  Rating**                      |       |       |
| 12.8                | ** ** | **Modifications**                              |       |       |
| 12.9                | ** ** | **Performance  of Work by Third Parties**      |       |       |
| 12.10               | ** ** | **Reporting  Requirements**                    |       |       |
| 12.11               | ** ** | **Information  Regarding Maintenance Program** |       |       |
| 12.12               | ** ** | **LESSOR  Rights to Inspect Aircraft**         |       |       |
|                | ** ** | ** **                                     |       |       |
| **ARTICLE 13** | ** ** | **USE OF RESERVES**                            | ** ** | ** ** |
| 13.1                | ** ** | **Airframe Reserves**                          |       |       |
| 13.2                | ** ** | **Engine  Performance Restoration Reserves**   |       |       |
| 13.3                | ** ** | **Engine LLP Reserves**                        |       |       |
| 13.4                | ** ** | **Landing Gear  Reserves**                     |       |       |
| 13.5                | ** ** | **Reimbursement**                              |       |       |
| 13.6                | ** ** | **Reimbursement  Adjustment**                  |       |       |
| 13.7                | ** ** | **Costs in  Excess of Reserves**               |       |       |
| 13.8                | ** ** | **Reimbursement  after Termination Date**      |       |       |
|                | ** ** | ** **                                     |       |       |
| **ARTICLE 14** | ** ** | **TITLE AND  REGISTRATION**                    | ** ** | ** ** |
| 14.1                | ** ** | **Title  to the Aircraft during Lease Term**   |       |       |
| 14.2                | ** ** | **Registration of  Aircraft**                  |       |       |
| 14.3                | ** ** | **Filing of This  Lease**                      |       |       |
|                | ** ** | ** **                                     |       |       |
| **ARTICLE 15** | ** ** | **IDENTIFICATION  PLATES**                     | ** ** | ** ** |
| 15.1                | ** ** | **Airframe  Identification Plates**            |       |       |
| 15.2                | ** ** | **Engine  Identification Plates**              |       |       |
|                | ** ** | ** **                                     |       |       |
| **ARTICLE 16** | ** ** | **TAXES**                                      | ** ** | ** ** |
| 16.1                | ** ** | **General  Obligation of LESSEE**              |       |       |
| 16.2                | ** ** | **Exceptions to  Indemnity**                   |       |       |
| 16.3                | ** ** | **After-Tax Basis**                            |       |       |

 

iv

----

 
| 16.4                | ** ** | **Timing  of Payment**                     |       |       |
|---------------------|------------|--------------------------------------------|------------|------------|
| 16.5                | ** ** | **Contests**                               |       |       |
| 16.6                | ** ** | **Refunds**                                |       |       |
| 16.7                | ** ** | **Cooperation in Filing  Tax Returns**     |       |       |
| 16.8                | ** ** | **Survival  of Obligations**               |       |       |
|                | ** ** | ** **                                 |       |       |
| **ARTICLE 17** | ** ** | **INDEMNITIES**                            | ** ** | ** ** |
| 17.1                | ** ** | **General  Indemnity**                     |       |       |
| 17.2                | ** ** | **Exceptions to General  Indemnities**     |       |       |
| 17.3                | ** ** | **After-Tax  Basis**                       |       |       |
| 17.4                | ** ** | **Timing  of Payment**                     |       |       |
| 17.5                | ** ** | **Subrogation**                            |       |       |
| 17.6                | ** ** | **Notice**                                 |       |       |
| 17.7                | ** ** | **Refunds**                                |       |       |
| 17.8                | ** ** | **Defense  of Claims**                     |       |       |
| 17.9                | ** ** | **Survival  of Obligation**                |       |       |
|                | ** ** | ** **                                 |       |       |
| **ARTICLE 18** | ** ** | **INSURANCE**                              | ** ** | ** ** |
| 18.1                | ** ** | **Categories  of Insurance**               |       |       |
| 18.2                | ** ** | **Third Party War  Liability Insurance**   |       |       |
| 18.3                | ** ** | **Installation of  Third Party Engine**    |       |       |
| 18.4                | ** ** | **Insurance for Indemnities**              |       |       |
| 18.5                | ** ** | **Renewal**                                |       |       |
| 18.6                | ** ** | **Assignment of Rights by  LESSOR**        |       |       |
| 18.7                | ** ** | **Deductibles**                            |       |       |
| 18.8                | ** ** | **Insurance for Wet  Lease Operations**    |       |       |
| 18.9                | ** ** | **Other  Insurance**                       |       |       |
| 18.10               | ** ** | **Information**                            |       |       |
| 18.11               | ** ** | **Currency**                               |       |       |
| 18.12               | ** ** | **Grounding  of Aircraft**                 |       |       |
| 18.13               | ** ** | **Failure  to Insure**                     |       |       |
| 18.14               | ** ** | **Reinsurance**                            |       |       |
| 18.15               | ** ** | **Limit on Hull in Favor  of LESSEE**      |       |       |
|                | ** ** | ** **                                 |       |       |
| **ARTICLE 19** | ** ** | **LOSS, DAMAGE AND  REQUISITION**          | ** ** | ** ** |
| 19.1                | ** ** | **Definitions**                            |       |       |
| 19.2                | ** ** | **Notice  of Total Loss**                  |       |       |
| 19.3                | ** ** | **Total Loss of  Aircraft or Airframe**    |       |       |
| 19.4                | ** ** | **Surviving  Engine(s)**                   |       |       |
| 19.5                | ** ** | **Total Loss of  Engine and Not Airframe** |       |       |
| 19.6                | ** ** | **Other  Loss or Damage**                  |       |       |

 

v

----

 
| 19.7                | ** ** | **Copy  of Insurance Policy**                            |       |       |
|---------------------|------------|----------------------------------------------------------|------------|------------|
| 19.8                | ** ** | **Government  Requisition**                              |       |       |
| 19.9                | ** ** | **Return of  Security Deposit and other Amounts**        |       |       |
|                | ** ** | ** **                                               |       |       |
| **ARTICLE 20** | ** ** | **REPRESENTATIONS,  WARRANTIES AND COVENANTS OF LESSEE** | ** ** | ** ** |
| 20.1                | ** ** | **Representations and  Warranties**                      |       |       |
| 20.2                | ** ** | **Covenants**                                            |       |       |
|                | ** ** | ** **                                               |       |       |
| **ARTICLE 21** | ** ** | **REPRESENTATIONS,  WARRANTIES AND COVENANTS OF LESSOR** | ** ** | ** ** |
| 21.1                | ** ** | **Representations and  Warranties**                      |       |       |
| 21.2                | ** ** | **Covenant of Quiet Enjoyment**                          |       |       |
| 21.3                | ** ** | **Covenant of U.S. Citizenship**                         |       |       |
|                | ** ** | ** **                                               |       |       |
| **ARTICLE 22** | ** ** | **FINANCIAL AND RELATED  INFORMATION**                   | ** ** | ** ** |
| ** **          | ** ** | ** **                                               | ** ** | ** ** |
| **ARTICLE 23** | ** ** | **RETURN  OF AIRCRAFT**                                  | ** ** | ** ** |
| 23.1                | ** ** | **Date of  Return**                                      |       |       |
| 23.2                | ** ** | **Technical  Report**                                    |       |       |
| 23.3                | ** ** | **Return  Location**                                     |       |       |
| 23.4                | ** ** | **Full Aircraft  Documentation Review**                  |       |       |
| 23.5                | ** ** | **Aircraft  Inspection**                                 |       |       |
| 23.6                | ** ** | **Certificate of  Airworthiness Matters**                |       |       |
| 23.7                | ** ** | **General  Condition of Aircraft at Return**             |       |       |
| 23.8                | ** ** | **Checks  Prior to Return**                              |       |       |
| 23.9                | ** ** | **Part Lives**                                      |       |       |
| 23.10               | ** ** | **Export and  Deregistration of Aircraft**               |       |       |
| 23.11               | ** ** | **LESSEE’s Continuing  Obligations**                |       |       |
| 23.12               | ** ** | **Airport and Navigation  Charges**                      |       |       |
| 23.13               | ** ** | **Return Acceptance  Certificate**                       |       |       |
| 23.14               | ** ** | **Indemnities and Insurance**                            |       |       |
| 23.15               | ** ** | **Civil  Reserve Air Fleet**                             |       |       |
|                | ** ** | ** **                                               |       |       |
| **ARTICLE 24** | ** ** | **ASSIGNMENT**                                           | ** ** | ** ** |
| 24.1                | ** ** | **No  Assignment by LESSEE**                             |       |       |
| 24.2                | ** ** | **Sale or Assignment by  LESSOR**                        |       |       |
| 24.3                | ** ** | **LESSOR’s  Lender**                                |       |       |
| 24.4                | ** ** | **LESSEE  Cooperation**                                  |       |       |
| 24.5                | ** ** | **Protections**                                          |       |       |

 

vi

----

 
| **ARTICLE 25** | ** ** | **DEFAULT  OF LESSEE**                        | ** ** | ** ** |
|---------------------|------------|-----------------------------------------------|------------|------------|
| 25.1                | ** ** | **LESSEE  Notice to LESSOR**                  |       |       |
| 25.2                | ** ** | **Events  of Default**                        |       |       |
| 25.3                | ** ** | **LESSOR’s  General Rights**             |       |       |
| 25.4                | ** ** | **Deregistration  and Export of Aircraft**    |       |       |
| 25.5                | ** ** | **LESSEE Liability for  Damages**             |       |       |
| 25.6                | ** ** | **Waiver  of Default**                        |       |       |
| 25.7                | ** ** | **Present  Value of Payments**                |       |       |
| 25.8                | ** ** | **Use  of “Termination Date”**      |       |       |
| 25.9                | ** ** | **LESSEE’s  Remedies**                   |       |       |
| 25.10               | ** ** | **Waiver of Consequential  Damages**          |       |       |
|                | ** ** | ** **                                    |       |       |
| **ARTICLE 26** | ** ** | **NOTICES**                                   | ** ** | ** ** |
| 26.1                | ** ** | **Manner of Sending Notices**                 |       |       |
| 26.2                | ** ** | **Notice  Information**                       |       |       |
|                | ** ** | ** **                                    |       |       |
| **ARTICLE 27** | ** ** | **GOVERNING LAW AND  JURISDICTION**           | ** ** | ** ** |
| 27.1                | ** ** | **California  Law**                           |       |       |
| 27.2                | ** ** | **Non-Exclusive  Jurisdiction in California** |       |       |
| 27.3                | ** ** | **Service  of Process**                       |       |       |
| 27.4                | ** ** | **Prevailing Party in Dispute**               |       |       |
| 27.5                | ** ** | **Waiver**                                    |       |       |
|                | ** ** | ** **                                    |       |       |
| **ARTICLE 28** | ** ** | **MISCELLANEOUS**                             | ** ** | ** ** |
| 28.1                | ** ** | **[Redacted]**                                |       |       |
| 28.2                | ** ** | **Press  Releases**                           |       |       |
| 28.3                | ** ** | **LESSOR Performance for  LESSEE**            |       |       |
| 28.4                | ** ** | **LESSOR’s Payment  Obligations**        |       |       |
| 28.5                | ** ** | **Application  of Payments**                  |       |       |
| 28.6                | ** ** | **Usury Laws**                                |       |       |
| 28.7                | ** ** | **Delegation  by LESSOR**                     |       |       |
| 28.8                | ** ** | **Rights  of Parties**                        |       |       |
| 28.9                | ** ** | **Further  Assurances**                       |       |       |
| 28.10               | ** ** | **Use  of Word “including”**        |       |       |
| 28.11               | ** ** | **Headings**                                  |       |       |
| 28.12               | ** ** | **Invalidity of Any Provision**               |       |       |
| 28.13               | ** ** | **Time  Is of the Essence**                   |       |       |
| 28.14               | ** ** | **Amendments  in Writing**                    |       |       |
| 28.15               | ** ** | **Counterparts**                              |       |       |
| 28.16               | ** ** | **Delivery of Documents by  Fax**             |       |       |
| 28.17               | ** ** | **Entire  Agreement**                         |       |       |

 

vii

----

 
| 28.18              | ** ** | **Expenses**                             |       |       |
|--------------------|------------|------------------------------------------|------------|------------|
|               | ** ** | ** **                               |       |       |
| **EXHIBIT A** | ** ** | **AIRCRAFT  DESCRIPTION**                | ** ** | ** ** |
| ** **         | ** ** | ** **                               | ** ** | ** ** |
| **EXHIBIT B** | ** ** | **SUMMARY  OF TRANSACTION**              | ** ** | ** ** |
| ** **         | ** ** | ** **                               | ** ** | ** ** |
| **EXHIBIT C** | ** ** | **COMMERCIAL  TERMS**                    | ** ** | ** ** |
| ** **         | ** ** | ** **                               | ** ** | ** ** |
| **EXHIBIT D** | ** ** | **PARTICIPATION  AGREEMENT**             | ** ** | ** ** |
| ** **         | ** ** | ** **                               | ** ** | ** ** |
| **EXHIBIT E** | ** ** | **CERTIFICATE  OF INSURANCE**            | ** ** | ** ** |
| ** **         | ** ** | ** **                               | ** ** | ** ** |
| **EXHIBIT F** | ** ** | **BROKERS’  LETTER OF UNDERTAKING** | ** ** | ** ** |
| ** **         | ** ** | ** **                               | ** ** | ** ** |
| **EXHIBIT G** | ** ** | **ESTOPPEL  AND ACCEPTANCE CERTIFICATE** | ** ** | ** ** |
| ** **         | ** ** | ** **                               | ** ** | ** ** |
| **EXHIBIT H** | ** ** | **OPINION  OF COUNSEL**                  | ** ** | ** ** |
| ** **         | ** ** | ** **                               | ** ** | ** ** |
| **EXHIBIT I** | ** ** | **ASSIGNMENT  OF RIGHTS (AIRFRAME)**     | ** ** | ** ** |
| ** **         | ** ** | ** **                               | ** ** | ** ** |
| **EXHIBIT J** | ** ** | **ASSIGNMENT  OF RIGHTS (ENGINES)**      | ** ** | ** ** |
| ** **         | ** ** | ** **                               | ** ** | ** ** |
| **EXHIBIT K** | ** ** | **RETURN  ACCEPTANCE RECEIPT**           | ** ** | ** ** |
| ** **         | ** ** | ** **                               | ** ** | ** ** |
| **EXHIBIT L** | ** ** | **MONTHLY  REPORT**                      | ** ** | ** ** |
| ** **         | ** ** | ** **                               | ** ** | ** ** |
| **EXHIBIT M** | ** ** | **AIRCRAFT  DOCUMENTATION**              | ** ** | ** ** |
| ** **         | ** ** | ** **                               | ** ** | ** ** |
| **EXHIBIT N** | ** ** | **TECHNICAL  EVALUATION REPORT**         | ** ** | ** ** |

 

viii

----

 

AIRCRAFT LEASE AGREEMENT

 

THISAIRCRAFT LEASE AGREEMENT is made and entered into as of December 5, 2003.

 

BETWEEN:

 

FRONTIERAIRLINES, INC., a Colorado corporation whose address and principal place ofbusiness are at Frontier Center One, 7001 Tower Road, Denver, Colorado 80249 (“**LESSEE**”) and

 

INTERNATIONALLEASE FINANCE CORPORATION, a California corporation whose address and principalplace of business are at 1999 Avenue of the Stars, 39th Floor, Los Angeles,California 90067-6049, United States of America (“**LESSOR**”).

 

Thesubject matter of this Lease is one (1) new Airbus A319-111 aircraftas more particularly described on Exhibit A attached hereto.  In consideration of and subject to the mutualcovenants, terms and conditions contained in this Lease, LESSOR hereby agreesto lease to LESSEE and LESSEE hereby agrees to lease from LESSOR the aircraftand the parties further agree as follows:

 

1

----

 

**ARTICLE 1****                                 ****SUMMARY OF TRANSACTION**

 

SEE EXHIBIT B.

 

2

----

 

**ARTICLE 2****                                 ****DEFINITIONS**

 

Exceptwhere the context otherwise requires, the following words have the followingmeanings for all purposes of this Lease. The definitions are equally applicable to the singular and plural formsof the words.  Any agreement definedbelow includes each amendment, modification, supplement and waiver thereto ineffect from time to time.

 

2.1                                                                     **General Definitions**.

 

“**Aircraft**” means the Aircraft describedon Exhibit A hereto, including the Airframe, two (2) Engines, Partsand Aircraft Documentation, collectively. As the context requires, “Aircraft” may also mean the Airframe, anyEngine, any Part, the Aircraft Documentation or any part thereofindividually.  For example, in thecontext of return to LESSOR the term “Aircraft” means the Airframe, Engines,Parts and Aircraft Documentation collectively, yet in the context of LESSEE notcreating any Security Interests other than Permitted Liens on the Aircraft, theterm “Aircraft” means any of the Airframe, any Engine, any Part or theAircraft Documentation individually.

 

“**Aircraft Documentation**” means all (a) logbooks, Aircraft records, manuals and other documents provided to LESSEE inconnection with the A3ircraft, as listed in Exhibit G, (b) alldocuments listed in Exhibit M and (c) any other documents required tobe maintained during the Lease Term by the Aviation Authority, LESSEE’sMaintenance Program and this Lease.

 

“**Airframe**” means the airframe listed inthe Estoppel and Acceptance Certificate executed at Delivery together with allParts relating thereto (except Engines or engines).

 

“**Airframe Warranty Assignment**” means theAssignment of Rights (Airframe) to be entered into between LESSOR and LESSEE inthe form of Exhibit I.

 

“**Airworthiness Directives**” or “**ADs**” means all airworthiness directives(or equivalent) issued by the FAA applicable to the Aircraft.

 

“**APU**” means the auxiliary power unit ofthe Aircraft.

 

“**Aviation Authority**” means the FAA orany Government Entity which under the Laws of U.S. from time to time hascontrol over civil aviation or the registration, airworthiness

 

3

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or operation of aircraft inU.S.  If the Aircraft is registered in acountry other than the U.S., “Aviation Authority” means the agency whichregulates civil aviation in such other country.

 

“**Aviation Documents**” means any or all ofthe following which at any time may be obtainable from the Aviation Authority: (a) LESSOR’sapplication for registration of the Aircraft with the appropriate authority inthe State of Registration, (b) the certificate of registration for theAircraft issued by the State of Registration, (c) a certificate ofairworthiness for the Aircraft specifying transport category (passenger), (d) anair operator’s certificate, (e) such recordation of LESSOR’s title to theAircraft and interest in this Lease as may be available in the State ofRegistration and (f) all such other authorizations, approvals, consentsand certificates in the State of Registration as may be required to enableLESSEE lawfully to operate the Aircraft.

 

“**AVSA**” means AVSA S.A.R.L., a *sociétéà responsabilité limitée*organized and existing under the laws of the Republic of France.

 

“**Basic Engine**” means those units andcomponents of the Engine which are used to induce and convert fuel/air mixtureinto thrust/power; to transmit power to the fan and accessory drives; tosupplement the function of other defined systems external to the Engine; and tocontrol and direct the flow of internal lubrication, plus all essentialaccessories as supplied by Engine manufacturer. The nacelle, installed components related to the Aircraft systems,thrust reversers, QEC and the exhaust nozzle are excluded.

 

“**BFE**” means any equipment which is to beprovided by the purchaser of the Aircraft (whether actually provided by LESSORas buyer-furnished equipment or Manufacturer as seller-purchased equipment).

 

“**Business Day**” means a day other than aSaturday or Sunday on which the banks in New York City and Denver, Colorado areopen for the transaction of business of the type required by this Lease.

 

“**Certificated Air Carrier**” means anyPerson (except the U.S. Government) that is a “citizen of the United States ofAmerica” (as defined in Section 40102 of Title 49 of U.S.C.) and holding aCertificate of Public Convenience and Necessity issued under Section 41102of Title 49 of U.S.C. by the Department of Transportation or any predecessor orsuccessor agency thereto, or, in the event such certificates shall no longer beapplicable, any Person (except the U.S. Government) that is a citizen of theU.S. (as defined in Section 40102 of Title 49 of the U.S.C.) and legallyengaged in the business of transporting for hire passengers or cargo by airpredominantly to, from or between points within the U.S., and, in either event,operating commercial jet aircraft capable of carrying ten or more individualsor 6,000 pounds or more of cargo, which also is certificated.

 

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“**Confidentiality Agreement**” means thatcertain agreement between LESSOR and LESSEE executed in September 2003,concerning the confidential treatment of certain information with respect tothe transaction contemplated by this Lease.

 

“**Creditor**” means any lessor, owner,bank, lender, mortgagee or other Person which is the owner of or has anyinterest in an aircraft engine or aircraft operated by LESSEE.

 

“**Creditor Agreement**” means theapplicable agreement between a Creditor and LESSEE or between Creditorspursuant to which such Creditor owns, leases or has an interest in either anaircraft operated by LESSEE on which an Engine may be installed or in anaircraft engine which may be installed on the Airframe.

 

“**Default**” means any event which, uponthe giving of notice or the lapse of time would constitute an Event of Default.

 

“**Delivery**” has the meaning given to suchterm in Article 6.6.

 

“**Delivery Date**” means the date on whichDelivery takes place.

 

“**DGAC**” means the French DirectionGénérale a l’Aviation Civile or any successor thereto.

 

“**Dollars**” and “**$**” means the lawful currency of theU.S.

 

“**Engine**” means (a) each of theengines listed on the Estoppel and Acceptance Certificate; (b) anyreplacement engine to which title has been transferred to LESSOR pursuant to Article 19.5following a Total Loss of an Engine and which otherwise meets the requirementsof such Article; and (c) all Parts installed in or on any of such enginesat Delivery (or substituted, renewed or replacement Parts in accordance withthis Lease) so long as title thereto is or remains vested in LESSOR inaccordance with the terms of Article 12.3.

 

“**Engine Refurbishment**” means allscheduled and unscheduled off wing Engine maintenance and repair accomplishedfor each module of the Basic Engine in accordance with the performancerestoration or full overhaul sections of the Engine manufacturer’s workscopeplanning guide.

 

“**Engine Warranty Assignment**” means theAssignment of Rights (Engines) to be entered into between LESSOR and LESSEE inthe form of Exhibit J.

 

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“**Estoppel and Acceptance Certificate**”means that certain estoppel and acceptance certificate in the form of Exhibit Gpursuant to which LESSEE accepts Delivery of the Aircraft.

 

“**Event of Default**” means any of theevents referred to in Article 25.2.

 

“**FAA**” means the Federal AviationAdministration of the Department of Transportation or any successor theretounder the Laws of the U.S.

 

“**FAR**” and “**FARs**” refer to the U.S. Federal Aviation Regulationsembodied in Title 14 of the U.S. Code of Federal Regulations, as amendedfrom time to time, or any successor regulations thereto.

 

“**Geneva Convention**” means the Conventionon the International Recognition of Rights in Aircraft signed in Geneva,Switzerland on June 19, 1948.

 

“**Government Entity**” means any (a) national,state or local government, (b) board, commission, department, division,instrumentality, court, agency or political subdivision thereof and (c) association,organization or institution of which any of the entities listed in (a) or (b) isa member or to whose jurisdiction any such entity is subject.

 

“**Landing Gear**” means the installed mainand nose landing gear, components and their associated actuators, side bracesand parts.

 

“**Law**” means any (a) statute,decree, constitution, regulation, order or any directive of any GovernmentEntity, (b) treaty, pact, compact or other agreement to which anyGovernment Entity is a signatory or party and (c) judicial oradministrative interpretation or application of any of the foregoing.

 

“**Lease**” means this Aircraft LeaseAgreement, together with all Exhibits hereto.

 

“**LESSOR’s Lien**” means any SecurityInterest created by LESSOR or otherwise arising solely as a result of any actor omission of LESSOR or any Person claiming by or through LESSOR.

 

“**LESSOR’s Taxes**” means any Taxesreferred to in Article 16.2.

 

“**Maintenance Program**” means (a) LESSEE’smaintenance program as approved by the Aviation Authority, (b) ifapplicable, the maintenance program of any Permitted Sublessee, during the termof any permitted sublease, or (c) such other maintenance program as LESSORmay, in its reasonable discretion, accept in writing.

 

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“**Manufacturer**” means Airbus Industries,G.I.E.

 

“**MPD**” means the Maintenance PlanningDocument published by Manufacturer and applicable to the Aircraft.  With respect to the hour/cycle/calendar timelimitation of Parts and inspections, references to the MPD mean the mostrestrictive limitation set forth therein.

 

“**Operative Documents**” means this Lease,the Participation Agreement, the Airframe Warranty Assignment, the EngineWarranty Assignment, the Estoppel and Acceptance Certificate and any SideLetter or other document or agreement signed by both LESSEE and LESSOR on orafter the date hereof relating to the leasing of the Aircraft hereunder or thetransactions contemplated hereby.

 

“**Overhaul**” means the full reconditioningof an APU, Landing Gear, module or Part, as the case may be, in which suchequipment has been fully disassembled; cleaned; thoroughly inspected; andreturned to the standard specified by the applicable manufacturer’smanual.  With respect to Engines, “**Overhaul**” means Engine Refurbishment.

 

“**Part**” means any part, component,appliance, system module, engine module, accessory, material, instrument,communications equipment, furnishing, LESSEE-furnished or LESSOR-purchasedequipment, the APU, or other item of equipment (other than complete Engines orengines) for the time being installed in or attached to the Airframe or anyEngine, or which, having been removed from the Airframe or any Engine, remainsthe property of LESSOR.

 

“**Participation Agreement**” means theParticipation Agreement to be entered into by LESSEE, LESSOR and AVSA and theManufacturer in the form of Exhibit D.

 

“**Permitted Lien**” means (a) LESSOR’sLiens; (b) Security Interests arising in the ordinary course of LESSEE’sbusiness for Taxes either not yet assessed or, if assessed, not yet due orbeing contested in good faith in accordance with Article 16.5 or (c) materialmen’s,mechanics’, workmen’s, repairmen’s, employees’ liens or similar SecurityInterests arising by operation of Law after the Delivery Date in the ordinarycourse of LESSEE’s business for amounts which are either not yet due or arebeing contested in good faith by appropriate proceedings (and for whichadequate reserves have been made or, when required in order to pursue suchproceedings, an adequate bond has been provided) so long as such proceedings donot involve any material danger of sale, forfeiture or loss of the Aircraft.

 

“**Permitted Sublessee**” has the meaningascribed thereto in Article 11.1.1.

 

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“**Permitted Transferee**” means any Personwho:

 

(a)                           is a “citizen of the United States” asdefined in Section 40102 of Title 49 of the U.S.C. with the requisitepower and authority to enter into and carry out the transactions contemplatedby this Lease;

 

(b)                          is not, and is not affiliated with, aCertificated Air Carrier or other commercial air carrier;

 

(c)                           enters into a binding agreement with LESSORand LESSEE pursuant to which, among other things, it agrees to be bound by theterms of this Lease and agrees to perform all of the obligations of LESSORhereunder; and

 

(d)                          is either (i) a U.S. bank, insurancecompany or other financial institution with a consolidated net worth, prior tothe date of transfer, of at least $30,000,000, (ii) a corporation whichhas (or a general partnership whose general partners have) a consolidated networth, prior to the date of transfer, of at least $30,000,000 and which is asophisticated entity, experienced in participating as an equity investor incommercial aircraft leases, (iii) the trustee or agent of an aircraftincome or similar fund; provided that such trustee or agent has a consolidatednet worth, prior to the date of transfer, of at least $30,000,000, or (iv) suchother Person as LESSEE shall approve in writing, such approval not to beunreasonably withheld or delayed.

 

“**Person**” means any individual, firm,partnership, joint venture, trust, corporation, Government Entity, committee,department, authority or any body, incorporated or unincorporated, whetherhaving distinct legal personality or not.

 

“**Prime Rate**” means the rate of interestfrom time to time publicly quoted by JPMorgan Chase Bank in New York, New York,or its successor, as its prime commercial lending rate.

 

“**Prohibited Country**” means any countryto which the export and/or use of an Airbus A319-111 aircraft with CFM56-5B5/Pengines attached thereto is not permitted under (a) any United Nationssanctions, (b) the Council Regulation (EC) No. 149/2003 which updatesand amends Council Regulation (EC) 1334/2000, (c) the United States ExportAdministration Act 1979 (as amended) or any successor legislation and/or theExport Administration Regulations promulgated thereunder, (d) whereapplicable, the various regulations administered from time to time by theOffice of Foreign Assets Control of the U.S. Treasury Department, (e) anysimilar or corresponding legislation then in effect in the U.S., the UnitedKingdom, France, Spain or

 

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Germany or (f) anysubsequent United Nations Sanctions Orders the effect of which prohibits orrestricts the export and/or use of Airbus A319-111 aircraft with CFM56-5B5/Pengines attached thereto to such country.

 

“**Security Interest**” means anyencumbrance or security interest, however and wherever created or arisingincluding (without prejudice to the generality of the foregoing) any right ofownership, security, mortgage, pledge, charge, encumbrance, lease, lien,statutory or other right in rem, hypothecation, title retention, attachment,levy, claim or right of possession or detention.

 

“**State of Registration**” means (a) theU.S., (b) in the case of a sublease by LESSEE to a Permitted Sublessee,the permitted state of registration of any aircraft leased by LESSOR to suchPermitted Sublessee, or (c) such other country or state of registration ofthe Aircraft as LESSOR may, in its absolute discretion, approve in writing.

 

“**U.S.**” means the United States ofAmerica.

 

**SpecificDefinitions**.  The following terms are defined in theArticles referenced below:

 
| **Terms**                                | ** ** | **Article** | ** ** |
|------------------------------------------|------------|-------------|------------|
| Accrued Engine Maintenance  Cost         |       | 23.9.2(a)   |       |
| Agreed Value                             |       | 19.1        |       |
| Airframe Reserves                        |       | 5.4.1       |       |
| CRAF                                     |       | 23.15.1     |       |
| CRAF Program Requisition  Period         |       | 23.15.1     |       |
| Default Interest                         |       | 5.7         |       |
| Delivery Location                        |       | 3.1         |       |
| Eligible Structural Check                |       | 13.1        |       |
| Engine LLP Reserves                      |       | 5.4.1       |       |
| Engine Performance  Restoration Reserves |       | 5.4.1       |       |
| Expenses                                 |       | 17.1        |       |
| Expiration Date                          |       | 4.2         |       |
| Indemnitees                              |       | 17.1        |       |
| Landing Gear Reserves                    |       | 5.4.1       |       |
| Lease Term                               |       | 4.1         |       |
| LESSEE Customization Costs               |       | 5.3.1       |       |

 

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| **Terms**                            | ** ** | **Article** | ** ** |
|--------------------------------------|------------|-------------|------------|
| LESSOR’s Assignee               |       | 24.2.1      |       |
| LESSOR’s Bank                   |       | 5.6         |       |
| LESSOR’s Lender                 |       | 24.3        |       |
| Manufacturer’s Escalation  Rate |       | 5.3.1       |       |
| MCPH Agreement                       |       | 12.1.5      |       |
| Modification                         |       | 12.8.1      |       |
| Net Total Loss Proceeds              |       | 19.1        |       |
| OEM Part                             |       | 12.1.4      |       |
| Outside Delivery Date                |       | 3.6         |       |
| Passenger Service  Equipment         |       | 12.8.1      |       |
| Payment Default                      |       | 5.4.2       |       |
| Rent                                 |       | 5.3.1       |       |
| Reserves                             |       | 5.4.1       |       |
| Scheduled Delivery Date              |       | 3.2         |       |
| Security Deposit                     |       | 5.1.1       |       |
| Taxes                                |       | 16.1        |       |
| Termination Date                     |       | 4.3         |       |
| Total Loss                           |       | 19.1        |       |
| Total Loss Date                      |       | 19.1        |       |
| Total Loss Proceeds                  |       | 19.1        |       |

 

**ARTICLE 3****                                 ****PLACE AND DATE OF DELIVERY**

 

3.1                                                                     **Place of Delivery**.   LESSOR will deliver the Aircraft to LESSEE at Manufacturer’s facility atHamburg, Germany or such other place as may be agreed in writing between theparties (the “**Delivery Location**”).

 

3.2                                                                     **Scheduled Delivery Date**.    Asof the date of this Lease, Delivery of the Aircraft from Manufacturer to LESSORis scheduled to occur in the month of [SEE PARAGRAPH 1 OF EXHIBIT C.].  LESSOR will notify LESSEE from time to timeand in a timely manner but no later than ninety (90) days prior to thescheduled month of delivery of the scheduled week of delivery and no later thanthirty (30) days prior to the exact date on which LESSOR expects Delivery totake place (the “**Scheduled Delivery Date**”).

 

3.3                                                                     **Delivery Subject toManufacturer Delivery**.    Subject to the provisions of this Article 3,LESSOR and LESSEE expressly acknowledge that Delivery of the Aircraft to

 

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LESSEEis subject to and conditioned upon delivery of the Aircraft by Manufacturer toLESSOR.

 

3.4                                                                     **No LESSOR Liability**.   LESSOR will not be liable for any loss or expense, or any loss ofprofit, arising from any delay or failure in Delivery to LESSEE unless suchdelay or failure arises as a direct consequence of the willful misconduct ofLESSOR or the breach by LESSOR of its obligations under the purchase agreementwith respect to the Aircraft, and in no event will LESSOR be liable for anydelay or failure which is caused by any breach or delay on the part ofManufacturer or any BFE supplier.

 

3.5                                                                     **Total Loss of Aircraft Priorto Delivery**.    If a Total Loss of the Aircraft occursprior to Delivery, neither party will have any further liability to the otherexcept that LESSOR will return to LESSEE the Security Deposit in accordancewith Article 5.1.3 and any prepaid Rent, whereupon this Lease shallterminate.

 

3.6                                                                     **Cancellation for Delay**.

 

3.6.1                        Promptly after LESSOR becomes aware that inManufacturer’s opinion a delay will cause Delivery to be delayed beyond [SEEPARAGRAPH 2 OF EXHIBIT C.] (the “**OutsideDelivery Date**”), LESSOR will notify LESSEE.  By written notice given within thirty (30)days after the first to occur of (i) LESSEE’s receipt of such LESSORnotice or (ii) the Outside Delivery Date, either party may by writtennotice to the other party terminate this Lease and this Lease will terminate onthe date of receipt of such notice, provided however that LESSOR shall not soterminate this Lease unless it has cancelled its purchase of the Aircraft fromthe Manufacturer.  If neither party givesnotice of termination within such thirty (30) day period, then the period fortermination shall be deemed to be extended for an additional one hundred andeighty (180) days after the expiration of such thirty (30) day period.  In the event that neither party gives anotice of termination within such one hundred and eighty (180) day period, theLease will automatically terminate upon the expiration of such period, andLESSOR will return to LESSEE the Security Deposit and any prepaid Rent asprovided above.

 

3.6.2                        In the event that Delivery is delayed morethan sixty (60) days beyond the Scheduled Delivery Date due to the grossnegligence or willful misconduct of LESSOR, LESSEE shall have the right toterminate this Lease by written notice to LESSOR, and this Lease will terminateon the date that is thirty (30) days after LESSOR’s receipt of such notice oftermination.

 

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3.6.3                        In the event of any termination of this Leasepursuant to Article 3.6.1 or Article 3.6.2, neither party will haveany further liability to the other party except that LESSOR will return toLESSEE the Security Deposit in accordance with Article 5.1.3 and anyprepaid Rent.

 

3.7                                                                     **Delay**.    Inthe event that the Delivery of the Aircraft is delayed beyond the ScheduledDelivery Date, then LESSEE and LESSOR will meet to discuss the action that theywill take against Manufacturer or any vendor as a result of such delay and whatcompensation they desire from the Manufacturer or such vendor.  In the event that LESSOR receivescompensation from Manufacturer as a result of any delay, LESSOR after deductingits costs and expenses resulting from such delay will provide to LESSEE thebalance of such compensation received from Manufacturer.  In the event that LESSOR receives anabatement or other concession by Manufacturer in respect of Manufacturer’sEscalation Rate as a result of any delay, LESSOR will pass through suchabatement or concession to LESSEE.

 

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**ARTICLE 4****                                 ****LEASE TERM**

 

4.1                                                                     **Lease Term**.   The term of leasing of the Aircraft will commence on the Delivery Dateand continue for a term of [SEE PARAGRAPH 3 OF EXHIBIT C.] (“**Lease Term**”).

 

4.2                                                                     **“Expiration Date**.    “**Expiration Date**” means the date onwhich LESSEE is required to redeliver the Aircraft to LESSOR in the conditionrequired by this Lease on the last day of the Lease Term.

 

4.3                                                                     **“Termination Date**.    IfLESSEE returns the Aircraft to LESSOR on the Expiration Date in the conditionrequired by Article 23, then “**TerminationDate**” has the same meaning as “Expiration Date”.  If LESSEE does not do so, then “**Termination Date**” means the date onwhich the first of the following events occurs:

 

(a)                                              there is a Total Loss of the Aircraft priorto Delivery pursuant to Article 3.5;

 

(b)                                             cancellation of this Lease occurs pursuant toArticle 3.6;

 

(c)                                              there is a Total Loss of the Aircraft andpayment is made to LESSOR in accordance with Article 19.3;

 

(d)                                             an Event of Default occurs and LESSORrepossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3prior to the Expiration Date and recovers possession and control of theAircraft;

 

(e)                                              an Event of Default occurs hereunder due toLESSEE returning the Aircraft after the Expiration Date in the conditionrequired by this Lease; or

 

(f)                                                an Event of Default occurs and LESSORrepossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3after the Expiration Date and recovers possession and control of the Aircraft.

 

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**ARTICLE 5****                                 ****SECURITY DEPOSIT,TRANSACTION FEE, RENT, RESERVES AND OTHER PAYMENTS**

 

5.1                                                                     **Security Deposit**.   SEE PARAGRAPH 4 OF EXHIBIT C.

 

5.1.1                        SEE PARAGRAPH 4(a) OF EXHIBIT C.

 

5.1.2                        SEE PARAGRAPH 4(b) OF EXHIBIT C.

 

5.1.3                        SEE PARAGRAPH 4(c) OF EXHIBIT C.

 

5.2                                                                     **[Redacted]**.   SEE PARAGRAPH 5 OF EXHIBIT C.

 

5.3                                                                     **Rent**.   SEE PARAGRAPH 6 OF EXHIBIT C.

 

5.3.1        SEE PARAGRAPH 6(a) OF EXHIBIT C.

 

5.3.2        SEE PARAGRAPH 6(b) OF EXHIBIT C.

 

5.4                                                                     **Reserves**.   SEE PARAGRAPH 7 OF EXHIBIT C.

 

5.4.1        SEE PARAGRAPH 7(a) OF EXHIBIT C.

 

5.4.2        SEE PARAGRAPH 7(b) OF EXHIBIT C.

 

5.4.3        SEE PARAGRAPH 7(c) OF EXHIBIT C.

 

5.4.4        SEE PARAGRAPH 7(d) OF EXHIBIT C.

 

(a)                                              SEE PARAGRAPH 7(d)(i) OF EXHIBIT C.

 

(b)                                             SEE PARAGRAPH 7(d)(ii) OF EXHIBIT C.

 

5.4.5        SEE PARAGRAPH 7(e) OF EXHIBIT C.

 

5.4.6        SEE PARAGRAPH 7(f) OF EXHIBIT C.

 

5.5                                                                     **[Redacted]**.   SEE PARAGRAPH 8 OF EXHIBIT C.

 

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5.6                                                                     **LESSOR’s Bank Account**.   The Security Deposit, Transaction Fee, Rent, Reserves and any otherpayment due under this Lease will be paid by wire transfer of immediatelyavailable U.S. Dollar funds to LESSOR’s bank account at:

 

InternationalLease Finance Corporation

AccountNo. 910-274-9067

JPMorganChase Bank

270Park Avenue

NewYork, New York 10017

ABA# 021000021

 

or to such other bankaccount as LESSOR may from time to time designate by written notice (“**LESSOR’s Bank**”).  When it is stated in this Lease that aninstallment of the Security Deposit, the monthly Rent, Reserves or any otherpayment is due or must be paid or made by LESSEE by a specific date, then suchpayment actually must be received by LESSOR’s Bank on or before such specificdate, even if, in order for such payment to be received by LESSOR’s Bank bysuch specific date, LESSEE must initiate the wire transfer prior to suchspecific date.

 

5.7                                                                     **Default Interest**.    IfLESSOR’s Bank does not receive the Rent or any other amount on or before thespecific date when due, LESSOR will suffer loss and damage the exact nature andamount of which are difficult or impossible to ascertain.  LESSEE will pay LESSOR as supplemental Rent(by way of agreed compensation and not as a penalty) interest on any due andunpaid amounts payable by LESSEE under this Lease calculated at a per annumrate (based on a 360 day year) equal to [SEE PARAGRAPH 9 OF EXHIBIT C.]plus the Prime Rate in effect on the date on which the amount was originallydue for the period from the date the amount originally was due through the datethe amount actually is received at LESSOR’s Bank or, in the case of LESSOR’sperformance of LESSEE’s obligations hereunder, from the date of payment byLESSOR through the date of LESSEE’s repayment to LESSOR (“**Default Interest**”).  Default Interest will accrue on a day-to-daybasis and be compounded monthly.

 

5.8                                                                     **No Deductions orWithholdings**.    Provided that LESSOR has not breached itscovenant of quiet enjoyment as set forth in Article 21.2, all payments byLESSEE under this Lease, including the Security Deposit, Transaction Fee, Rent,Reserves, Default Interest, fees, indemnities or any other item, will be madein full without any deduction or withholding whether in respect of set-off,counterclaim, duties, or Taxes (as defined in Article 16) imposed in theState of Registration or any jurisdiction from which such payments are madeexcept to the extent otherwise required by Law, in which event LESSEE will payany additional amount such that the net payment received by LESSOR after anyrequired deduction or withholding equals the amount that LESSOR would havereceived if such withholding had not been required; provided,

 

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however,that if LESSEE pays any such additional amount to compensate for thewithholding of any LESSOR Taxes, LESSOR shall pay to LESSEE promptly afterreceipt of LESSEE’s written request therefor (which request shall include adescription in reasonable detail of the LESSOR Taxes involved and thecalculation of the amounts to be paid) such amounts as are necessary so thatthe net additional amounts received by LESSOR under this Article 5.8 donot exceed the amounts that LESSOR would have received if no amounts in respectof LESSOR Taxes had been required to be withheld or deducted by LESSEE.

 

5.9                                                                     **Value Added Taxes**.   The Rent and other amounts payable by LESSEE under this Lease areexclusive of any value added tax, turnover tax or similar tax or duty.

 

5.10                                                               **Wire Transfer DisbursementReport**.    At the time of each Rent or other payment,LESSEE will advise LESSOR in writing of the amount of the payment being made byLESSEE and the allocation of such payment to the Security Deposit, Rent,Reserves, Default Interest and other charges. Notwithstanding the allocation set forth in LESSEE’s report, in theevent an Event of Default has occurred and is continuing under this Lease,LESSOR will have complete discretion to allocate LESSEE’s payments as LESSORdetermines.

 

5.11                                                               **Net Lease**.

 

5.11.1                                                      This Lease is a net lease and LESSEE’sobligation to pay Rent and make other payments in accordance with this Leasewill be absolute and unconditional under any and all circumstances andregardless of other events, including the following:

 

(a)                                              any right of set-off, counterclaim, recoupment,defense or other right (including any right of reimbursement) which LESSEE mayhave against LESSOR, Manufacturer, the Engine manufacturer or any other personfor any reason, including any claim LESSEE may have for the foregoing;

 

(b)                                             unavailability or interruption in use of theAircraft for any reason, including a requisition thereof or any prohibition orinterference with or other restriction against LESSEE’s use, operation orpossession of the Aircraft (whether by Law or otherwise), any defect in title,airworthiness, merchantability, fitness for any purpose, condition, design,specification or operation of any kind or nature of the Aircraft, theineligibility of the Aircraft for any particular use or trade or forregistration under the Laws of any jurisdiction or Total Loss of the Aircraft;

 

(c)                                              insolvency, bankruptcy, reorganization,arrangement, readjustment of debt, dissolution, liquidation, receivership,administration or similar proceedings by or

 

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againstLESSOR, LESSEE, Manufacturer, the Engine manufacturer or any other Person;

 

(d)                                             invalidity or unenforceability or lack of dueauthorization of or other defect in this Lease;

 

(e)                                              failure or delay on the part of any party toperform its obligations under this Lease; or

 

(f)                                                any other circumstance which but for thisprovision would or might have the effect of terminating or in any other wayaffecting any obligation of LESSEE hereunder.

 

5.11.2                  Nothing in Article 5.11 will be construed (a) tolimit LESSEE’s rights and remedies in the event of LESSOR’s breach of itswarranty of quiet enjoyment set forth in Article 21.2 or LESSOR’s breachof its warranty of U.S. citizenship set forth in Article 21.3 or (b) tolimit LESSEE’s rights and remedies to institute legal or other proceedings orpursue any claim it may have against LESSOR or any other Person; provided,however, that LESSEE will have no obligation to pay Rent as aforesaid, exceptin respect of Rent accrued at the time, for the number of days that LESSEE isdeprived of the possession and use of the Aircraft as the result of the breachby LESSOR of its warranty of quiet enjoyment obligations set forth Article 21.2.

 

5.12                                                               **LESSOR Performance of LESSEEObligation**.    If LESSEE fails to make any payment dueunder this Lease to a third party in connection with the Aircraft or fails toperform any other obligation required under this Lease, LESSOR may (but is notrequired to) at its election and without waiver of its rights perform suchobligation and/or pay such amount.

 

5.12.1                                                      LESSEE’s Right to Contest in Good Faith.   Notwithstanding the terms of Article 5.12, if LESSEE reasonablycontests its obligation to make a payment to a third party, LESSOR will notexercise its right to make such payment so long as (i) no other Event ofDefault under this Lease exists and is continuing, (ii) no SecurityInterest in the Aircraft (other than Permitted Liens) has arisen as a result ofsuch non-payment, and (iii) there is no significant risk of prejudice toany of the rights or interests of LESSOR or any LESSOR’s Lender with respect tothe Aircraft or the Lease as a result of such non-payment.

 

5.12.2                                                      LESSOR’s Right to Repayment.    Within five (5) Business Days after written notice to LESSEE of theamount paid by LESSOR on behalf of LESSEE pursuant to Article 5.12, LESSEEwill repay such amount to LESSOR together with Default Interest. 

 

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Such payment to LESSOR will constitute additional Rent payable byLESSEE to LESSOR hereunder.  Any payment,performance or compliance by LESSOR of a LESSEE obligation hereunder will notaffect the occurrence or continuance of an Event of Default.

 

5.13                                                               **Consideration for Rent andOther Amounts**.    The amount of the Rent and other paymentscontained herein are in consideration of LESSEE’s waiver of warranties andindemnities set forth in Articles 8 and 17, respectively, and the otherprovisions of this Lease.

 

**ARTICLE 6****                                 ****INVOLVEMENT WITH AIRCRAFTMANUFACTURER**

 

6.1                                                                     **LESSEE Selection of Aircraft**.   LESSEE ACKNOWLEDGES THAT THE DESCRIPTION OF THE AIRCRAFT SET FORTH INTHIS LEASE IS BASED UPON INFORMATION SUPPLIED BY MANUFACTURER.  LESSEE COVENANTS TO LESSOR THAT LESSEE HASUSED ITS OWN JUDGMENT IN SELECTING THE AIRCRAFT AND HAS DONE SO BASED ON ITSSIZE, DESIGN AND TYPE.  LESSEEACKNOWLEDGES THAT LESSOR IS NOT A MANUFACTURER, REPAIRER OR SERVICING AGENT OFTHE AIRCRAFT.

 

6.2                                                                     **Participation Agreement**.   LESSEE shall have the right to inspect the Aircraft during themanufacture process and to attend and observe the acceptance tests of theAircraft pursuant to the terms of a Participation Agreement to be entered intobetween LESSEE and LESSOR in the form set forth in Exhibit D.

 

6.3                                                                     **Procurement of BFE**.   LESSEE’s and LESSOR’s technical representatives will meet and determinewhich of LESSEE or LESSOR will provide specific items of BFE.  Such BFE will then be provided toManufacturer by LESSEE or LESSOR, as applicable, within the time framesrequired by Manufacturer.

 

6.4                                                                     **LESSEE Inspection ofAircraft**.    During the course of final assembly of theAircraft, and at Delivery, LESSEE may have its own representative present toinspect the Aircraft and to ensure its conformity with LESSEE’s needs and theterms of this Lease.  LESSEE will haveground inspection and acceptance flight rights with respect to theAircraft.  If LESSEE’s inspection revealsthat the Aircraft does not comply in any respect with the terms of this Lease,LESSOR will (for its own behalf and at LESSEE’s request) promptly cause theManufacturer to correct any such defects and make the Aircraft available forreinspection to LESSEE, and to conduct such further demonstration flights asmay be necessary to verify compliance with the requirements of this Lease,including but not limited to Exhibit A attached

 

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hereto.  LESSEE acknowledges that, as between LESSEEand LESSOR, in accepting the Aircraft LESSEE is relying on its own inspectionand knowledge of the Aircraft in determining whether the Aircraft meets therequirements of this Lease.

 

6.5                                                                     **Aircraft at Delivery**.    AtDelivery, the Aircraft will be as set forth in Exhibit A, as suchdescription may be modified by any change requests agreed to among LESSEE,LESSOR and Manufacturer (which will be reflected in amendment(s) to thisLease).  In the event of anydiscrepancies, LESSEE and LESSOR will cooperate in good faith with one anotherand with Manufacturer and Engine manufacturer, as applicable, in order toarrive at a mutually acceptable resolution of any such discrepancies.

 

6.6                                                                     **Delivery of the Aircraft toLESSEE**.    Subject to LESSEE having performed all ofthe conditions precedent to Delivery set forth herein, immediately followingdelivery of the Aircraft from Manufacturer to LESSOR, LESSOR will tender theAircraft to LESSEE at the Delivery Location. Provided that the Aircraft is in the condition required by Article 6.5and provided that LESSOR shall have performed all conditions precedent noted inArticle 7.2 hereof, upon the tender of the Aircraft by LESSOR to LESSEE,LESSEE will accept the Aircraft by executing and delivering to LESSOR theEstoppel and Acceptance Certificate, whereupon Delivery will be deemed to haveoccurred for all purposes under this Lease (hereinafter, “**Delivery**”), including, but not limitedto, the commencement of LESSEE’s obligation to pay Rent hereunder.

 

6.7                                                                     **LESSEE Acceptance ofAircraft**.    If LESSEE fails to (a) comply with theconditions contained in Articles 7.1 and 7.3 so as to allow Delivery totake place immediately following delivery of the Aircraft by Manufacturer toLESSOR or (b) take delivery of the Aircraft when properly tendered fordelivery by LESSOR in the condition required hereunder, LESSEE will indemnifyLESSOR for all reasonable and documented costs and expenses incurred by LESSORas a direct result thereof including (but without limitation) any paymentsother than the purchase price which LESSOR becomes obliged to make toManufacturer.

 

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**ARTICLE 7****                                 ****PRE-DELIVERY, DELIVERY ANDPOST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS**

** **

7.1                                                                     **Pre-Delivery Requirements**.   LESSEE will do each of the following prior to the Scheduled DeliveryDate of the Aircraft within the time frames set forth below:

 

7.1.1                        Within one (1) month after execution of thisLease, LESSEE will deliver to LESSOR each of the following:

 

(a)                                              copies of resolutions of the Board ofDirectors of LESSEE or other written evidence of appropriate corporate action,duly certifying and authorizing the lease of the Aircraft hereunder and theexecution, delivery and performance of this Lease, together with an incumbencycertificate as to the person or persons authorized to execute and deliverdocuments on behalf of LESSEE hereunder; and

 

(b)                                             an opinion of LESSEE’s in-house counsel inthe form and substance of Exhibit H.

 

7.1.2                        At least seven (7) days prior to theScheduled Delivery Date, LESSEE will have delivered to LESSOR a Certificate ofInsurance and Brokers’ Letter of Undertaking substantially in the form ofExhibits E and F, respectively, from LESSEE’s insurance brokers evidencinginsurance of the Aircraft in accordance with this Lease from the Delivery Date.

 

7.1.3                        At least three (3) Business Days prior to theScheduled Delivery Date, LESSEE will do each of the following:

 

(a)                                              provide LESSOR with a power of attorneyevidencing the authority of LESSEE’s representative, who may be an officer oremployee of LESSEE, to accept the Aircraft on behalf of LESSEE; and

 

(b)                                             provide LESSOR with such other documents asLESSOR may reasonably request.

 

7.2                                                                     **LESSOR’s Pre-DeliveryRequirements**.    LESSEE’s obligation to accept delivery ofand lease the Aircraft hereunder is subject to satisfaction of the followingconditions precedent:

 

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(a)                                              No later than sixty (60) days prior to theScheduled Delivery Date, LESSOR will have entered into an agreement with theowner or financier of the Inflight Equipment as provided inArticle 12.8.7(b).

 

(b)                                             LESSOR shall tender the Aircraft includingthe Aircraft Documentation to LESSEE at the Delivery Location in accordancewith Article 6.6;

 

(c)                                              LESSOR shall have delivered to its specialFAA counsel an executed original application for registration and will beprepared to advise such counsel to register the Aircraft in the U.S. in thename of LESSOR;

 

(d)                                             The Aircraft shall have a valid Certificateof Airworthiness and shall be in the condition required in order to meet theoperating requirements of FAR Part 121;

 

(e)                                              All Airworthiness Directives which are issuedprior to the Delivery Date and which require compliance (either by means ofrepetitive inspections, modifications or terminating action) prior to Deliveryor within one (1) year after Delivery will be complied with on a terminatingaction basis at LESSOR’s cost; Airworthiness Directives which do not have aterminating action will be accomplished at the highest level of inspection ormodification possible;

 

(f)                                                LESSOR shall have executed and delivered toLESSEE the Airframe Warranty Assignment and the Engine Warranty Assignment,together with the consents of Seller and the Engine manufacturer, respectively,in the form set forth as Schedule 1 to each agreement, and a consent ofManufacturer to the Airframe Warranty Assignment in form and substancereasonably satisfactory to LESSEE; and

 

(g)                                             LESSOR shall have taken delivery of theAircraft from the Manufacturer and the Aircraft shall be in the conditionrequired for Delivery to LESSEE in accordance with this Lease.

 

7.3                                 **Delivery Requirements**.    Onthe Delivery Date of the Aircraft, each of the following will occur:

 

7.3.1                        If not previously done, LESSEE will pay toLESSOR the first monthly installment of Rent in accordance withArticle 5.3.2;

 

7.3.2                        LESSEE will execute and deliver to LESSOR theEstoppel and Acceptance Certificate covering the Aircraft and dated theDelivery Date.

 

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7.3.3                        LESSEE will deliver a certificate signed byan officer of LESSEE stating all of the following:

 

(a)                                              the representations and warranties containedin Article 20 are true and accurate on and as of the Delivery Date asthough made on and as of such date (except to the extent that suchrepresentations and warranties relate solely to an earlier date); and

 

(b)                                             no Default has occurred and is continuing orwill result from LESSEE’s lease of the Aircraft hereunder.

 

7.3.4                        LESSEE’s in-house counsel will deliver anopinion confirming the matters set forth in the opinion of counsel described inArticle 7.1 and advising that all filing and other requirements describedin the earlier opinion of counsel have been met.

 

7.4                                                                     **Post-Delivery Requirements**.

 

7.4.1                        At or immediately following Delivery and withLESSEE’s cooperation, LESSOR will, at its expense, procure registration of theAircraft in the State of Registration and will have completed all necessaryfilings with the FAA.

 

**ARTICLE 8****                                 ****DISCLAIMERS**

** **

LESSOR HAS COMMITTED TOLESSEE THAT ON THE DELIVERY DATE THE AIRCRAFT WILL BE IN THE CONDITION REQUIREDBY ARTICLE 6 SUCH COMMITMENT OR COVENANT ON THE PART OF LESSOR EXPIRES ANDTHE DISCLAIMERS SET FORTH IN THIS ARTICLE 8 APPLY UPON LESSEE’S ACCEPTANCEOF THE AIRCRAFT AND EXECUTION OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE.  AFTER SUCH TIME, THEN AS BETWEEN LESSOR ANDLESSEE:

 

8.1                                                                     **“As Is, Where Is**.   LESSEE AGREES THAT IT IS LEASING THE AIRCRAFT “AS IS, WHERE IS”.  LESSEE UNCONDITIONALLY ACKNOWLEDGES ANDAGREES THAT NEITHER LESSOR NOR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES ORREPRESENTATIVES HAVE MADE OR WILL BE DEEMED TO HAVE MADE ANY TERM, CONDITION,REPRESENTATION, WARRANTY OR COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OROTHERWISE) AS TO (a) THE CAPACITY, AGE, AIRWORTHINESS, VALUE, QUALITY,DURABILITY, CONFORMITY TO THE

 

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PROVISIONS OF THIS LEASE,DESCRIPTION, CONDITION (WHETHER OF THE AIRCRAFT, ANY ENGINE, ANY PART THEREOFOR THE AIRCRAFT DOCUMENTATION), DESIGN, WORKMANSHIP, MATERIALS, MANUFACTURE,CONSTRUCTION, OPERATION, DESCRIPTION, STATE, MERCHANTABILITY, PERFORMANCE,FITNESS FOR ANY PARTICULAR USE OR PURPOSE (INCLUDING THE ABILITY TO OPERATE ORREGISTER THE AIRCRAFT OR USE THE AIRCRAFT DOCUMENTATION IN ANY OR ALLJURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY PART THEREOF, OR THEABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, KNOWN ORUNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b) THE ABSENCE OFANY INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER INTELLECTUALPROPERTY RIGHTS, (c) ANY IMPLIED WARRANTY ARISING FROM COURSE OFPERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (d) ANY OTHERREPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT ORANY PART THEREOF, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND EXTINGUISHEDEXCEPT AS EXPRESSLY PROVIDED IN ARTICLE 21 HEREOF.

 

8.2                                                                     **Waiver of Warranty ofDescription**.    IN CONSIDERATION OF (a) LESSEE’SRIGHTS HEREUNDER TO INSPECT THE AIRCRAFT AND (b) LESSOR’S ASSIGNMENT TOLESSEE OF ANY EXISTING AND ASSIGNABLE WARRANTIES OF MANUFACTURER AND THE ENGINEMANUFACTURER, LESSEE HEREBY AGREES THAT ITS ACCEPTANCE OF THE AIRCRAFT ATDELIVERY AND ITS EXECUTION AND DELIVERY OF THE ESTOPPEL AND ACCEPTANCECERTIFICATE CONSTITUTE LESSEE’S WAIVER OF THE WARRANTY OF DESCRIPTION, ANYCLAIMS LESSEE MAY HAVE AGAINST LESSOR BASED UPON THE FAILURE OF THE AIRCRAFT TOCONFORM WITH SUCH DESCRIPTION AND ANY AND ALL RIGHTS IT MAY HAVE TO THEREMEDIES SET FORTH IN SECTIONS 10508 THROUGH 10522 OF THE CALIFORNIACOMMERCIAL CODE.  EVEN IF AT ANY TIME THEFAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION SUBSTANTIALLY IMPAIRSTHE VALUE AND UTILITY OF THE AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THEAIRCRAFT BASED ON A REASONABLE ASSUMPTION THAT THE NONCONFORMITY WOULD BE CUREDAND IT WAS NOT SEASONABLY CURED OR (ii) LESSEE ACCEPTED THE AIRCRAFTWITHOUT DISCOVERING THE NONCONFORMITY BUT LESSEE’S ACCEPTANCE OF THE AIRCRAFTWAS REASONABLY INDUCED EITHER BY LESSOR’S ASSURANCES OR BY THE DIFFICULTY OFDISCOVERING ANY DEFECT PRIOR TO ACCEPTANCE, LESSEE AGREES NOT TO LOOK TO LESSORFOR DAMAGES OR RELIEF ARISING OUT OF THE FAILURE OF THE AIRCRAFT TO CONFORM TOSUCH DESCRIPTION.

 

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8.3                                                                     **LESSEE Waiver**.   LESSEE hereby waives as between itself and LESSOR and agrees not to seekto establish or enforce any rights and remedies, express or implied (whetherstatutory or otherwise) against LESSOR or the Aircraft relating to any of thematters mentioned in Articles 8.1 or 8.2 and the leasing thereof by LESSORto LESSEE.

 

8.4                                                                     **Conclusive Proof**.   DELIVERY BY LESSEE TO LESSOR OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATEWILL BE CONCLUSIVE PROOF AS BETWEEN LESSOR AND LESSEE THAT LESSEE’S TECHNICALEXPERTS HAVE EXAMINED AND INVESTIGATED THE AIRCRAFT, INCLUDING THE ENGINES ANDTHE AIRCRAFT DOCUMENTATION AND THAT EACH IS IN THE CONDITION REQUIRED HEREUNDER(EXCEPT AS SPECIFICALLY SET FORTH IN SUCH CERTIFICATE), AND OTHERWISE IN EVERYWAY SATISFACTORY TO LESSEE.

 

8.5                                                                     **No LESSOR Liability forLosses**.    LESSEE agrees that LESSOR will not beliable to LESSEE, any sublessee or any Person, whether in contract or tort andhowever arising, for any cost, loss or damage (consequential or otherwise)arising out of the condition of the Aircraft, whether or not due in whole or inpart to an act or omission or the active or passive negligence of LESSOR.

 

8.6                                                                     **No Liability to Repair orReplace**.    LESSOR will not be liable for any expensein repairing or replacing any item of the Aircraft or be liable to supplyanother aircraft or any item in lieu of the Aircraft or any Part thereof if thesame is lost, confiscated, damaged, destroyed or otherwise rendered unfit foruse.

 

8.7                                                                     **No Waiver**.   Nothing in this Article 8 or elsewhere in this Lease will be deemedto be a waiver by LESSEE of any rights it may have against Manufacturer, theEngine manufacturer or any other Person.

 

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**ARTICLE 9****                                 ****MANUFACTURERS’ AND VENDORS’WARRANTIES**

** **

9.1                                                                     **Warranties**.   Effective upon Delivery LESSOR will assign to LESSEE for the duration ofthe Lease Term the benefit of all warranties and indemnities given to LESSOR byManufacturer and the Engine manufacturer pursuant to the Airframe WarrantyAssignment and the Engine Warranty Assignment, respectively.  Effective on the Delivery Date, all otherassignable vendor warranties with respect to the Aircraft are hereby assignedby LESSOR to LESSEE.

 

9.2                                                                     **Non-Assignable Warranties**.    Tothe extent that any warranty or indemnity given to LESSOR by Manufacturer andothers with respect to the Aircraft cannot be assigned, LESSEE will be entitledto take such action to enforce such warranty or indemnity in the name of LESSORagainst Manufacturer and such other parties as LESSEE sees fit (and,notwithstanding any provision to the contrary in Article 8.3, LESSOR willreasonably cooperate with LESSEE in pursuit of the same), but subject to LESSEEfirst ensuring that LESSOR is indemnified and secured to LESSOR’s reasonablesatisfaction against all losses, damage, costs, expenses and liabilitiesthereby incurred or reasonably likely to be incurred.

 

9.3                                                                     **Reassignment**.    Onthe Termination Date, the benefit of any warranty assigned by LESSOR to LESSEEwill be reassigned automatically to LESSOR or its designee.  LESSEE’s rights to receive payment under anysuch warranties will revert to LESSOR during any period in which an Event ofDefault is continuing.  LESSEE at its owncost and expense will do all such things and execute such documents as may bereasonably required for this purpose.

 

9.4                                                                     **Warranty Claims**.   LESSEE will diligently and promptly pursue any valid claims it may haveagainst Manufacturer and others under such warranties with respect to theAircraft.  If there are any outstandingwarranty claims at the time of return, LESSEE will provide notice of the sameto LESSOR.

 

**ARTICLE 10****                          ****OPERATION OF AIRCRAFT**

** **

10.1                                                               **Costs of Operation**.   LESSEE will pay all costs incurred in the operation of the Aircraftduring the Lease Term, for profit or otherwise, including the costs of flightcrews, cabin personnel, fuel, oil, lubricants, maintenance, insurance, storage,landing and navigation fees, airport charges, passenger service and any and allother expenses of any kind or nature, directly or indirectly, in connectionwith or related to the use, movement and operation of the Aircraft.  The obligations, covenants and liabilities ofLESSEE under this paragraph arising prior to return

 

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of the Aircraft to LESSORwill continue in full force and effect, notwithstanding the termination of thisLease or expiration of the Lease Term.

 

10.2                                                               **Compliance with Laws**.   Except as expressly provided in this Lease, LESSEE agrees throughout theLease Term to maintain operational control of the Aircraft and use the Aircraftin accordance with applicable Laws of the State of Registration and of anycountry, state, territory or municipality into or over which LESSEE may operatethe Aircraft.  LESSEE will not employ,suffer or cause the Aircraft to be used in any business which is forbidden byLaw or in any manner which will render it liable to condemnation, destruction,seizure, or confiscation by any authority. Unless due to emergency, LESSEE will not permit the Aircraft to fly toany airport or country if so doing would cause LESSEE to be in violation of anyLaw applicable to LESSEE or the Aircraft.

 

10.3                                                               **Training**.   LESSEE will not use the Aircraft for testing or for training of flightcrew members other than LESSEE crew members or as otherwise may be required bythe Aviation Authority and, from and after the date on which it obtains otherA319 aircraft, it will not use the Aircraft for training any more than itutilizes for training the other A319 aircraft in its fleet.

 

10.4                                                               **No Violation of InsurancePolicies**.    LESSEE will not use or permit the Aircraftto be used in any manner or for any purpose which is not covered by theinsurance policies LESSEE is required to carry and maintain as set forth inthis Lease.  LESSEE will not carry anygoods of any description excepted or exempted from such policies or do anyother act or permit to be done anything which could reasonably be expected byLESSEE to invalidate or limit any such insurance policy.

 

10.5                                                               **Flight Charges**.   LESSEE will pay promptly when due all en route navigation charges,navigation service charges and all other charges payable by LESSEE for the useof or for services provided at any airport, whether in respect of the Aircraftor any other aircraft of LESSEE, and will indemnify and hold LESSOR harmless inrespect of the same.  This indemnity willcontinue in full force and effect notwithstanding the termination or expirationof the Lease Term for any reason or the return of the Aircraft.

 

**ARTICLE 11****                          ****SUBLEASES**

** **

11.1                                                               **No Sublease without LESSORConsent**.    LESSEE WILL NOT SUBLEASE OR PART WITHPOSSESSION OF THE AIRCRAFT (EXCEPT FOR MAINTENANCE AND REPAIR) AT ANY TIMEWITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (NOT TO BE UNREASONABLY WITHHELD ORDELAYED) EXCEPT FOR A SUBLEASE TO A

 

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PERMITTED SUBLESSEE PRE-APPROVEDIN ARTICLE 11.1.1 BELOW, AND IN ACCORDANCE WITH SUCH REQUIREMENTS AS MAYFROM TIME TO TIME BE AGREED IN WRITING BETWEEN LESSOR AND LESSEE.  The wet leasing of the Aircraft during theLease Term (in which LESSEE and its crews retain operational control of theAircraft) will not be considered a sublease of the Aircraft.

 

11.1.1                                                      LESSEE may sublease the Aircraft withoutLESSOR’s prior consent to any operator which is then currently a lessee ofLESSOR (“**Permitted Sublessee**”),provided that such operator is not then in default and has not been in defaultat any time during the preceding ninety (90) days under any aircraft leaseagreement between such operator and LESSOR. Any such sublease will be subject to the provisions of thisArticle 11, including the provisions of Article 11.2 below.

 

11.2                                                               **LESSOR Costs**.   LESSEE will indemnify LESSOR on demand for all reasonable and actual out-of-pocketexpenses (including legal fees) incurred in connection with LESSOR’s assessmentof the subleasing proposal (whether or not LESSOR’s consent to such sublease isultimately given), review of the sublease documentation and implementation ofthe sublease.

 

11.3                                                               **Any Approved Sublease**.   Any sublease to a Permitted Sublessee, and any other sublease approved byLESSOR will be for a term no greater than the remaining Lease Term and containprovisions consistent with this Lease protecting LESSOR’s title to theAircraft, providing appropriate LESSOR indemnities, regarding the maintenanceand repair standards for the Aircraft, concerning the insurances which will becarried by the sublessee and the circumstances which constitute a Total Loss ofthe Aircraft.  Any such sublease will besubject and subordinate to this Lease. In its sole discretion, LESSOR may require an opinion of counsel inconnection with such sublease, including LESSOR’s right to repossess theAircraft in the event of an Event of Default hereunder or under thesublease.  LESSEE will not amend theterms of any approved sublease which, if so amended, would have a materialadverse effect on LESSOR’s right, title or interest in the Aircraft or thisLease, without the prior written consent of LESSOR, which will not beunreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, LESSOR agrees that even if an Event ofDefault has occurred and is continuing hereunder, so long as the approvedsublessee fully performs all of the obligations of LESSEE hereunder and agreesto do so on a going forward basis and there is no risk to LESSOR of an impairmentto LESSOR’s unencumbered title to the Aircraft, LESSOR will not interfere withsuch sublessee’s quiet use and enjoyment of the Aircraft.

 

11.4                                                               **Assignment of Sublease**.   Any approved sublease will be assigned to LESSOR as security for LESSEE’sobligations under this Lease.  LESSEEwill deliver the original counterpart of the sublease to LESSOR and make anyfilings necessary to protect LESSOR’s security interest.

 

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11.5                                                               **Wet Leases**.   The wet leasing of the Aircraft during the Lease Term (in which LESSEEand its crews retain operational control of the Aircraft) will not beconsidered a sublease of the Aircraft and will be permitted without LESSOR’sconsent, provided that (a) the Aircraft remains registered in the State ofRegistration, (b) the Aircraft will neither be based in nor operated in orto a Prohibited Country, (c) LESSEE provides LESSOR with either (i) acertified copy of the applicable provisions from the wet lease agreement, (ii)a certified copy or original of an insurance certificate confirming themaintenance of insurance coverage as required by Article 18 andExhibit E, or (iii) an officer’s certificate indicating whether LESSEE orthe wet lessee will be responsible for maintaining the primary passenger,baggage and cargo liability insurance relating to operation under the wetlease, and (d) LESSEE complies with Article 18.8.

 

11.6                                                               **Continued Responsibility ofLESSEE**.    LESSEE will continue to be responsible forperformance of its obligations under this Lease during any period of sublease.

 

**ARTICLE 12****                          ****MAINTENANCE OF AIRCRAFT**

** **

12.1                                                               **General Obligation**.

 

12.1.1                                                      During the Lease Term and until the Aircraftis returned to LESSOR in the condition required by this Lease, LESSEE alone hasthe obligation, at its expense, to maintain and repair the Aircraft, Engines,and all of the Parts (a) in accordance with the Maintenance Program,(b) in accordance with the rules and regulations of the AviationAuthority, (c) in accordance with Manufacturer’s type design, (d) inaccordance with any other regulations or requirements necessary in order tomaintain a valid Certificate of Airworthiness for the Aircraft and meet therequirements at all times during the Lease Term and upon return of the Aircraftto LESSOR for issuance of a Standard Certificate of Airworthiness for transportcategory aircraft issued by the FAA in accordance with FAR Part 21(except during those periods when (i) the Aircraft is undergoing maintenance,Overhaul, modification, or repairs as required or permitted by this Lease andto the extent in conflict with the requirements of the Aviation Authority or(ii) the Aircraft type has been grounded by the FAA, the DGAC or otherapplicable Aviation Authority) and (e) in the same manner and with thesame care as used by LESSEE with respect to similar aircraft and enginesoperated by LESSEE and without in any way discriminating against the Aircraft.

 

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12.1.2                                                      No Engine will remain in an unserviceablecondition for more than three (3) months.

 

12.1.3                                                      [SEE PARAGRAPH 10 OF EXHIBIT C.]

 

12.1.4                                                      [SEE PARAGRAPH 11 OF EXHIBIT C.]

 

12.1.5                                                      LESSEE will not enter into any Enginemaintenance cost per flight hour, power-by-the-hour or similar agreement withrespect to the Engines (“**MCPH Agreement**”)with the Engine manufacturer or any other Engine maintenance facility ororganization without LESSOR’s prior written consent, which shall not beunreasonably withheld.  At a minimum, anyMCPH Agreement must provide that the MCPH provider will not place or enforceany lien upon any Engine covered by the MCPH program for any amounts owed byLESSEE.  In all events, LESSEE will atits cost be responsible for performing all work necessary to meet the returnconditions with respect to the Engines set forth in Article 23 even ifsuch work is not covered by LESSEE’s MCPH Agreement.

 

12.2                                                               **Specific Obligations**.   Without limiting Article 12.1, LESSEE agrees that such maintenanceand repairs will include but will not be limited to each of the followingspecific items:

 

(a)                                              performance in accordance with theMaintenance Program of all routine and non-routine maintenance work;

 

(b)                                             incorporation in the Aircraft of allAirworthiness Directives which are applicable to the Aircraft;

 

(c)                                              incorporation in the Aircraft of all alertservice bulletins of Manufacturer, Engine manufacturer and other vendors ormanufacturers of Parts installed on the Aircraft which are applicable to theAircraft and any service bulletins which must be performed in order to maintainthe warranties on the Aircraft, Engines, and Parts;

 

(d)                                             [SEE PARAGRAPH 12 OF EXHIBIT C.]

 

(e)                                              compliance with a corrosion prevention andcontrol program including the correction of any discrepancies in accordancewith the Maintenance Program.  Inaddition, all inspected areas will be properly treated with corrosion inhibitorin accordance with the Maintenance Program;

 

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(f)                                                maintaining in English and keeping in an up-to-datestatus the records and historical documents set forth in Exhibit M;

 

(g)                                             maintaining historical records as required bythe FAA, in English, for on condition, condition-monitored, hard time and life-limitedParts (including tags from the manufacturer of such Part or a repair facilitywhich evidence that such Part is new or overhauled and establish authenticityin accordance with FAA requirements, total time in service and time sinceoverhaul for such Part), the hours and cycles the Aircraft and Engines operateand all maintenance and repairs performed on the Aircraft; and

 

(h)                                             properly documenting all repairs,Modifications and alterations and the addition, removal or replacement ofequipment, systems or components in accordance with the rules and regulationsof the Aviation Authority and reflecting such items in the AircraftDocumentation.  In addition, all repairsto the Aircraft will be accomplished in accordance with either (i) Manufacturer’sStructural Repair Manual (or DGAC-approved Repair Approval Sheets) or (ii) FAA-approveddata (such as FAA Form 8110 or equivalent). All Modifications and alterations will be accomplished in accordancewith FAA-approved data (such as FAA Form 8110 or equivalent).

 

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12.3                                                               **Replacement of Parts**.

 

12.3.1                                                      LESSEE, at its own cost and expense, willpromptly replace all Parts which may from time to time become worn out, lost,stolen, destroyed, seized, confiscated, damaged beyond repair or rendered unfitor beyond economical repair (BER) for use for any reason.  In the ordinary course of maintenance,service, repair, overhaul or testing, LESSEE may remove any Part provided thatLESSEE replaces such Part as promptly as practicable.  All replacement Parts will (a) be freeand clear of all Security Interests (except Permitted Liens) of any kind ordescription, (b) be in condition approved for return to service and of atleast equivalent model, service bulletin and modification status and have avalue and utility at least equal to the Parts replaced, assuming such replacedParts were in the condition and repair required to be maintained by the termshereof and (c) have a current “serviceable tag” of the manufacturer ormaintenance facility providing such items to LESSEE, indicating that such Partsare new, serviceable or Overhauled.  Solong as a substitution meets the requirements of the Maintenance Program andthe Aviation Authority, LESSEE may substitute for any Part a part that does notmeet the requirements of the foregoing sentence if a complying Part cannot beprocured or installed within the available ground time of the Aircraft and assoon as practicable the noncomplying part is removed and replaced by acomplying Part.  With respect toreplacement modules in an Engine, (x) the life limited Part that is due to beremoved earliest in such replacement module will have no less life remainingthan the life limited Part that is due to be removed earliest in the replacedmodule and (y) the average life remaining for all life limited Parts in thereplacement module will be no less than the average life remaining for the lifelimited Parts in the replaced module.

 

12.3.2                                                      All Parts removed from the Airframe or anyEngine will remain the property of LESSOR and subject to this Lease no matterwhere located, until such time as such Parts have been replaced by Parts (whichhave been incorporated or installed in or attached to the Airframe or suchEngine) which meet the requirements for replacement Parts specified above andtitle to such replacement Parts has passed to LESSOR under the Laws of theState of Registration and *lex situs*.  To the extent permitted by the Laws of theState of Registration and the *lex situs*it is the intent of LESSOR and LESSEE that without further act and immediatelyupon any replacement Part becoming incorporated, installed or attached to theAirframe or an Engine as above provided, (a) title to the removed Partwill thereupon vest in LESSEE, free and clear of all rights of LESSOR andLESSOR’s Liens, (b) title to the replacement Part will thereupon vest inLESSOR free and clear of all rights of LESSEE (other than LESSEE’s rights underthis Lease) and (c) such replacement

 

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Part will become subject tothis Lease and be deemed to be a Part hereunder to the same extent as the Partsoriginally incorporated or installed in or attached to the Airframe or suchEngine.

 

12.4                                                               **Removal of Engines**.

 

12.4.1                                                      If an Engine is removed for testing, service,repair, maintenance, Overhaul work, alterations or modifications, title to suchEngine will at all times remain vested in LESSOR.

 

12.4.2                                                      LESSEE will be entitled to remove any of theEngines from the Aircraft and install another engine or engines on theAircraft, provided that LESSEE complies with each of the following obligations:

 

(a)                                              the insurance requirements set forth inArticle 18 and Exhibit E are in place;

 

(b)                                             LESSEE ensures that the identification platesreferred to in Article 15 are not removed from any Engine upon such Enginebeing detached from the Aircraft; and

 

(c)                                              title to the Engine remains with LESSOR freefrom all Security Interests (except Permitted Liens) regardless of the locationof the Engine or its attachment to or detachment from the Aircraft.

 

12.5                                                               **Pooling of Engines and Parts**.   LESSEE may subject the Engines and Parts to normal interchange orpooling agreements with responsible international scheduled commercial aircarriers customary in the airline industry and entered into by LESSEE in theordinary course of its business with respect to its entire Airbus narrow body(A318, A319, A320 and/or A321) fleet so long as (a) in the case of poolingof an Engine, such Engine is returned to LESSEE within four (4) months,(b) no transfer of title to the Engine occurs, (c) all other terms ofthis Lease continue to be observed with respect to the Engines or Parts,including but not limited to Articles 8, 10, 12, 14, 15, 16, 17, 18 and 19and (d) LESSEE continues to be fully responsible to LESSOR for theperformance of all of its obligations hereunder.

 

12.6                                                               **Installation of Engines onOther aircraft**.    Any Engine removed from the Aircraft may beinstalled on another aircraft in LESSEE’s fleet which utilizes engines of thesame type as the Engine only if one of the situations described in thisArticle 12.6 exists:

 

12.6.1                                                      LESSEE or LESSOR has title to such otheraircraft free and clear of all Security Interests (except Permitted Liens).

 

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12.6.2                                                      LESSEE, LESSOR and all of the Creditors ofLESSEE of such aircraft enter into an engines cooperation agreement in form andsubstance reasonably acceptable to LESSOR in which each party agrees torecognize one another’s rights in the engines. LESSEE will reimburse LESSOR and LESSOR’s Lender for their reasonableattorneys’ fees and costs in negotiating and finalizing engine cooperationagreement arrangements with LESSEE and its Creditors.

 

12.6.3                                                      Such other aircraft is subject to a CreditorAgreement (but no other Security Interests except Permitted Liens) which by itsterms expressly or effectively states that such Creditor and its successors andassigns will not acquire any right, title or interest in any Engine by reasonof such Engine being installed on such aircraft.   LESSEE hereby agrees that if LESSOR’s titleto an Engine is in fact impaired under any such Creditor Agreement, suchimpairment will be deemed to be a Total Loss of such Engine and the provisionsof Article 19.5 will apply unless, no later than thirty (30) days afterthe impairment arose, (a) the impairment has ceased to exist or (b) LESSEE hasprovided LESSOR with a bond, bank guarantee, or other form of protectionacceptable to LESSOR in its sole discretion. To the extent another Creditor Agreement contains such provisions, thenLESSOR hereby agrees for the benefit of the Creditor of such Creditor Agreementthat neither LESSOR nor its successors or assigns will acquire or claim anyright, title or interest in any engine in which LESSEE or another Creditor hasan interest as a result of such engine being installed on the Airframe.

 

12.7                                                               **Engine Thrust Rating**.    NoEngine shall be utilized at a thrust rating greater than the thrust rating setforth in Exhibit A, absent LESSOR’s express written consent.

 

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12.8                                                               **Modifications**.

 

12.8.1                                                      No modification, alteration, addition, orremoval to or from the Aircraft (“**Modification**”)expected to cost over [SEE PARAGRAPH 13 OF EXHIBIT C.] or deviation from theAircraft’s original type design or configuration will be made without the priorwritten consent of LESSOR, which consent will not be unreasonably withheld ordelayed.  “Modification” does not includeany modification, alteration, addition or removal (a) performed inaccordance with Airworthiness Directives, (b) performed in accordancewith recommended or alert service bulletins of the Manufacturer or themanufacturer of any Engine or other Part or (c) of any Parts which areowned by LESSEE, leased or conditionally sold to LESSEE (other than by LESSOR)including, without limitation, entertainment and passenger service equipmentsuch as audio-visual equipment, personal computers, fax machines, telephones orother communications equipment (collectively, the “**Passenger Service Equipment**”), for whichLESSOR’s consent is not required.

 

12.8.2                                                      LESSOR may review LESSEE’s proposed designs,plans, engineering drawings and diagrams, and flight and maintenance manualrevisions for any proposed Modification. If requested by LESSOR, LESSEE will furnish LESSOR (at LESSEE’s expense)with such documents in final form and any other documents required by Law,relating to such Modification.  AllModifications incorporated on the Aircraft will be properly documented in theAircraft Documentation and be fully approved by the Aviation Authority.

 

12.8.3                                                      Notwithstanding any other provision of thisLease, no Modification will be made which has the effect of decreasing theutility or value of the Aircraft or invalidating any warranty applicable to theAircraft.

 

12.8.4                                                      No Modification (except as permitted underArticles 12.8.1(a) and 12.8.1(b)) will be made by LESSEE if an Event ofDefault exists and is continuing hereunder.

 

12.8.5                                                      Unless otherwise agreed by LESSOR in writing,all permanent or structural Modifications will forthwith become a part of theAircraft and LESSEE relinquishes to LESSOR all rights and title thereto.  However, all (i) temporary and non-structuralModifications and (ii) all Passenger Service Equipment so long as suchequipment can be removed without causing material damage to the Aircraft, willremain the property of LESSEE and, at LESSOR’s request and LESSEE’s cost, willbe removed from the Aircraft prior to return of the Aircraft, with LESSEErestoring the Aircraft to the condition and configuration it was in prior tothe

 

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Modification or installationof Passenger Service Equipment in a manner cosmetically acceptable toLESSOR.  Notwithstanding the foregoing,no such removal will be permitted without LESSOR’s permission during theoccurrence of an Event of Default hereunder and immediately upon the occurrenceof an Event of Default hereunder, without the requirement of any further act ornotice, all right, title and interest in such Modifications and PassengerService Equipment will immediately vest in LESSOR; provided however, that inthe event of such an Event of Default, with respect to any Passenger ServiceEquipment, LESSOR will use commercially reasonable efforts to reach agreementwith any vendors or suppliers holding title to the Passenger Service Equipmentin order to protect the mutual interests of LESSOR and such parties.

 

12.8.6                                                      LESSOR will bear no liability for the cost ofModifications of the Aircraft whether in the event of grounding or suspensionsof certification, or for any other cause.

 

12.8.7                  InflightEquipment. LESSOR acknowledges that LESSEE may at any time during the LeaseTerm install on the Aircraft a telephone system and/or a Live TV system orother severable equipment for passenger use (collectively, the “**Inflight Equipment**”, which term shallnot, for the avoidance of doubt, include the video system or any equipmentinstalled on the seats at Delivery and purchased and paid for by LESSOR, whichshall remain the property of LESSOR), which Inflight Equipment may be ownedeither by LESSEE or by a third party provided that:

 

(a)                                              LESSEE shall give LESSOR notice of theinstallation of any Inflight Equipment on the Aircraft and the name and addressof the owner of such Inflight Equipment (which may be LESSEE), and a copy ofthe supplementary type certificate relating to the installation thereof; and

 

(b)                                             the owner of the Inflight Equipment andLESSOR will enter into an agreement, in form and substance reasonablyacceptable to LESSEE, which agreement will provide:

 

(i)                                     that such owner shall not have any lien,security interest, claim or other encumbrance on or against the Aircraft or anyPart or Parts thereof,

 

(ii)                                  that such owner’s only right with respect tothe Aircraft shall be to remove the Inflight Equipment from the aircraft notlater than the earlier of (A) thirty (30) days after notice from LESSOR that ithas repossessed the Aircraft because of the occurrence of an Event of Default,and (B) the Lease Termination Date,

 

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(iii)                               that such right of removal is made subject toand conditional upon such owner, at no expense to LESSOR or to any subsequentowner or operator of the Aircraft, removing and repairing (or causing LESSEE toremove and repair) all alterations made to the Aircraft in connection with theinstallation of the Inflight Equipment so as to eliminate all evidence of theinstallation of such Inflight Equipment and to restore the Aircraft to itscondition prior to the installation thereof (ordinary wear and tear excepted)in accordance with an Airframe Manufacturer’s service bulletin, and

 

(iv)                              that such removal and repair shall beconducted at such times and in such a manner as not to interfere in any waywith the commercial operation of the Aircraft and completed within the timeperiod set forth in Article 12.8.7(b)(ii).

 

12.9                                                               **Performance of Work by ThirdParties**.    Whenever maintenance and repair work on theAircraft or Engines will be regularly performed by a Person other than LESSEE,such Person will be an FAA-authorized repair station.

 

12.10                                                         **Reporting Requirements**.

 

12.10.1                                                Commencing with a report furnished ten (10)days after the end of the calendar month in which Delivery occurs, LESSEE willfurnish to LESSOR a Monthly Report in English in the form attached hereto asExhibit L.  Each Monthly Report willbe furnished within ten (10) days after the end of each calendar month, exceptthat the Monthly Report pertaining to the last month (or any portion thereof)of the Lease Term will be furnished to LESSOR on the Termination Date.

 

12.10.2                                                Commencing on the first anniversary of theDelivery Date and no more than once per each year of the Lease Term thereafter,upon LESSOR’s request LESSEE will provide LESSOR with a Technical EvaluationReport for the Aircraft in the form and substance of Exhibit N, asrevised.  Such Technical EvaluationReport will be furnished within thirty (30) Business Days after LESSOR’srequest.

 

12.11                                                         **Information RegardingMaintenance Program**.    LESSEE will provide LESSOR with suchinformation regarding the Maintenance Program for the Aircraft as LESSOR mayreasonably request during the Lease Term.

 

12.12                                                         **LESSOR Rights to InspectAircraft**.    On reasonable notice, LESSOR and/or itsauthorized agents or representatives will have the right to inspect theAircraft and Aircraft 

 

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Documentation.  LESSOR agrees that such requests will becoordinated with LESSEE so as to cause the minimum practical disturbance toLESSEE’s operation or its personnel; provided that at no time will LESSEE berequired to remove the Aircraft from active service.  LESSEE agrees to cooperate with LESSOR inmaking the Aircraft and Aircraft Documentation available to such authorized technicalteams.  LESSOR will have no duty to makeany such inspection and will not incur any liability or obligation by reason of(and LESSEE’s indemnity obligations pursuant to Article 17 will applynotwithstanding) not making any such inspection or by reason of any reports itreceives or any reviews it may make of the Aircraft records.

 

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**ARTICLE 13****                          ****USE OF RESERVES**

** **

13.1                                                               **Airframe Reserves**.   Subject to the terms of Article 13.5, LESSOR will reimburse LESSEE(or, at LESSEE’s option, pay on behalf of LESSEE) from the Airframe Reservesfor the actual cost of any full and completed scheduled “4C/5Y” and “8C/10Y”check (or then-current equivalent check) as described in the MPD or theMaintenance Program, as applicable (each such check, an “**Eligible Structural Check**”) and therectification of any deficiencies resulting from such inspection, with workperformed for all other causes excluded, including those causes set forth inArticle 13.6.  Subject toArticle 16.1, reimbursement (including exchange fees and handling,packaging and shipping charges) will be made up to the amount in the AirframeReserves on the commencement date of the structural check.

 

13.2                                                               **Engine PerformanceRestoration Reserves**.

 

13.2.1                                                      Subject to the terms of Article 13.5,LESSOR will reimburse LESSEE (or, at LESSEE’s option, pay on behalf of LESSEE)from the Engine Performance Restoration Reserves for the actual cost associatedwith an Engine Refurbishment that meets the requirements of Article 12.1.3(each such visit, an “**Eligible Shop Visit**”),with work performed for all other causes excluded, including those causes setforth in Article 13.6.  Subject toArticle 16.1, reimbursement for an Engine Refurbishment (includingexchange fees and handling, packaging and shipping charges) will be made up tothe amount in the Engine Performance Restoration Reserves applicable to suchEngine at the time of removal of such Engine.

 

13.3                                                               **Engine LLP Reserves**.   Subject to the terms of Article 13.5, LESSOR will reimburse LESSEE(or, at LESSEE’s option, pay on behalf of LESSEE) from the Engine LLP Reservesfor an Engine for the actual out-of-pocket materials cost without overhead,mark-up or profit factor associated with on or off-wing replacement of life-limitedParts in such Engine, with work performed for all other causes excluded,including those causes set forth in Article 13.6.  Subject to Article 16.1, reimbursementfor replacement of life-limited Parts in an Engine (including exchange fees andhandling, packaging and shipping charges) will be made up to the amount in theEngine LLP Reserves applicable to such Engine at the time of replacement ofsuch life-limited Part.

 

13.4                                                               **Landing Gear Reserves**.   Subject to the terms of Article 13.5, LESSOR will reimburse LESSEE(or, at LESSEE’s option, pay on behalf of LESSEE) from the Landing GearReserves for the actual cost of an Overhaul of the Landing Gear (includingexchange fees and handling, packaging and shipping charges), up to the amountremaining in the Landing Gear

 

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Reserves, with workperformed for all other causes excluded, including those causes set forth inArticle 13.6.

 

13.5                                                               **Reimbursement**.   LESSEE will be entitled to reimbursement from the Reserves after thework is completed and the Airframe, Engine or Landing Gear has left the repairagency (or after LESSOR has received from the repair agency written assurance,in form and substance acceptable to LESSOR, that the repair agency will releasethe Airframe, Engine, or Landing Gear upon receipt of LESSOR’s payment of theamount required by this Article 13) by submitting invoices and properdocumentation within twelve (12) months after completion of the work.  LESSOR will reimburse to LESSEE, no later thanthirty (30) days after receipt of such proper documentation, all, or allundisputed, amounts due to be reimbursed hereunder.  For the Airframe, proper documentationincludes a list of all routine and non-routine work cards and an itemized laborand materials report.  For the Engine,proper documentation includes a description of the reason for removal (ifremoved), a shop teardown report, a shop findings report if an Engine isremoved (or an equivalent report if an Engine is not removed), a full descriptionof the workscope and complete disk records for the Engine both prior to andafter the repair.  Both the invoicesupplied by the Engine repair facility and that submitted by LESSEE to LESSORwith respect to an Engine will state whether or not credits were provided dueto life remaining on any removed Engine Parts and the amount of any suchcredits will be itemized.  For theLanding Gear, proper documentation includes the total calendar time, hours andcycles on the Landing Gear both prior to and after the Overhaul, a copy of thecomplete Overhaul report which includes a life limited component list and adescription of all work performed on the Landing Gear assembly.

 

13.6                                                               **Reimbursement Adjustment**.    Byway of example, among the exclusions from reimbursement are those itemsresulting from repairs covered by LESSEE’s or a third party’s insurance(deductibles being for the account of LESSEE), or warranties or required as aresult of an Airworthiness Directive, manufacturer’s service bulletin, faultymaintenance or installation, improper operations, misuse, neglect, accident,incident, ingestion, or other accidental cause. Reimbursement from the Reserves will not be available for the APU, quickengine change (QEC) Parts, thrust reversers, or any of their associatedcomponents.  Notwithstanding theforegoing sentence, if the Airframe, any Engine or any Landing Gear undergoes arepair or inspection that is otherwise excluded from reimbursement pursuant tothis Article 13.6, and if, in the course of such repair or inspection,LESSEE performs additional work that (a) constitutes an Eligible StructuralCheck, an Eligible Shop Visit, or an Overhaul of any Landing Gear or (b)results in an increase in the time remaining until the next Eligible StructuralCheck, Eligible Shop Visit, or Overhaul of any Landing Gear, then LESSEE shallbe entitled to reimbursement for the cost of such additional work and the samewill not be excluded from reimbursement hereunder from the Airframe Reserves,Engine Performance Restoration Reserves, Engine LLP Reserves or Landing GearReserves, as applicable.  All invoicessubject to reimbursement from LESSOR will be

 

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reduced (by adjustmentbetween LESSEE and LESSOR retroactively if necessary) by the actual amountsreceived by LESSEE on account of such work from responsible third parties orother sources, such as insurance proceeds, manufacturer’s warranties,guarantees, concessions and credits actually received from such sources(including, with respect to Engines, credits due to life remaining on anyremoved Engine Parts).

 

13.7                                                               **Costs in Excess of Reserves**.   LESSEE will be responsible for payment of all costs in excess of theamounts reimbursed hereunder.  If on anyoccasion the balance in the Airframe Reserves, Engine Performance RestorationReserves, Engine LLP Reserves or Landing Gear Reserves for a particular Engineor Landing Gear (at the time of the structural check, in the case of theAirframe, or at the time of removal, in the case of an Engine or the LandingGear) is insufficient to satisfy a claim for reimbursement in respect of theAirframe, such Engine or the Landing Gear, as applicable, the shortfall may notbe carried forward or made the subject of any further claim for reimbursement.

 

13.8                                                               **Reimbursement afterTermination Date**.    LESSEE may not submit any invoice forreimbursement from the Reserves after the Termination Date unless on or priorto such date LESSEE has notified LESSOR in writing that such outstandinginvoice will be submitted after the Termination Date and the anticipated amountof such invoice.  So long as LESSEE hasprovided such notice to LESSOR, LESSEE may then submit such outstanding invoiceat any time within six (6) months after the Termination Date.  In the event of the Total Loss of theAircraft and provided that no Event of Default has occurred and is continuing,the unreimbursed Reserves held by LESSOR will be paid to LESSEE.

 

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**ARTICLE 14****                          ****TITLE AND REGISTRATION**

** **

14.1                                                               **Title to the Aircraft duringLease Term**.    Title to the Aircraft will be and remainvested in LESSOR.  LESSOR and LESSEEintend this Lease to be a “true lease”. LESSEE will have no right, title or interest in the Aircraft except asprovided in this Lease.

 

14.2                                                               **Registration of Aircraft**.   LESSOR at its sole cost and expense will register and maintainregistration of the Aircraft in the name of LESSOR at the register of aircraftin the State of Registration, except that in the event of a permitted sublease,LESSEE at its sole cost and expense will register and maintain registration ofthe Aircraft in the name of LESSOR at the State of Registration.  LESSEE will cooperate with LESSOR and willfrom time to time take all other steps then required by Law (including theGeneva Convention if applicable) or as LESSOR may reasonably request to protectand perfect LESSOR’s interest in the Aircraft and this Lease in the State ofRegistration or in any other jurisdictions in or over which LESSEE may operatethe Aircraft.

 

14.3                                                               **Filing of This Lease**.    Tothe extent permitted by Law and in accordance with the requirements of the Lawfrom time to time, LESSEE at its sole cost and expense will cause this Lease tobe kept, filed, recorded and refiled or rerecorded in the State of Registrationand in any other offices necessary to protect LESSOR’s rights hereunder asreasonably requested by LESSOR.  Notwithstanding anything to the contrary in this Article 14, LESSORwill pay the costs and fees of special FAA counsel, in making the initialfilings and recordings with the FAA.

 

**ARTICLE 15****                          ****IDENTIFICATION PLATES**

** **

LESSOR will affix and LESSEEwill at all times maintain on the Airframe and each Engine the identificationplates containing the following legends or any other legend reasonablyrequested by LESSOR in writing:

 

15.1                                                               **Airframe IdentificationPlates**.

 
|  Location: | One to be affixed to the  Aircraft structure above the forward entry door adjacent to and not less  prominent than that of Manufacturer’s data plate and another in a prominent  place on the flight deck. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |                                                                                                                                                                                                            |
|  Size:     | No smaller than 4” x 6”.                                                                                                                                                                              |
|            |                                                                                                                                                                                                            |
|  Legend:   | “THIS AIRCRAFT IS OWNED BY  INTERNATIONAL LEASE                                                                                                                                                            |

 

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|   | FINANCE CORPORATION.  MANUFACTURER’S SERIAL NO: 2198                                                                                                                                                                                                                                                |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                     |
|   | OWNER’S ADDRESS:  INTERNATIONAL LEASE FINANCE CORPORATION  [Until January 31, 2004]  1999 Avenue of the Stars, 39th Floor  Los Angeles, California 90067-6049  U.S.A.  [On and after February 1, 2004]  10250 Constellation Boulevard, 34th Floor  Los Angeles, California 90067-6234  U.S.A.” |

 

15.2                                                               **Engine Identification Plates**.

 
|  Location: | The legend on the plate  must be no less prominent than the Engine data plate and must be visible.          |
|-----------------|-------------------------------------------------------------------------------------------------------------|
|            |                                                                                                        |
|  Size:     | No smaller than 2” x 6”.                                                                          |
|            |                                                                                                        |
|            | “THIS ENGINE IS OWNED BY  INTERNATIONAL LEASE FINANCE CORPORATION, LOS ANGELES, CALIFORNIA, USA.” |

 

**ARTICLE 16****                          ****TAXES**

** **

16.1                                                               **General Obligation of LESSEE**.   Except as set forth in Article 16.2, LESSEE agrees to pay promptlywhen due, and to indemnify and hold harmless LESSOR on a full indemnity basisfrom, all license and registration fees and all taxes, fees, levies, imposts,duties, charges, deductions or withholdings of any nature (including withoutlimitation any value added, franchise, transfer, sales, gross receipts, use,business, excise, turnover, personal property, stamp or other tax) togetherwith any assessments, penalties, fines, additions to tax or interest thereon,however or wherever imposed (whether imposed upon LESSEE, LESSOR, on all orpart of the Aircraft, the Engines or otherwise), by any Government Entity ortaxing authority in the U.S. (including without limitation the City or Countyof Los Angeles), or any foreign country or by any international taxingauthority, upon or with respect to, based upon or measured by any of the following(collectively, “**Taxes**”):

 

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(a)                                              the Aircraft, Engines or any Parts;

 

(b)                                             the use, operation or maintenance of theAircraft or carriage of passengers or freight during the Lease Term;

 

(c)                                              this Lease, the payments due hereunder andthe terms and conditions hereof; and

 

(d)                                             the delivery under lease, import, export, orreturn of the Aircraft or payment of Total Loss Proceeds.

 

16.2                                                               **Exceptions to Indemnity**.   The indemnity provided for in Article 16.1 does not extend to anyof the following Taxes (hereinafter referred to as “**LESSOR’s Taxes**”):

 

(a)                                              Taxes imposed by the U.S. or by anyGovernment Entity within the U.S. on the net income, profits or gains,accumulated or undistributed earnings or income, gross receipts, capital or networth of LESSOR;

 

(b)                                             Taxes attributable to the period, or an eventoccurring, prior to Delivery or after return of the Aircraft to LESSOR inaccordance with this Lease;

 

(c)                                              Taxes attributable to LESSOR’s grossnegligence, willful misconduct or breach of this Lease;

 

(d)                                             Taxes which LESSEE is contesting in goodfaith in accordance with Article 16.5;

 

(e)                                              Taxes imposed by any country other than theU.S. on the net income, gross receipts, capital or net worth of LESSOR but onlyto the extent that (i) such Taxes were not in any way connected with, due to orarising out of this Lease, LESSEE’s business operations or office locations inany such country or LESSEE’s use and operation of the Aircraft and (ii) suchTaxes would be otherwise payable by LESSOR notwithstanding this Lease, LESSEE’sbusiness operations or office locations in any such country or LESSEE’s use andoperation of the Aircraft;

 

(f)                                                Taxes imposed as a result of LESSOR’svoluntary or involuntary transfer, pledge, assignment, financing, or othersimilar disposition of the Aircraft, Engines, any Parts, or this Lease or anyinterest in any of the foregoing (except a transfer or sale following LESSOR’sexercise of any of its rights or remedies provided in

 

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Article 25.3) providedthat LESSEE remains responsible for payment of any Taxes and the specificamount of such Taxes that it would have been required to indemnify for had suchvoluntary or involuntary transfer not occurred;

 

(g)                                             Taxes consisting of any Taxes, interest,penalties or additions to Tax imposed on LESSOR as a result, in whole or inpart, of a failure of LESSOR to file any Tax return or Tax-related registrationproperly and timely, unless such failure shall be caused by the failure ofLESSEE to fulfill any obligations of LESSEE under Section 16.7 with respect tosuch Tax return; or

 

(h)                                             Taxes resulting from, or that would not havebeen imposed but for, any LESSOR’s Lien arising as a result of claims against,or acts or omissions of, or otherwise attributable to, LESSOR or any relatedparty.

 

16.3                                                               **After-Tax Basis**.   The amount which LESSEE is required to pay with respect to any Taxesindemnified against under Article 16.1 is an amount sufficient to restoreLESSOR on an after-tax basis to the same position LESSOR would have been in hadsuch Taxes not been incurred.  If LESSORdetermines in good faith that it has realized a Tax benefit (by way ofdeduction, credit or otherwise) as a result of any payment for which LESSEE isliable under Section 5.7 or 16.1 of this Lease, and such benefit was notpreviously taken into account in calculating the amount of such payment on anafter-tax basis in accordance with the immediately preceding sentence of thisArticle 16.3, LESSOR will pay to LESSEE an amount that is reasonablysufficient to ensure that LESSOR is in no better an after-tax position than itwould have been in if the event giving rise to LESSEE’s liability for paymenthad not occurred.

 

16.4                                                               **Timing of Payment**.    Anyamount payable to LESSOR pursuant to this Article 16 will be paid withinten (10) days after receipt of a written demand therefor from LESSORaccompanied by a written statement describing in reasonable detail the basisfor such indemnity and the computation of the amount so payable provided,however, that such amount need not be paid by LESSEE prior to the earlier of(a) the date any Tax is payable to the appropriate Government Entity ortaxing authority or (b) in the case of amounts which are being contestedby LESSEE in good faith or by LESSOR pursuant to Article 16.5, the datesuch contest is finally resolved.

 

16.5                                                               **Contests**.    Ifclaim is made against LESSOR for Taxes with respect to which LESSEE is liablefor a payment or indemnity under this Lease, LESSOR will promptly give LESSEEnotice in writing of such claim provided, however, that LESSOR’s failure togive notice will not relieve LESSEE of its obligations hereunder unless suchfailure materially impairs or precludes LESSEE’s ability to contest theclaim.  So long as (a) a contest ofsuch Taxes does not involve any material risk of the sale, forfeiture or lossof the Aircraft or any interest therein, (b) if

 

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LESSOR so requests, LESSEEhas provided LESSOR with an opinion of independent tax counsel that areasonable basis exists for contesting such claim and (c) adequatereserves have been made for such Taxes or, if required, an adequate bond hasbeen posted, then LESSOR at LESSEE’s written request will in good faith, withdue diligence and at LESSEE’s expense, contest (or permit LESSEE to contest inthe name of LESSEE or LESSOR) the validity, applicability or amount of suchTaxes.

 

16.6                                                               **Refunds**.   Upon receipt by LESSOR of a refund of all or any part of any Taxes(including any deductions or withholdings referred to in Article 5.8)which LESSEE has paid, LESSOR will promptly pay to LESSEE the amount of suchTaxes refunded, to the extent that the underlying Tax liability has beenextinguished.

 

16.7                                                               **Cooperation in Filing TaxReturns**.    LESSEE and LESSOR will cooperate with oneanother in providing information which may be reasonably required to fulfilleach party’s tax filing requirements and any audit information request arisingfrom such filing.

 

16.8                                                               **Survival of Obligations**.   The indemnity obligations and other agreements of LESSEE as set forth inthis Article 16 will survive the Termination Date.

 

**ARTICLE 17****                          ****INDEMNITIES**

** **

17.1                                                               **General Indemnity**.   Except as set forth in Article 17.2 and Article 28.18, LESSEEagrees to indemnify and hold harmless LESSOR and its officers, directors,employees, agents and shareholders (individually an “**Indemnitee**” and collectively “**Indemnitees**”) from any and allliabilities, obligations, losses, damages, penalties, claims, actions, suits,costs, disbursements and expenses (including legal fees, costs and relatedexpenses) of every kind and nature, whether or not any of the transactionscontemplated by this Lease are consummated (collectively “**Expenses**”), which are imposed on,incurred by or asserted against any Indemnitee and which are in any wayrelating to, based on or arising out of any of the following:

 

(a)                                              this Lease or any transactions contemplatedhereby;

 

(b)                                             the operation, possession, use, non-use,control, leasing, subleasing, maintenance, storage, overhaul, testing,inspections or acceptance flights at return of the Aircraft, any Engine, or anyPart during the Lease Term by LESSEE, any sublessee or any other Person,whether or not the same is in compliance with the terms of this Lease,including without limitation claims for death, personal injury, propertydamage, other loss or harm to any Person and claims relating to any Laws,

 

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including without limitationenvironmental control, noise and pollution laws, rules or regulations;

 

(c)                                              the manufacture, design, acceptance,rejection, delivery, return, import, export, condition, repair, modification,servicing, rebuilding, enforcement of warranties whether in LESSOR’s or LESSEE’sname, any sale of the Aircraft in connection with the exercise of any of LESSOR’sremedies provided in Article 25.3, customer and product support providedby Manufacturer and other vendors, airworthiness, registration, reregistration,performance, sublease, merchantability, fitness for use, substitution orreplacement of the Aircraft, Engine, or any Part under this Lease or othertransfer of use or possession of the Aircraft, Engine, or any Part, includingunder a pooling or interchange arrangement, including without limitation latentand other defects, whether or not discoverable and patent, trademark orcopyright infringement;

 

(d)                                             any non-compliance by LESSEE with any term ofthis Lease or the falsity or inaccuracy of any representation or warranty ofLESSEE set forth herein;

 

(e)                                              the prevention or attempt to prevent thelawful arrest, confiscation, seizure, taking in execution, impounding,forfeiture or detention of the Aircraft, or in securing the lawful release ofthe Aircraft; or

 

(f)                                                as a consequence of any Default in payment byLESSEE of any sum to be paid by LESSEE when due under this Lease or any otherDefault by LESSEE in the due and punctual performance of its obligations underthis Lease.

 

The foregoing indemnity byLESSEE is intended to include and cover any Expense to which an Indemnitee maybe subject (in contract, tort, strict liability or under any other theory)regardless of the negligence, active or passive or any other type, of suchIndemnitee, so long as such Expense does not fall within any of the exceptionslisted in Article 17.2.

 

17.2                                                               **Exceptions to GeneralIndemnities**.    The indemnity provided for inArticle 17.1 will not extend to Expenses of any Indemnitee to the extentresulting from or arising out of any of the following:

 

(a)                                              Expenses which LESSEE and LESSOR mutuallyagree or, absent mutual agreement, are judicially determined to have resultedfrom the willful misconduct of such Indemnitee;

 

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(b)                                             Expenses which LESSEE and LESSOR mutuallyagree or, absent mutual agreement, are judicially determined to be attributableto incidents, accidents or occurrences prior to the Delivery Date, but onlywhere both the act or omission which gave rise to the incident, accident oroccurrence and the incident, accident or occurrence itself occurred prior tothe Delivery Date;

 

(c)                                              Expenses which LESSEE and LESSOR mutuallyagree or, absent mutual agreement, are judicially determined to be attributableto acts or events which occur after the Termination Date and return of theAircraft to LESSOR in the condition required hereunder, but in any such caseonly to the extent not attributable to acts or omissions of LESSEE;

 

(d)                                             Expenses representing Taxes, it beingacknowledged that the terms of Article 16 apply exclusively to LESSEE’sindemnity obligations with respect to Taxes;

 

(e)                                              Expenses due to the breach by LESSOR of itscovenant of quiet enjoyment pursuant to Article 21.2;

 

(f)                                                Expenses arising directly from the willfulmisconduct of an Indemnitee;

 

(g)                                             Expenses related to LESSOR Taxes or a LESSOR’sLien;

 

(h)                                             Expenses that LESSOR has expressly agreed topay under this Lease;

 

(i)                                                 Expenses which are attributable to theassignment, pledge, financing or other related activity of LESSOR or anyIndemnitee with respect to the Aircraft or this Lease;

 

(j)                                                 Expenses of any Indemnitee which are ordinaryand customary operating, overhead or administrative expenses;

 

(k)                                              Expenses which are attributable to LESSOR’Sfailure to maintain U.S. citizenship as required by Article 21.3; and

 

(l)                                                 Expenses which are attributable to anyIndemnitee’s default or failure to perform under any financing or relatedagreement with respect to the Aircraft.

 

17.3                                                               **After-Tax Basis**.   The amount which LESSEE will be required to pay with respect to anyExpense indemnified against under Article 17.1 will be an amountsufficient to restore the

 

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Indemnitee, on an after-taxbasis, to the same position such Indemnitee would have been in had such Expensenot been incurred.

 

17.4                           **Timing of Payment**.   Subject to Article 17.8 and LESSEE’s right to defend any claimsthat are subject to this Article 17, it is the intent of the parties thateach Indemnitee will have the right to indemnification for Expenses hereunderas soon as a claim is made and as soon as an Expense is incurred.  LESSEE will pay an Indemnitee for Expensespursuant to this Article 17 within ten (10) days after receipt of awritten demand therefor from such Indemnitee accompanied by a written statementdescribing in reasonable detail the basis for such indemnity, the actualExpense which is claimed, and the computation of the amount payable.

 

17.5                           **Subrogation**.   Upon the payment in full of any indemnity pursuant to thisArticle 17 by LESSEE, LESSEE will be subrogated to any right of theIndemnitee in respect of the matter against which such indemnity has been made.

 

17.6                           **Notice**.   Each Indemnitee and LESSEE will give prompt written notice one to theother of any liability of which such party has knowledge for which LESSEE is,or may be, liable under Article 17.1 provided, however, that failure togive such notice will not terminate any of the rights of Indemnitees under thisArticle 17 except to the extent that LESSEE has been materially prejudicedby the failure to provide such notice.

 

17.7                           **Refunds**.    Ifany Indemnitee obtains a recovery of all or any part of any amount which LESSEEhas paid to such Indemnitee, such Indemnitee will promptly pay to LESSEE thenet amount recovered by such Indemnitee.

 

17.8                           **Defense of Claims**.   Unless an Event of Default has occurred and is continuing, LESSEE andits insurers will have the right (in each such case at LESSEE’s sole expense)to investigate or defend or compromise any claim covered by insurance for whichindemnification is sought pursuant to Article 17.1, provided that ifLESSEE or its insurers have reserved the right to dispute liability withrespect to any insurance policies pursuant to which coverage is sought, thenLESSEE shall be obliged to ensure that its indemnity obligations are adequatelysecured to the reasonable satisfaction of LESSOR.   Each Indemnitee will cooperate with LESSEEor its insurers with respect to any such defense of claims.  If LESSEE or its insurers are retainingattorneys to handle any such claim, such counsel must be reasonablysatisfactory to the Indemnitees.  If not,the Indemnitees will have the right to retain counsel of their choice at LESSEE’sexpense.

 

17.9                           **Survival of Obligation**.    Notwithstandinganything in this Lease to the contrary, the provisions of this Article 17will survive the Termination Date and continue in full force and effectnotwithstanding any breach by LESSOR or LESSEE of the terms of this Lease, the

 

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termination of the lease ofthe Aircraft to LESSEE under this Lease or the repudiation by LESSOR or LESSEEof this Lease.

 

**ARTICLE 18****                          ****INSURANCE**

** **

18.1                                                               **Categories of Insurance**.   Throughout the Lease Term and until the Termination Date, LESSEE will,at its own expense, effect and maintain in full force and effect the types ofinsurance and amounts of insurance (including deductibles) described inExhibit E through brokers and insurers of recognized standing in the Londonor New York insurance markets or, in the event of a sublease to a PermittedSublessee, with such brokers and with such insurers in the London or New Yorkmarkets as may be approved by LESSOR, such approval not to be unreasonablywithheld.

 

18.2                                                               **Third Party War LiabilityInsurance**.    LESSEE will provide evidence to LESSOR thatthe U.S. government indemnity for third party (non-passenger) war liabilitycovers LESSEE and its operation of the Aircraft, up to the limits of coveragespecified in Exhibit E for Aircraft Third Party, Passenger, Baggage, Cargoand Mail Liability and Airline General Third Party Liability.  For so long as such U.S. government indemnityis in effect and LESSEE is covered thereby with respect to the Aircraft, LESSORagrees that LESSEE may substitute such indemnity for Extended CoverageEndorsement AVN 52D and the excess coverage required byExhibit E.  In the event that LESSEEis no longer covered by such U.S. government indemnity, LESSEE will carryExtended Coverage Endorsement AVN 52D and excess third party war liabilityinsurance coverage in the amount required by Exhibit E.

 

18.3                                                               **Installation of Third PartyEngine**.    If LESSEE installs an engine not owned byLESSOR on the Aircraft, either (a) LESSEE’s hull insurance on the Aircraftwill automatically increase to such higher amount as is necessary in order tosatisfy both LESSOR’s requirement to receive the Agreed Value in the event of aTotal Loss and the amount required by the third party engine owner or(b) separate additional insurance on such engine will attach in order tosatisfy separately the requirements of the LESSEE to such third party engineowner.

 

18.4                                                               **Insurance for Indemnities**.   The insurance referred to in Article 18.1 will in each case includeand insure (to the extent of the risks covered by the policies) the indemnityprovisions of Article 17 and LESSEE will maintain such insurance of theindemnities for a minimum of two (2) years following the Termination Date.

 

18.5                                                               **Renewal**.   Not less than five (5) Business Days before the expiration ortermination date of any insurance required hereunder, LESSEE will provideLESSOR with fax

 

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confirmation from LESSEE’sinsurance brokers that renewed certificates of insurance evidencing the renewalor replacement of such insurance and complying with Exhibit E will beissued on the termination date of the prior certificate.  Prior to such termination date, LESSEE’sinsurance brokers will provide LESSOR with fax confirmation that such renewedcertificates have been issued.  Withinseven (7) days after such renewal, LESSEE will furnish its brokers’certificates of insurance to LESSOR.

 

18.6                                                               **Assignment of Rights byLESSOR**.    If LESSOR assigns all or any of its rightsunder this Lease as permitted by this Lease or otherwise disposes of anyinterest in the Aircraft to any other Person, LESSEE will, upon request,procure that such Person hereunder be added as loss payee and/or additionalassured in the policies effected hereunder and enjoy the same rights andinsurance enjoyed by LESSOR under such policies.  LESSOR will nevertheless continue to becovered by such policies.

 

18.7                                                               **Deductibles**.    Ifthere has been a Payment Default and there is a material adverse change in thefinancial condition of LESSEE which LESSOR reasonably believes will causeLESSEE to be unable to pay the deductible upon the occurrence of a partial lossof the Aircraft or an Engine, then LESSOR may require LESSEE at LESSEE’sexpense to lower its deductibles on the insurance maintained hereunder to alevel which is available on commercially reasonable terms in the insurancemarket.

 

18.8                                                               **Insurance for Wet LeaseOperations**.    In the event LESSEE is performing wet leaseoperations with the Aircraft pursuant to Article 11.5 and the wet lesseeis carrying the primary passenger, baggage and cargo liability insurance withrespect to the flights, then such insurance must meet the requirements ofExhibit E, including with respect to the amounts of coverage, naming ofLESSOR as an additional insured and inclusion of the other endorsements setforth in Exhibit E.  Moreover,LESSEE will at all times carry contingent passenger, baggage and cargoliability insurances for such flights. Prior to commencement of wet lease operations for a particular wetlessee, LESSOR will receive certificates of insurance from the insurancebrokers for LESSEE and, if applicable, the wet lessee evidencing suchcoverages.

 

18.9                                                               **Other Insurance**.   LESSOR may from time to time by notice to LESSEE require LESSEE atLESSEE’s expense to effect such other insurance or such variations to the termsof the existing insurance as may then be customary in the airline industry foraircraft of the same type as the Aircraft and at the time commonly available inthe insurance market.

 

18.10                                                         **Information**.   LESSEE will provide LESSOR with any information reasonably requested byLESSOR from time to time concerning the insurance maintained with respect tothe Aircraft or in connection with any claim being made or proposed to be madethereunder.

 

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18.11                                                         **Currency**.   All proceeds of insurance pursuant to this Lease will be payable inDollars except as may be otherwise agreed by LESSOR.

 

18.12                                                         **Grounding of Aircraft**.    Ifat any time any of the insurance required pursuant to this Lease will cease tobe in full force and effect, LESSEE will forthwith ground the Aircraft and keepthe Aircraft grounded until such time as such insurance is in full force andeffect again.

 

18.13                                                         **Failure to Insure**.    Ifat any time LESSEE fails to maintain insurance in compliance with thisArticle 18, LESSOR will be entitled but not bound to do any of thefollowing (without prejudice to any other rights which it may have under thisLease by reason of such failure):

 

(a)                                              to pay any premiums due or to effect ormaintain insurance reasonably satisfactory to LESSOR or otherwise remedy suchfailure in such manner as LESSOR considers appropriate (and LESSEE will upondemand reimburse LESSOR in full for any amount so expended in that connection);or

 

(b)                                             at any time while such failure is continuing,to require the Aircraft to remain at any airport or (as the case may be),proceed to and remain at any airport designated by LESSOR, until such failureis remedied to LESSOR’s satisfaction.

 

18.14                                                         **Reinsurance**.    Inthe event that the Aircraft is subleased to a Permitted Sublessee locatedoutside of the U.S., any reinsurance will be maintained with reinsurers andbrokers approved by LESSOR.  Suchreinsurance will contain each of the following terms and will in all otherrespects (including amount) be satisfactory to LESSOR:

 

(a)                                              the same terms as the original insurance;

 

(b)                                             a cut-through and assignment clausesatisfactory to LESSOR; and

 

(c)                                              payment will be made notwithstanding(i) any bankruptcy, insolvency, liquidation or dissolution of any of theoriginal insurers and/or (ii) that the original insurers have made nopayment under the original insurance policies.

 

In the event that LESSEE andother, similarly situated commercial air carriers in the U.S. change thestructure of their insurance coverage with respect to reinsurance, LESSEE andLESSOR will discuss in good faith whether the foregoing provisions relating toreinsurance should apply to this Lease.

 

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18.15                                                         **Limit on Hull in Favor ofLESSEE**.    LESSEE may carry hull all risks or hull warand allied perils on the Aircraft in excess of the Agreed Value (which ispayable to LESSOR) only to the extent such excess insurance which would bepayable to LESSEE in the event of a Total Loss does not exceed one hundred tenpercent (110%) of the Agreed Value and only to the extent that such additionalinsurance will not prejudice the insurances required herein or the recovery byLESSOR thereunder.  LESSEE agrees that itwill not create or permit to exist any liens or encumbrances over theinsurances, or its interest therein, except as constituted by this Lease.

 

**ARTICLE 19****                          ****LOSS, DAMAGE AND REQUISITION**

** **

Throughout the Lease Termand until the Termination Date, LESSEE will bear all risk of loss, theft,damage and destruction to the Aircraft.

 

19.1                                                               **Definitions**.    Inthis Article 19 and throughout this Lease:

 

“**Agreed Value**” has the meaning set forthin Paragraph 14 of Exhibit C.

 

“**Net Total Loss Proceeds**” means theTotal Loss Proceeds actually received by LESSOR following a Total Loss, lessany legal and other out-of-pocket expenses, taxes or duties incurred by LESSORin connection with the collection of such proceeds.

 

“**Total Loss**” means any of the followingin relation to the Aircraft, Airframe or any Engine, and “**Total Loss Date**” means the date setforth in parenthesis after each Total Loss:

 

(a)                                              destruction, damage beyond repair or beingrendered permanently unfit for normal use for any reason (the date such eventoccurs or, if not known, the date on which the Aircraft, Airframe or Engine waslast heard of);

 

(b)                                             actual or constructive total loss (includingany damage to the Aircraft which results in an insurance settlement on thebasis of a total loss) (the earlier of the date on which the loss occurs orthirty (30) days after the date of notice to LESSEE’s brokers or insurersclaiming such total loss);

 

(c)                                              requisition of title, confiscation,forfeiture or any compulsory acquisition or other similar event (the date on whichthe same takes effect);

 

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(d)                                             sequestration, detention, seizure or anysimilar event for more than sixty (60) consecutive days or one-hundred eighty(180) consecutive days if the Aircraft is located in the U.S. for such entireperiod (the earlier of the date on which insurers make payment on the basis ofa total loss or the date of expiration of such period);

 

(e)                                              requisition for use for more than one hundredeighty (180) consecutive days, except as set forth in Article 19.8 (theearlier of the date on which the insurers make payment on the basis of a totalloss or the date of expiration of such period); or

 

(f)                                                in the case of an Engine, the event describedin Article 12.6.3 (the date on which the same takes effect).

 

“**Total Loss Proceeds**” means the proceedsof any insurance or any compensation or similar payment arising in respect of aTotal Loss.

 

19.2                                                               **Notice of Total Loss**.   LESSEE will notify LESSOR in writing within two (2) Business Days aftera Total Loss Date of the Aircraft, Airframe or any Engine.

 

19.3                                                               **Total Loss of Aircraft orAirframe**.    If the Total Loss of the Aircraft orAirframe occurs during the Lease Term, the following will occur:

 

19.3.1                                                      After the Total Loss Date and until receiptby LESSOR of the Agreed Value and all other amounts then due under this Lease,LESSEE will continue to pay Rent and the parties will perform, to the extentpossible, all of their other obligations under this Lease.

 

19.3.2                                                      On the date which is the earlier of thefollowing dates:

 

(a)                     the date on which the Total Loss Proceeds ofthe Aircraft or the Airframe are paid by LESSEE’s insurance underwriters orbrokers and

 

(b)                    the date which falls sixty (60) days afterthe Total Loss Date,

 

LESSEE will pay to LESSOR anamount equal to the sum of:

 

(a)                     the Agreed Value and

 

(b)                    all other amounts then due under this Lease,

 

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less an amount equal to theNet Total Loss Proceeds received by LESSOR by such date.

 

19.3.3                                                      LESSOR will apply the Net Total Loss Proceedsand any amounts received from LESSEE pursuant to Article 19.3.2 asfollows:

 

(a)                     first, in discharge of any unpaid Rent andany other amounts accrued and unpaid up to the date of LESSOR’s receipt of theAgreed Value;

 

(b)                    second, in discharge of the Agreed Value; and

 

(c)                     third, payment of the balance, if any, toLESSEE.

 

19.3.4                                                      Upon receipt by LESSOR of all monies payableby LESSEE in Article 19.3, this Lease will terminate except for LESSEE’sobligations under Articles 10.5, 16 and 17 which survive the TerminationDate, and LESSOR will relinquish title to the Aircraft to the insuranceunderwriters or LESSEE, as appropriate.

 

FOR AVOIDANCE OF DOUBT, THEAGREED VALUE OF THE AIRCRAFT WILL BE PAYABLE TO LESSOR PURSUANT TO THISARTICLE 19.3 WHEN A TOTAL LOSS OF THE AIRFRAME OCCURS EVEN IF THERE HASNOT BEEN A TOTAL LOSS OF AN ENGINE OR ENGINES.

 

19.4                                                               **Surviving Engine(s**.    Ifa Total Loss of the Airframe occurs and there has not been a Total Loss of anEngine or Engines, then, provided no Default has occurred and is continuing, atthe request of LESSEE (subject to agreement of relevant insurers) and onreceipt of all monies due under Article 19.3 and payment by LESSEE of allairport, navigation and other charges on the Aircraft, LESSOR will transfer allits right, title and interest in the surviving Engine(s) to LESSEE, but withoutany responsibility, condition or warranty on the part of LESSOR other than asto freedom from any LESSOR’s Lien.

 

19.5                                                               **Total Loss of Engine and NotAirframe**.

 

19.5.1                                                      Upon a Total Loss of any Engine not installedon the Airframe or a Total Loss of an Engine installed on the Airframe notinvolving a Total Loss of the Airframe, LESSEE will replace such Engine as soonas reasonably possible by duly conveying to LESSOR title to another engine (a)free and clear of all Security Interests (except Permitted Liens) of any kindor description, (b) in airworthy condition and of the same or improved model,service bulletin and modification status and having a value and utility atleast equal to the Engine which sustained the 

 

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Total Loss, (c) in the sameor better operating condition as the Engine which sustained a Total Loss,including time in service, hours and cycles since new and hours and cyclesavailable to the next inspection, Overhaul or scheduled or anticipatedremoval.  In all circumstances, withrespect to life limited Parts in any replacement engine, (x) the life limitedPart that is due to be removed earliest in such replacement engine will have noless life remaining than the life limited Part that was due to be removedearliest in the Engine which sustained the Total Loss and (y) the average liferemaining for all life limited Parts in the replacement engine will be no lessthan the average life remaining for the life limited Parts in the Engine whichsustained the Total Loss.  Suchreplacement engine will be an Engine as defined herein and the Engine whichsustained such Total Loss will cease to be an Engine; whereupon, subject toagreement of relevant insurers, LESSOR will transfer all of its right, titleand interest in and to the Engine which sustained the Total Loss to LESSEE, butwithout any responsibility, condition or warranty on the part of LESSOR otherthan as to title and freedom from any LESSOR’s Lien.

 

19.5.2                                                      LESSEE agrees at its own expense to take suchaction as LESSOR may reasonably request in order that any such replacementEngine becomes the property of LESSOR and is leased hereunder on the same termsas the destroyed Engine.  LESSEE’sobligation to pay Rent will continue in full force and effect, but an amountequal to the Net Total Loss Proceeds received by LESSOR with respect to suchdestroyed Engine will, subject to LESSOR’s right to deduct therefrom anyamounts then due and payable by LESSEE under this Lease, be paid to LESSEE.

 

19.6                                                               **Other Loss or Damage**.

 

19.6.1                                                      If the Aircraft or any Part thereof suffersloss or damage not constituting a Total Loss of the Aircraft or the Airframe orany Engine, all the obligations of LESSEE under this Lease (including paymentof Rent) will continue in full force.

 

19.6.2                                                      In the event of any loss or damage to theAircraft or Airframe which does not constitute a Total Loss of the Aircraft orthe Airframe, or any loss or damage to an Engine which does not constitute aTotal Loss of such Engine, LESSEE will at its sole cost and expense fullyrepair the Aircraft, Engine or APU in order that the Aircraft or Engine isplaced in an airworthy condition and substantially the same condition as it wasprior to such loss or damage.  Allrepairs will be performed in a manner which preserves and maintains, to theextent possible, all warranties and service life policies to the same extent asthey existed prior to such loss or damage. LESSEE will notify LESSOR forthwith of any loss, theft or damage to theAircraft for which the cost of repairs is estimated to exceed [SEE PARAGRAPH 15OF

 

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EXHIBIT C.], together withLESSEE’s proposal for carrying out the repair. In the event that LESSOR does not agree with LESSEE’s proposals forrepair, LESSOR will so notify LESSEE within two (2) Business Days after itsreceipt of such proposal.  Upon receiptof such notice from LESSOR, LESSEE and LESSOR will then consult withManufacturer and LESSEE and LESSOR agree to accept as conclusive, and be boundby, Manufacturer’s directions or recommendations as to the manner in which tocarry out such repairs.  If Manufacturerdeclines to give directions or recommendations, LESSEE will carry out therepairs in accordance with the directions of LESSOR.

 

19.6.3                                                      To the extent insurance proceeds received byLESSEE directly from its insurers do not cover the cost of such repair work on theAircraft or Engine and LESSOR has received additional insurance proceeds fromLESSEE’s insurers with respect to such repair work, LESSOR will (subject toLESSOR’s right to deduct therefrom any amounts then due and payable by LESSEEunder this Lease and submission by LESSEE of reasonable documentation insupport of such excess repair costs) pay to LESSEE insurance proceeds receivedby LESSOR as and when such repair work is performed on the Aircraft.

 

19.7                                                               **Copy of Insurance Policy**.   Promptly after the occurrence of a partial loss or Total Loss of theAircraft or an Engine, at the request of LESSOR (and then only in the eventreasonably required by LESSOR in connection with insurance policies pursuant towhich coverage is sought) LESSEE will provide LESSOR with a copy of therelevant portions of LESSEE’s insurance policy. LESSEE’s insurance policy will be confidential between LESSOR and LESSEEand will not be disclosed by LESSOR to third parties other than LESSOR’sprofessional advisors and except as necessary in respect of proceedingsrelating to such insurance claim.

 

19.8                                                               **Government Requisition**.    Ifthe Aircraft, Airframe or any Engine is requisitioned for use by any GovernmentEntity, LESSEE will promptly notify LESSOR of such requisition.  All of LESSEE’s obligations hereunder willcontinue as if such requisition had not occurred.  So long as no Event of Default has occurredand is continuing, all payments received by LESSOR or LESSEE from suchGovernment Entity will be paid over to or retained by LESSEE.  If an Event of Default has occurred and iscontinuing, all payments received by LESSEE or LESSOR from such GovernmentEntity may be used by LESSOR to satisfy any obligations owing by LESSEE.

 

19.9                                                               **Return of Security Depositand other Amounts**.    For avoidance of doubt, the parties agreethat in the event of the Total Loss of the Airframe, upon receipt by LESSOR ofall monies payable by LESSEE in accordance with Article 19.3, and subjectalways to the terms of

 

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Articles 5.1.3and 13.8, LESSOR will (a) return to LESSEE the amount of the SecurityDeposit then held by LESSOR and any prepaid Rent and (b) pay to LESSEE anamount equal to one hundred percent (100%) of the Reserves then held by LESSORand which are not subject to a claim for reimbursement pursuant toArticle 13.5.

 

**ARTICLE 20****                          ****REPRESENTATIONS, WARRANTIESAND COVENANTS OF LESSEE**

** **

20.1                                                               **Representations andWarranties**.    LESSEE represents and warrants thefollowing to LESSOR as of the date of execution of this Lease and as of theDelivery Date:

 

20.1.1                                                      Corporate Status.   LESSEE is a corporation duly incorporated, validly existing and in goodstanding under the Laws of the State of Colorado.  It has the corporate power and authority tocarry on its business as presently conducted and to perform its obligationshereunder.

 

20.1.2                                                      Governmental Approvals.    Noauthorization, approval, consent, license or order of, or registration with, orthe giving of notice to the Aviation Authority or any other Government Entityis required for the valid authorization, execution, delivery and performance byLESSEE of this Lease, except as will have been duly effected as of the DeliveryDate.

 

20.1.3                                                      Binding.    LESSEE’s Board of Directorshas authorized LESSEE to enter into this Lease and the other OperativeDocuments and to perform its obligations hereunder and thereunder.  This Lease and the other Operative Documentsthat have been executed and delivered by LESSEE as of the date of this Leasebeen duly executed and delivered by LESSEE and represent the valid, binding andenforceable obligations of LESSEE except as enforceability may be limited bybankruptcy, insolvency, reorganization or other similar Laws of generalapplication affecting the enforcement of creditors’ rights and by suchprinciples of equity as a court having jurisdiction may impose.  When executed by LESSEE at Delivery, the samewill apply to the Estoppel and Acceptance Certificate and the other OperativeDocuments.

 

20.1.4                                                      No Breach.    The execution and deliveryof the Operative Documents that have been executed and delivered by LESSEE asof the date of this Lease, the consummation by LESSEE of the transactionscontemplated under the Operative Documents and compliance by LESSEE with theterms and provisions thereof do not and will not contravene any Law applicableto LESSEE, or result in any material breach of or

 

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constituteany material default under or result in the creation of any Security Interestupon any property of LESSEE, pursuant to any indenture, mortgage, chattelmortgage, deed of trust, conditional sales contract, bank loan or creditagreement, corporate charter, bylaw or other material agreement or instrumentto which LESSEE is a party or by which LESSEE or its properties or assets maybe bound or affected.  When executed byLESSEE at Delivery, the same will apply to the Estoppel and AcceptanceCertificate and the other Operative Documents.

 

20.1.5                                                      Licenses.    LESSEE holds all licenses,certificates and permits from applicable Government Entities in the U.S.necessary for the conduct of its business as a Certificated Air Carrier andperformance of its obligations under this Lease.

 

20.1.6                                                      No Suits.    There are no suits,arbitrations or other proceedings pending or threatened before any court oradministrative agency against or affecting LESSEE which, if adverselydetermined, would have a material adverse effect on the business, assets orcondition (financial or otherwise) of LESSEE or its ability to perform underthis Lease, except as described in the filings provided to LESSOR pursuant toArticle 22.

 

20.1.7                                                      Tax Returns.    All necessary returns havebeen delivered by LESSEE to all relevant taxation authorities in thejurisdiction of its incorporation and LESSEE is not in default in the paymentof any taxes due and payable.

 

20.1.8                                                      No Material Adverse Effect.   LESSEE is not in default under any agreement to which it is a party orby which it may be bound which default if left uncured would have a materialadverse effect on its business, assets or condition.

 

20.1.9                                                      No Default under this Lease.    Atthe time of execution of this Lease, no Default has occurred and is continuingand the financial statements provided to LESSOR pursuant to Article 22fairly present the financial condition of LESSEE.

 

20.2                                                               **Covenants**.   LESSEE covenants to LESSOR that it will comply with the followingthroughout the entire Lease Term:

 

20.2.1                                                      Licensing.    LESSEE will hold alllicenses, certificates and permits from applicable Government Entities in theU.S. necessary for the conduct of its business as a Certificated Air Carrierand performance of its obligations under this Lease.  LESSEE will advise LESSOR promptly in theevent any such licenses, certificates or permits are cancelled, terminated,revoked or not renewed.

 

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20.2.2                                                      Information about Suits.   LESSEE will promptly give to LESSOR a notice in writing of any suit,arbitration or proceeding before any court, administrative agency or GovernmentEntity which, if adversely determined, would materially adversely affect LESSEE’sfinancial condition, affairs, operations or its ability to perform under thisLease provided, however, that compliance by LESSEE with the requirements ofArticle 22 hereof will be deemed compliance with the provisions of thisArticle 20.2.2.

 

20.2.3                                                      Restrictions on Mergers.   LESSEE will not consolidate with or merge into any other corporation orother Person, and will not convey, transfer, lease or otherwise dispose of allor substantially all of its assets to any corporation or other Person, unless:

 

(i)                              such transaction shall not have any materialadverse effect on the rights of LESSOR under or in respect of the Lease or theAircraft;

 

(ii)                           the Person formed by or surviving suchconsolidation or merger or the Person which acquires by conveyance, transfer,lease or other disposition all or substantially all of such property and otherassets: (A) shall be a corporation organized and existing under the laws of theU. S.  or any State thereof or theDistrict of Columbia; (B) immediately after giving effect to such transaction,shall have acquired or succeeded to all or substantially all of the assets ofLESSEE (if such assets are being transferred) as an entirety, and shall have atangible net worth (determined in accordance with GAAP) of not less than LESSEE’stangible net worth (determined in accordance with GAAP) immediately prior tosuch transaction; (C) shall be a “citizen of the United States” of America asdefined in Section 40102(a)(15)(c) of Title 49 of the U.S.C. and a CertificatedAir Carrier; and (D) shall executed and deliver to LESSOR (1) such recordationsand filings with any Government Entity and such other documents as shall bereasonably necessary or advisable in connection with such consolidation,merger, sale, lease, transfer or other disposition (2) an agreement, in formand substance reasonably satisfactory to LESSOR, assuming all of LESSEE’sobligations under the Lease and the other Operative Documents without amendmentthereto and (3) an officer’s certificate to the effect that the requirements ofthis Section have been satisfied; and

 

(iii)                        no Event of Default shall have occurred andbe continuing or shall occur as a result thereof.

 

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20.2.4                                                      Restriction on Relinquishment of Possession.   LESSEE will not, without the prior consent of LESSOR, deliver, transferor relinquish possession of the Aircraft except in accordance withArticles 11 and 12.

 

20.2.5                                                      No Security Interests.   LESSEE will not create or agree to or permit to arise any SecurityInterest (other than Permitted Liens) on or with respect to the Aircraft, titlethereto or any interest therein.  LESSEEwill forthwith, at its own expense, take all action as may be reasonablynecessary to discharge or remove any such Security Interest if it exists at anytime.

 

20.2.6                                                      Representations to Other Parties.   LESSEE will not represent or hold out LESSOR as carrying goods orpassengers on the Aircraft or as being in any way connected or associated withany operation of the Aircraft.

 

**ARTICLE 21****                          ****REPRESENTATIONS, WARRANTIESAND COVENANTS OF LESSOR**

** **

21.1                                                               **Representations andWarranties**.    LESSOR represents and warrants thefollowing to LESSEE as of the date of execution of the Lease and as of theDelivery Date and ALL OTHER WARRANTIES, EXPRESS OR IMPLIED HAVE BEEN WAIVED INACCORDANCE WITH ARTICLE 8:

 

21.1.1                                                      Corporate Status.   LESSOR is a corporation duly incorporated, validly existing and in goodstanding under the Laws of the State of California.  It has the corporate power and authority tocarry on its business as presently conducted and to perform its obligationshereunder.

 

21.1.2                                                      Governmental Approvals.    Noauthorization, approval, consent, license or order of, or registration with, orthe giving of notice to any U.S. Government Entity is required for the validauthorization, execution, delivery and performance by LESSOR of this Lease.

 

21.1.3                                                      Binding.    This Lease and the otherOperative Documents that have been have been executed and delivered by LESSEEas of the date of this Lease have been duly authorized, executed and deliveredby LESSOR and represent the valid, enforceable and binding obligations ofLESSOR except as enforceability may be limited by bankruptcy, insolvency,reorganization or other similar Laws of general application affecting theenforcement of creditors’ rights and by such principles of equity as a courthaving

 

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jurisdiction mayimpose.  When executed by LESSOR atDelivery, the same will apply to the other Operative Documents.

 

21.1.4                                                      No Breach.    The execution and deliveryof the Operative Documents that have been executed and delivered by LESSOR asof the date of this Lease, the consummation by LESSOR of the transactionscontemplated therein and compliance by LESSOR with the terms and provisionsthereof do not and will not contravene any Law applicable to LESSOR, or resultin any material breach of or constitute any material default under anyindenture, mortgage, chattel mortgage, deed of trust, conditional salescontract, bank loan or credit agreement, corporate charter, bylaw or othermaterial agreement or instrument to which LESSOR is a party or by which LESSORor its properties or assets may be bound or affected.  When executed by LESSOR at Delivery, the samewill apply to the other Operative Documents.

 

21.1.5                                                      Title to Aircraft.    Onthe Delivery Date LESSOR will have good and valid title to the Aircraft.

 

21.1.6                                                      Citizen of the United States.   LESSOR is a “citizen of the United States of America” (as defined inSection 40102 of Title 49 of U.S.C.).

 

21.2                                                               **Covenant of Quiet Enjoyment**.    Solong as no Event of Default has occurred and is continuing hereunder, LESSORcovenants that neither LESSOR nor any person lawfully claiming through LESSORwill interfere with LESSEE’s quiet, peaceful use and enjoyment of the Aircraftduring the Lease Term.

 

21.3                                                               **Covenant of U.S. Citizenship**.   LESSOR hereby covenants that as of the date of Delivery, the date ofregistration of the Aircraft with the Aviation Authority, and for the entireduration of the Lease Term, it shall be a “citizen of the United States ofAmerica” (as defined in Section 40102 of Title 49 of U.S.C.).

 

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**ARTICLE 22****                          ****FINANCIAL AND RELATEDINFORMATION**

** **

LESSEE agrees to furnisheach of the following to LESSOR:

 

(a)                                              within forty-five (45) days after the end ofeach fiscal quarter of LESSEE, three (3) copies of the unaudited consolidatedfinancial statements (including a balance sheet and profit and loss statement)prepared for such quarter in accordance with generally accepted accountingprinciples in the U.S.;

 

(b)                                             within ninety (90) days after the end of eachfiscal year of LESSEE, three (3) copies of the audited consolidated financialstatements (including a balance sheet and profit and loss statement) preparedas of the close of such fiscal year in accordance with generally acceptedaccounting principles in the U.S.;

 

(c)                                              promptly after distribution, three (3) copiesof all reports and financial statements which LESSEE sends or makes availableto its stockholders or creditors generally;

 

(d)                                             Technical Evaluation Reports in conjunctionwith every second “C” check for the Aircraft and at other times reasonablyrequested by LESSOR in accordance with Article 12.10.2 hereof; and

 

(e)                                              from time to time, such other reasonableinformation as LESSOR or LESSOR’s Lender may reasonably request concerning thelocation, condition, use and operation of the Aircraft or the financialcondition of LESSEE.

 

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**ARTICLE 23****                          ****RETURN OF AIRCRAFT**

** **

23.1                                                               **Date of Return**.   LESSEE is obligated to return the Aircraft, Engines, Parts and AircraftDocumentation to LESSOR on the Expiration Date, unless a Total Loss of theAircraft occurred prior to the Expiration Date and this Lease was terminatedearly in accordance with Article 19.3. If LESSEE is in Default hereunder by failing to return the Aircraft onthe Expiration Date or if an Event of Default occurs prior to the ExpirationDate and LESSOR repossesses the Aircraft, the return requirements set forth inthis Article 23 nonetheless must be met on the date the Aircraft isactually returned to LESSOR or repossessed by LESSOR.

 

23.2                                                               **Technical Report**.   Six (6) months prior to the Expiration Date (and in an updated form atreturn of the Aircraft), LESSEE will provide LESSOR with a Technical EvaluationReport in the form and substance of Exhibit N, as revised, and, inaddition upon LESSOR’s request, will make copies available of (a) drawingsof the interior configuration of the Aircraft both as it then exists and as itwill exist at return, (b) an Airworthiness Directive status list,(c) to the extent available, a service bulletin incorporation list(provided that if it does not maintain such a list, LESSEE will provide anynecessary information and such reasonable assistance as LESSOR may require to preparesuch a list), (d) rotable tracked, hard-time and life-limited componentlistings, (e) to the extent available, a list of LESSEE-initiatedmodifications and alterations (provided that if it does not maintain such alist, LESSEE will provide any necessary information and such reasonableassistance as LESSOR may require to prepare such a list), (f) interiormaterial burn certificates, (g) the Aircraft Maintenance Program(provided, however, that LESSEE’s Aircraft Maintenance Program will be deemed “ConfidentialInformation” as provided in the Confidentiality Agreement, and provided furtherthat LESSOR shall have the right to disclose the contents of the MaintenanceProgram to any prospective buyer or lessee of the Aircraft, or to any thirdparty maintenance provider working on behalf of such party, so long as suchparty and/or such third party maintenance provider have executed anAcknowledgment and Agreement as provided in the Confidentiality Agreement),(h) the complete workscope for the checks, inspections and other work tobe performed prior to return, (i) a list of all no-charge service bulletinkits with respect to the Aircraft which were ordered by LESSEE fromManufacturer or the Engine manufacturer, (j) current Engine disk sheetsand a description of the last shop visit for each Engine and (k) any otherdata which is reasonably requested by LESSOR.

 

23.3                                                               **Return Location**.   LESSEE at its expense will return the Aircraft, Engines, Parts andAircraft Documentation to LESSOR at Denver, Colorado, or to such other airporton LESSEE’s route system as may be mutually agreed to by LESSEE and LESSOR.

 

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23.4                                                               **Full Aircraft DocumentationReview**.    For the period commencing at least ten (10)Business Days prior to the proposed redelivery date and continuing until thedate on which the Aircraft is returned to LESSOR in the condition required bythis Lease, LESSEE will provide for the review of LESSOR and/or itsrepresentative all of the Aircraft records and historical documents describedin Exhibit M in one central room at the Aircraft return location.

 

23.5                                                               **Aircraft Inspection**.

 

23.5.1                                                      During the maintenance checks performedimmediately prior to the proposed redelivery (“**Final Check**”) and at the actual return of the Aircraft,LESSOR and/or its representatives will have an opportunity to conduct a fullsystems functional and operational inspection of the Aircraft (and other typesof reasonable inspections based upon the Aircraft type, age, use and otherknown factors with respect to the Aircraft; provided that LESSOR’s access forinspection shall be limited to those areas of the Aircraft that are exposed onthe Aircraft during the course of performance of the Final Check and withoutopening or removing panels, compartments or bays unless (a) such opening orremoval is specified as part of the Final Check or (b) LESSOR has reasonablevisual grounds to suspect corrosion and a full inspection of the AircraftDocumentation (including records and manuals), all to LESSOR’s reasonablesatisfaction.  Any deficiencies from theAircraft return condition requirements set forth in this Article 23 willbe corrected by LESSEE at its cost prior to the acceptance flight described inArticle 23.5.2.

 

23.5.2                                                      Immediately prior to the proposed redeliveryof the Aircraft, LESSEE will carry out for LESSOR and/or LESSOR’srepresentatives a reasonable, mutually agreed upon Aircraft acceptance flightin accordance with reasonable commercial airline acceptance flight procedures,which will be for a duration not to exceed two (2) hours.  Flight costs and fuel will be furnished byand at the expense of LESSEE.  Anydeficiencies from the Aircraft return condition requirements set forth in thisArticle 23 will be corrected by LESSEE at its cost prior to return of theAircraft.

 

23.5.3                                                      To the extent that the ground inspection andacceptance flight extend beyond the Expiration Date, the Lease Term will bedeemed to have been automatically extended and the obligations of LESSEEhereunder (including Article 23.11.3) will continue on a day-to-day basisuntil the Aircraft is accepted by LESSOR as being in the condition requiredhereunder, which acceptance shall be evidenced by LESSOR executing anddelivering to LESSEE the Return Acceptance Receipt in the form of Exhibit K.

 

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23.6                                                               **Certificate of AirworthinessMatters**.

 

23.6.1                                                      The Aircraft will possess a currentCertificate of Airworthiness issued by the Aviation Authority (although thisCertificate of Airworthiness may be substituted by an Export Certificate ofAirworthiness or equivalent if requested by LESSOR pursuant toArticle 23.6.3).  In addition, evenif LESSEE must perform engineering, maintenance and repair work on the Aircraftbeyond the requirements of Article 12, the Aircraft at return must be inthe condition required in order to meet the requirements for issuance of a U.S.Standard Certificate of Airworthiness for transport category aircraft issued bythe FAA in accordance with FAR Part 21 and, in addition, to meet theoperating requirements of FAR Part 121.

 

23.6.2                                                      If the Aircraft is registered in a countryother than the U.S. at time of return, LESSEE at its cost will demonstrate thatthe Aircraft meets the requirements for issuance of the U.S. Standard Certificateof Airworthiness for transport category aircraft specified inArticle 23.6.1 by delivering to LESSOR at its option either an actual U.S.Standard Certificate of Airworthiness (if the Aircraft is to be registered inthe U.S.) or a letter reasonably acceptable to LESSOR signed by an FAADesignated Airworthiness Representative (DAR) or another Person reasonablyacceptable to LESSOR stating that the DAR or such Person has inspected theAircraft and Aircraft Documentation (including records and manuals) and hasfound that the Aircraft meets the requirements for issuance of a U.S. StandardCertificate of Airworthiness for transport category aircraft in accordance withFAR Part 21 and, in addition, meets the operating requirements of FAR Part121.

 

23.6.3                                                      If the Aircraft is to be registered in acountry other than in the U.S. after return from LESSEE, LESSOR may in its solediscretion waive the requirements of Article 23.6.1 and instead requirethat LESSEE at its expense (to the extent such expense is no greater than thatwhich LESSEE would have incurred pursuant to Article 23.6.1, with anyadditional expenses being for LESSOR’s account):

 

(a)                                              obtain an Export Certificate of Airworthinessfrom the State of Registration, and

 

(b)                                             subject to LESSEE’s capacity, resources, andtechnical capability, put the Aircraft in a condition to meet the requirementsfor issuance of a Certificate of Airworthiness of the Aviation Authority of thenext country of register, provided that if solely as a result of such work theAircraft is returned after the scheduled redelivery date, LESSEE will not beliable for payment of Rent in respect of the period following the date theAircraft would have been returned following

 

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completion of therequirements of this Article 23, but for the provisions of thisArticle 23.6.3.

 

23.7                                                               **General Condition ofAircraft at Return**.

 

23.7.1                                                      The Aircraft, Engines, and Parts will havebeen maintained and repaired in accordance with the Maintenance Program, therules and regulations of the Aviation Authority and this Lease.

 

23.7.2                                                      Aircraft Documentation (including records andmanuals) will have been maintained in an up-to-date status, in accordance withthe rules and regulations of the Aviation Authority and the FAA and this Leaseand in a form necessary in order to meet the requirements ofArticle 23.6.1.  The records andhistorical documents set forth in Exhibit M will be in English.

 

23.7.3                                                      There will be no pilot discrepancies ordeferred maintenance items.

 

23.7.4                                                      The Aircraft will be airworthy (conform totype design and be in a condition for safe operation), with all Aircraftequipment, components and systems operating in accordance with their intendeduse and within limits approved by Manufacturer, Aviation Authority and FAA.

 

23.7.5                                                      The Aircraft interior (including cabin andwindows) and exterior will be clean in accordance with U.S. commercial airlinestandards and cosmetically acceptable to LESSOR in its reasonable discretion,with all compartments free of foreign objects, dirt, grease, fluids, stains,grime, cracks, tears and rips and ready to be placed into immediate commercialairline operations.

 

23.7.6                                                      No special or unique Manufacturer, Enginemanufacturer or Aviation Authority inspection or check requirements which arespecific to the Aircraft or Engines (as opposed to a group of aircraft orengines of their types) will exist with respect to the Airframe, Engines andAircraft equipment, components and systems.

 

23.7.7                                                      All repairs, modifications and alterations tothe Aircraft will have been accomplished in accordance with either (i)Manufacturer’s Structural Repair Manual (or DGAC-approved Repair ApprovalSheets) for the Aircraft or (ii) FAA-approved data (such as FAA Form 8110 orequivalent).

 

23.7.8                                                      SEE PARAGRAPH 16(a) OF EXHIBIT C.

 

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23.7.9                                                      Subject to the terms of Article 23.7.10,the Aircraft will be returned with LESSOR’s Engines installed and with the sameequipment as at Delivery, subject only to those replacements, additions andModifications permitted under this Lease.

 

23.7.10                                                Notwithstanding the terms ofArticle 23.7.9, at the time of return one or more engines other than theEngines may be installed on the Aircraft, provided that such engine or enginesare owned or beneficially owned by the Person who is (a) the LESSOR of theAircraft at the time of return or (b) the beneficial owner of the Aircraft atthe time of return.

 

23.7.11                                                SEE PARAGRAPH 16(b) OF EXHIBIT C.

 

23.7.12                                                SEE PARAGRAPH 16(c) OF EXHIBIT C.

 

23.7.13                                                SEE PARAGRAPH 16(d) OF EXHIBIT C.

 

23.7.14                                                The Aircraft will be in compliance withManufacturer’s Corrosion Prevention and Control Program (CPCP) specified forthe model type by Manufacturer.  Whereany evidence of corrosion exists, perform an internal and external corrosioninspection and correct any discrepancies in accordance with the recommendationsof Manufacturer and the Structural Repair Manual.  In addition, all inspected areas will beproperly treated with corrosion inhibitor if and as recommended byManufacturer.

 

23.7.15                                                If any waivers, deviations, dispensations,alternate means of compliance, extensions or carry-overs with respect tomaintenance or operating requirements, repairs or Airworthiness Directives aregranted by the Aviation Authority or permitted by the Maintenance Program,LESSEE at its sole cost and expense will nonetheless perform such maintenanceor operating requirements, repairs or Airworthiness Directives as if suchwaivers, deviations, dispensations, alternate means of compliance, orextensions or carry-overs did not exist, unless such waivers, deviations,dispensations, alternate means of compliance, extensions or carry-overs areapplicable to all A319 aircraft and operators of such aircraft worldwide.

 

23.7.16                                                The Aircraft will be free from any SecurityInterest except LESSOR’s Liens and no circumstance will have so arisen wherebythe Aircraft is or could become subject to any Security Interest or right ofdetention or sale in favor of the Aviation Authority, any airport authority, orany other authority.

 

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23.7.17                                                All no-charge vendor and Manufacturer’sservice bulletin kits received by LESSEE for the Aircraft but not installedthereon will be on board the Aircraft as cargo. At LESSOR’s request, any other service bulletin kit which LESSEE paidfor will also be delivered to LESSOR on board the Aircraft, but LESSOR willreimburse LESSEE for its actual out-of-pocket costs for such kit, unless LESSEEpurchased such kit as part of its implementation of a service bulletin on itsfleet of aircraft of the same type as the Aircraft but had not yet installedsuch kit on the Aircraft, in which case such kit will be furnished free ofcharge to LESSOR.

 

23.7.18                                                The Aircraft will be free of any leaks andany damage resulting therefrom.  Allrepairs will have been performed on a permanent basis in accordance with theapplicable manufacturer’s instructions.

 

23.7.19                                                The Aircraft fluid reservoirs (including oil,oxygen, hydraulic and water) will be serviced to full and the waste tankserviced in accordance with Manufacturer’s instructions.  Fuel tanks will be at least as full as atDelivery.

 

23.8                                                               **Checks Prior to Return**.   Immediately prior to return of the Aircraft to LESSOR, LESSEE at itsexpense will do each of the following:

 

23.8.1                                                      Have performed, by LESSEE or any other FAA-approvedrepair station, the next due full and complete zonal, systems and structuralcheck (“C” or its equivalent), the corresponding lower checks (“A” and “B” orequivalent) and any other maintenance and inspections tasks, all in accordancewith the then-current MPD (save only for those MPD tasks which are (a) non-MRBtasks (as defined in the MPD) *and*(b) which arise from information service bulletins and/or service informationletters that relate to service bulletins and/or modifications that have notbeen incorporated in the Aircraft), sufficient to clear the Aircraft foroperation until the next-scheduled full and complete zonal, systems andstructural check under the then-current MPD (which in any event will not beless than fifteen (15) months).  LESSEEwill also weigh the Aircraft.  Anydiscrepancies revealed during such inspection will be corrected in accordancewith Manufacturer’s maintenance and repair manuals or FAA-approved data.  Subject to LESSEE’s capacity, resources, andtechnical capability, LESSEE agrees to perform during such check any other workreasonably required by LESSOR (and not otherwise required under this Lease) andLESSOR will reimburse LESSEE for such work at LESSEE’s preferred customerrates.

 

23.8.2                                                      Remove LESSEE’s exterior markings, includingall exterior paint, by stripping (or, at LESSOR’s option, pneumaticallyscuff/sanding) the paint from the fuselage,

 

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empennage, wings and Enginecowlings, and clean, reseal, refinish, prepare (including application ofalodine or another corrosion inhibitor) and prime the surfaces to be painted,all in accordance with Manufacturer’s and paint manufacturer’srecommendations.  LESSEE will thenrepaint the fuselage, empennage, wings and Engine cowlings in the colors andlogo specified by LESSOR provided, however, that if such colors and logo aresubstantially more complex than those of LESSEE, at LESSOR’s discretion, LESSORwill either (i) pay to LESSEE an amount equal to the incremental cost ofrepainting the Aircraft in such complex colors and logo over and above the costof repainting the Aircraft in LESSEE’s colors and logo at such time or(ii) permit LESSEE to return the Aircraft repainted white and to payLESSOR an amount equal to the incremental cost of painting the colors and logorequired by LESSOR’s next operator, up to an amount equal to the amount thatwould have been required to paint the Aircraft in LESSEE’s livery.  Such painting will be accomplished in such amanner as to result in a uniformly smooth and cosmetically acceptableaerodynamic surface.  All externalplacards, signs and markings will be properly attached, free from damage, cleanand legible.

 

23.8.3                                                      Clean the exterior and interior of theAircraft.

 

23.8.4                                                      If reasonably requested by LESSOR, repaintthe flight deck and replace placards of the Aircraft.

 

23.8.5                                                      In accordance with Article 23.7.7,permanently repair damage to the Aircraft that exceeds Manufacturer’s limitsand replace any non-flush structural patch repairs installed on the Aircraftwith flush-type repairs unless Manufacturer does not recommend a flush-typerepair.

 

23.8.6                                                      With LESSOR or its representatives present,perform a full and complete hot and cold section videotape borescope on eachEngine and its modules in accordance with the Engine manufacturer’s maintenancemanual.

 

23.8.7                                                      If the Engine historical and technicalrecords and/or condition trend monitoring data of any Engine (including theAPU, if such data are available) indicate an acceleration in the rate ofdeterioration in performance, such that the Engine will not meet therequirements of Article 23.9.2 in light of the Engine manufacturer’s data,LESSEE will correct, to LESSOR’s reasonable satisfaction, such conditions whichare determined to be causing such accelerated rate of deterioration.

 

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23.8.8                                                      With LESSOR or its representatives present,accomplish a power assurance run (if reasonably requested by LESSOR),acceleration and bleed valve scheduling checks on the Engines.  LESSEE will evaluate the Engine performanceand record the Engine power assurance test conditions and results on the ReturnAcceptance Receipt.

 

23.8.9                                                      If the Engine historical and technicalrecords, borescope inspection, trend monitoring and other checks specified inArticle 23.8.8 reveal any condition which would cause the Engines or anymodule to be unserviceable, beyond serviceable limits or serviceable with anincreased frequency of inspection or with calendar time, flight hour or flightcycle restrictions under the Engine manufacturer’s maintenance manual LESSEEwill correct such discrepancies in accordance with the guidelines set out bythe Engine manufacturer which may be discovered during such inspections.

 

23.8.10                                                In the event the Engine historical andtechnical records, borescope inspection, trend monitoring and other checksspecified in Article 23.8.8 result in a dispute regarding the conformityof an Engine with the requirements of this Article 23, LESSEE and LESSORwill consult with Engine manufacturer and follow Engine manufacturer’srecommendations (including the accomplishment of an Engine test cell operationalcheck) with regard to determining if such Engine complies with the requirementsof this Article 23 and the manner in which any discrepancies from therequirements of this Article 23 will be rectified.

 

23.9                                                               **Part Lives**.   SEE PARAGRAPH 17 OF EXHIBIT C.

 

23.9.1                                                      SEE PARAGRAPH 17(a) OF EXHIBIT C.

 

23.9.2                                                      SEE PARAGRAPH 17(b) OF EXHIBIT C.

 

(a)                                              SEE PARAGRAPH 17(b)(i) OFEXHIBIT C.

 

(b)                                             SEE PARAGRAPH 17(b)(ii) OFEXHIBIT C.

 

(c)                                              SEE PARAGRAPH 17(b)(iii) OFEXHIBIT C.

 

(d)                                             SEE PARAGRAPH 17(b)(iv) OF EXHIBIT C.

 

(e)                                              SEE PARAGRAPH 17(b)(v) OFEXHIBIT C.

 

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23.9.3                                                      SEE PARAGRAPH 17(c) OF EXHIBIT C.

 

23.9.4                                                      SEE PARAGRAPH 17(d) OF EXHIBIT C.

 

23.9.5                                                      SEE PARAGRAPH 17(e) OF EXHIBIT C.

 

(a)                                              SEE PARAGRAPH 17(e)(i) OFEXHIBIT C.

 

(b)                                             SEE PARAGRAPH 17(e)(ii) OFEXHIBIT C.

 

(c)                                              SEE PARAGRAPH 17(e)(iii) OFEXHIBIT C.

 

23.9.6                                                      SEE PARAGRAPH 17(f) OF EXHIBIT C.

 

(a)                                              SEE PARAGRAPH 17(f)(i) OFEXHIBIT C.

 

(b)                                             SEE PARAGRAPH 17(f)(ii) OFEXHIBIT C.

 

(c)                                              SEE PARAGRAPH 17(f)(iii) OFEXHIBIT C.

 

23.9.7                                                      SEE PARAGRAPH 17(g) OF EXHIBIT C.

 

23.9.8                                                      SEE PARAGRAPH 17(h) OF EXHIBIT C.

 

23.9.9                                                      SEE PARAGRAPH 17(i) OF EXHIBIT C.

 

23.10                                                         **Export and Deregistration ofAircraft**.    At LESSOR’s request by notice at leastfifteen (15) days prior to the Expiration Date, LESSEE will (a) pursuantto the terms of Article 23.6.3, provide an Export Certificate ofAirworthiness or its equivalent from the State of Registration for the countrydesignated by LESSOR, (b) assist with deregistration of the Aircraft fromthe register of aircraft in the State of Registration, and (c) perform anyother acts reasonably required by LESSOR in connection with suchderegistration.

 

23.11                                                         **LESSEE’s ContinuingObligations**.    In the event that LESSEE does not returnthe Aircraft to LESSOR on the Expiration Date and in the condition required bythis Article 23 for any reason (whether or not the reason is within LESSEE’scontrol):

 

23.11.1                                                the obligations of LESSEE under this Leasewill continue in full force and effect on a day-to-day basis until suchreturn.  This will not be considered awaiver of LESSEE’s Event of Default or any right of LESSOR hereunder.

 

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23.11.2                                                Until such return, the Agreed Value will bean amount equal to the Agreed Value on the day the Aircraft should have beenreturned to LESSOR pursuant to this Lease.

 

23.11.3                                                SEE PARAGRAPH 18 OF EXHIBIT C.

 

23.11.4                                                LESSOR may elect, in its sole and absolutediscretion, to accept the return of the Aircraft prior to the Aircraft beingput in the condition required by this Article 23 and thereafter have anysuch non-conformance corrected at such time as LESSOR may deem appropriate (butwithin ninety (90) days following the return of the Aircraft) and at commercialrates then-charged by the Person selected by LESSOR to perform suchcorrection.  Any direct and reasonableexpenses incurred by LESSOR for such correction will become additional Rentpayable by LESSEE within fifteen (15) days following the submission of a writtenstatement by LESSOR to LESSEE, identifying the items corrected and settingforth the expense of such corrections in reasonable detail.  LESSEE’s obligation to pay such supplementalRent will survive the Termination Date.

 

23.12                                                         **Airport and Navigation Charges**.   LESSEE will ensure that at return of the Aircraft any and all airport,navigation and other charges which give rise or would if unpaid give rise toany lien, right of detention, right of sale or other Security Interest inrelation to the Aircraft, Engine or any Part have been paid and discharged infull and will at LESSOR’s request produce evidence thereof reasonablysatisfactory to LESSOR.

 

23.13                                                         **Return AcceptanceCertificate**.    Upon return of the Aircraft in accordancewith the terms of this Lease, LESSEE will promptly prepare and execute two (2)Return Acceptance Certificates in the form and substance of Exhibit K andLESSOR will countersign and return one such Return Acceptance Certificate toLESSEE.  In addition, LESSEE and LESSORwill execute a Lease Termination for filing with the FAA evidencing terminationof this Lease.

 

23.14                                                         **Indemnities and Insurance**.   The indemnities and insurance requirements set forth in Articles 17and 18, respectively, will apply to Indemnitees and LESSOR’s representativesduring return of the Aircraft, including the ground inspection and acceptanceflight.  With respect to the acceptanceflight, LESSOR’s representatives will receive the same protections as LESSOR onLESSEE’s Aviation and Airline General Third Party Liability Insurance.

 

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23.15                                                         **Civil Reserve Air Fleet**.

 

23.15.1                                                LESSEE may transfer possession of theAircraft to the United States of America or any instrumentality or agencythereof as part of the Civil Reserve Air Fleet Program authorized under 10U.S.C. ‘ 9511 et seq. (or any substantially similar program) (“**CRAF Program**”) for a period whichincludes (collectively, the “**CRAF ProgramRequisition Period**”) (a) the entire period of requisitionunder the CRAF Program and (b) an additional six (6) months after theexpiration of the requisition under the CRAF Program.  If the CRAF Program Requisition Periodextends beyond the Expiration Date provided by this Lease, then the Lease willbe deemed to continue until the end of the CRAF Program Requisition Period at amonthly rental rate equal to the monthly rental rate in effect at the end ofthe Lease Term and the Expiration Date will be deemed to be the end of the CRAFProgram Requisition Period.  If theAircraft is requisitioned under the CRAF Program for a period which extendsbeyond the Lease Term, then LESSEE will provide LESSOR with written notice ofthe proposed redelivery at least six (6) months prior to such redelivery dateand LESSEE must return the Aircraft in the condition required byArticle 23 on the redelivery date set forth in such written notice.

 

23.15.2                                                LESSEE will promptly notify LESSOR in writingin the event of the requisition for use of the Aircraft under CRAF activationby the U.S. Government.  All of LESSEE’sobligations under this Lease will continue to the same extent as if suchrequisition had not occurred.

 

23.15.3                                                Any provisions of this Lease to the contrarynotwithstanding, if there is a requisition for use of the Aircraft pursuant to theCRAF Program and/or CRAF activation, LESSOR agrees that LESSEE’s insurancesdescribed in Exhibit E may be supplemented or replaced by insurancesprovided under Title XIII of the Act, and/or U.S. Government indemnification(which Title XIII insurances and indemnification will be, as to the Aircraft,in an amount not less than the Agreed Value and, as to all other insurances, inamounts not less than those established in Exhibit C); provided, however,that LESSEE will remain responsible for full compliance with all the provisionsof this Lease, including Articles 17 and 19, to the extent Title XIIIand/or the U.S. Government indemnification do not satisfy LESSEE’s obligationsunder this Lease.

 

23.15.4                                                If there is a requisition for use of theAircraft pursuant to the CRAF Program and/or CRAF activation, there will be nolimitation on the geographic area in which the Aircraft may be operated so longas, taken as a whole, LESSEE’s insurance, the Title XIII insurance and/or theindemnification provided by the U.S. Government

 

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fully cover (without anygeographic exclusions) LESSEE’s Exhibit E insurance requirements.

 

23.15.5                                                If an Event of Default occurs under thisLease and LESSOR elects to pursue its remedies under Article 25.3.5 toterminate this Lease and repossess the Aircraft, LESSOR will so notify the U.S.Government by sending a written communication with a copy to LESSEE as follows:

 

Headquarters Air MobilityCommand

AMC Contracting Office CXOKA

Scott Air Force Base,Illinois 62225-5007

 

or such other location asmay be directed from time to time during the Lease Term.

 

23.15.6                                                So long as no Event of Default has occurredand is continuing, all payments received by LESSOR or LESSEE from suchGovernment Entity in connection with the requisition of the Aircraft under theCRAF Program (except payments on account of a Total Loss of the Aircraft) willbe paid over to or retained by LESSEE. If an Event of Default has occurred and is continuing, all payments receivedby LESSEE or LESSOR from such Government Entity in connection with therequisition of the Aircraft under the CRAF Program may be used by LESSOR tosatisfy any obligations owing by LESSEE.

 

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**ARTICLE 24****                          ****ASSIGNMENT**

** **

24.1                                                               **No Assignment by LESSEE**.   EXCEPT AS EXPRESSLY PERMITTED BY ARTICLE 11 OR ARTICLE 20.2.3,NO ASSIGNMENT, NOVATION, TRANSFER, MORTGAGE OR OTHER CHARGE MAY BE MADE BYLESSEE OF ANY OF ITS RIGHTS WITH RESPECT TO THE AIRCRAFT, ENGINE OR PART ORTHIS LEASE.

 

24.2                                                               **Sale or Assignment by LESSOR**.

 

24.2.1                                                      Subject to LESSEE’s rights pursuant to thisLease, LESSOR may at any time and without LESSEE’s consent sell, assign ortransfer its rights, interest and obligations hereunder, under any other OperativeDocument, or with respect to the Aircraft to a Permitted Transferee; provided,however, that no such transfer shall (a) cause any added expenses, costs orliabilities to LESSEE, (b) materially increase LESSEE’s obligations hereunder(including but not limited to LESSEE’s liabilities or obligations pursuant toArticles 16 or 17), or (c) materially adversely affect LESSEE’s rightsunder this Lease.  For a period of two(2) years after such sale or assignment and at LESSEE’s cost, LESSEE willcontinue to name LESSOR as an additional insured under the Aviation and AirlineGeneral Third Party Liability Insurance specified in Exhibit E.

 

24.2.2                                                      The term “**LESSOR**” as used in this Lease means the lessor of theAircraft at the time in question.  In theevent of the sale of the Aircraft and transfer of LESSOR’s rights andobligations under this Lease to a Permitted Transferee, such PermittedTransferee will become “LESSOR” of the Aircraft under this Lease and thetransferring party (the prior “LESSOR”) will be relieved of all liability toLESSEE under this Lease for obligations arising on and after the date theAircraft is sold.  LESSEE willacknowledge and accept the Permitted Transferee as the new “LESSOR” under thisLease and will look solely to the Permitted Transferee for the performance ofall LESSOR obligations and covenants under this Lease arising on and after theAircraft sale date.

 

24.3                                                               **LESSOR’s Lender**.   Subject to LESSEE’s rights pursuant to this Lease, LESSOR may at anytime and without LESSEE’s consent grant security interests over the Aircraftand assign the benefit of this Lease to a lender (“**LESSOR’s Lender**”) as security forLESSOR’s obligations to LESSOR’s Lender.

 

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24.4                                                               **LESSEE Cooperation**.    Onrequest by LESSOR, LESSEE will execute all such documents (such as a consent toa lease assignment agreement) as LESSOR may reasonably require to confirmLESSEE’s obligations under this Lease and obtain LESSEE’s acknowledgment thatLESSOR is not in breach of the Lease. LESSEE will provide all other reasonable assistance and cooperation toLESSOR in connection with any such sale or assignment or the perfection andmaintenance of any such security interest, including, at LESSOR’s cost, makingall necessary filings and registrations in the State of Registration andproviding all opinions of counsel with respect to matters reasonably requestedby LESSOR.  LESSOR will reimburse LESSEEfor its reasonable out-of-pocket costs and expenses (including reasonable legalfees) in reviewing documents required by LESSOR and cooperating with a transferpursuant to this Article 24.

 

24.5                                                               **Protections**.

 

24.5.1                                                      LESSOR will obtain for the benefit of LESSEEa written acknowledgment from any Permitted Transferee or LESSOR’s Lender that,so long as no Event of Default has occurred and is continuing hereunder,neither such Person nor any Person claiming by, through or under such Personwill not interfere with LESSEE’s quiet, peaceful use and enjoyment of theAircraft.

 

24.5.2                                                      Wherever the term “LESSOR” is used in thisLease in relation to any of the provisions relating to disclaimer, title andregistration, indemnity and insurance contained in Articles 8, 14, 17 and18, respectively, or with respect to Article 20.2.6, the term “LESSOR”will be deemed to include any Permitted Transferee and its lenders, ifapplicable.  For avoidance of doubt, inthe event of LESSOR’s sale or financing of the Aircraft, the disclaimer andindemnity provisions contained in Articles 8 and 17 will continue to beapplicable after the sale or assignment to International Lease FinanceCorporation, as well as being applicable to any Permitted Transferee and itslenders.

 

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**ARTICLE 25****                          ****DEFAULT OF LESSEE**

** **

25.1                                                               **LESSEE Notice to LESSOR**.   LESSEE will promptly notify LESSOR if LESSEE becomes aware of theoccurrence of any Default.

 

25.2                                                               **Events of Default**.   [SEE PARAGRAPH 19 OF EXHIBIT C]

 

25.3                                                               **LESSOR’s General Rights**.   Upon the occurrence and continuance of any Event of Default, LESSOR maydo all or any of the following at its option (in addition to such other rightsand remedies which LESSOR may have by statute or otherwise but subject to anyrequirements of applicable Law):

 

25.3.1                                                      terminate this Lease by giving written noticeto LESSEE;

 

25.3.2                                                      require that LESSEE immediately move theAircraft to an airport or other location designated by LESSOR;

 

25.3.3                                                      for LESSEE’s account, do anything that mayreasonably be required to cure any default and recover from LESSEE allreasonable costs, including legal fees and expenses incurred in doing so andDefault Interest;

 

25.3.4                                                      proceed as appropriate to enforce performanceof this Lease and to recover any damages for the breach hereof, including theamounts specified in Article 25.5;

 

25.3.5                                                      terminate this Lease by taking possession ofthe Aircraft or by serving notice requiring LESSEE to return the Aircraft toLESSOR at the location specified by LESSOR. If LESSOR takes possession of the Aircraft, it may enter upon LESSEE’spremises where the Aircraft is located as permitted by applicable law.  Upon repossession of the Aircraft, LESSORwill then be entitled to sell, lease or otherwise deal with the Aircraft as ifthis Lease had never been made.  LESSORwill be entitled to the full benefit of its bargain with LESSEE as permitted byapplicable Law; or

 

25.3.6                                                      apply all or any portion of the SecurityDeposit and any other security deposits held by LESSOR pursuant to any otheragreements between LESSOR and LESSEE to any amounts due.

 

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25.4                                                               **Deregistration and Export ofAircraft**.    If an Event of Default has occurred and iscontinuing, LESSOR may take all steps necessary to deregister the Aircraft inand export the Aircraft from the State of Registration.

 

25.5                                                               **LESSEE Liability for Damages**.   Upon the occurrence and during the continuance of an Event of Default,in addition to all other remedies available at law or in equity, LESSOR has theright to recover from LESSEE and LESSEE will pay LESSOR within two (2) BusinessDays after LESSOR’s written demand, all of the following:

 

(a)                                              all amounts which are then due and unpaidhereunder and which become due prior to the earlier of LESSOR’s recovery ofpossession of the Aircraft or LESSEE making an effective tender thereof;

 

(b)                                             subject to LESSOR’s obligations at Law tomitigate its damages, any losses suffered by LESSOR because of LESSOR’sinability to place the Aircraft on lease with another lessee or to otherwiseutilize the Aircraft on financial terms as favorable to LESSOR as the termshereof or, if LESSOR elects to dispose of the Aircraft, the funds arising froma sale or other disposition of the Aircraft are not as profitable to LESSOR asleasing the Aircraft in accordance with the terms hereof would have been (andLESSOR will be entitled to accelerate any and all Rent which would have beendue from the date of LESSOR’s recovery or repossession of the Aircraft throughthe Expiration Date);

 

(c)                                              all costs associated with LESSOR’s exerciseof its remedies hereunder, including but not limited to repossession costs,legal fees, Aircraft storage costs and Aircraft re-lease or sale costs;

 

(d)                                             any amount of principal, interest, fees orother sums paid or payable on account of funds borrowed in order to carry anyunpaid amount;

 

(e)                                              any loss, premium, penalty or expense whichmay be incurred in repaying funds raised to finance the Aircraft or inunwinding any financial instrument relating in whole or in part to LESSOR’sfinancing of the Aircraft;

 

(f)                                                direct expenses incurred by LESSOR to correctnon-conformance of the Aircraft with return conditions in accordance withArticle 23.11.4; and

 

(g)                                             an amount sufficient to fully compensateLESSOR for any loss of or damage to the Aircraft caused by LESSEE’s default.

 

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25.6                                                               **Waiver of Default**.    Bywritten notice to LESSEE, LESSOR may at its election waive any Default or Eventof Default and its consequences and rescind and annul any prior notice of terminationof this Lease.  The respective rights ofthe parties will then be as they would have been had no Default or Event ofDefault occurred and no such notice been given.

 

25.7                                                               **Present Value of Payments**.    Incalculating LESSOR’s damages hereunder, upon an Event of Default all Rent andother amounts which would have been due hereunder during the Lease Term if anEvent of Default had not occurred will be calculated on a present value basisusing a discounting rate of six percent (6%) per annum discounted to theearlier of the date on which LESSOR obtains possession of the Aircraft orLESSEE makes an effective tender thereof.

 

25.8                                                               **Use of “Termination Date**.   For avoidance of doubt, it is agreed that if this Lease terminates andthe Aircraft is repossessed by LESSOR due to an Event of Default, then,notwithstanding the use of the term “Termination Date” in this Lease, theperiod of the Lease Term and the “Expiration Date” will be utilized incalculating the damages to which LESSOR is entitled pursuant to Article 25.5.  For example, it is agreed and understood thatLESSOR is entitled to receive from LESSEE the Rent and the benefit of LESSEE’sinsurance and maintenance of the Aircraft until expiration of the Lease Term.

 

25.9                                                               **LESSEE’s Remedies**.   Except as otherwise set forth in the Operative Documents, upon a breachby LESSOR of any of the terms and conditions of this Lease, LESSEE shall haveall rights available at law or in equity.

 

25.10                                                         **Waiver of ConsequentialDamages**.    LESSEE and LESSOR each agree that it shallnot be entitled to recover, and hereby disclaims and waives any right that itmay otherwise have to recover, any special, indirect, incidental orconsequential damages as a result of any breach or alleged breach by the otherparty of any of the agreements, representations or warranties contained in thisLease or the other Operative Documents; provided, however, that nothing hereinshall be deemed to disclaim or waive any of LESSOR’s remedies expressly setforth in Article 25.3.

 

**ARTICLE 26****                          ****NOTICES**

** **

26.1                                                               **Manner of Sending Notices**.   Any notice, request or information required or permissible under thisLease will be in writing and in English. Notices will be delivered in person or sent by fax, certified letterwith return receipt requested, or by expedited delivery addressed to theparties as set forth in Article 26.2. In the case of a fax, notice will be deemed received upon actual receipt(and the date of actual receipt will be deemed to be the date set forth

 

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on the confirmation ofreceipt produced by the sender’s fax machine immediately after the fax issent).  In the case of a certifiedletter, notice will be deemed received on the date indicated on the returnreceipt.  In the case of a notice sent byexpedited delivery, notice will be deemed received on the date of delivery setforth in the records of the Person which accomplished the delivery.  If any notice is sent by more than one of theabove listed methods, notice will be deemed received on the earliest possibledate in accordance with the above provisions.

 

26.2                                                               **Notice Information**.   Notices will be sent:

 
| If to LESSOR: | INTERNATIONAL LEASE  FINANCE CORPORATION  [Until January 31, 2004]  1999 Avenue of the Stars, 39th Floor  Los Angeles, California 90067-6049  U.S.A.  [On and after February 1, 2004]  10250 Constellation Boulevard, 34th Floor  Los Angeles, California 90067-6234  U.S.A. |                              |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------|
|          |                                                                                                                                                                                                                                                                         |                              |   |
|          | Attention:                                                                                                                                                                                                                                                                   | Legal Department                  |   |
|          |                                                                                                                                                                                                                                                                         |                              |   |
|          | Fax:                                                                                                                                                                                                                                                                         | [SEE PARAGRAPH 20 OF  EXHIBIT C.] |   |
|          | Telephone:                                                                                                                                                                                                                                                                   | [SEE PARAGRAPH 20 OF  EXHIBIT C.] |   |
|          |                                                                                                                                                                                                                                                                         |                              |   |
| If to LESSEE: | FRONTIER AIRLINES, INC.  Frontier Center One  7001 Tower Road  Denver, Colorado 80249                                                                                                                                                                                        |                              |
|          |                                                                                                                                                                                                                                                                         |                              |   |
|          | Attention:                                                                                                                                                                                                                                                                   | General Counsel                   |   |
|          |                                                                                                                                                                                                                                                                         |                              |   |
|          | Fax:                                                                                                                                                                                                                                                                         | [SEE PARAGRAPH 20 OF  EXHIBIT C.] |   |
|          | Telephone:                                                                                                                                                                                                                                                                   | [SEE PARAGRAPH 20 OF  EXHIBIT C.] |   |

 

or to such other places andnumbers as either party directs in writing to the other party.

 

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**ARTICLE 27****                          ****GOVERNING LAW ANDJURISDICTION**

** **

27.1                                                               **California Law**.   This Lease is being delivered in the State of California and will in allrespects be governed by and construed in accordance with the Laws of the Stateof California (notwithstanding the conflict Laws of the State of California).

 

27.2                                                               **Non-Exclusive Jurisdictionin California**.    As permitted by Section 410.40 of theCalifornia Code of Civil Procedure, the parties hereby irrevocably submit tothe non-exclusive jurisdiction of the Federal District Court for the CentralDistrict of California and the State of California Superior or Municipal Courtin Los Angeles, California.  Nothingherein will prevent either party from bringing suit in any other appropriatejurisdiction.

 

27.3                                                               **Service of Process**.   The parties hereby consent to the service of process (a) out of anyof the courts referred to above, (b) by personal service in accordancewith the California Code of Civil Procedure, or (c) in accordance with theHague Convention, if applicable.

 

27.4                                                               **Prevailing Party in Dispute**.    Ifany legal action or other proceeding is brought in connection with or arisesout of any provisions in this Lease, the prevailing party will be entitled torecover reasonable attorneys’ fees and other actual and reasonable costsincurred in such action or proceedings. The prevailing party will also, to the extent permissible by Law, beentitled to receive pre- and post-judgment Default Interest.

 

27.5                                                               **Waiver**.   LESSEE AND LESSOR HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY.  LESSEE AND LESSOR HEREBY IRREVOCABLY WAIVEANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OFANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS LEASE BROUGHTIN ANY OF THE COURTS REFERRED TO IN ARTICLE 27.2, AND HEREBY FURTHERIRREVOCABLY WAIVE ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT INANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

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**ARTICLE 28****                          ****MISCELLANEOUS**

** **

28.1                                                               **[Redacted]**.   [SEE PARAGRAPH 21 OF EXHIBIT C.]

 

28.2                                                               **Press Releases**.   The parties will give copies to one another, in advance if possible, ofall news, articles and other releases provided to the public media regardingthis Lease or the Aircraft.

 

28.3                                                               **LESSOR Performance forLESSEE**.    The exercise by LESSOR of its remedy ofperforming a LESSEE obligation hereunder is not a waiver of and will notrelieve LESSEE from the performance of such obligation at any subsequent timeor from the performance of any of its other obligations hereunder.

 

28.4                                                               **LESSOR’s Payment Obligations**.   Any obligation of LESSOR under this Lease to pay or release any amountto LESSEE is conditioned upon and will be delayed until (a) all amountsthen due and payable by LESSEE to LESSOR under this Lease or under any otheragreement between LESSOR and LESSEE having been paid in full and (b) nopayment or other material Default having occurred and continuing hereunder atthe time such payment or release of payment is payable to LESSEE.

 

28.5                                                               **Application of Payments**.   Any amounts paid or recovered in respect of LESSEE liabilities hereundermay be applied to Rent, Default Interest, fees or any other amount duehereunder in such proportions, order and manner as LESSOR determines.

 

28.6                                                               **Usury Laws**.   The parties intend to contract in strict compliance with the usury Lawsof the State of California and, to the extent applicable, the U.S.  Notwithstanding anything to the contrary inthe Operative Documents, LESSEE will not be obligated to pay Default Interestor other interest in excess of the maximum non-usurious interest rate, as ineffect from time to time, which may by applicable Law be charged, contractedfor, reserved, received or collected by LESSOR in connection with the OperativeDocuments.  During any period of time inwhich the then-applicable highest lawful rate is lower than the DefaultInterest rate, Default Interest will accrue and be payable at such highestlawful rate; however, if at later times such highest lawful rate is greaterthan the Default Interest rate, then LESSEE will pay Default Interest at thehighest lawful rate until the Default Interest which is paid by LESSEE equalsthe amount of interest that would have been payable in accordance with theinterest rate set forth in Article 5.7.

 

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28.7                                                               **Delegation by LESSOR**.   LESSOR may delegate to any Person(s) all or any of the rights, powers ordiscretion vested in it by this Lease and any such delegation may be made uponsuch terms and conditions as LESSOR in its absolute discretion thinks fit,provided that no such delegation shall relieve LESSOR of any of its obligationshereunder.

 

28.8                                                               **Rights of Parties**.   The rights of the parties hereunder are cumulative, not exclusive, maybe exercised as often as each party considers appropriate and are in additionto its rights under general Law.  Therights of one party against the other party are not capable of being waived oramended except by an express waiver or amendment in writing.  Any failure to exercise or any delay inexercising any of such rights will not operate as a waiver or amendment of thator any other such right any defective or partial exercise of any such rightswill not preclude any other or further exercise of that or any other such rightand no act or course of conduct or negotiation on a party’s part or on itsbehalf will in any way preclude such party from exercising any such right orconstitute a suspension or any amendment of any such right.

 

28.9                                                               **Further Assurances**.   Each party agrees from time to time to do and perform such other andfurther acts and execute and deliver any and all such other instruments as maybe required by Law or reasonably requested by the other party to establish,maintain or protect the rights and remedies of the requesting party or to carryout and effect the intent and purpose of this Lease.

 

28.10                                                         **Use of Word “including**.   The term “**including**”is used herein without limitation.

 

28.11                                                         **Headings**.   All article and paragraph headings and captions are purely forconvenience and will not affect the interpretation of this Lease.  Any reference to a specific article,paragraph or section will be interpreted as a reference to such article,paragraph or section of this Lease.

 

28.12                                                         **Invalidity of Any Provision**.    Ifany of the provisions of this Lease become invalid, illegal or unenforceable inany respect under any Law, the validity, legality and enforceability of theremaining provisions will not in any way be affected or impaired.

 

28.13                                                         **Time Is of the Essence**.   Time is of the essence in the performance of all obligations of theparties under this Lease and, consequently, all time limitations set forth inthe provisions of this Lease will be strictly observed.

 

28.14                                                         **Amendments in Writing**.   The provisions of this Lease may only be amended or modified by awriting executed by LESSOR and LESSEE.

 

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28.15                                                         **Counterparts**.   This Lease may be executed in any number of identical counterparts, eachof which will be deemed to be an original, and all of which together will bedeemed to be one and the same instrument when each party has signed anddelivered one such counterpart to the other party.

 

28.16                                                         **Delivery of Documents by Fax**.   Delivery of an executed counterpart of this Lease or of any otherdocuments in connection with this Lease by fax will be deemed as effective asdelivery of an originally executed counterpart. Any party delivering an executed counterpart of this Lease or otherdocument by fax will also deliver an originally executed counterpart, but thefailure of any party to deliver an originally executed counterpart of thisLease or such other document will not affect the validity or effectiveness ofthis Lease or such other document.

 

28.17                                                         **Entire Agreement**.   The Operative Documents constitute the entire agreement between theparties in relation to the leasing of the Aircraft by LESSOR to LESSEE andsupersede all previous proposals, agreements and other written and oralcommunications in relation hereto.  Theparties acknowledge that there have been no representations, warranties,promises, guarantees or agreements, express or implied, except as set forthherein.

 

28.18                                                         **Expenses**.   Each party shall be responsible for its own expenses in connection withthe drafting, negotiation, execution and delivery of this Lease and the otherOperative Documents.

 

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IN WITNESS WHEREOF, LESSEEand LESSOR have caused this Lease to be executed by their respective officersas of December 5, 2003.

 
| INTERNATIONAL LEASE  FINANCE  CORPORATION | FRONTIER AIRLINES, INC. |
|-------------------------------------------|-------------------------|
|                                      |                    |
|                                      |                    |
|                                      |                    |   |   |   |   |
| By:                                       | By:                     |
|                                      |                    |
| Its:                                      | Its:                    |
|                                           |                         |  |  |  |  |

 

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**EXHIBIT A****                                   ****AIRCRAFT DESCRIPTION**

 
| Aircraft Manufacturer and  Model:   | Airbus A319-111                                                                                                                                                                     |
|-------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                |                                                                                                                                                                                |
| Specification:                      | Airframe: Airbus A319,  Standard Specification J 000 01000, Issue 4.0, dated January 1998, as more  fully described in Schedule 1 hereto Engine Manufacturer and Model: CFM56-5B5/P |
|                                |                                                                                                                                                                                |
| Manufacturer’s Serial  Number: | 2198                                                                                                                                                                                |
|                                |                                                                                                                                                                                |
| Registration Mark:                  | N                                                                                                                                                                                   |
|                                |                                                                                                                                                                                |
| Engine Serial Numbers:              | To be identified in the  Estoppel and Acceptance Certificate                                                                                                                        |
|                                |                                                                                                                                                                                |
| Engine Thrust Rating:               | 22,000 pounds                                                                                                                                                                       |

 

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SCHEDULE1 TO EXHIBIT A

 

**AIRLINE : Frontier A319-100**

**MSN 2198,2209 & 2241 and on**

**STANDARDSPECIFICATION :  J 000 01000 , ISSUE :4.0 , DATED : Jan 1998**

 

SCN LISTING:

 
| **RFC**     | ** ** | **SCN OR RMO** | ** ** | **TITLE**                                                                                    | ** ** | **ST** | ** ** |
|-------------|------------|----------------|------------|----------------------------------------------------------------------------------------------|------------|--------|------------|
| ** **  | ** ** | ** **     | ** ** | ** **                                                                                   |       |   |       |
| **ATA**     | ** ** | **02**         | ** ** | **Certification**                                                                            |       |   |       |
| ** **  | ** ** | ** **     | ** ** | ** **                                                                                   |       |   |       |
| 02J001A     |       | 02J1014901S1A  |       | CERTIFICATION OF SEATS IN  ACCORDANCE TO FAA/CAA REQUIREMENTS                                |       | AC     |       |
| 02J002A     |       | 02J4010101S1A  |       | EXTERNAL LIVERY                                                                              |       | AC     |       |
| 02J003A     |       | 02J1211701S2A  |       | AIRCRAFT COMPLIANCE WITH  FAR 121                                                            |       | AC     |       |
| 02J004A     |       | 02J2010117S1A  |       | EMERGENCY EQUIPMENT -  CHANGE BFE INTO SFE (FFT*A)                                           |       | AC     |       |
| 02J005A     |       | 02J1000102S2A  |       | CABIN CONFIGURATION FOR  NON-SMOKING FLIGHTS (ONLY CAM PROGRAMMING)                          |       | AC     |       |
| 02J006A     |       | 02J4016021S1A  |       | EXTERNAL LIVERY - NOSE  LANDING GEAR TOWING ANGLE MARKINGS                                   |       | AC     |       |
| 02J008A     |       | 02J1214001S2A  |       | COMPLIANCE WITH FAR  121.344                                                                 |       | AC     |       |
| 02J009A     |       | 02J4010917S1A  |       | EXTERNAL LIVERY - NEW  PHRASE FOR FRONTIER A318/A319                                         |       | AC     |       |
| 02J1011101A |       | 02J1011101S2A  |       | FAA CERTIFICATION                                                                            |       | AC     |       |
| 02J1012001A |       | 02J1012001S1A  |       | 15 KNOTS TAILWIND  CERTIFICATION AT TAKE-OFF                                                 |       | AC     |       |
| 02J001FY    |       |           |       | LOOSE EQUIPMENT LIST                                                                         |       | AC     |       |
| 02J002FY    |       |           |       | AVIONICS CHANGE INTO BFE                                                                     |       | AC     |       |
|        |       |           |       |                                                                                         |       |   |       |
| **ATA**     | ** ** | **03**         | ** ** | **Weights**                                                                                  |       |   |       |
| ** **  | ** ** | ** **     | ** ** | ** **                                                                                   |       |   |       |
| 03J2022008A |       | 03J2022008S1A  |       | INCREASED MTOW TO 70.0 T  (ASSOCIATED WITH CFM 56-5B5/_P ENGINES)                            |       | AC     |       |
|        |       |           |       |                                                                                         |       |   |       |
| **ATA**     | ** ** | **11**         | ** ** | **Placards  and markings**                                                                   |       |   |       |
| ** **  | ** ** | ** **     | ** ** | ** **                                                                                   |       |   |       |
| 11J001A     |       | 11J3013001S1A  |       | NO SMOKING PLACARDS AT  SEATS AND WINDSCREENS                                                |       | AC     |       |
| 11J002A     |       |           |       | INSTALLATION OF LEASING  PLATES ON ENGINES AND DOOR FRAME                                    |       | AC     |       |
| 11J3011004A |       | 11J3011004S1A  |       | MONOLINGUAL PASSENGER  PLACARDS AND SIGNS - ENGLISH ONLY                                     |       | AC     |       |
| 11J001FY    |       |           |       | ALL IDENTIFICATION PLATES  ON FWD LH UPPER PASSENGER/CREW/SERVICE DOOR FRAME                 |       | AC     |       |
| 11J002FY    |       |           |       | COCKPIT IDENTIFICATION  PLATE ON LAVATORY PARTITION                                          |       | AC     |       |
| 11J003FY    |       |           |       | LESSOR IDENTIFICATION  PLATES ON COCKPIT REAR PARTITION AND ENGINES (SIZE 4” X 6”) |       | AC     |       |

 

87

----

 
| 11J004FY     |       |          |       | ENGINE DANGER AREA DECALS -  CFMI ENGINES                                             |   | AC     |   |
|--------------|------------|---------------|------------|---------------------------------------------------------------------------------------|--------|--------|--------|
| 11J005FY     |       |          |       | ENGINE DANGER AREA DECALS -  FEET AND METRIC DISTANCES                                |   | AC     |   |
| 11J006FY     |       |          |       | EMERGENCY EXIT “PUSH”  MARKING PAINTING IN WHITE                            |   | AC     |   |
| 11J007FY     |       |          |       | OXYGEN SUPPLY SYSTEM LABEL  CHANGE                                                    |   | AC     |   |
| 11J3013601FY |       |          |       | US AND METRIC UNITS FOR  CARGO COMPARTMENT HEIGHT PLACARDS                            |   | AC     |   |
|         |       |          |       |                                                                                  |   |   |   |
| **ATA**      | ** ** | **21**        | ** ** | **Air  conditioning**                                                                 |   |   |   |
| ** **   | ** ** | ** **    | ** ** | ** **                                                                            |   |   |   |
| 21J001A      |       | 21J2710801S1A |       | AVIONICS VENTILATION AIR  FILTER ALTERNATE EQUIPMENT - PALL APME                      |   | AC     |   |
| 21J2821001A  |       | 21J2821001S1A |       | INSTALLATION OF  VENTILATION SYSTEM FOR COMPLETE AFT CARGO HOLD                       |   | AC     |   |
| 21J4320401A  |       | 21J4320401S1A |       | INSTALLATION OF HEATING  SYSTEM FOR COMPLETE AFT CARGO HOLD                           |   | AC     |   |
| 21J7010903A  |       | 21J7010903S1A |       | INSTALLATION OF OZONE  CATALYTIC CONVERTERS - ENGELHARDT                              |   | AC     |   |
|         |       |          |       |                                                                                  |   |   |   |
| **ATA**      | ** ** | **22**        | ** ** | **Auto  flight**                                                                      |   |   |   |
| ** **   | ** ** | ** **    | ** ** | ** **                                                                            |   |   |   |
| 22J7010003A  |       | 22J7010003S1A |       | FM KITS/MCDUS -  SEXTANT/SMITHS ASSOCIATED WITH CFMI ENGINES                          |   | AC     |   |
|         |       |          |       |                                                                                  |   |   |   |
| **ATA**      | ** ** | **23**        | ** ** | **Communications**                                                                    |   |   |   |
| ** **   | ** ** | ** **    | ** ** | ** **                                                                            |   |   |   |
| 23J0013212A  |       | 23J0013212S1A |       | AUTOMATIC PROGRAMMABLE ELT  ASSOCIATED WITH REMOTE CONTROL PANEL IN COCKPIT - SEXTANT |   | AC     |   |
| 23J002A      |       | 23J3600100G1A |       | ENTERTAINMENT SYSTEM                                                                  |   | AC     |   |
| 23J003A      |       | 23J7300100G1A |       | CIDS CHANGES                                                                          |   | AC     |   |
| 23J007A      |       | 23J3611502S1A |       | INSTALLATION OF TV SYSTEM  COMPONENTS IN PASSENGER SEATS - LIVE TV (FFT)              |   | AC     |   |
| 23J1213002A  |       | 23J1213002S1A |       | VHF DATA RADIO (VDR)  ALTERNATE EQUIPMENT - ALLIEDSIGNAL                              |   | AC     |   |
| 23J5113616A  |       | 23J5113616S1A |       | BOOMSETS ALTERNATE  EQUIPMENT - TELEX AIRMAN 750                                      |   | AC     |   |
|         |       |          |       |                                                                                  |   |   |   |
| **ATA**      | ** ** | **24**        | ** ** | **Electrical  power**                                                                 |   |   |   |
| ** **   | ** ** | ** **    | ** ** | ** **                                                                            |   |   |   |
| 24J002A      |       | 24J0010001S1A |       | INSTALLATION OF THE ENHANCED  EPGS ON AIRCRAFT FITTED WITH CFMI ENGINES               |   | AC     |   |
| 24J0033501A  |       | 24J0033501S1A |       | INSTALLATION OF ADDITIONAL  ELECTRICAL OUTLETS 115V/60HZ                              |   | AC     |   |
|         |       |          |       |                                                                                  |   |   |   |
| **ATA**      | ** ** | **25**        | ** ** | **Cabin  & cockpit**                                                              |   |   |   |
| ** **   | ** ** | ** **    | ** ** | ** **                                                                            |   |   |   |
| 25J001A      |       | 25J2000100G2A |       | CABIN LAYOUT DEFINITION                                                               |   | AC     |   |
| 25J002A      |       | 25J2350001S1A |       | INTERIOR COLOR SCHEME  DEFINITION                                                     |   | AC     |   |
| 25J003A      |       | 25J6311002S1A |       | ADDITIONAL EVACUATION  ALARM ACTIVATION FROM AFT CABIN ATTENDANT STATION              |   | AC     |   |
| 25J004A      |       | 25J2316102S1A |       | BUMPER PROFILE FOR SLIDE  DECORATED COVER                                             |   | AC     |   |
| 25J005A      |       | 25J6550003S1A |       | CABIN EMERGENCY EQUIPMENT                                                             |   | AC     |   |
| 25J006A      |       | 25J2212805S1A |       | ADDITIONAL BUMPER PROFILE  ON SWIVEL CABIN ATTENDANT SEAT                             |   | AC     |   |

 

88

----

 
| 25J007A     |       | 25J2732101S1A |       | PROVISIONS FOR WALL-MOUNTED  BABY BASSINET (OUTBOARD POSITION)                              |   | AC     |   |
|-------------|------------|---------------|------------|---------------------------------------------------------------------------------------------|--------|--------|--------|
| 25J008A     |       | 25J2614006S1A |       | INSTALLATION OF CRANKED  WINDSCREEN (SFE) LH                                                |   | AC     |   |
| 25J009A     |       | 25J2614007S1A |       | INSTALLATION OF CRANKED  WINDSCREEN (SFE) RH                                                |   | AC     |   |
| 25J010A     |       | 25J2729907S1A |       | PROVISIONS FOR  INSTALLATION OF A WHEELCHAIR AT AFT FACING WALL OF LAV E                    |   | AC     |   |
| 25J012A     |       | 25J6514302S1A |       | INSTALLATION OF MEDICAL  KIT IN COCKPIT - MAJESTIC AEROTECH                                 |   | AC     |   |
| 25J013A     |       | 25J2810111S1A |       | ALTERNATE NTF - LONSEAL  (BFE)                                                              |   | AC     |   |
| 25J015A     |       | 25J2034738S1A |       | PASSENGER COMPARTMENT  RECONFIGURATION FOR FFT*A                                            |   | AC     |   |
| 25J016A     |       | 25J2310214S1A |       | COLOR CHANGE OF LAVATORY  FLOOR PAN AND PELMETS IN EXIT AREA                                |   | AC     |   |
| 25J018A     |       | 25J5013701S1A |       | INSTALLATION OF RUBBER  SEAL PROFILES FOR FLOOR PANELS IN FWD AND AFT CARGO HOLDS           |   | AC     |   |
| 25J019A     |       | 25J2062322S2A |       | REMOVAL OF WHEEL CHAIR  PROVISIONS FROM LAVATORY E                                          |   | AC     |   |
| 25J026A     |       | 25J5018902S1A |       | DECOMPRESSION PANEL  PROTECTION FOR HEAVY BULK USAGE                                        |   | AC     |   |
| 25J027A     |       | 25J2117559S1A |       | PASSENGER SEATS P/N CHANGE  (LIFE TV)                                                       |   | AC     |   |
| 25J030A     |       | 25J3510307S1A |       | INSTALLATION OF COFFEE  MAKER - CSI                                                         |   | AC     |   |
| 25J1120801A |       | 25J1120801S1A |       | INSTALLATION OF FOURTH OCCUPANT  SEAT IN COCKPIT - SOCEA                                    |   | AC     |   |
| 25J5018401A |       | 25J5018401S1A |       | REINFORCED FLOOR PANELS IN  FWD & AFT CARGO HOLD ASSOCIATED WITH STD BULK CONFIGURATION |   | AC     |   |
| 25J001FY    |       |          |       | ADDITIONAL BUMPER STRIPS  ON C/A SEATS AT FORWARD AND AFT PASSENGER/CREW/SERVICE DOOR       |   | AC     |   |
| 25J002FY    |       |          |       | FROM DISPERSION-ADHESIVE  TO DOUBLE-SIDED ADHESIVE TAPE                                     |   | AC     |   |
| 25J004FY    |       |          |       | DISK STOWAGE RELOCATION IN  COCKPIT COAT STOWAGE                                            |   | AC     |   |
|        |       |          |       |                                                                                        |   |   |   |
| **ATA**     | ** ** | **28**        | ** ** | **Fuel  System**                                                                            |   |   |   |
| ** **  | ** ** | ** **    | ** ** | ** **                                                                                  |   |   |   |
| 28J2513001A |       | 28J2513001S1A |       | RELOCATION OF THE  REFUELING PANEL TO THE RIGHT WING ADJACENT TO THE REFUEL COUPLING        |   | AC     |   |
|        |       |          |       |                                                                                        |   |   |   |
| **ATA**     | ** ** | **31**        | ** ** | **Indicating/Recording**                                                                    |   |   |   |
| ** **  | ** ** | ** **    | ** ** | ** **                                                                                  |   |   |   |
| 31J0010701A |       | 31J0010701S1A |       | DEFINTION OF UNITS - USE  OF US UNITS IN PLACE OF METRIC UNITS                              |   | AC     |   |
| 31J3320014A |       | 31J3320014S1A |       | SSFDR ALTERNATE EQUIPMENT -  ALLIEDSIGNAL (256 W/S)                                         |   | AC     |   |
| 31J5210202A |       | 31J5210202S1A |       | ECAM OEB REMINDER FUNCTION  ACTIVATION                                                      |   | AC     |   |

 

89

----

 
| **ATA**     | ** ** | **32**        | ** ** | **Landing  gear**                                                                                |   |   |   |
|-------------|------------|---------------|------------|--------------------------------------------------------------------------------------------------|--------|--------|--------|
| ** **  | ** ** | ** **    | ** ** | ** **                                                                                       |   |   |   |
| 32J001A     |       | 32J1010501S1A |       | SMALL BORE INFLATION  VALVES WITH INDICATOR ON NLG & MLG BF GOODRICH WHEELS                  |   | AC     |   |
| 32J4011315A |       | 32J4011315S1A |       | WHEELS AND BRAKES  ALTERNATE EQUIPMENT (TYPE SEPCARB III) - BF GOODRICH                          |   | AC     |   |
|        |       |          |       |                                                                                             |   |   |   |
| **ATA**     | ** ** | **33**        | ** ** | **Lights**                                                                                       |   |   |   |
| ** **  | ** ** | ** **    | ** ** | ** **                                                                                       |   |   |   |
| 33J001A     |       | 33J2616601S1A |       | EVACUATION ALARM GUARDED  SWITCHES (FWD AND AFT)                                                 |   | AC     |   |
| 33J5010011A |       | 33J5010011S1A |       | SEAT-MOUNTED EEPMS - BRUCE  WITH TWO BULBS PER LAMP MODULE                                       |   | AC     |   |
|        |       |          |       |                                                                                             |   |   |   |
| **ATA**     | ** ** | **34**        | ** ** | **Navigation**                                                                                   |   |   |   |
| ** **  | ** ** | ** **    | ** ** | ** **                                                                                       |   |   |   |
| 34J001A     |       | 34J2020202S1A |       | INSTALLATION OF ISIS -  SEXTANT                                                                  |   | AC     |   |
| 34J003A     |       | 34J4211009S1A |       | RADIO ALTITUDE AUTOMATIC  CALL-OUT CHANGES FOR FFT*A                                             |   | AC     |   |
| 34J004A     |       | 34J2020302S1A |       | ISIS OPTIONAL FUNCTION -  BARO SETTING IN INHG                                                   |   | AC     |   |
| 34J1011701A |       | 34J1011701S1A |       | ADIRS 4MCU ALTERNATE  EQUIPMENT - HONEYWELL                                                      |   | AC     |   |
| 34J2110601A |       | 34J2110601S2A |       | STANDBY ALTIMETER BARO  SETTING - SEXTANT AVIONIQUE                                              |   | AC     |   |
| 34J4120022A |       | 34J4120022S1A |       | SINGLE WEATHER RADAR  SYSTEM (ARINC 708A) ALTERNATE EQUIPMENT - ALLIEDSIGNAL WITH PWS ACTIVATION |   | AC     |   |
| 34J4210109A |       | 34J4210109S1A |       | RADIO ALTIMETERS -  ALLIEDSIGNAL QUANTUM LINE                                                    |   | AC     |   |
| 34J4320002A |       | 34J4320002S1A |       | TCAS BFE SELECTION - TCAS  COMPUTER ALLIEDSIGNAL CHANGE 7/ ATC - ALLIEDSIGNAL                    |   | AC     |   |
| 34J5110109A |       | 34J5110109S1A |       | DME INTERROGATORS -  ALLIEDSIGNAL QUANTUM LINE                                                   |   | AC     |   |
| 34J5311103A |       | 34J5311103S1A |       | ADF RECEIVER ALTERNATE  EQUIPMENT - ALLIEDSIGNAL QUANTUM LINE                                    |   | AC     |   |
| 34J5510203A |       | 34J5510203S1A |       | VOR/MARKER RECEIVERS  ALTERNATE EQUIPMENT - ALLIEDSIGNAL QUANTUM LINE                            |   | AC     |   |
| 34J5831311A |       | 34J5831311S1A |       | MMR ALTERNATE EQUIPMENT  PROVIDING ILS (FM IMMUNITY) AND GPS C1 FUNCTIONS - SEXTANT              |   | AC     |   |
|        |       |          |       |                                                                                             |   |   |   |
| **ATA**     | ** ** | **35**        | ** ** | **Oxygen**                                                                                       |   |   |   |
| ** **  | ** ** | ** **    | ** ** | ** **                                                                                       |   |   |   |
| 35J001A     |       | 35J3110814S1A |       | COCKPIT PBE- ESSEX - PN MR-10049N                                                                |   | AC     |   |
| 35J1120102A |       | 35J1120102S1A |       | COCKPIT OXYGEN CYLINDER  ALTERNATE EQUIPMENT 115 CU.FT (STEEL) - EROS                            |   | AC     |   |
| 35J2001001A |       | 35J2001001S1A |       | INSTALLATION OF 4 OXYGEN  MASKS PER BOX                                                          |   | AC     |   |
|        |       |          |       |                                                                                             |   |   |   |
| **ATA**     | ** ** | **49**        | ** ** | **APU**                                                                                          |   |   |   |
| ** **  | ** ** | ** **    | ** ** | ** **                                                                                       |   |   |   |
| 49J0010504A |       | 49J0010504S1A |       | APU ALTERNATE EQUIPMENT -  ALLIEDSIGNAL (131-9EA!)                                               |   | AC     |   |

 

90

----

 
| **ATA**     | ** ** | **51**        | ** ** | **Structure**                                                                                  |   |   |   |
|-------------|------------|---------------|------------|------------------------------------------------------------------------------------------------|--------|--------|--------|
| ** **  | ** ** | ** **    | ** ** | ** **                                                                                     |   |   |   |
| 51J001A     |       | 51J2230003S1A |       | LOW VOC PAINT SCHEME ON  FUSELAGE, VERTICAL STABILIZER AND NACELLES)- PRC                      |   | AC     |   |
| 51J0xxA     |       | 51J2226121S1A |       | LARGE DECORATIVE ADHESIVE  FILM (DECALS BFE) ON VERTICAL STABILIZER - FINELINE FFT A319-921-XX |   | AC     |   |
| 51J2225001A |       | 51J2225001S1A |       | LARGE DECORATIVE ADHESIVE  FILM (BFE)                                                          |   | AC     |   |
| 51J001FY    |       |          |       | APPLICATION OF WATER REPELLENT  FLUID ON LH & RH WING STRUT WELLS.                         |   | AC     |   |
|        |       |          |       |                                                                                           |   |   |   |
| **ATA**     | ** ** | **52**        | ** ** | **Doors**                                                                                      |   |   |   |
| ** **  | ** ** | ** **    | ** ** | ** **                                                                                     |   |   |   |
| MSCN        |       |          |       | REINFORCED COCKPIT DOOR                                                                        |   | AC     |   |
|        |       |          |       |                                                                                           |   |   |   |
| **ATA**     | ** ** | **53**        | ** ** | **Fuselage**                                                                                   |   |   |   |
| ** **  | ** ** | ** **    | ** ** | ** **                                                                                     |   |   |   |
| 53J001FY    |       |          |       | BELLY FAIRING PANELS - ADD  EXTRUSION                                                          |   | AC     |   |
|        |       |          |       |                                                                                           |   |   |   |
| **ATA**     | ** ** | **55**        | ** ** | **Stabilizers**                                                                                |   |   |   |
| ** **  | ** ** | ** **    | ** ** | ** **                                                                                     |   |   |   |
| 55J001A     |       | 55J3010101S1A |       | VERTICAL STABILIZERS  LEADING EDGE EROSION PROTECTION - STAINLESS STEEL                        |   | AC     |   |
|        |       |          |       |                                                                                           |   |   |   |
| **ATA**     | ** ** | **57**        | ** ** | **Wings**                                                                                      |   |   |   |
| ** **  | ** ** | ** **    | ** ** | ** **                                                                                     |   |   |   |
| 57J001FY    |       |          |       | WING LEADING EDGE ACCESS  PANELS - REMOVAL OF SEALANT                                          |   | AC     |   |
|        |       |          |       |                                                                                           |   |   |   |
| **ATA**     | ** ** | **72**        | ** ** | **Engines**                                                                                    |   |   |   |
| ** **  | ** ** | ** **    | ** ** | ** **                                                                                     |   |   |   |
| 72J0011211A |       | 72J0011211S1A |       | CFMI ENGINES ALTERNATE  EQUIPMENT - CFM56-5B5/P (SAC) ON A319-100 ( 22 000 LBF NOMINAL THRUST) |   | AC     |   |

 

91

----

 

**MSCNLISTING*:**

 

----

[*NOTE:  The following is a list of the MSCN’s that,to the best of LESSOR’s information as of the date of execution of this Lease,Manufacturer intends to incorporate into the Aircraft.  The actual MSCN’s incorporated into theAircraft may vary as a result of decisions made by the Manufacturer during themanufacturing process, provided that such decisions are consistent with thespecification and SCN’s described above.]

 
| **MSCN  reference** | ** ** | **MSCN title**                                                                                        | ** ** | **MSCN  status** | ** ** | **Applicability** | ** ** | **MOD/MP**  | ** ** |
|---------------------|------------|-------------------------------------------------------------------------------------------------------|------------|------------------|------------|-------------------|------------|-------------|------------|
| I2L22J8110104M1FY   |       | Auto flight - Flight  Control Unit (FCU) - Introduce new hardware standard with revised power  supply |       | Accepted         |       | 2198, 2209, 2236  |       | 32412       |       |
| I2L23J5112501M1FY   |       | Communications - Audio  management - Introduce ACP with new front face design                         |       | Accepted         |       | 2198, 2209, 2237  |       | 32526       |       |
| I2L23J5112701M1FY   |       | Communications - Audio  management - Introduce new standard of Audio Management Unit (AMU)            |       | Accepted         |       | 2198, 2209, 2238  |       | 31296       |       |
| I2L24J2200003M1FY   |       | Electrical power - AC main  generation - Introduce software standard 5.1 GCU                          |       | Accepted         |       | 2198, 2209, 2239  |       | 32875       |       |
| I2L24J2300005M1FY   |       | Electrical power - AC  auxiliary generation - Introduce new standard of APU generator                 |       | Accepted         |       | 2198, 2209, 2240  |       | 32614/P7874 |       |
| I2L25J1000302M1FY   |       | Equipment/Furnishings -  Cockpit - Relocate floppy disk stowage from coat stowage to side consoles    |       | REJECTED         |       | N/A               |       | 31863       |       |
| I2L25J6210004M1FY   |       | Equipment/Furnishings -  Escape facilities - Introduce a new slide with inflation hose retainer       |       | Accepted         |       | 2198, 2209, 2241  |       | 33429       |       |
| I2L27J2601005M1FY   |       | Flight Controls - Yaw  damper actuation - Introduce new standard of yaw damper                        |       | Accepted         |       | 2198, 2209, 2242  |       | 33293       |       |
| I2L28J4210001M1FY   |       | Fuel - Quantity indicating  - Introduce new standard of Fuel Quatity Indication Computer (FQIC)       |       | Accepted         |       | 2198, 2209, 2243  |       | 32517       |       |
| I2L30J4200101M1FY   |       | Ice and rain protection -  Windshield anti-ice and defogging - Introduce new standard of WHC          |       | Accepted         |       | 2198, 2209, 2244  |       | 32995       |       |
| I2L32J1100101M1FY   |       | Landing gear - Main gear -  Introduce new standard with serial numbers on structural elements         |       | Accepted         |       | 2198, 2209, 2245  |       | 33091       |       |
| I2L32J2110202M1FY   |       | Landing gear - Nose gear -  Introduce new design                                                      |       | Accepted         |       | 2198, 2209, 2246  |       | 28919       |       |

 

92

----

 
| I2L32J4210504M1FY |   | Landing gear - Normal  braking - Introduce L4.5 standard of BSCU                                       |   | Accepted |   | 2198, 2209, 2247 |   | 33376       |   |
|-------------------|--------|--------------------------------------------------------------------------------------------------------|--------|----------|--------|------------------|--------|-------------|--------|
| I2L34J4200101M1FY |   | Electric and electronic  common installation - Improve sealing of radio altimeter antennas             |   | Accepted |   | 2198, 2209, 2248 |   | 33377/K8537 |   |
| I2L34J4800001M1FY |   | Navigation - Ground  Proximity Warning System (GPWS) - Modify push buttons and warning logic           |   | Accepted |   | 2198, 2209, 2249 |   | 21391       |   |
| I2L34J4812808M1FY |   | Navigation - Enhanced  Ground Proximity Warning System (EGPWS) - Introduce new functions               |   | Accepted |   | 2198, 2209, 2250 |   | 31374       |   |
| I2L34J5710001M1FY |   | Navigation - Radio  magnetic information switching and indicating - Introduce new standard of  DDRMI   |   | Accepted |   | 2198, 2209, 2251 |   | 32414       |   |
| I2L56J1100101M1FY |   | Windows - Fixed windows -  Introduce new standard of windshield                                        |   | Accepted |   | 2198, 2209, 2252 |   | 32876       |   |
| I2L73J2200201M1FY |   | Engine fuel and control -  FADEC system - Introduce 5BL standard Electronic Control Unit (ECU)         |   | Accepted |   | 2198, 2209, 2253 |   | 33239       |   |
| I2L20J4500100M1FY |   | Standard practices -  Direct connection components - Introduce LED lighted pushbutton elect.  switches |   | Accepted |   | 2198, 2209, 2254 |   | 31608       |   |
| I2L21J2600100M1FY |   | Air conditioning -  Avionics equipment ventilation - Introduce -V05 standard of AEVC                   |   | Accepted |   | 2198, 2209, 2255 |   | 31678       |   |
| I2L21J3090400M1FY |   | Air conditioning -  Pressurization control - Introduce modified cabin pressure controller PN  20791    |   | Accepted |   | 2198, 2209, 2256 |   | 26229       |   |
| I2L21J5300100M1FY |   | Air conditioning system -  Pack cooling air control - Introduce modified air conditioning pack         |   | Accepted |   | 2198, 2209, 2257 |   | 28412       |   |
| I2L21J5300200M1FY |   | Air conditioning - Pack  control and indicating - Introduce new standard of air conditioning pack      |   | Accepted |   | 2198, 2209, 2258 |   | 31709       |   |
| I2L21J6100100M1FY |   | Air conditioning - Pack  temperature control - Introduce modified pack temperature control             |   | Accepted |   | 2198, 2209, 2259 |   | 28488       |   |
| I2L22J8000100M1FY |   | Autoflight - FMGC - For  A319/A320/A321 with CFM engines (FM version FA8 and FG version C7)            |   | Accepted |   | 2198, 2209, 2260 |   | 26968       |   |
| I2L22J8100300M1FY |   | Auto flight - Flight  Control Unit - Introduce FCU EM2 STD 2                                           |   | Accepted |   | 2198, 2209, 2261 |   | 30357       |   |
| I2L22J8200100M1FY |   | Auto flight-MCDU-Introduce  improved HONEYWELL MCDU resistant to blanking (A320 specific keyboard)     |   | Accepted |   | 2198, 2209, 2262 |   | 28829       |   |
| I2L22J8300200M1FY |   | Autoflight - FMGC -  Install FMGC PN B546CAM0103 (CFMI)                                                |   | Accepted |   | 2198, 2209, 2263 |   | 31365       |   |

 

93

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| I2L23J1200300M1FY |   | Communications - VHF  system - Activate VHF 8.33 kHz channel function                                 |   | Accepted |   | 2198, 2209, 2264 |   | 27214 |   |
|-------------------|--------|-------------------------------------------------------------------------------------------------------|--------|----------|--------|------------------|--------|-------|--------|
| I2L23J1300100M1FY |   | Communications - Radio  Management Panel - Introduce RMP standard CA01                                |   | Accepted |   | 2198, 2209, 2265 |   | 31215 |   |
| I2L23J1390200M1FY |   | Communications - Radio  management - Introduce radio management panel PN -AA01                        |   | Accepted |   | 2198, 2209, 2266 |   | 26729 |   |
| I2L23J5100100M1FY |   | Audio management  (Integrating/Flight interphone/SELCAL/Call - Introduce new hand microphone          |   | Accepted |   | 2198, 2209, 2267 |   | 25602 |   |
| I2L23J7300200M1FY |   | Communications-Cabin  Intercommunication Data System (CIDS)- Introduce a modified DEU-B (PN -000720A) |   | Accepted |   | 2198, 2209, 2268 |   | 28704 |   |
| I2L23J7300400M1FY |   | Communications - Cabin intercommunication  data - Introduce CIDS directore software 520A              |   | Accepted |   | 2198, 2209, 2269 |   | 31011 |   |
| I2L23J7300500M1FY |   | CIDS - Introduce LED  technology for Area Call Panel (ACP) and Lavatory Call Light                    |   | Accepted |   | 2198, 2209, 2270 |   | 31015 |   |
| I2L23J7300600M1FY |   | Communications - Cabin  Intercommunication Data System (CIDS) - Introduce a modified DEU B (PN -820A) |   | Accepted |   | 2198, 2209, 2271 |   | 31535 |   |
| I2L23J7300700M1FY |   | Communications - Cabin  Intercommunication Data System (CIDS) - Introduce director with 521A software |   | Accepted |   | 2198, 2209, 2272 |   | 32101 |   |
| I2L24J0000300M1FY |   | Electrical power - Change  IFE power supplies, and introduce COMMERCIAL” switch in cockpit” |   | Accepted |   | 2198, 2209, 2273 |   | 31276 |   |
| I2L24J2100100M1FY |   | Electrical power - IDG -  Introduce IDG PN 740119H on CFM engines                                     |   | Accepted |   | 2198, 2209, 2274 |   | 27999 |   |
| I2L24J2100200M1FY |   | Electrical power -  Integrated drive generator system - Introduce std 5.0, GCU and GAPCU software     |   | Accepted |   | 2198, 2209, 2275 |   | 32004 |   |
| I2L24J3200100M1FY |   | Electrical power - DC main  generation - Install TRU with capacitors disconnected                     |   | Accepted |   | 2198, 2209, 2276 |   | 30737 |   |
| I2L25J1000100M1FY |   | Equipment/Furnishings -  Cockpit - Relocate Landing gear pins stowage box                             |   | Accepted |   | 2198, 2209, 2277 |   | 28004 |   |
| I2L25J1100200M1FY |   | Equipment/furnishings-Cockpit  seats-Install modified third occupant seat                             |   | Accepted |   | 2198, 2209, 2278 |   | 30549 |   |
| I2L25J1100300M1FY |   | Equipment/Furnishings -  Cockpit seats - Introduce new Captains’ and First Officers’ seats  |   | Accepted |   | 2198, 2209, 2279 |   | 32109 |   |
| I2L25J2500100M1FY |   | E/F-PSIU-Introduce LED  technology in PSU/PSIU.                                                       |   | Accepted |   | 2198, 2209, 2280 |   | 30424 |   |
| I2L25J2800100M1FY |   | Equipment/Furnishings -  Floor covering - Introduce a dispersion-adhesive for carpet installation     |   | REJECTED |   | N/A              |   | 26606 |   |

 

94

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| I2L25J6000100M1FY |   | Equipment/Furnishings-Emergency-Introduce  modified slides with frangible link in pack D31516, D31517 |   | Accepted |   | 2198, 2209, 2281 |   | 28103 |   |
|-------------------|--------|-------------------------------------------------------------------------------------------------------|--------|----------|--------|------------------|--------|-------|--------|
| I2L25J6000200M1FY |   | E/F-Emergency-Introduce  off-wing slide enclosure and off-wing slides with light emitting diode tech. |   | Accepted |   | 2198, 2209, 2282 |   | 30088 |   |
| I2L25J6090400M1FY |   | Equipment/Furnishings-Emergency-Introduce  modified off-wing slide                                    |   | Accepted |   | 2198, 2209, 2283 |   | 27275 |   |
| I2L25J6200100M1FY |   | Equipment/Furnishings -  Escape facilities-cabin - Introduce escape slide with new decorative cover   |   | Accepted |   | 2198, 2209, 2284 |   | 31060 |   |
| I2L25J6500200M1FY |   | E/F-Miscellaneous  emergency eqpt - Install protection gloves BENNETT SAFETYWEAR LTD PN FKK8-35KL     |   | Accepted |   | 2198, 2209, 2285 |   | 26115 |   |
| I2L25J6500300M1FY |   | Equipment/Furnishings -  Miscellaneous emergency equipment - Introduce modified ELT antenna           |   | Accepted |   | 2198, 2209, 2286 |   | 30351 |   |
| I2L25J6500500M1FY |   | E/F - Miscellaneous  emergency equipment - Introduce new flashlight in the cockpit                    |   | Accepted |   | 2198, 2209, 2287 |   | 30865 |   |
| I2L26J1000100M1FY |   | Fire protection-Engine and  APU fire and overheat detect. syst.-Introduce new FDU with improved tech. |   | Accepted |   | 2198, 2209, 2288 |   | 30547 |   |
| I2L26J1600100M1FY |   | FIRE PROTECTION-C/C SMOKE  DETECTION-INSTALL SYSTEM PROVISION FOR AFT CARGO COMPARTMENT SYSTEM        |   | Accepted |   | 2198, 2209, 2289 |   | 24494 |   |
| I2L26J1600200M1FY |   | FIRE PROTECTION-C/C SMOKE  DETECTION-INSTALL SYSTEM PROVISION FOR FORWARD CARGO COMPARTMENT SYSTEM    |   | Accepted |   | 2198, 2209, 2290 |   | 24492 |   |
| I2L26J1600400M1FY |   | Fire protection - Cargo  compartment smoke detection - Introduce new standard of smoke detector       |   | Accepted |   | 2198, 2209, 2291 |   | 32319 |   |
| I2L26J1700200M1FY |   | Fire protection - Lavatory  smoke detection - Introduce new standard of smoke detector                |   | Accepted |   | 2198, 2209, 2292 |   | 32320 |   |
| I2L26J2500100M1FY |   | Fire protection - Lavatory  fire extinguishing - Introduce new standard for lavatory waste bin        |   | Accepted |   | 2198, 2209, 2293 |   | 32229 |   |
| I2L27J2000100M1FY |   | Flight controls - Rudder -  Introduce Force Transducer Unit (FTU) on flight control linkage           |   | Accepted |   | 2198, 2209, 2294 |   | 32521 |   |
| I2L27J4400100M1FY |   | Flight controls - THS  actuation - Introduce new standard of THS actuator                             |   | Accepted |   | 2198, 2209, 2295 |   | 32155 |   |
| I2L27J5100100M1FY |   | Flight controls -  Slat/Flap Control Computer (SFCC) - Introduce standard SFCC PN 49-170-11           |   | Accepted |   | 2198, 2209, 2296 |   | 28165 |   |

 

95

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| I2L27J9300200M1FY |   | Flight controls - ELAC  system - Introduce ELAC STD L81                                            |   | Accepted |   | 2198, 2209, 2297 |   | 31395 |   |
|-------------------|--------|----------------------------------------------------------------------------------------------------|--------|----------|--------|------------------|--------|-------|--------|
| I2L27J9392000M1FY |   | Flight controls - General -  ELAC system - Introduce ELAC with enhanced relays                     |   | Accepted |   | 2198, 2209, 2298 |   | 26910 |   |
| I2L28J2100100M1FY |   | Fuel-Main fuel pump system-Introduce  INTERTECHNIQUE fuel pump PN P99C38-605 on SA A/C             |   | Accepted |   | 2198, 2209, 2299 |   | 28818 |   |
| I2L28J2100200M1FY |   | Fuel - Main fuel pump  system - Change supplier of fuel pumps and canisters                        |   | Accepted |   | 2198, 2209, 2300 |   | 31956 |   |
| I2L28J2200100M1FY |   | Fuel - APU fuel pump  system - Introduce a modified APU fuel pump                                  |   | Accepted |   | 2198, 2209, 2301 |   | 30707 |   |
| I2L28J2200200M1FY |   | Fuel-APU fuel pump system-Introduce  an improved fuel pump                                         |   | Accepted |   | 2198, 2209, 2302 |   | 31747 |   |
| I2L28J4300100M1FY |   | Fuel - Manual magnetic  indicators - Delete attitude monitor                                       |   | Accepted |   | 2198, 2209, 2303 |   | 32115 |   |
| I2L29J0090000M1FY |   | Hydraulic power - General -Introduce  modified VICKERS electrical driven hydraulic pump PN 974540  |   | Accepted |   | 2198, 2209, 2304 |   | 27730 |   |
| I2L29J2290800M1FY |   | Hydraulic power -  Auxiliary hydraulic power - Introduce modified SUNDSTRAND RAT                   |   | Accepted |   | 2198, 2209, 2305 |   | 27014 |   |
| I2L29J2300100M1FY |   | Hydraulic power - Power  transfer unit - Introduce HONEYWELL PTU-11                                |   | Accepted |   | 2198, 2209, 2306 |   | 30627 |   |
| I2L30J4200100M1FY |   | Ice and rain protection -  Windshield anti-icing and defogging - Introduce a new standard of WHC   |   | Accepted |   | 2198, 2209, 2307 |   | 31463 |   |
| I2L30J4590700M1FY |   | Ice and rain protection -  Windshield rain protection - Activation of rain repellent system        |   | Accepted |   | 2198, 2209, 2308 |   | 26963 |   |
| I2L31J3000100M1FY |   | Indicating/Recording  systems - Introduce a combined FDIU/DMU                                      |   | Accepted |   | 2198, 2209, 2309 |   | 27997 |   |
| I2L31J3300100M1FY |   | Indicating/Recording  systems-DFDRS-Introduce a linear accelerometer from vendor MAGNETEK/GENISCO  |   | Accepted |   | 2198, 2209, 2310 |   | 28226 |   |
| I2L31J3300200M1FY |   | Indicating/Recording  systems - Introduce wiring provision for combined FDIU/DMU computer          |   | Accepted |   | 2198, 2209, 2311 |   | 27569 |   |
| I2L31J3300400M1FY |   | Indicating/Recording  systems - DFDRS - Introduction of SAGEM FDIU PN ED43A1D6                     |   | Accepted |   | 2198, 2209, 2312 |   | 30655 |   |
| I2L31J3800100M1FY |   | Indicating recording  system - Data loading - Introduce a multipurpose disk drive unit PN AC68A200 |   | Accepted |   | 2198, 2209, 2313 |   | 28110 |   |
| I2L31J5500100M1FY |   | Indicating/Recording  systems - SDAC- Introduce standard SDAC PN 350E5500202                       |   | Accepted |   | 2198, 2209, 2314 |   | 30365 |   |
| I2L31J6200100M1FY |   | Indicating/Recording  systems - DMC - Define DMC V40 standard                                      |   | Accepted |   | 2198, 2209, 2315 |   | 28308 |   |

 

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| I2L32J0000100M1FY |   | Main landing gear -  General - Change from 3 coat to 2 coat paint scheme for A319/A320 aircraft   |   | Accepted |   | 2198, 2209, 2316 |   | 28222       |   |
|-------------------|--------|---------------------------------------------------------------------------------------------------|--------|----------|--------|------------------|--------|-------------|--------|
| I2L32J2100100M1FY |   | Landing gear - Nose gear -  Introduce reinforced gear                                             |   | Accepted |   | 2198, 2209, 2317 |   | 31238       |   |
| I2L32J4090600M1FY |   | LANDING GEAR-WHEELS AND  BRAKES-INTRODUCE COMMON BSCU STD                                         |   | Accepted |   | 2198, 2209, 2318 |   | 26965       |   |
| I2L32J4100200M1FY |   | Landing gear-Wheels-Install  radial tyres 46 x 17 R20 on main landing gear - MICHELIN PN M01103   |   | Accepted |   | 2198, 2209, 2319 |   | 28346       |   |
| I2L32J4100300M1FY |   | Landing gear - Wheels -  Introduce reinforced nose landing gear wheels                            |   | Accepted |   | 2198, 2209, 2320 |   | 27853       |   |
| I2L32J4200100M1FY |   | Landing gear - Nose  landing gear wheels - Remove rubbing strips                                  |   | Accepted |   | 2198, 2209, 2321 |   | 28482       |   |
| I2L32J4200300M1FY |   | Landing gear - Normal  braking - Introduce std 9 BSCU (Twin version)                              |   | Accepted |   | 2198, 2209, 2322 |   | 31106       |   |
| I2L33J5000100M1FY |   | Lights - Emergency  lighting - Introduce LED technology for cabin EXIT signs and emergency lights |   | Accepted |   | 2198, 2209, 2323 |   | 30792       |   |
| I2L34J1000400M1FY |   | Navigation - ADIRS -  Introduce new hardware standard of Honeywell 4MCU ADIRU                     |   | Accepted |   | 2198, 2209, 2324 |   | 30941       |   |
| I2L34J2200100M1FY |   | Navigation - Standby data -  Altitude heading - Introduce SIRS standby compass PN PG0105W         |   | Accepted |   | 2198, 2209, 2325 |   | 28216       |   |
| I2L34J4800100M1FY |   | Installation of an  enhanced ground proximity warning system (ALLIED SIGNAL)                      |   | Accepted |   | 2198, 2209, 2326 |   | 28244       |   |
| I2L34J5290400M1FY |   | Navigation - ATC modeS” -  Introduce ATC/TCAS control unit PN C124-04-AB02”             |   | Accepted |   | 2198, 2209, 2327 |   | 27285       |   |
| I2L46J2100400M1FY |   | Information system - ATIMS  - Upgrade ATSU hardware for new ARINC 429 I/O board                   |   | Accepted |   | 2198, 2209, 2328 |   | 30625       |   |
| I2L51J2300100M1FY |   | Standard practices and  structures - Protective treatment - Introduce low VOC paint on wing       |   | Accepted |   | 2198, 2209, 2329 |   | 32006/J2294 |   |
| I2L52J5100100M1FY |   | Doors - Cockpit door -  Installation of an intrusion and penetration resistant cockpit door       |   | Accepted |   | 2198, 2209, 2330 |   | 32088       |   |
| I2L56J1100100M1FY |   | Windows - Front cockpit  windows - Change to PPG windows                                          |   | Accepted |   | 2198, 2209, 2331 |   | 22094       |   |

 

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**EXHIBIT B****                                   ****SUMMARY OF TRANSACTION**

** **

The following is a summaryof the lease transaction between LESSEE and LESSOR.  It is set forth for the convenience of theparties only and will not be deemed in any way to amend, detract from orsimplify the other provisions of this Lease.

 

**1.****                           ****Description of Aircraft**

** **

One new Airbus A319-111aircraft with two (2) installed CFM56-5B5/P engines, all as more particularlydescribed on Exhibit A hereto

 

**2.****                           ****Scheduled Delivery Date andLocation**

** **

In the month of**[Redacted ]**2004 at Hamburg, Germany

 

**3.****                           ****Lease Term**

** **

**[Redacted ]**

 

**4.****                           ****Security Deposit**

 

**[Redacted**], payable as follows (in US Dollars):

 
| **Payment Date** | ** ** | **Amount**     | ** ** |
|------------------|------------|----------------|------------|
| **[Redacted]**   | ** ** | **[Redacted]** | ** ** |
| **[Redacted]**   | ** ** | **[Redacted]** | ** ** |
| **[Redacted]**   | ** ** | **[Redacted]** | ** ** |
| **[Redacted]**   | ** ** | **[Redacted]** | ** ** |

 

**5**.                            **Transaction Fee**

** **

**[Redacted]**, payable upon**[Redacted]**

 

**6.****                           ****Rent during Lease Term**

** **

Payable **[Redacted],**in the amount of **[Redacted]**.

 

----

*The above base rent isexpressed in **[Redacted]**U.S.Dollars and will increase in accordance with the Manufacturer’s announcedescalation rates as provided to LESSEE by LESSOR for the period from andincluding the **[Redacted]**

 

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through and including theDelivery Date (the “**Manufacturer’sEscalation Rate**”).  Anysuch escalation will be calculated immediately prior to Delivery.

 

**7.****                           ****Reserves**

 

Reserves for the Aircraftare payable as follows:

 
| **Type of Reserves** | ** ** | **Amount of Reserves** | ** ** |
|----------------------|------------|------------------------|------------|
| **[Redacted]:**      | ** ** | **[Redacted]**         | ** ** |
| **[Redacted]:**      | ** ** | **[Redacted]**         | ** ** |
| **[Redacted]:**      | ** ** | **[Redacted]**         | ** ** |
| **[Redacted]:**      | ** ** | **[Redacted]**         | ** ** |
| **[Redacted]:**      | ** ** | **[Redacted]**         | ** ** |

 

Provided that no PaymentDefault has occurred and is continuing, LESSEE shall not be obligated to pay **[Redacted]** during any period in which thetotal amount of **[Redacted]**held byLESSOR is greater than or equal to **[Redacted]**;provided, however, that such waiver will not apply, and LESSEE will beobligated to pay **[Redacted]**asprovided in this Article 5.4 (irrespective of the then-existing balance of **[Redacted]**held by LESSOR), during each **[Redacted]**following an **[Redacted]**.

 

Provided that no PaymentDefault has occurred and is continuing, LESSEE shall not be obligated to pay **[Redacted]**for any **[Redacted]**during any period in which thetotal amount of **[Redacted]** held by LESSOR for **[Redacted]** is greater than or equal to **[Redacted]**; provided, however, that suchwaiver will not apply, and LESSEE will be obligated to pay **[Redacted]**for **[Redacted]** as provided in this Article 5.4 (irrespective ofthe then-existing balance of **[Redacted]**heldby LESSOR), during each **[Redacted]**.

 

**8.****                           ****Additional Rent for[Redacted]**

 

**[Redacted]**for each **[Redacted]**actually operated during **[Redacted]**of **[Redacted]**which result from an**[Redacted]** during (a) the **[Redacted]**period beginning on the**[Redacted]**, (b) the **[Redacted]**period beginning on the**[Redacted]**, and (c) the **[Redacted]**period beginning on the**[Redacted]**.

 

99

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**9.****                           ****Country of AircraftRegistration**

** **

United States

 

**10.****                    ****Maintenance Program**

** **

LESSEE’s Maintenance Program

 

**11.****                    ****Agreed Value of Aircraft**

** **

The agreed value shall be **[Redacted]**, which amount will be reduced by**[Redacted]** on the **[Redacted]**

 

**12.****                    ****LESSOR’s Bank Account**

** **

**[Redacted]**

 

**EXHIBIT C****                                   ****COMMERCIAL TERMS**

** **

**1.****                           ****Article 3.2.****                                          ****[Redacted]**

** **

**2.****                           ****Article 3.6.1.****                                   ****[Redacted]**

** **

**3.****                           ****Article 4.1.****                                             ****[Redacted]**

** **

**4.****                           ****Article 5.1 — SecurityDeposit.**

** **

(a)                           Article 5.1.1. LESSEE will pay LESSOR a security deposit of **[Redacted]**for its lease of the Aircraft (the “**Security Deposit**”).  The Security Deposit is payable as follows(in US$):

 

| **Payment Date**                               | ** ** | **Amount**     | ** ** |
|------------------------------------------------|------------|----------------|------------|
| Received                                       | ** ** | **[Redacted]** | ** ** |
| Upon  execution of Lease                       | ** ** | **[Redacted]** | ** ** |
| **[Redacted]**                                 | ** ** | **[Redacted]** | ** ** |
| **[Redacted]**prior to Scheduled Delivery Date | ** ** | **[Redacted]** | ** ** |

 

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(b)                          Article 5.1.2.  TheSecurity Deposit may be commingled with LESSOR’s general funds and any interestearned on such Security Deposit will be for LESSOR’s account.  The Security Deposit will serve as securityfor the performance by LESSEE of its obligations under this Lease and any otheragreements between LESSEE and LESSOR relating to aircraft, engines, aircraftequipment or the extension of credit and may be applied by LESSOR upon theoccurrence of an Event of Default hereunder or of an event of default by LESSEEunder any such other agreements.  If theSecurity Deposit is reduced below the required amount by application to meetLESSEE’s unperformed obligations under this Lease, LESSEE will replenish theSecurity Deposit within **[Redacted]**daysafter LESSOR’s demand therefor.

 

(c)                        Article 5.1.3.  Upontermination of this Lease in accordance with Article 4.3 and provided thatno Event of Default has occurred and is continuing, LESSOR will return toLESSEE the amount of the Security Deposit then held by LESSOR (so long as nodefault by LESSEE exists under any other agreement between LESSEE and LESSORrelating to aircraft, engines or aircraft equipment or the extension of creditby LESSOR to LESSEE in which case LESSOR will be entitled to set off amountsowing to it), without interest, less an amount determined to be a reasonableestimate of the costs, if any, which LESSOR will incur to remedy anyunperformed obligations of LESSEE under this Lease, including the correction ofany discrepancies from the required condition of the Aircraft on return of theAircraft.

 

**5.****                           ****Article 5.2—[Redacted]****.  [Redacted]**

** **

**6.****                           ****Article 5.3—Rent.**

 

(a)                           Article 5.3.1. LESSEE will pay LESSOR monthly in advance as rent for the Aircraft theamount of **[Redacted]**, expressed in**[Redacted]**U.S. Dollars* (the “**Rent**”).

 

----

*The above base rent isexpressed in **[Redacted]**U.S.Dollars and will increase in accordance with the Manufacturer’s announcedescalation rates as provided to LESSEE by LESSOR for the period from andincluding the **[Redacted]** throughand including the Delivery Date (the “**Manufacturer’sEscalation Rate**”).  Anysuch escalation will be calculated immediately prior to Delivery.

 

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(b)                          Article 5.3.2.  Thefirst payment of Rent during the Lease Term will be paid no later than theDelivery Date.  Each subsequent paymentof Rent will be due monthly thereafter no later than the same day of the monthas the Delivery Date of the Aircraft except that, if such day is not a BusinessDay, the Rent will be due on the immediately preceding Business Day.  If Delivery occurred on the 29th,30th or 31st of the month and in any given month duringthe Lease Term there is no such corresponding date, Rent will be payable on thelast Business Day of such month.

 

7.                             **Article 5.4**—**Reserves****.**

 

(a)                           Article 5.4.1.  LESSEEwill pay to LESSOR supplemental Rent, based on LESSEE’s use of the Aircraftduring the Lease Term, in the form of the following reserves in the followingamounts per flight hour (individually, **[Redacted]**and collectively “**Reserves**”):

 
| **Type of Reserves** | ** ** | **Amount of Reserves** | ** ** |
|----------------------|------------|------------------------|------------|
| **[Redacted]:**      | ** ** | **[Redacted]**         | ** ** |
| **[Redacted]**       | ** ** | **[Redacted]**         | ** ** |
| **[Redacted]:**      | ** ** | **[Redacted]**         | ** ** |
| **[Redacted]:**      | ** ** | **[Redacted]**         | ** ** |
| **[Redacted]:**      | ** ** | **[Redacted]**         | ** ** |

 

(b)                          Article 5.4.2.  Providedthat no Payment Default has occurred and is continuing, LESSEE shall not beobligated to pay **[Redacted]** duringany period in which the total amount of **[Redacted]**held by LESSOR is greater than or equal to **[Redacted]**; provided, however, that suchwaiver will not apply, and LESSEE will be obligated to pay **[Redacted]**as provided in this Article 5.4(irrespective of the then-existing balance of **[Redacted]**held by LESSOR), during each **[Redacted]**.

 

(c)                           Article 5.4.3.  Providedthat no Payment Default has occurred and is continuing, LESSEE shall not beobligated to pay **[Redacted]**forany **[Redacted]**during any periodin which the total amount of **[Redacted]** held by LESSOR for **[Redacted]** is greater than or equal to **[Redacted]**; provided, however, that suchwaiver will not apply, and LESSEE will be obligated to pay **[Redacted]**for **[Redacted]** as provided in this Article 5.4 (irrespective ofthe then-existing balance of **[Redacted]**heldby LESSOR), during each **[Redacted]**.

 

(d)                          Article 5.4.4.  Forpurposes of this Article 5.4, the term “**PeriodPending Reimbursement**” is defined as follows:

 

102

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(i)                          In reference to a reimbursement from **[Redacted]**, the Period PendingReimbursement is the period beginning on the date the **[Redacted]**is returned to LESSEE followingan **[Redacted]**and ending on thedate on which LESSOR pays to LESSEE the amount due for reimbursement from **[Redacted]**with respect to such **[Redacted]**.

 

(ii)                       In reference to a reimbursement from **[Redacted]**, the Period PendingReimbursement is the period beginning on the date of **[Redacted]**following an **[Redacted]**and ending on the date on which LESSOR pays to LESSEE the amount duefor reimbursement from **[Redacted]**with respect to such **[Redacted]**.

 

(e)                           Article 5.4.5.  SuchReserves will be paid on or before the **[Redacted]**of the calendar month next following the month in which the Delivery Dateoccurs and on or before the **[Redacted]**of each succeeding calendar month for flying performed during the calendarmonth prior to payment.  All Reserves forflying performed during the month in which the Termination Date occurs will bepaid on the Termination Date, unless otherwise agreed by the parties.

 

(f)                             Article 5.4.6.  Nointerest will accrue or be paid at any time to LESSEE on such Reserves and,subject to LESSOR’s obligations under Article 13, LESSOR may commingle theReserves with LESSOR’s general funds.

 

**8.****                           ****Article 5.5**—**[Redacted]****.  [Redacted]**

** **

**9.****                           ****Article 5.7.****  [Redacted].**

** **

**10.****                  ****Article 12.1.3**  LESSEEwill not discriminate against the Engines with respect to Overhaul buildstandards and life-limited Part replacements and, in any event, at each EngineRefurbishment, LESSEE will (a) build the Engine life-limited Parts to **[Redacted]** and (b) perform, at aminimum, a **[Redacted]**.  Notwithstanding anything to the contrary inthis Article 12.1.3, life-limited Parts contained in Engine modules that arenot included in the work-scope of an Engine Refurbishment need only have **[Redacted]**.

 

**11.****                  ****Article 12.1.4**  Whenreplacing any non-consumable, rotating Part in an Engine, in the event thatLESSEE elects to utilize a part other than an original equipment manufacturerpart (“**OEM Part”**), LESSEEwill consult with LESSOR and, in the event that LESSOR requires that an OEMPart be used, **[Redacted].**  In the event that LESSEE fails to consultwith LESSOR as required in this Article 12.1.4, LESSOR will have the right to **[Redacted]**.

 

103

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**12.****                  ****Article 12.2(d)**  incorporationin the Aircraft of all other service bulletins of Manufacturer, the Enginemanufacturer and other vendors or manufacturers of Parts installed on theAircraft which are applicable to the Aircraft, which service bulletins LESSEEhas incorporated or has scheduled to have incorporated upon any other aircraftin its A319 fleet; provided, however, that LESSEE will not be required toincorporate any such service bulletin **[Redacted]**unless (i) LESSEE has incorporated such service bulletin in any otherleased aircraft in its A319 fleet or has scheduled such service bulletin to beincorporated in any such aircraft **[Redacted]**,or (ii) LESSOR requests that LESSEE incorporate such service bulletin in theAircraft at LESSOR’s expense, subject to LESSEE’s capacity, resources, andtechnical capabilities.

 

**13.****                  ****Article 12.8.1****  [Redacted].**

** **

**14.****                  ****Article 19.1—Agreed Value Definition**.  “**Agreed Value**” means **[Redacted]**, which amount will be reduced by**[Redacted]** on **[Redacted]** and, on **[Redacted]**, by an amount equal to **[Redacted]** of the Agreed Value that was ineffect the immediately preceding year of the Lease Term.

 

**15.****                  ****Article 19.6.2**  **[Redacted].**

** **

**16.****                  ****Article 23.7— GeneralCondition of Aircraft at Return (Selected Provisions Concerning Incorporationof Service Bulletins and Airworthiness Directives)**

 

(a)                           Article 23.7.8.  Allalert service bulletins of Manufacturer, the Engine manufacturer and othervendors or manufacturers of Parts installed on the Aircraft which areapplicable to the Aircraft and any service bulletins which must be performed inorder to maintain the warranties on the Aircraft, Engines, and Parts, will havebeen incorporated in the Aircraft.  Allother service bulletins of Manufacturer, the Engine manufacturer and othervendors or manufacturers of Parts installed on the Aircraft which areapplicable to the Aircraft, which service bulletins LESSEE has incorporated orhas scheduled to have incorporated upon any other aircraft in its A319 fleet,will also have been incorporated in the Aircraft; provided, however, thatLESSEE will not be required to have incorporated any such service bulletin **[Redacted]**unless (i) LESSEE hasincorporated such service bulletin in any other leased aircraft in its A319fleet or has scheduled such service bulletin to be incorporated in any suchaircraft **[Redacted]**, or (ii)LESSOR requests that LESSEE incorporate such service bulletin in the Aircraftat LESSOR’s expense, subject to LESSEE’s capacity, resources, and technicalcapabilities.

 

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(b)                          Article 23.7.11.  Subjectto the terms of Article 23.7.12, all **[Redacted]**which are issued during the Lease Term and which require **[Redacted]** or prior to the **[Redacted]** following the **[Redacted]** will have been complied with onthe Aircraft on **[Redacted]**.

 

(c)                           Article 23.7.12.  **[Redacted]**will be accomplished at a levelof inspection or modification that **[Redacted]**;provided that if it is not possible to **[Redacted]**,LESSEE will comply with **[Redacted]**.   If, after using commercially reasonableefforts, LESSEE is **[Redacted]**,LESSEE will **[Redacted]**.  If the **[Redacted]**cannot be mutually agreed upon by LESSEE and LESSOR, LESSEE and LESSOR willeach obtain **[Redacted]**(unaffiliated with LESSEE or LESSOR) and the **[Redacted]**.

 

(d)                          Article 23.7.13.  Withrespect to any **[Redacted]**described in Article 23.7.12, upon LESSOR’s request and at LESSOR’s expense,LESSEE will comply with **[Redacted]**as LESSOR may request **[Redacted]**,subject to LESSEE’s capacity, resources, and technical capabilities.

 

**17.****                  ****Article 23.9—Part Lives.**  Atreturn, the condition of the Aircraft will be as follows:

 

(a)                           Article 23.9.1.  TheAircraft will have **[Redacted]**since the last full and complete zonal, systems and structural check (“C” checkor equivalent) (excluding hours consumed on the acceptance flight).

 

(b)                          Article 23.9.2.  EachEngine will meet all of the following:

 

(i)                          Article 23.9.2(a)  EachEngine will have **[Redacted]** untilits next anticipated removal, based upon (a) **[Redacted]**,(b) the Engine manufacturer’s estimated mean time between removals for enginesof the same type as the Engines, and (c) the number of hours and cycles that eachof the respective Engines has operated since **[Redacted]**.

 

(ii)                       Article 23.9.2(b)  EachEngine will have a **[Redacted]**sufficientto permit the operation of such Engine for the hours and cycles set forth inthe preceding subparagraph, based upon the historical experience of the Enginemanufacturer’s worldwide fleet.

 

(iii)                    Article 23.9.2(c)  No **[Redacted]** will have **[Redacted]**than such **[Redacted]**.

 

105

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(iv)                   Article 23.9.2(d)  EachPart of an Engine which has a hard time limit will have **[Redacted]** remaining **[Redacted]**. Notwithstanding the foregoing, any such Engine Part may be returned with**[Redacted]**, provided that (i) nosuch Part will have **[Redacted]**,and (ii) for each such Part, **[Redacted]**.

 

(v)                      Article 23.9.2(e)  EachPart of an Engine which has a life limit will have **[Redacted]**.

 

(c)                           Article 23.9.3.  The **[Redacted]**will have no more than **[Redacted]**.

 

(d)                          Article 23.9.4.  The **[Redacted]** will have at least **[Redacted]**, provided that in all events the**[Redacted]**.

 

(e)                           Article 23.9.5.  EachPart of the Aircraft **[Redacted]**  which has a **[Redacted]**  will have at least **[Redacted]**. Notwithstanding the foregoing, any such Part may be returned with **[Redacted]**, provided that:

 

(i)                          Article 23.9.5(a)  nosuch Part will have **[Redacted]**,

 

(ii)                       Article 23.9.5(b)  foreach such Part, **[Redacted]**, and

 

(iii)                    Article 23.9.5(c)  **[Redacted]**.

 

(f)                             Article 23.9.6.  Eachlife-limited Part of **[Redacted]**will have at least **[Redacted]**.  Notwithstanding the foregoing, any such Partmay be returned with less than **[Redacted]**,provided that:

 

(i)                          Article 23.9.6(a)  nosuch Part will have **[Redacted]**,

 

(ii)                       Article 23.9.6(b)  foreach such Part, **[Redacted]**, and

 

(iii)                    Article 23.9.6(c)  **[Redacted]**.

 

(g)                          Article 23.9.7.  EachPart which **[Redacted]** after returnof the Aircraft to LESSOR (which in any event will be **[Redacted]**).  If a Part has **[Redacted]**l, then such Part will be returned with **[Redacted]**.

 

(h)                          Article 23.9.8.  NoPart of **[Redacted]** will have **[Redacted]**of that of **[Redacted]** and, with respect to all Partsas a group, the Parts will have **[Redacted]**.

 

106

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(i)                              Article 23.9.9.  **[Redacted]**.

 

**18.****                  ****Article 23.11.3.**  **[Redacted]**.

 

**19.****                  ****Article 25.2.**  Theoccurrence of any of the following will constitute an Event of Default andmaterial breach of this Lease by LESSEE:

 

(a)                           LESSEE fails to take delivery of the Aircraftwhen obligated to do so under the terms of this Lease;

 

(b)                          LESSEE fails to make a Rent or other paymentdue hereunder in the manner and by the date provided herein and fails to makesuch payment within **[Redacted]**after receipt of written notice from LESSOR of LESSEE’s failure to make suchpayment;

 

(c)                           LESSEE fails to obtain or maintain theinsurance required by Article 18;

 

(d)                          LESSEE fails to return the Aircraft to LESSORon the Expiration Date in accordance with Article 23;

 

(e)                           LESSEE fails to observe or perform any of itsother obligations hereunder and fails to cure the same within **[Redacted]** after written notice thereof toLESSEE.  If such failure cannot by itsnature be cured within **[Redacted]**,LESSEE will have the reasonable number of days necessary to cure such failure(not to exceed a period of **[Redacted]**)so long as it uses diligent and best efforts to do so;

 

(f)                             any representation or warranty of LESSEEherein proves to be untrue in any material respect when made and LESSOR hasrelied upon such representation or warranty to its detriment;

 

(g)                          the registration of the Aircraft is cancelledsolely as a result of an act or omission of LESSEE;

 

(h)                          LESSEE abandons the Aircraft or Engines;

 

(i)                              LESSEE or an approved sublessee no longer hasunencumbered control (other than Permitted Liens) or possession of the Aircraftor Engines, except as otherwise permitted by this Lease, or any otheroccurrence not permitted under this Lease which deprives LESSEE of use orpossession for a period **[Redacted]**;

 

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(j)                              LESSEE discontinues business (other than atemporary suspension of business as the result of labor disputes) or sells orotherwise disposes of all or substantially all of its assets;

 

(k)                           LESSEE is no longer a Certificated AirCarrier;

 

(l)                              LESSEE (i) generally suspends payment onits debts or other obligations, (ii) is unable to or admits its inabilityto generally pay its debts or other obligations as they fall due, or(iii) is adjudicated or becomes bankrupt or insolvent;

 

(m)                        any proceedings, resolutions, filings orother steps are instituted with respect to LESSEE relating to the bankruptcy,liquidation, reorganization or protection from creditors of LESSEE or asubstantial part of LESSEE’s property. If instituted by LESSEE, the same will be an immediate Event ofDefault.  If instituted by anotherPerson, the same will be an Event of Default if not dismissed, remedied orrelinquished within ninety (90) days;

 

(n)                          any order, judgment or decree is entered byany court of competent jurisdiction appointing a receiver, trustee orliquidator of LESSEE or a substantial part of its property, or if a substantialpart of LESSEE’s property is to be sequestered. If instituted by or done with the consent of LESSEE, the same will be animmediate Event of Default.  Ifinstituted by another Person, the same will be an Event of Default if not dismissed,remedied or relinquished within ninety (90) days;

 

(o)                          any indebtedness for borrowed moneys or aguarantee or similar obligation owed by LESSEE with an unpaid balance of atleast **[Redacted]** is declared to bedue before its stated maturity (and any applicable cure period has expired) or **[Redacted]**; or

 

(p)                          a Payment Default has occurred and iscontinuing under any other lease, loan or other material agreement betweenLESSEE and LESSOR.

 

**20.****                  ****Article 26.2.**

 
| If to LESSOR: | Fax:       | **[Redacted]** |
|---------------|------------|----------------|
|          | Telephone: | **[Redacted]** |
| ** **    | ** ** | ** **     |
| If to LESSEE: | Fax:       | **[Redacted]** |
|          | Telephone: | **[Redacted]** |

 

108

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**21.****                  ****Article 28.1. - [Redacted]****.**  **[Redacted].**

 

109

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**EXHIBIT D****                                 ****PARTICIPATION AGREEMENT**

** **

This Participation Agreementis made this             day of                               ,             (the “ParticipationAgreement”)

 

**BETWEEN**

 

(1)                                INTERNATIONAL LEASE FINANCE CORPORATION, acorporation organized and existing under the laws of the State of California,United States of America, having its principal corporate offices located at1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067-6049,U.S.A. (“**ILFC**”); and

 

(2)                                FRONTIER AIRLINES, INC., a Coloradocorporation whose address and principal place of business is at Frontier CenterOne, 7001 Tower Road, Denver, Colorado 80249, U.S.A. (“**LESSEE**”)

 

**RECITALS**

 

(A)                            Pursuant to the AirbusA319-100 PurchaseAgreement between ILFC and AVSA, S.A.R.L. (“**AVSA**”)dated as of August 29, 1997, as further amended (the “**Purchase Agreement**”) and the General TermsAgreement between ILFC and AVSA dated as of November 10, 1988 (the “**G.T.A.**”), ILFC has agreed to purchase fromAVSA certain Airbus A319-100 model aircraft, including the aircraft bearing as oftoday production number 4157 and scheduled for delivery in the month of April2004 (the “**Aircraft**”);

 

(B)                              Pursuant to the Product Support Agreement(Exhibit E) applicable to the Purchase Agreement (the “**Support Agreement**”), AVSA has agreed toprovide certain product support to ILFC;

 

(C)                              Pursuant to the Aircraft Lease Agreementbetween ILFC and LESSEE dated as of December [    ], 2003(the “**Lease Agreement**”), ILFC hasagreed to lease the Aircraft to LESSEE;

 

(D)                             ILFC and LESSEE have agreed to enter into thisParticipation Agreement:

 

**IT IS NOWHEREBY AGREED AS FOLLOWS:**

 

1.**                                        ****Authorization for LESSEE toParticipate**.    ILFC hereby authorizes LESSEE toparticipate in the following activities in connection with the delivery of theAircraft:

 

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(a)                                              to inspect, pursuant to Clause 7.1 ofthe G.T.A., the manufacture of the Aircraft and the materials and partsthereto; and

 

(b)                                             to attend and observe the acceptance tests ofthe Aircraft referred to in Clause 8.1 of the G.T.A.; and

 

(c)                                              to receive, pursuant to Clause 15 of theSupport Agreement, the technical publications set forth in Appendix 3hereto.

 

2.**                            ****Effectivity of ParticipationAgreement**.    This Participation Agreement shall beeffective from the date hereof until the earliest of:

 

(a)                                              the occurrence of an Event of Default asdefined in the Lease Agreement;

 

(b)                                             notification by ILFC to LESSEE of thetermination hereof due to LESSEE=s default hereunder; or

 

(c)                                              transfer of Aircraft title by AVSA to ILFC orits designee.

 

3.**                            ****Conditions of Participation**.   This Participation Agreement is made subject to the followingconditions:

 

(a)                                              LESSEE hereby agrees to be bound by and tocomply with the following provisions of the G.T.A. and Support Agreement(copies of which are attached hereto) as if LESSEE had been named “Buyer” ofthe Aircraft under such agreements:

 

(i)  Clauses 7.2 and 8.5 of the G.T.A. to theextent of (aa) injury to or death of any LESSEE representative,(bb) loss or damage to property of any LESSEE representatives and(cc) liabilities, damages, losses, costs and expenses of Seller,Manufacturer and their associated subcontractors, officers, agents andemployees arising out of or caused by the willful misconduct or grossnegligence of LESSEE’s representatives.

 

(b)                                             So long as this Participation Agreement is infull force and effect, LESSEE and not ILFC will be responsible for theliabilities and obligations set forth in section 3(a) above.

 

(c)                                              For avoidance of doubt, even while thisParticipation Agreement is in full force and effect, ILFC will remainresponsible for compliance with Clauses 7.2 and 8.5 of

 

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the G.T.A. to the extent of(aa) injury to or death of any ILFC representative, (bb) loss or damageto property of any ILFC representative and (cc) liabilities, damages,losses, costs and expenses of Seller, Manufacturer and their associatedsubcontractors, officers, agents and employees arising out of or caused by thewillful misconduct or gross negligence of ILFC’s representatives.

 

(d)                                             Except with respect to events occurring priorto termination of the Participation Agreement, upon termination of thisParticipation Agreement, ILFC shall once again be bound by Clauses 7.2 and8.5 of the G.T.A.

 

(e)                                              Other than with respect to the obligationsassumed by LESSEE under this Participation Agreement as set forth insection 3(a) above, ILFC shall remain fully bound by all provisions of thePurchase Agreement, G.T.A. and Support Agreement.

 

(f)                                                Nothing contained herein shall subject AVSAto any liability or additional obligations whatsoever to which it would nototherwise be subject under the Purchase Agreement, the G.T.A. and the SupportAgreement or, except to the extent set forth in sections 3(a) and (b) above,modify in any respect whatsoever its contractual rights under the saidagreements.

 

(g)                                             LESSEE shall not be appointed as ILFC’s agentand shall not be permitted to act on behalf or in place of ILFC without theexpress written authorization of ILFC and nothing contained herein shall beconstrued as to give such authorization.

 

**4.****                           ****Notification**

** **

(a)                                              This Participation Agreement shall benotified to AVSA by courier service immediately after the executionhereof.  AVSA shall not be deemed to havereceived notice of any of the provisions hereof prior to receipt of notice asprovided in this section 4(a) in the form of Appendix 1 hereto.

 

(b)                                             On termination of this ParticipationAgreement pursuant to either section 2(a) or (b) hereof, ILFC shallimmediately notify AVSA by courier service of such termination.  AVSA shall not be deemed to have receivednotice of such termination prior to receipt of notice as provided in thissection 4(b) in the form of Appendix 2 hereto.

 

(c)                                              All notices and requests required or authorizedunder this Participation Agreement shall be given in writing either by personaldelivery to a responsible officer of

 

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the party to whom the sameis given or by internationally recognized courier service or by telefaxdirected as set forth below:

 

ILFC shall be addressed at:

 
|   | [Until January 31, 2004]  1999 Avenue of the Stars, 39th Floor  Los Angeles, California 90067-6049  U.S.A.  [On and after February 1, 2004]  10250 Constellation Boulevard, 34th Floor  Los Angeles, California 90067-6234  U.S.A. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                               |   |
|   | Attention:                                                                                                                                                                                                                         | Senior Vice  PresidentCTechnical |
|   |                                                                                                                                                                                                                               |   |
|   | Fax:                                                                                                                                                                                                                               | **[Redacted]** |
|   | Telephone:                                                                                                                                                                                                                         | **[Redacted]** |

 

LESSEE shall be addressedat:

 
|   | Frontier Center One  7001 Tower Road  Denver, Colorado 80249  U.S.A. |
|--------|----------------------------------------------------------------------|
|   |                                                                 |
|   | Attention:                                                           | General Counsel |
|   |                                                                 |   |
|   | Fax:                                                                 | **[Redacted]** |
|   | Telephone:                                                           | **[Redacted]** |

 

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AVSA shall be addressed at:

 
|   | 2, rond-point Maurice  Bellonte  31 700 Blagnac  France |
|--------|---------------------------------------------------------|
|   |                                                    |
|   | Attention:                                              | Director Contracts |
|   |                                                    |   |
|   | Fax:                                                    | **[Redacted]** |
|   | Telephone:                                              | **[Redacted]** |

 

or at such other address orto such other person as the party receiving the notice or request may designatefrom time to time.

 

Suchnotice or request shall be deemed to be effective in the case of(aa) personal delivery, on the date upon which personally delivered,(bb) delivery by courier, on the date of receipt or (cc) telefaxtransmission, on the date of confirmation of successful transmission.

 

5.**                            ****Survival of Obligations**.   The obligations of LESSEE set forth in section 3(a) with respect toevents occurring prior to termination of this Participation Agreement willsurvive termination of the Participation Agreement.

 

6.**                            ****Assignment**.   The rights and obligations under this Participation Agreement arepersonal to the parties and shall not be assigned, transferred, sold orotherwise disposed of by either of the parties hereto.

 

7.**                            ****Applicable Law andJurisdiction**.    THIS PARTICIPATION AGREEMENT SHALL BEGOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORKWITHOUT REGARD TO PRINCIPLES OF CHOICE OF LAW, AND THE PARTIES AGREE THAT ANYCOMPETENT FEDERAL COURT LOCATED IN NEW YORK, NEW YORK SHALL HAVE JURISDICTIONOVER ANY DISPUTE ARISING IN CONNECTION HEREWITH.  Nothing in this section will prevent either partyfrom making a claim in a court of competent jurisdiction in California or, ifAVSA is involved, France.

 

8.**                            ****Confidentiality**.   Subject to any legal or governmental requirements of disclosure, ILFCand LESSEE shall keep confidential the terms and conditions of thisParticipation Agreement and the clauses from the G.T.A. and Support Agreementprovided to LESSEE pursuant to this Participation Agreement.

 

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**IN WITNESSWHEREOF**, the partieshave caused this Participation Agreement to be executed on their behalf bytheir duly authorized officers.

 

 
| INTERNATIONAL LEASE  FINANCE  CORPORATION | FRONTIER AIRLINES, INC. |
|-------------------------------------------|-------------------------|
|                                      |                    |
|                                      |                    |
| By:                                       |                    |   | By: |   |   |
|                                      |                    |   |
| Its:                                      | Its:                    |
|                                           |                         |  |  |  |  |

 

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**APPENDIX 1**

 

[DATE]

 

BY COURIER

AVSA, S.A.R.L.

2, rond-point MauriceBellonte

31700 Blagnac

 

Attention:   Director-Contracts

 

Re:                             ILFC/FRONTIER AIRLINES, INC.: PARTICIPATIONAGREEMENT

 

Dear Sirs,

 

Pursuant toSection 4(a) of the Participation Agreement between ILFC and FRONTIERAIRLINES, INC. dated                                      ,            , weadvise you that pursuant to the Participation Agreement (a copy of which isattached hereto), FRONTIER AIRLINES, INC. has been authorized by ILFC toparticipate with respect to the Aircraft. This authorization shall be effective on acknowledgment of this letterby you.

 

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We confirm for your benefitthe provisions of Sections 3(c), 3(d), 3(e) and 3(f) contained therein.

 
|   | Yours faithfully,                        |
|--------|------------------------------------------|
|   |                                     |
|   |                                     |
|   |                                     |   |
|   | for and on behalf of                     |
|   | INTERNATIONAL LEASE  FINANCE CORPORATION |

 
| CC: | FRONTIER AIRLINES, INC. |
|-----|-------------------------|

 

 

AVSA, S.A.R.L. confirmsreceipt of this notice and agrees to the terms of Section 3 of theParticipation Agreement.

 
|   | By:    |   |   |
|--------|--------|--------|--------|
|   |   |
|   | Its:   |   |   |
|   |   |
|   | Date:  |   |   |
|        |        |        |        |  |

 

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**APPENDIX 2**

 

[DATE]

 

BY COURIER

AVSA, S.A.R.L.

2, rond-point MauriceBellonte

31700 Blagnac

 

Attention:   Director-Contracts

 

Re:                             ILFC/FRONTIER AIRLINES, INC.: PARTICIPATIONAGREEMENT

 

Dear Sirs,

 

Pursuant toSection 4(b) of the Participation Agreement between ILFC and FRONTIERAIRLINES, INC. dated                                      ,            , weadvise you that the authorization provided therein for FRONTIER AIRLINES, INC. isterminated with immediate effect.

 
|   | Yours faithfully,                        |
|--------|------------------------------------------|
|   |                                     |
|   |                                     |
|   |                                     |   |
|   | for and on behalf of                     |
|   | INTERNATIONAL LEASE  FINANCE CORPORATION |

 

CC:                             FRONTIER AIRLINES, INC.

 

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**APPENDIX 3**

 

1.                                       TECHNICAL PUBLICATIONS

 

As selected by LESSEE fromthe Technical Data and Documentation Index attached to this Appendix 3

 

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**TECHNICAL DATA AND DOCUMENTATION INDEX**

 

The following indexidentifies the Technical Data and Documentation provided in support of theAircraft.  The explanation of the tableis as follows:

 
| NOMENCLATURE                    | Self explanatory. |
|---------------------------------|-------------------|
|                            |              |
| ABBREVIATED DESIGNATION  (Abbr) | Self explanatory. |

 

 

FORM

 
| CD-A   | CD-ROM: Advanced  Consultation and Navigation System                                         |
|--------|----------------------------------------------------------------------------------------------|
|   |                                                                                         |
| CD-P   | CD-ROM: in PDF - Portable  Document Format                                                   |
|   |                                                                                         |
| D      | DISKETTE (Floppy Disk)                                                                       |
|   |                                                                                         |
| DD     | DIGITAL DATA. Stands  generally for SGML format on CD-ROM.                                   |
|   |                                                                                         |
|   | MICROFILM. Refers to 16mm  roll film in 3M type cartridges.                                  |
|   |                                                                                         |
| P1     | PRINTED ONE SIDE. Refers  to manuals in paper with print on one (1) side of the sheets only. |
|   |                                                                                         |
| P2     | PRINTED BOTH SIDES. Refers  to manuals with print on both sides of the sheets.               |
|   |                                                                                         |
| AC     | Aperture Cards                                                                               |

 

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| TYPE   | C      | CUSTOMIZED. Refers to  manuals which are applicable to an individual Airbus customer/operator fleet  or aircraft.                  |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                               |
|   | G      | GENERIC. Refers to manuals  which are for all aircraft types/models/series.                                                        |
|   |   |                                                                                                                               |
|   | E      | ENVELOPE. Refers to  manuals which are applicable to a whole group of Airbus customers for a  specific aircraft type/model/series. |
|   |   |                                                                                                                               |
|   | P      | PRELIMINARY. Refers to  preliminary data or manuals which may consist of either:                                                   |
|   |   |                                                                                                                               |
|   |   | •                                                                                                                             | one-time issue not  maintained by revision service, or |
|   |   |                                                                                                                               |   |
|   |   | •                                                                                                                             | preliminary issues  maintained by revision service until final manual or data delivery, or |
|   |   |                                                                                                                               |   |
|   |   | •                                                                                                                             | supply of best available  data under final format with progressive completion through revision service. |

 
| ATA | Manuals established with  reference to ATA specification 2200 (iSpec 2200). Information Standards for  Aviation Maintenance. |
|-----|------------------------------------------------------------------------------------------------------------------------------|

 
| QUANTITY (Qty)   | Self explanatory.                                                                                                                                                                                |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |                                                                                                                                                                                             |
| DELIVERY (Deliv) | Delivery refers to  scheduled delivery dates and is expressed in either the number of  corresponding days prior to first Aircraft delivery, or nil (0) corresponding  to the first delivery day. |
|             |                                                                                                                                                                                             |
|             | The number of days  indicated shall be rounded up to the next regular revision release date.                                                                                                     |

 

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| **NOMENCLATURE**                     | ** ** | **Abbr** | ** ** | **Form** | ** ** | **Type** | ** ** | **ATA** | ** ** | **Qty** | ** ** | **Deliv** | ** ** | **Comments**                                                                                                                                                                                   | ** ** |
|--------------------------------------|------------|----------|------------|----------|------------|----------|------------|---------|------------|---------|------------|-----------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| **OPERATIONAL MANUALS AND DATA**     |       |     |       |     |       |     |       |    |       |    |       |      |       |                                                                                                                                                                                           |       |
| Cabin Attendant Operating Manual     |       | CAOM     |       | P2       |       | C        |       | NO      |       | 1       |       | 90        |       | Only provided in existing customization                                                                                                                                                        |       |
| Flight Crew Operating Manual         |       | FCOM     |       | P2       |       | C        |       | NO      |       | 1       |       | 90        |       | Plus one copy per Aircraft at delivery                                                                                                                                                         |       |
|                                 |       | FCOM     |       | CD-A     |       | C        |       | NO      |       | 1       |       | 90        |       |                                                                                                                                                                                           |       |
|                                 |       | FCOM     |       | DD       |       | C        |       | NO      |       | 1       |       | 90        |       | SGML data for further processing by the Buyer                                                                                                                                                  |       |
| Flight Manual                        |       | FM       |       | P1       |       | C        |       | NO      |       | 1       |       | 0         |       | Plus one copy per Aircraft at delivery                                                                                                                                                         |       |
| Master Minimum Equipment List        |       | MMEL     |       | P2       |       | C        |       | NO      |       | 1       |       | 180       |       | Plus one copy per Aircraft at delivery                                                                                                                                                         |       |
|                                 |       | MMEL     |       | DD       |       | C        |       | NO      |       | 1       |       | 180       |       | SGML data for further processing by the Buyer                                                                                                                                                  |       |
| Quick Reference Handbook             |       | QRH      |       | P2       |       | C        |       | NO      |       | 1       |       | 90        |       | Plus one copy per Aircraft at delivery                                                                                                                                                         |       |
| Trim Sheet                           |       | TS       |       | P2       |       | C        |       | NO      |       | 1       |       | 0         |       |                                                                                                                                                                                           |       |
| Weight and Balance Manual            |       | WBM      |       | P1       |       | C        |       | YES     |       | 1       |       | 0         |       | For the WBM the flight deck copy is an advance copy  only of the customized manual, not subject to revision or updating. Weighing  Equipment List delivered two weeks after Aircraft delivery. |       |
| Performance Engineer’s Programs |       | PEP      |       | CD-A     |       | C        |       | NO      |       | 1       |       | 90        |       | One per operator and a/c type                                                                                                                                                                  |       |
| Performance Programs Manual          |       | PPM      |       | CD-A     |       | C        |       | NO      |       | 1       |       | 90        |       | Included in the PEP CD-Rom                                                                                                                                                                     |       |

 

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| **NOMENCLATURE**                                                       | ** ** | **Abbr** | ** ** | **Form** | ** ** | **Type** | ** ** | **ATA** | ** ** | **Qty** | ** ** | **Deliv** | ** ** | **Comments**                                                                                                                                                                                                                                        |   |
|------------------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|---------|------------|---------|------------|-----------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **MAINTENANCE  AND ASSOCIATED MANUALS**                                |       |     |       |     |       |     |       |    |       |    |       |      |       |                                                                                                                                                                                                                                                |   |
| APU Build-up  Manual                                                   |       | ABM      |       | P2       |       | C        |       | NO      |       | 1       |       | 90        |       | Only for A300-A300-600/A310 (for other A/C types  integrated into AMM).One per operator.                                                                                                                                                            |   |
| Aircraft  Maintenance Manual                                           |       | AMM      |       | CD-A     |       | C        |       | YES     |       | 2       |       | 90        |       | Contained on “ADRES” CD-ROM for SA and LR Aircraft                                                                                                                                                                                        |   |
|                                                                   |       | AMM      |       | CD-P     |       | C        |       | YES     |       | 2       |       | 90        |       | Optional to CD-A                                                                                                                                                                                                                                    |   |
|                                                                   |       | AMM      |       | DD       |       | C        |       | YES     |       | 1       |       | 90        |       | SGML data for further processing by the Buyer                                                                                                                                                                                                       |   |
| Aircraft  Schematic Manual                                             |       | ASM      |       | CD-P     |       | C        |       | YES     |       | 2       |       | 90        |       |                                                                                                                                                                                                                                                |   |
|                                                                   |       | ASM      |       | DD       |       | C        |       | YES     |       | 1       |       | 90        |       | SGML data for further processing by the Buyer                                                                                                                                                                                                       |   |
| Aircraft Wiring  Lists                                                 |       | AWL      |       | CD-P     |       | C        |       | YES     |       | 2       |       | 90        |       |                                                                                                                                                                                                                                                |   |
|                                                                   |       | AWL      |       | DD       |       | C        |       | YES     |       | 1       |       | 90        |       | SGML data for further processing by the Buyer                                                                                                                                                                                                       |   |
| Aircraft Wiring  Manual                                                |       | AWM      |       | CD-P     |       | C        |       | YES     |       | 2       |       | 90        |       |                                                                                                                                                                                                                                                |   |
|                                                                   |       | AWM      |       | DD       |       | C        |       | YES     |       | 1       |       | 90        |       | SGML data for further processing by the Buyer                                                                                                                                                                                                  |   |
| Component  Location Manual                                             |       | CLM      |       | P2       |       | C        |       | NO      |       | 1       |       | 90        |       | For SA and LR Aircraft                                                                                                                                                                                                                              |   |
| Consumable  Material List                                              |       | CML      |       | CD-P     |       | G        |       | YES     |       | 1       |       | 180       |       |                                                                                                                                                                                                                                                |   |
| Duct Repair  Manual                                                    |       | DRM      |       | CD-P     |       | E        |       | NO      |       | 1       |       | 90        |       | Upon request                                                                                                                                                                                                                                        |   |
| Electrical Load  Analysis                                              |       | ELA      |       | D        |       | C        |       | NO      |       | 1       |       | 0         |       |                                                                                                                                                                                                                                                |   |
| Electrical  Standard Practices Manual                                  |       | ESPM     |       | CD-P     |       | G        |       | YES     |       | 1       |       | 90        |       |                                                                                                                                                                                                                                                |   |
|                                                                   |       | ESPM     |       | DD       |       | G        |       | YES     |       | 1       |       | 90        |       | SGML data for further processing by the Buyer                                                                                                                                                                                                       |   |
| Electrical  Standard Practices booklet                                 |       | ESP      |       | P2       |       | G        |       | NO      |       | 1       |       | 90        |       |                                                                                                                                                                                                                                                |   |
| Fuel Pipe Repair  Manual                                               |       | FPRM     |       | P2       |       | G        |       | NO      |       | 1       |       | 90        |       | Upon request                                                                                                                                                                                                                                        |   |
| Illustrated Parts  Catalog (Airframe)/Additional Cross Reference Table |       | IPC/ACRT |       | CD-A     |       | C        |       | YES     |       | 1       |       | 90        |       | Contained on “ADRES” CD-ROM for SA and LR Aircraft                                                                                                                                                                                        |   |
|                                                                   |       | IPC/ACRT |       | CD-P     |       | C        |       | YES     |       | 1       |       | 90        |       | Optional to CD-A                                                                                                                                                                                                                                    |   |
| Power Plant  Build-Up Manual                                           |       | PBM      |       |     |       | C        |       | NO      |       | 1       |       | 90        |       | Supplied by power plant manufacturer - Only supplied  by Airbus for A300.One per operator                                                                                                                                                           |   |
| Illustrated Parts  Catalog (Power Plant)                               |       | PIPC     |       |     |       | C        |       | NO      |       | 1       |       | 90        |       | Integrated in the Airframe IPC for SA and LR Aircraft  for IAE engines (SA Aircraft) and Rolls-Royce engines (A340 Aircraft).For  other Aircraft and engine types, supplied by Propulsion Systems Manufacturer  concurrently with the Airframe IPC. |   |

 

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| **NOMENCLATURE**                        | ** ** | **Abbr** | ** ** | **Form** | ** ** | **Type** | ** ** | **ATA** | ** ** | **Qty** | ** ** | **Deliv** | ** ** | **Comments**                                                                                                                                                                        |   |
|-----------------------------------------|------------|----------|------------|----------|------------|----------|------------|---------|------------|---------|------------|-----------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **MAINTENANCE  AND ASSOCIATED MANUALS** |       |     |       |     |       |     |       |    |       |    |       |      |       |                                                                                                                                                                                |   |
| Maintenance  Facility Planning          |       | MFP      |       | CD-P     |       | E        |       | NO      |       | 1       |       | 360       |       | Grouped with AC on one single CD-ROM                                                                                                                                                |   |
| Maintenance  Planning Document          |       | MPD      |       | CD-P     |       | E        |       | YES     |       | 1       |       | 360       |       |                                                                                                                                                                                |   |
| Maintenance  Review Board               |       | MRB      |       | P2       |       | E        |       | NO      |       | 1       |       | 360       |       | MRB Report includes the Certification Maintenance  Requirements (CMR) and Airworthiness Limitation Items (ALI) documents.  One per operator.                                   |   |
| Support Equipment  Summary              |       | SES      |       | CD-P     |       | G        |       | NO      |       | 1       |       | 360       |       | Grouped with TEM, TEI on one single CD-ROM. One per  operator.                                                                                                                      |   |
| Tool and  Equipment Bulletins           |       | TEB      |       | P1       |       | E        |       | NO      |       | 1       |       | —    |       | One per operator                                                                                                                                                                    |   |
| Tool and  Equipment Drawings            |       | TED      |       | AC       |       | E        |       | NO      |       | 1       |       | 360       |       | One per operator                                                                                                                                                                    |   |
| Tool and  Equipment Index               |       | TEI      |       | CD-P     |       | E        |       | NO      |       | 1       |       | 360       |       | Grouped with TEM, SES on a single CD-ROM.  One per operator.                                                                                                                   |   |
| Illustrated Tool  and Equipment Manual  |       | TEM      |       | CD-P     |       | E        |       | YES     |       | 1       |       | 360       |       | Grouped with TEM, SES on a single CD-ROM.  One per operator.                                                                                                                   |   |
| Technical  Publications Combined Index  |       | TPCI     |       | CD-A     |       | C        |       | NO      |       | 1       |       | 90        |       | One per operator                                                                                                                                                                    |   |
| Trouble Shooting  Manual                |       | TSM      |       | DD       |       | C        |       | YES     |       | 1       |       | 90        |       | SGML data for further processing by the Buyer                                                                                                                                       |   |
|                                    |       | TSM      |       | CD-A     |       | C        |       | YES     |       | 2       |       | 90        |       | Contained on “CAATS” CD-ROM for SA and LR Aircraft                                                                                                                        |   |
|                                    |       | TSM      |       | CD-P     |       | C        |       | YES     |       | 2       |       | 90        |       | Optional to CD-A                                                                                                                                                                    |   |
|                                    |       | IPC/ACRT |       | DD       |       | C        |       | YES     |       | 1       |       | 90        |       | Issue date to be coordinated with Initial  Provisioning Data delivery included in EXHIBIT “E” Spare Parts  Procurement.  Useful for SGML data  processing only. |   |

 

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| **NOMENCLATURE**                  | ** ** | **Abbr** | ** ** | **Form** | ** ** | **Type** | ** ** | **ATA** | ** ** | **Qty** | ** ** | **Deliv** | ** ** | **Comments**                               |   |
|-----------------------------------|------------|----------|------------|----------|------------|----------|------------|---------|------------|---------|------------|-----------|------------|--------------------------------------------|--------|
| **STRUCTURAL  MANUALS**           |       |     |       |     |       |     |       |    |       |    |       |      |       |                                       |   |
| Nondestructive  Testing Manual    |       | NTM      |       | CD-P     |       | E        |       | YES     |       | 1       |       | 90        |       | One per operator                           |   |
| Nacelle  Structural Repair Manual |       | NSRM     |       | P2       |       | E        |       | YES     |       | 1       |       | 90        |       | Supplied by Propulsion System Manufacturer |   |
|                              |       | NSRM     |       | F        |       | E        |       | YES     |       | 1       |       | 90        |       | Supplied by Propulsion System Manufacturer |   |
| Structural Repair  Manual         |       | SRM      |       | CD-P     |       | E        |       | YES     |       | 1       |       | 90        |       |                                       |   |

 

125

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| **NOMENCLATURE**                             | ** ** | **Abbr** | ** ** | **Form** | ** ** | **Type** | ** ** | **ATA** | ** ** | **Qty** | ** ** | **Deliv** | ** ** | **Comments**                   |   |
|----------------------------------------------|------------|----------|------------|----------|------------|----------|------------|---------|------------|---------|------------|-----------|------------|--------------------------------|--------|
| **OVERHAUL  DATA**                           |       |     |       |     |       |     |       |    |       |    |       |      |       |                           |   |
| Component  Evolution List                    |       | CEL      |       | CD-P     |       | G        |       | NO      |       | 1       |       | —    |       | Delivered as follow-on for CDS |   |
| Component  Maintenance Manual B Manufacturer |       | CMMM     |       | CD-P     |       | E        |       | YES     |       | 1       |       | 90        |       |                           |   |
| Component  Maintenance Manual B Vendor       |       |     |       |     |       |     |       |    |       |    |       |      |       |                           |   |
|                                         |       | CMMV     |       | FC       |       | E        |       | YES     |       | 1       |       | 90        |       | One per operator               |   |
| Cable Fabrication  Manual                    |       | CFM      |       | CD-P     |       | E        |       | NO      |       | 1       |       | 90        |       | One per operator               |   |

 

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| **NOMENCLATURE**                    | ** ** | **Abbr** | ** ** | **Form** | ** ** | **Type** | ** ** | **ATA** | ** ** | **Qty** | ** ** | **Deliv** | ** ** | **Comments**     |   |
|-------------------------------------|------------|----------|------------|----------|------------|----------|------------|---------|------------|---------|------------|-----------|------------|------------------|--------|
| **ENGINEERING  DOCUMENTS**          |       |     |       |     |       |     |       |    |       |    |       |      |       |             |   |
| Process and  Material Specification |       | PMS      |       | F        |       | G        |       | NO      |       | 1       |       | 0         |       | One per operator |   |
| Standards Manual                    |       | SM       |       | CD-P     |       | G        |       | NO      |       | 1       |       | 180       |       | One per operator |   |

 

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| **NOMENCLATURE**                               | ** ** | **Abbr** | ** ** | **Form** | ** ** | **Type** | ** ** | **ATA** | ** ** | **Qty** | ** ** | **Deliv** | ** ** | **Comments**                                                                              |   |
|------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|---------|------------|---------|------------|-----------|------------|-------------------------------------------------------------------------------------------|--------|
| **MISCELLANEOUS  PUBLICATIONS**                |       |     |       |     |       |     |       |    |       |    |       |      |       |                                                                                      |   |
| Airplane  Characteristics for Airport Planning |       | AC       |       | CD-P     |       | E        |       | NO      |       | 1       |       | 360       |       | Grouped with MFP on one single CD-ROM                                                     |   |
| ATA Breakdown  Index                           |       | ATBI     |       | P1       |       | E        |       | NO      |       | 1       |       | 360       |       | Optional                                                                                  |   |
| CADETS (Technical  Publications Training)      |       | CADE     |       | CD-A     |       | G        |       | NO      |       | 1       |       | 360       |       |                                                                                      |   |
| Aircraft Recovery  Manual                      |       | ARM      |       | CD-P     |       | E        |       | YES     |       | 1       |       | 90        |       |                                                                                      |   |
| Crash Crew Chart                               |       | CCC      |       | P1       |       | E        |       | NO      |       | 1       |       | 180       |       |                                                                                      |   |
| Cargo Loading  System Manual                   |       | CLS      |       | P2       |       | E/C      |       | NO      |       | 1       |       | 180       |       | CLS is Envelope (E) for SA and LR Aircraft and  Customized (C) for WB Aircraft. |   |
| Guidelines for  Customer Originated Changes    |       | GCOC     |       | P1       |       | G        |       | NO      |       | 1       |       | 0         |       |                                                                                      |   |
| List of  Applicable Publications               |       | LAP      |       | P2       |       | C        |       | NO      |       | 1       |       | 90        |       |                                                                                      |   |
| List of  Radioactive and Hazardous Elements    |       | LRE      |       | CD-P     |       | G        |       | NO      |       | 1       |       | 90        |       |                                                                                      |   |
| Livestock  Transportation Manual               |       | LTM      |       | P2       |       | E        |       | NO      |       | 1       |       | 90        |       |                                                                                      |   |
| Service Bulletins                              |       | SB       |       | D        |       | C        |       | YES     |       | 1       |       | 0         |       | SGML data for further processing by the Buyer                                             |   |
| Service  Information Letters                   |       | SIL      |       | CD-A     |       | E        |       | YES     |       | 1       |       | 0         |       | On TPCI-CD-ROM                                                                            |   |
| Supplier Product  Support Agreements           |       | SPSA     |       | P2       |       | E        |       | NO      |       | 1       |       | 360       |       | Envelope (E) for SA and LR Aircraft.  One per operator                          |   |
| Supplier Product  Support Agreements 2000      |       | SPSA     |       | CD-P     |       | G        |       | NO      |       | 1       |       | 360       |       | Based on General Conditions of Purchase (GCP)  2000.  One per operator               |   |
| Transportability  Manual                       |       | TM       |       | P1       |       | G        |       | NO      |       | 1       |       | 180       |       | One per operator                                                                          |   |
| Vendor  Information Manual                     |       | VIM      |       | CD-A     |       | G        |       | NO      |       | 1       |       | 360       |       | One per operator                                                                          |   |
| Vendor  Information Manual GSE                 |       | VIM/GSE  |       | CD-A     |       | G        |       | NO      |       | 1       |       | 360       |       | One per operator                                                                          |   |
| Vendor Product  Support Agreements             |       | VPSA     |       | P2       |       | E        |       | NO      |       | 1       |       | 360       |       | Envelope (E) for WB Aircraft. One per operator.                                      |   |

 

**WB = WideBody: A310/A300-600**

**SA = SingleAisle: A318/A319/A320/A321**

**LR = LongRange: A330/A340**

 

128

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**APPENDIX 4**

 

[Copies of Clauses 7.2and 8.5 of the General Terms Agreement]

 

129

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**EXHIBIT E****                                     ****CERTIFICATE OF INSURANCE**

 

[Refer to Aircraft LeaseAgreement dated as **[Redacted]**betweenLESSEE and LESSOR (the “Lease”). If applicable, insurance certificates from both the insurers andreinsurers will be provided.  If there isa LESSOR’s Lender, include references to it where appropriate after referencesto LESSOR.]

 

To:                            INTERNATIONAL LEASE FINANCE CORPORATION (“LESSOR”)

UntilJanuary 31, 2004:

1999Avenue of the Stars, 39th Floor

LosAngeles, California 90067, U.S.A.

 

Onand after February 1, 2004:

10250Constellation Boulevard, 34th Floor

LosAngeles, California 90067, U.S.A.

 
| Re:    | FRONTIER AIRLINES, INC. (“LESSEE”) |
|--------|----------------------------------------------|
|   | Airbus A319-100                              |   |
|   | Manufacturer’s Serial No.:              | [TBD] |
|   | Registration Mark:                           | N-            (the “Aircraft”) |

 

Thefollowing security has subscribed to the insurance and/or reinsurance policies:

 

[LISTCOMPANIES & PERCENTAGES]

 

THISIS TO CERTIFY THAT, as Insurance Brokers, we have effected Fleet Insurance inrespect of aircraft owned or operated by LESSEE (including the Aircraft) asspecified below.

 

**AIRCRAFT HULL ALL RISKS**

 

COVERING:

 

Allrisks of physical loss or damage to the Aircraft from any cause (subject onlyto the exclusions as specified below), for an Agreed Value of Aircraft in theamount of US$[list amount calculated in accordance with Article 19.1]

 

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DEDUCTIBLES:

 

**[Redacted]**each and every loss (or such lesser amount as applicable to the rest ofLESSEE’s fleet).  Not applicable to TotalLoss/Constructive Total Loss or Arranged Total Loss

 

GEOGRAPHICAL COVERAGE:

 

Worldwide

 

**AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY**

 

COVERING:

 

AircraftThird Party, **[Redacted]****[Redacted]** for combined single limit of notless than **[Redacted]** (or suchhigher amount as LESSEE may carry on any other aircraft in its fleet) any oneaccident/occurrence (but in the aggregate in relation to Products Liability),extended to cover LESSEE’s liability under the Lease to the extent of the riskscovered by the policy including war and allied perils under Extended CoverageEndorsement as per AVN 52D (however, the total War and Allied PerilsLiability Coverage including Third Party War Risks must be the same amount asthe combined single limit either by the purchase of Excess Third Party War Risksinsurance or through a government indemnity in accordance with Article 18.2)subject only to exclusions as specified below, unless otherwise agreed byLESSOR in writing

 

GEOGRAPHICAL LIMITS:

 

Worldwide

 

**HULL WAR AND ALLIED PERILS**

 

COVERING:

 

HullWar Risks as per LSW555.B, but including (a) confiscation or requisition(including by State of Registration and state where airline is domiciled), (b) hijackingor other unlawful seizure or wrongful exercise of control of the Aircraft orcrew in flight (including any attempt at such seizure or control) and coveringclaims excluded from Hull All Risks Policy while Aircraft outside Assured’scontrol by reason of perils insured under this policy, for an Agreed Value ofAircraft in the amount of US$[list amount calculated in accordance with Article 19.1]

 

131

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DEDUCTIBLE:

 

Nodeductible

 

GEOGRAPHICAL LIMITS:

 

Worldwide

 

**AIRCRAFT SPARES ALL RISKS INSURANCE**

 

COVERING:

 

Allrisks of physical loss or damage to Aircraft Parts or spares or Engines at alltimes when removed from the Aircraft from whatever cause, subject only to theexclusions specified below, including the risks set down in AVN 48B otherthan paragraphs (a) and (b) thereof (but including paragraph (a) inrespect of transit risks) for limits of not less than:

 

**[Redacted]**

**[Redacted]**

 

andcovering:

 

**[Redacted]**

 

**[Redacted]**

 

DEDUCTIBLE:

 

**[Redacted]**

 

GEOGRAPHICAL COVERAGE:

 

Worldwide

 

**CONTRACTUAL INDEMNITY**

 

LESSEEhas insurance coverage for the indemnities agreed to by LESSEE pursuant to Article 17of the Lease.

 

132

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**PERIOD OF COVERAGE (ALL POLICIES)**

 

Fromthe Delivery Date of Aircraft to [EXPIRATION DATE]

 

Itis further certified that LESSOR has an interest in respect of the Aircraftunder the Lease.  Accordingly, withrespect to losses occurring during the period from the Effective Date until theexpiry of the Insurance or (except as provided in the next sentence) until theexpiry or agreed termination of the Lease or until the obligations under theLease are terminated by any action of the Insured or LESSOR and inconsideration of the Additional Premium it is confirmed that the Insuranceafforded by the Policy is in full force and effect and it is further agreedthat the provisions set forth below are specifically endorsed to thePolicy.  Notwithstanding the foregoing,if LESSEE has retained care, custody and control of the Aircraft even aftersuch expiry or agreed termination of the Lease and LESSOR has not expresslyagreed to insure the Aircraft, the Policy will remain in full force and effectuntil the earlier of expiry of the Insurance or the return of the Aircraft toLESSOR.

 

**1.****                           ****UNDER THE HULL (ALL RISKSAND HULL WAR AND ALLIED RISKS) AND AIRCRAFT SPARES INSURANCES**

 

(a)                                              **[Redacted]** In respect of any claim on the Aircraft thatbecomes payable on the basis of a Total Loss, settlement will be made to, or tothe order of LESSOR as sole loss payee, up to the Agreed Value.  With respect to repairable damage to anAircraft or Engine, LESSOR will receive all insurance proceeds in excess of **[Redacted]** provided that upon receipt bythe insurance broker of written notice of a material default on the part ofLESSEE, all insurance proceeds which otherwise would be payable to LESSEE willbe made directly to LESSOR.  In respectof any other claim, settlement (net of any relevant policy deductible) will bemade with such party(ies) as may be necessary to repair the Aircraft unlessotherwise agreed after consultation between the Insurers and the Insured and,where necessary under the terms of the Lease, LESSOR.  Such payments will only be made provided theyare in compliance with all applicable laws and regulations.

 

(b)                                             Insurers agree **[Redacted]**.

 

(c)                                              Insurers have no right to replace the Aircrafton a Total Loss (arranged, constructive or otherwise).

 

(d)                                             Insurers recognize that LESSEE and LESSORhave agreed that a Total Loss of the Airframe will constitute a Total Loss ofthe Aircraft.

 

133

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(e)                                              In the event of a Total Loss of the Aircraft,Insurers agree to pay LESSOR all amounts up to the Agreed Value based solelyupon LESSOR’s (not LESSEE’s) execution of the appropriate form ofrelease/discharge document.  LESSOR maysign any required release in lieu of the Insured in the event of a Total Loss,Constructive Total Loss or Arranged Total Loss.

 

(f)                                                “Cut-through clause”: Subject to the terms ofArticle 18.14, Insurers confirm that in the event of any claim arisingunder the hull insurances, the Reinsurers will in lieu of payment of theInsurers, its successors in interest and assigns, pay to the person named assole loss payee under the original insurances that portion of any loss due forwhich the Reinsurers would otherwise be liable to pay the Insurers (subject toproof of loss), it being understood and agreed that any such payment by anyReinsurers will fully discharge and release such Reinsurer from any and allfurther liability in connection therewith and provide for payment to be madenotwithstanding (i) any bankruptcy, insolvency, liquidation or dissolutionof the Insurers and (ii) that the Insurers have made no payment under theoriginal insurance policies.

 

(g)                                             Insurers confirm that under the insurancepolicies, if the Insured installs an engine owned by a third party on theAircraft, either (i) the hull insurance will automatically increase tosuch higher amount as is necessary in order to satisfy both LESSOR’srequirement to receive the Agreed Value in the event of a Total Loss, ConstructiveTotal Loss or Arranged Total Loss and the amount required by the third partyengine owner, or (ii) separate additional insurance on such engine willattach in order to satisfy separately the requirements of the Insured to suchthird party engine owner.

 

**2.****                           ****UNDER THE LEGAL LIABILITYINSURANCE**

 

(a)                                              Subject to the provisions of thisEndorsement, the Insurance will operate in all respects as if a separate Policyhad been issued covering each party insured hereunder, but this provision willnot operate to include any claim arising howsoever in respect of loss or damageto the Aircraft insured under the Hull or Spares Insurance of the Insured.  Notwithstanding the foregoing the totalliability of Insurers in respect of any and all Insureds will not exceed the limitsof liability stated in the Policy.

 

(b)                                             The Insurance provided hereunder will beprimary and without right of contribution from any other insurance which may beavailable to LESSOR.

 

134

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**3.****                           ****UNDER ALL INSURANCES**

 

(a)                                              LESSOR, its successors and assigns, and (withrespect to Aviation and Airline General Third Party Liability only) itsdirectors, officers and employees for their respective rights and interests,are included as Additional Insureds.

 

(b)                                             The cover afforded to LESSOR by the Policy inaccordance with this Endorsement will not be invalidated by any act or omission(including misrepresentation and non-disclosure) of any other person or partywhich results in a breach of any term, condition or warranty of the Policy.

 

(c)                                              LESSOR will have no responsibility forpremium and insurers will waive any right of set-off or counterclaim againstLESSOR except in respect of outstanding premium in respect of the Aircraft,provided that Insurer may only set-off for premiums against the proceeds of thehull insurance for outstanding premiums in connection with hull all risks andhull war and allied perils insurance.

 

(d)                                             Upon payment of any loss or claim to or onbehalf of LESSOR, Insurers will to the extent and in respect of such payment bethereupon subrogated to all legal and equitable rights of LESSOR indemnifiedhereby (but not against LESSOR). Insurers will not exercise such rights without the consent of thoseindemnified, such consent not to be unreasonably withheld.  At the expense of Insurers LESSOR will do allthings reasonably necessary to assist the Insurers to exercise said rights.

 

(e)                                              Except in respect of any provision forCancellation or Automatic Termination specified in the Policy or any endorsementthereof, cover provided by this Endorsement may only be cancelled or materiallyaltered in a manner adverse to LESSOR by the giving of not less than **[Redacted]** notice in writing toLESSOR.  Notice will be deemed tocommence from the date such notice is given by the Insurers.  Such notice will NOT, however, be given atnormal expiry date of the Policy or any endorsement.

 

**4.****                           ****EXCEPT AS SPECIFICALLYVARIED OR PROVIDED BY THE TERMS OF THIS CERTIFICATE**

 

(a)                                              LESSOR IS COVERED BY THE POLICY SUBJECT TOALL TERMS, CONDITIONS, LIMITATIONS, WARRANTIES, EXCLUSIONS AND CANCELLATIONPROVISIONS THEREOF.

 

(b)                                             THE POLICY WILL NOT BE VARIED BY ANYPROVISIONS CONTAINED IN THE LEASE WHICH PURPORT TO SERVE AS AN ENDORSEMENT ORAMENDMENT TO THE POLICY.

 

135

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SUBJECT(save as specifically stated in this Certificate) to policy terms, conditions,limitations and exclusions.

 

Yours faithfully,

[BROKERS]

 

136

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**EXHIBIT F****                                     ****BROKERS’ LETTER OFUNDERTAKING**

 

To:                                                                  INTERNATIONAL LEASE FINANCE CORPORATION

[UntilJanuary 31, 2004]

1999Avenue of the Stars, 39th Floor

LosAngeles, California 90067, U.S.A.

 

[Onand after February 1, 2004]

10250Constellation Boulevard, 34th Floor

LosAngeles, California 90067, U.S.A.

 
| Date: | Our Ref: |
|-------|----------|

 
|   Re: | FRONTIER AIRLINES, INC. (“LESSEE”) |
|-----------------|----------------------------------------------|
|            | Airbus A319-100                              |   |   |
|            | Manufacturer’s Serial No.:              | [TBD] |   |
|            | Registration Mark:                           | N-            (the “Aircraft”) |   |

 

 

Dear Sirs:

 

Dear Sirs:

 

Weconfirm that insurance has been effected for the account of [LESSEE] (the “Operator”)covering all aircraft owned or operated by them, including the above-referencedaircraft (the “Aircraft”).  [Alsoconfirm, if applicable, the amount of any hull all risks or hull war and alliedperils on the Aircraft which LESSEE is carrying in excess of the Agreed Value(which excess insurance would be payable to LESSEE).  Such excess insurance may not exceed**[Redacted]**]

 

Pursuantto instructions received from the Operator and in consideration of yourapproving the arrangement of the Operator’s “Fleet Policy” (under which theabove-referenced Aircraft is insured) through the intermediary of ourselves asBrokers in connection with the insurance (the “Insurance”) mentioned inour Certificate of Insurance (Reference No. [     ]dated [     ] and attached hereto), we undertake asfollows:

 

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1.                             In relation to the Hull and War RisksInsurance to hold to your order the insurance Slips or Contracts and anyPolicies which may be issued or any policies substituted (with your consent)therefor (but only insofar as the same relate to the Aircraft only) and thebenefit of the Hull and War Risks Insurance thereunder, but subject to ourrequirements to operate the Fleet Policy insofar as it relates to any otheraircraft insured thereunder.

 

2.                             To advise you of any of the following:

 

(a)                                              If any insurer or the Operator cancels orgives notice of cancellation of any of the Insurance at least **[Redacted]** (or such lesser period as may beavailable in the case of War and Allied Perils) before such cancellation is totake effect in respect of the Aircraft.

 

(b)                                             Of any act or omission or of any event(including non-payment of premium) of which we have knowledge or are notifiedand which might invalidate or render unenforceable in whole or in part any ofthe Insurance, insofar as the same relate to the Aircraft.

 

(c)                                              If we do not receive instructions to renewall or any of the Insurance at least **[Redacted]**prior to their expiration.

 

(d)                                             If any of the Insurance are not renewed onthe same terms (save as to premium and period of cover and as you mightotherwise have notified us to be acceptable to you) **[Redacted]**prior to expiry thereof.

 

Theabove undertakings are given subject to our continuing appointment for the timebeing as Insurance Brokers to the Operator.

 

Wealso undertake to advise you if we cease to be Insurance Brokers to theOperator.

 

Yoursfaithfully,

 

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**EXHIBIT G****                                   ****ESTOPPEL AND ACCEPTANCECERTIFICATE**

 

FRONTIERAIRLINES, INC. (“LESSEE”), a corporation organized under the laws ofColorado does hereby agree as follows:

 

1.                             LESSEE and INTERNATIONAL LEASE FINANCECORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as ofOctober 23, 2003  (hereinafterreferred to as the “Lease”). Words used herein with capital letters and not otherwise defined willhave the meanings set forth in the Lease.

 

2.                             LESSEE has this         day of                     ,         (Time:                     )at                                         received from LESSOR possession of:

 

(a)                                              One (1) Airbus A319-100 aircraft bearingManufacturer’s serial number           and U.S. registration mark           ,together with two (2) CFM56-5B5/P engines bearing manufacturer’s serialnumbers            and           (each of which has 750 or more rated take-off horsepower) and an APU bearingmanufacturer’s serial number         ,all in airworthy condition.

 

(b)                                             All Aircraft Documentation, including theusual and customary manuals, logbooks, flight records and historicalinformation regarding the Aircraft, Engines, APU and Parts.

 

(c)                                              The Manufacturer flyaway equipment (SFE) andLESSOR-furnished equipment (BFE) attached hereto.

 

3.                             The Aircraft had the following seatingconfiguration at Delivery:

 

              first class seats

 

              business class seats

 

              coach class seats

 

4.                             The certified thrust rating of the Engines is                                  pounds (from data plate).

 

5.                             The maximum gross takeoff weight of theAircraft is                                   pounds.

 

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6.                             The amount of fuel on board at Delivery is                     (circle one) pounds/kilos (                gallons).

 

7.                             All of the foregoing has been delivered andaccepted on the date set forth above to LESSEE’s full satisfaction and pursuantto the terms and provisions of the Lease.

 

8.                             The Agreed Value of the Aircraft is US$                              .

 

9.                             The Aircraft, Engines, APU, Parts andAircraft Documentation as described in the Lease have been fully examined byLESSEE and have been received in a condition fully satisfactory to LESSEE andin full conformity with the Lease in every respect.

 

10.                       The Lease is in full force and effect, LESSORhas fully, duly and timely performed all of its obligations of every kind ornature thereunder and LESSEE has no claims, offsets, deductions, set-off ordefenses of any kind or nature in connection with the Lease.

 

11.                       LESSOR’s Lender may rely upon all of theforegoing in granting substantial financial accommodations to LESSOR and LESSEEunderstands and agrees that any funds being advanced by LESSOR’s Lender will bemade in reliance upon the foregoing.

 

12.                       LESSEE has obtained all required permits,authorizations, licenses and fees of the State of Registration or anyGovernment Entity thereof necessary in order for LESSEE to operate the Aircraftas permitted by the terms of the Lease.

 

Datedon the date set forth above

 
|   | FRONTIER AIRLINES, INC. |
|--------|-------------------------|
|   |                    |
|   | By:                     |   |   |
|   |                    |   |   |
|   | Title:                  |   |   |

 

ATTACHMENTS:

1.                                     List of Aircraft Documentation

2.                                     List of Manufacturer Flyaway Equipment (SFE)

3.                                     List of LESSOR-Furnished Equipment (BFE)

 

140

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**ATTACHMENT 1 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE**

 

**LIST OF AIRCRAFT DOCUMENTATION**

 

(to be replaced at Delivery by actual inventory of manuals and records)

 

MANUALS (MINIMUM)

 

1.                                     Approved Airplane Flight Manual

2.                                     Airplane Flight Operation Manual

3.                                     Quick Reference Handbook

4.                                     Weight and Balance Manual

5.                                     Aircraft Maintenance Manual

6.                                     Illustrated Parts Catalog

7.                                     Structural Repair Manual

8.                                     Wiring Diagram Manual

 

141

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AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS

 

1.                                       Copies of original Certificates delivered byAirbus:

a.  Airworthiness Certificate for Export

b.  Radio installation conformity certificate

c.  Noise limitation certificate

2.                                       Copies of original Documents delivered byAirbus:

a.  Airworthiness Directive Compliance list

b.  Aircraft inspection report

c.  Aircraft Definition Report

d.  Weighing report

3.                                       Copies of current Certificates:

a.  Airworthiness Certificate

b.  Noise limitation

c.  Radio license

d.  Interior material burn certificates

e.  Certificate of Export

f.  Aircraft deregistration confirmation

e.  Aircraft Registration

4.                                       Letters signed and stamped by QualityAssurance:

a.  Current aircraft hours and cycles

b.  Current engines hours and cycles

c.  Accident and Incident report

d.  Summary of Maintenance Program

e.  AD compliance during the lease term

5.                                       Aircraft log books and Aircraft readiness log

6.                                       Aircraft Hard Time (HT) inspection status

7.                                       One year forecast for HT inspection

8.                                       Aircraft Modification status, including servicebulletins

9.                                       Last weighing report prior to redelivery

10.                                 AD compliance report with original signoffs

11.                                 Routine and non-routine job cards of the last4C/5Y and 8C/10Y checks

12.                                 Past year pilots and maintenancediscrepancies

13.                                 Major and Minor structural repairs withapplicable approvals

14.                                 Compass Swing report of the last three years

15.                                 Cabin Configuration drawing (LOPA)

16.                                 Emergency equipment location drawing

17.                                 Engineering data package for allmodifications

 

ENGINES RECORDS

 

142

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1.                                       Last test cell run reports

2.                                       Life-limited Parts status and traceability

3                                          AD compliance report with original signoffs

4.                                       Engine Modification / service bulletin/inspection report and applicable forms

5.                                       Last heavy maintenance records for eachmodule

6.                                       Engine log books

7.                                       Engine removal history

8.                                       Past year trend monitoring reports

9.                                       Historical borescope reports

10.                                 Engine component report

 

APU RECORDS

 

1.                                       APU status (FH, FC, limits)

2.                                       Life-limited Part status and traceability

3.                                       AD compliance with original signoffs

4.                                       Modification status

5.                                       Last heavy maintenance documents

6.                                       APU log books

7.                                       Last test cell report

 

COMPONENT RECORDS

 

1.                                       Aircraft component inventory

2.                                       Hard time component inventory

3.                                       All required serviceable tags

4.                                       Landing Gear status with last overhaul andlife-limited Part status

5.                                       AD compliance with original signoffs

6.                                       Modification status

 

143

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**ATTACHMENT 2 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE**

 

 

**LIST OF MANUFACTURER FLYAWAY EQUIPMENT (SFE)**

 

144

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**ATTACHMENT 3 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE**

 

 

**LIST OF LESSOR-FURNISHED EQUIPMENT (BFE)**

 

145

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**EXHIBIT H****                                   ****OPINION OF COUNSEL**

 

 

[SEE ATTACHED]

 

146

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**EXHIBIT I****                                        ****ASSIGNMENT OF RIGHTS(AIRFRAME)**

 

This Assignment of Warrantyand Support Rights is made this             day of                               ,             (the “AssignmentAgreement”)

 

**BETWEEN**

 

(1)                                INTERNATIONAL LEASE FINANCE CORPORATION, acorporation organized and existing under the laws of the State of California,United States of America, having its principal corporate offices located at1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, U.S.A. (“**ILFC**”); and

 

(2)                                FRONTIER AIRLINES, INC. a Coloradocorporation whose address and principal place of business is at Frontier CenterOne, 7001 Tower Road, Denver, Colorado 80249, U.S.A. (“**LESSEE**”)

 

**1.****                           ****Preamble**.    Inconnection with the lease by ILFC to LESSEE of one Airbus A319-100aircraft bearing manufacturer’s serial number [TBD] (the “**Aircraft**”), reference is made to thefollowing documents:

 

(a)                                              the Airbus A319-100 Purchase Agreement betweenILFC and AVSA, S.A.R.L. (“**AVSA**”)dated as of January 11, 1999, as further amended (the “**Purchase Agreement**”), under which ILFCagreed to purchase the Aircraft;

 

(b)                                             the General Terms Agreement between ILFC andAVSA dated as of November 10, 1988 (the “**G.T.A.**”);

 

(c)                                              the Product Support Agreement (“**Exhibit E**”) applicable to the PurchaseAgreement (the “**Support Agreement**”);

 

(d)                                             the Aircraft Lease Agreement between ILFC andLESSEE dated as of May      , 2000 (the “**Lease Agreement**”);

 

(e)                                              the Participation Agreement between ILFC andLESSEE dated as of                                ,             (the “**Participation Agreement**”).

 

**2.****                           ****Assignment**.   Pursuant to the Lease Agreement, ILFC will lease the Aircraft to LESSEE,including in such Lease Agreement a commitment to assign to LESSEE certain

 

147

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warrantyand other rights related to the Aircraft under the Purchase Agreement, theG.T.A. and the Support Agreement.  Witheffect from the actual delivery date of the Aircraft by AVSA to ILFC in respectof (a), (b) and (d) below, and with effect from the date hereof inrespect of (c) below, ILFC therefore hereby assigns to LESSEE and LESSEEaccepts the assignment on the terms and conditions specified herein of the followingrights (the “**Rights**”) under theprovisions indicated (the “**AssignedProvisions**”) with respect to the Aircraft:

 

(a)                                              **[Redacted]**;

 

(b)                                             **[Redacted]**;

 

(c)                                              **[Redacted]**;

 

(d)                                             **[Redacted]**.

 

**3.****                           ****Conditions of Assignment**.   This Assignment Agreement is made subject to the following conditions:

 

(a)                                              LESSEE hereby agrees to be bound by and tocomply with all applicable terms, conditions and limitations of **[Redacted]**with respect to the exercise ofany of the Rights and **[Redacted]**.

 

(b)                                             Nothing contained herein shall subject AVSAto any liability or additional obligations whatsoever to which it would nototherwise be subject under the Purchase Agreement, the G.T.A. and the SupportAgreement or, except to the extent set forth in section 3(c) below,modify in any respect whatsoever its contractual rights under the saidagreements.

 

(c)                                              So long as this Assignment Agreement is infull force and effect, LESSEE and not ILFC will be responsible for compliancewith **[Redacted]**, in each case withrespect to the Aircraft.  Upontermination of this Assignment Agreement, ILFC shall once again be bound bysuch clauses with respect to the rights and benefits described in section 2above received by ILFC in connection with the Aircraft.

 

(d)                                             **[Redacted]**.

 

**4.****                           ****Reassignment**.   Upon termination of the Lease Agreement between ILFC and LESSEE, andprovided that LESSEE and ILFC shall have furnished AVSA with written noticethereof, upon receipt of such notice by AVSA, the rights contained herein shallautomatically be reassigned to ILFC.

 

148

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**5.****                           ****Assignment by LESSEE**.   Except as permitted under Article 24 of the Lease Agreement, therights of ILFC and LESSEE under this Assignment Agreement in respect of thePurchase Agreement, the G.T.A. and the Support Agreement shall not be furtherassigned by the parties hereto.

 

**6.****                           ****Notification**

 

(a)                                              It shall be a condition precedent to thisAssignment Agreement that this Assignment Agreement shall, at the expense ofLESSEE, be notified to AVSA within 2 weeks of the date hereof pursuant to Article 1690of the French Civil Code.

 

(b)                                             All notices and requests required orauthorized under this Assignment Agreement shall be given in writing either bypersonal delivery to a responsible officer of the party to whom the same isgiven or by internationally recognized courier service or by telefax directedas set forth below:

 

ILFCshall be addressed at:

 
|   | [Until January 31,  2004]  1999 Avenue of the Stars, 39th Floor  Los Angeles, California 90067, U.S.A.  [On and after February 1, 2004]  10250 Constellation Boulevard, 34th Floor  Los Angeles, California 90067, U.S.A. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                |   |
|   | Attention:                                                                                                                                                                                                                          | Senior Vice  President-Technical |
|   |                                                                                                                                                                                                                                |   |
|   | Fax:                                                                                                                                                                                                                                | **[Redacted]** |
|   | Telephone:                                                                                                                                                                                                                          | **[Redacted]** |

 

LESSEEshall be addressed at:
|   | Frontier Center One  7001 Tower Road  Denver, CO 80249, U.S.A. |
|--------|----------------------------------------------------------------|
|   |                                                           |   |
|   |                                                           |   |
|   | Attention:                                                     | General Counsel |

 

149

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|   | Fax:       | **[Redacted]** |
|--------|------------|----------------|
|   | Telephone: | **[Redacted]** |

 

AVSAshall be addressed at:
|   | 2 Rond-Point Maurice  Bellonte  31 700 Blagnac, France |
|--------|--------------------------------------------------------|
|   |                                                   |   |
|   | Attention:                                             | Director Contracts |
|   |                                                   |   |
|   | Fax:                                                   | **[Redacted]** |
|   | Telephone:                                             | **[Redacted]** |

 

orat such other address or to such other person as the party receiving the noticeor request may designate from time to time.

 

Such notice or request shall be deemed to be effective in the case of(aa) personal delivery, on the date upon which personally delivered,(bb) delivery by courier, on the date of receipt or (cc) telefaxtransmission, on the date of confirmation of successful transmission.

 

**7.****                           ****Consent of AVSA**.    Itshall be a condition precedent to this Assignment Agreement that AVSA executethe Consent contained in Schedule 1 hereto.

 

**8.****                           ****Applicable Law andJurisdiction**.    THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNEDBY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUTREGARD TO PRINCIPLES OF CONFLICTS OF LAW, AND THE PARTIES AGREE THAT ANYCOMPETENT FEDERAL COURT LOCATED IN NEW YORK, NEW YORK SHALL HAVE JURISDICTIONOVER ANY DISPUTE ARISING IN CONNECTION HEREWITH.  **[Redacted]**

 

**9.****                           ****Confidentiality**.    Subject to any legal or governmentalrequirements of disclosure, ILFC and LESSEE shall keep confidential the termsand conditions of this Assignment Agreement and the clauses from the G.T.A. andSupport Agreement provided to LESSEE provided that ILFC and LESSEE may disclosesuch materials to their professional advisors.

 

**IN WITNESS WHEREOF**, the parties have caused this Assignment Agreement to be executed ontheir behalf by their duly authorized officers.

 

150

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| INTERNATIONAL LEASE FINANCE  CORPORATION | FRONTIER AIRLINES, INC. |
|------------------------------------------|-------------------------|
|                                     |                    |
|                                     |                    |
| By:                                      |                    |   | By: |   |   |
|                                     |                    |
| Its:                                     | Its:                    |
|                                          |                         |  |  |  |  |

 

151

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**SCHEDULE 1**

 

[DATE]

 

Re:                             ILFC/FRONTIERAIRLINES (“**LESSEE**”): ASSIGNMENT OFWARRANTY AND SUPPORT RIGHTS

 

Dear Sirs,

 

1.                                     Referenceis made to the Assignment of Warranty and Support Rights dated                                   ,                   between ILFC and LESSEE (the “**AssignmentAgreement**”) concerning the assignment of certain warranty rightsunder the **[Redacted]** with respectto the Aircraft.

 

2.                                     Allterms defined herein bear the meaning ascribed hereto in the AssignmentAgreement.

 

3.                                     AVSAhereby consents to the assignment and reassignment contained in Clauses 2and 4 respectively of the Assignment Agreement on the terms and conditionstherein, subject to the following conditions:

 

(a)                                              AVSAshall have received formal notification of the Assignment Agreement;

 

(b)                                             AVSAshall not be subject by reason of the Assignment Agreement to any liability oradditional obligations whatsoever to which it would not otherwise be subjectunder the Purchase Agreement, the G.T.A. and the Support Agreement or modify inany respect whatsoever its contractual rights under the said agreements;

 

(c)                                              Solong as the Assignment Agreement is in full force and effect, LESSEE and notILFC will be responsible for compliance with **[Redacted]**.  Upon termination of the Assignment Agreement,ILFC shall once again be bound by such clauses with respect to the rights andbenefits described in **[Redacted]**in connection with the Aircraft.

 

(d)                                             LESSEEhereby agrees to be bound by and to comply with all applicable terms,conditions and limitations of **[Redacted]**with respect to the exercise of any of the Rights and to be bound by thecovenants of the Buyer in the Assigned Provisions to the same extent as ifLESSEE had been named “Buyer” of the Aircraft under the Purchase Agreement.

 

(e)                                              Otherthan with respect to the obligations assumed by LESSEE under the AssignmentAgreement as set forth in section 3(a) above, ILFC shall remain fullybound by all provisions of the **[Redacted]**.

 

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4.                                     ThisConsent shall be governed by and construed in accordance with the laws of theState of New York and any dispute arising hereunder shall be referred to thefederal court located in New York, New York. **[Redacted]**.

 
|   | For and on behalf of AVSA, S.A.R.L. |
|--------|-------------------------------------|
|   |                                |
|   |                                |
|   | By:                                 |   |   |
|   |                                |
|   | Title:                              |   |   |
|   |                                |
|   | Date:                               |   |   |
|        |                                     |  |  |  |

 

 
| Signed in acknowledgment for and on  behalf of |   | Signed in acknowledgment for and on  behalf of |
|------------------------------------------------|--------|------------------------------------------------|
|                                           |   |                                           |
| INTERNATIONAL LEASE FINANCE  CORPORATION       |   | FRONTIER AIRLINES, INC.                        |
|                                           |   |                                           |   |
|                                           |   |                                           |
|                                           |   |                                           |
| By:                                            |   |                                           | By: |   |   |
|                                           |   |                                           |   |   |   |
| Its:                                           |   |                                           | Its: |   |

 

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| **EXHIBIT J** | **ASSIGNMENT OF RIGHTS  (ENGINES)** |
|--------------------|-------------------------------------|

 

[INSERT MANUFACTURER FORM AGREEMENT]

 

[Date]

 

CFM INTERNATIONAL, INC.

1 Neumann Way, J-165

Cincinnati, Ohio  45215

 

Attention:  Commercial Contracts

 

Reference is hereby made to that Consent toAssignment made as of April 29, 1988 (the “**Consent to Assignment**”), by and between CFM INTERNATIONAL,INC. (“**CFMI**”) and INTERNATIONALLEASE FINANCE CORPORATION (“**ILFC**”).  Terms defined in the Consent to Assignmentare used herein with the same meaning as in the Consent to Assignment.

 

As of                                ,ILFC has assigned all of its rights and interest in, to and under the EngineWarranties to FRONTIER AIRLINES, INC.(“**Assignee**”)in connection with its lease to Assignee of an A319-100 aircraft (the “**Aircraft**”) together with two (2) CFMIModel CFM56-5B5/P bearing Manufacturer’s Serial Numbers             and            (the “**Engines**”) as of the date each such Enginewas delivered to Assignee.  Suchassignment shall be effective from such date until ILFC notifies CFMI that suchassignment has been terminated.

 

The Assignee has accepted such assignment andall the limitations and liabilities pertaining to the Engine Warranties asstated in the provisions of the GTA listed in Schedule 2 to the Consent toAssignment.

 

A copy of the aforesaid assignment isattached hereto.

 
|   | Very truly yours,                        |
|--------|------------------------------------------|
|   | INTERNATIONAL LEASE FINANCE  CORPORATION |
|   |                                     |
|   |                                     |
|   | By:                                      |   |   |
|   |                                     |
|   | Title:                                   |   |   |

 

154

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**ASSIGNMENTOF WARRANTIES**

 

[DATE]

 

In consideration of FRONTIER AIRLINES, INC. (“**Lessee**”) leasing from International LeaseFinance Corporation (“**ILFC**”) one (1) AirbusA319-100 aircraft together two (2) CFMI Model CFM56-5B5/P engines bearingmanufacturer’s serial numbers              and              ,it is hereby agreed as follows:

 

1.                                     ILFChereby assigns and transfers to Lessee all of ILFC’s respective rights andinterest in and to and in and under the Engine Warranties set forth in andsubject to the limitations and liabilities set forth in Exhibit BWarranty, Section X (the “**EngineWarranties**”) of CFM International, Inc. - ILFC General TermsAgreement No. 6-3987 dated 22 June 1984 (the “**GTA**”) during the term of such lease so longas Lessee is not in default thereunder.

 

2.                                     Lesseehereby accepts such assignment including all the limitations and liabilitiespertaining to said Engine Warranties as stated in the provisions of Exhibit BWarranty, Section X of the GTA.

 

3.                                     ThisAgreement shall be binding upon and inure to the benefit of each of the partieshereto and their respective successors and assigns to the extent permitted bythe GTA and hereunder.

 

4.                                     ThisAgreement shall be governed by and construed in accordance with the laws of theState of California.

 

5.                                     ThisAgreement may be executed in any number of counterparts, each of which whenexecuted and delivered is an original but all of which taken togetherconstitute one and the same instrument and any party may execute this Agreementby signing any counterpart.

 

**IN WITNESS WHEREOF**,the authorized representative of the parties hereto have executed thisAgreement as of the day and year first above written.

 

 
| For and on behalf of        | For and on behalf of    |
|-----------------------------|-------------------------|
| INTERNATIONAL LEASE FINANCE | FRONTIER AIRLINES, INC. |
| CORPORATION                 |                    |
|                        |                    |
|                        |                    |   |   |
| By:                         |                    |   |   | By: |   |   |
|                        |                    |   |   |   |   |   |
| Its:                        |                    |   | Its: |   |
|                             |                         |  |  |  |  |  |  |  |

 

155

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| **EXHIBIT K** | **RETURN ACCEPTANCE RECEIPT** |
|--------------------|-------------------------------|

 

 

Date:                                        ,          

 

1.                             FRONTIERAIRLINES, INC. as LESSEE, and INTERNATIONAL LEASE FINANCE CORPORATION,as LESSOR, have entered into an Aircraft Lease Agreement dated as of October 23,2003 (the “Lease”).  Words usedherein with capital letters and not otherwise defined will have the meaningsset forth in the Lease.

 

2.                             LESSORhas this             dayof                   ,                (Time:                    )at                               received from LESSEE possession of:

 

(a)                                              One(1) Airbus A319-100 Aircraft bearing Manufacturer’s serial number              together with two (2) CFM56-5B5/P Engines bearing manufacturer’s serialnumbers             and             ,an APU bearing manufacturer’s serial number            ,and all Parts attached thereto and thereon in an airworthy condition and

 

(b)                                             AllAircraft Documentation, including the usual and customary manuals, logbooks,flight records and historical information regarding the Aircraft, Engines, APUand Parts, as listed in the Document Receipt attached hereto.

 

3.                             TheAircraft had the following seating configuration at return:

 

                first class seats

 

                business class seats

 

                coach class seats

 

4.                                         The Airframe,Engines, APU and Parts had the following hours/cycles at return:

 

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(a)                           **Airframe:**

 

 

Maximum gross takeoff weight:                                     pounds

 

Total hours:                                    Total Landings:                           

 

Date last “C” check performed:                                    

 

             hours/              cycles since last “C” check

 

Date last “4C/5Y” check performed:                               

 

             hours/              cycles since last “4C/5Y” check

 

Date last “8C/10Y” check performed:                               

 

             hours/              cycles since last “8C/10Y” check

 

(b)                          **Engines:**

 

Certified thrust rating:                                   pounds (from data plate)

 
| **Position** | ** ** | **Serial No.** | ** ** | **Total Hours** | ** ** | **Total Cycles** | ** ** | **Hrs/Cycles since last  performance  restoration shop visit** |
|--------------|------------|----------------|------------|-----------------|------------|------------------|------------|----------------------------------------------------------------|
|         |       |           |       |            |       |             |       |                                                           |
|         |       |           |       |            |       |             |       |                                                           |
|         |       |           |       |            |       |             |       |                                                           |
|         |       |           |       |            |       |             |       |                                                           |

 
| **Position** | ** ** | **Part Name** | ** ** | **Part Number** | ** ** | **Cycles Remaining to Next  Life-limited Part Removal** |
|--------------|------------|--------------------|------------|----------------------|------------|--------------------------------------------------------------|
| ** **   | ** ** | ** **         | ** ** | ** **           | ** ** | ** **                                                   |
|         |       |               |       |                 |       |                                                         |
|         |       |               |       |                 |       |                                                         |
|         |       |               |       |                 |       |                                                         |

 

(c)                                              **APU:**   MSN                       

 

Total hours:                         

 

          hours/            cyclessince last hot section refurbishment

 

          hours/            cyclesremaining on APU life-limited Parts

 

157

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(d)                                             **Landing Gear:**

 
| **Position** | ** ** | **Serial No.** | ** ** | **Total  Hrs/Cycles** | ** ** | **Hrs/Cycles/Days  since last  Overhaul** | ** ** | **Date of last  Overhaul** | ** ** |
|--------------|------------|----------------|------------|-----------------------|------------|-------------------------------------------|------------|----------------------------|------------|
|         |       |           |       |                  |       |                                      |       |                       |       |
| Nose         |       |           |       |                  |       |                                      |       |                       |       |
| Left Main    |       |           |       |                  |       |                                      |       |                       |       |
| Right Main   |       |           |       |                  |       |                                      |       |                       |       |

 

(e)                                              **Fuel on board at return:**                     (circle one) pounds/kilos (                   gallons)

 

5.                             Othertechnical information regarding the Aircraft and its components are correctlyset forth on the Technical Evaluation Report (in the form of Exhibit L)attached hereto.

 

6.                             Withreference to Article 13.8 of the Lease regardingreimbursement from the Reserves after return of the Aircraft:

 
|          |   | There are no claims for reimbursement from  the Reserves which will be submitted after the date hereof. |
|--------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------|
| or                                               |   |                                                                                                    |
|          |   | Claims for reimbursement from the Reserves  will be submitted after the date hereof for the following:  |
|                                             |   | Type of Work                                                                                            | Estimated  Invoice Amount |   |

 

7.                             Theabove specified aircraft, engines and documentation are hereby accepted byLESSOR subject to (a) the provisions of the Lease and (b) correction byLESSEE (or procurement by LESSEE at LESSEE’s cost) as soon as reasonablypossible of the discrepancies specified in Attachment 2 hereto.

 

8.                             Subjectto the following paragraph, the leasing of the Aircraft by LESSOR to LESSEEpursuant to the Lease is hereby terminated without prejudice to LESSEE’scontinuing obligations under the Lease including, without limitation,paragraph 6(b) above and Articles 10.5, 16and 17.

 

9.                             LESSEErepresents and warrants that during the term of the Lease all maintenance and repairsto the Airframe and Engines were performed in accordance with the requirementscontained in the Lease.  LESSEE furtherconfirms that all of its obligations under the Lease whether accruing prior tothe date hereof or which survive the termination of the Lease by their termsand accrue after the date hereof, will remain in full force and effect untilall such obligations have been satisfactorily completed.

 

158

----

 

10.                                   This ReturnAcceptance Receipt is executed and delivered by the parties in [place].

 

IN WITNESS WHEREOF, the parties hereto havecaused this Return Acceptance Receipt to be executed in their respectivecorporate names by their duly authorized representatives as of the day and yearfirst above written.

 

 
| INTERNATIONAL LEASE FINANCE  CORPORATION | FRONTIER AIRLINES, INC. |
|------------------------------------------|-------------------------|
|                                     |                    |
| By:                                      |                    |   | By: |   |
|                                     |                    |
| Its:                                     | Its:                    |
|                                          |                         |  |  |  |

 

ATTACHMENTS:

1.                                     Listof Aircraft Documentation

2.                                     Listof Loose Equipment

3.                                     Free-of-ChargeKits

4.                                     Listof Discrepancies

5.                                     EnginePower Assurance Test Conditions and Results

6.                                     Dentand Damage Chart

7.                                     Incident/AccidentLetter

8.                                     TechnicalEvaluation Report (in the form of Exhibit L)

 

159

----

 
| **EXHIBIT L** | **MONTHLY REPORT** |
|--------------------|--------------------|

 

 

(SEE FOLLOWING SHEET)

 

160

----

 

**MONTHLYAIRCRAFT UTILIZATION AND STATUS REPORT**

 
| Report Due Date: |   |   |   |   |
|------------------|--------|--------|--------|--------|

 
| To:    |   | INTERNATIONAL LEASE FINANCE CORPORATION   |   | Fax: **[Redacted]** |
|--------|--------|-------------------------------------------|--------|---------------------|
|   |   | [Until January 31, 2004]             |   |                |
|   |   | 1999 Avenue of the Stars, 39th Floor      |   |                |
|   |   | Los Angeles, California 90067, U.S.A.     |   |                |
|   |   |                                      |   |                |
|   |   | [On and after February 1, 2004]      |   |                |
|   |   | 10250 Constellation Boulevard, 34th Floor |   |                |
|   |   | Los Angeles, California 90067, U.S.A.     |   |                |

 
| From:          |   | **FRONTIER AIRLINES** |          |   |   |
|----------------|--------|-----------------------|---------------|--------|--------|
| Contact:       |   |                  |          |   | Fax:   |   |   |
|           |   |                  |          |   |
| AIRCRAFT TYPE: |   | **Airbus A319-100**   |          |   |   |
| ENGINE TYPE:   |   | **CFM56-5B5/P**       | REGISTRATION: |   |   | **N-** |   |
| SERIAL NUMBER: |   | **[TBD]**             | MONTH OF:     |   |   |
|                |        |                       |               |        |        |  |  |  |

 

NOTE:                                    PLEASE RECORD TIMEIN HOURS AND MINUTES NOT DECIMALS.

 
| Aircraft Total Time Since New As Of Last  Month:                         |   | Hours:  | Min:   |
|--------------------------------------------------------------------------|--------|---------|--------|
| Aircraft Total Time Since New:                                           |   | Hours:  | Min:   |
| Aircraft Total Cycles Since New:                                         |   | Cycles: |   |
| Airframe Hours Flown During Month:                                       |   | Hours:  | Min:   |
| Airframe Cycles/Landings During Month:                                   |   | Cycles: |   |
| Date of return from last “4C/5Y” or “8C/10Y”  Check: |   |    |   |
| Time Remaining to next “4C/5Y” or “8C/10Y”  Check:   |   |    |   |

 
| ** **                                           | ** ** | **HOURS OR  CYCLES FLOWN  DURING MONTH  (as applicable)** | **x**      | **US$ PER  HOUR OR  CYCLE (as  applicable)** | ** ** | **=**  | **RESERVES** |
|------------------------------------------------------|------------|-----------------------------------------------------------|------------|---------------------------------------------------|------------|--------|--------------|
| **TOTAL AIRFRAME:**                                  | ** ** | **Hrs:**                                                  | **x**      | ** **                                        | ** ** | **=**  | ** **   |
| **TOTAL LANDING GEAR:**                              | ** ** | **Hrs:**                                                  | **x**      | ** **                                        | ** ** | **=**  | ** **   |
| **Original Engine Serial Number:**                   |       | Hrs:                                                      | Min:       | **x**                                             |       |   | =            |   |
| ** **                                           |       |                                                      |       | ** **                                        |       |   |         |   |
|                                                 |       | Cycles                                                    |       |                                              |       |   | =            |   |
| **Original Engine Serial Number:**                   |       | Hrs:                                                      | Min:       | **x**                                             |       |   | =            |   |
| ** **                                           |       |                                                      |       | ** **                                        |       |   |         |   |
|                                                 |       | Cycles                                                    |       |                                              |       | =      |         |
| **TOTAL AMOUNT OF RESERVES (US$) PAID THIS  MONTH:** | ** ** | ** **                                                | ** ** | ** **                                        | **US$**    |

 

1

----

 

Monthly Aircraft Utilization and Status Report

From:** FRONTIER AIRLINES**

 
| **ENGINE SERIAL NUMBER:**                                          | ** ** | **ENGINE SERIAL NUMBER:**                                          |
|--------------------------------------------------------------------|------------|--------------------------------------------------------------------|
| ** **                                                         | ** ** | ** **                                                         |
| ORIGINAL POSITION:                                                 |       | ORIGINAL POSITION:                                                 |
|                                                               |       |                                                               |
| ACTUAL LOCATION:                                                   |       | ACTUAL LOCATION:                                                   |
|                                                               |       |                                                               |
| CURRENT THRUST RATING:                                             |       | CURRENT THRUST RATING:                                             |
|                                                               |       |                                                               |
| HOURS:/MIN:                                                        |       | HOURS:/MIN:                                                        |
|                                                               |       |                                                               |
| Total Time Since New As Of  Last Month:                            |       | Total Time Since New As Of  Last Month:                            |
|                                                               |       |                                                               |
| Total Time Since New:                                              |       | Total Time Since New:                                              |
|                                                               |       |                                                               |
| Total Cycles Since New:                                            |       | Total Cycles Since New:                                            |
|                                                               |       |                                                               |
| Hours Flown During Month:                                          |       | Hours Flown During Month:                                          |
|                                                               |       |                                                               |
| Cycles During Month:                                               |       | Cycles During Month:                                               |
|                                                               |       |                                                               |
| DATE OF  REINSTALLATION  FOLLOWING LAST  HEAVY  MAINTENANCE VISIT: |       | DATE OF  REINSTALLATION  FOLLOWING LAST  HEAVY  MAINTENANCE VISIT: |

 
| **IMPORTANT:** | ** ** | **IF ILFC-OWNED ENGINE IS REMOVED OR  INSTALLED ON ANOTHER AIRCRAFT, IT MUST BE REPORTED MONTHLY ON THIS FORM.** |
|----------------|------------|------------------------------------------------------------------------------------------------------------------|

 

2

----

 
| **EXHIBIT M** | **AIRCRAFT DOCUMENTATION** |
|--------------------|----------------------------|

 

 

AIRCRAFTRECORDS

 

1.               Copies of originalCertificates delivered by Airbus:

a. Airworthiness Certificate for Export

b. Radio installation conformity certificate

c. Noise limitation certificate

2.               Copies of originalDocuments delivered by Airbus:

a. Airworthiness Directive Compliance list

b. Aircraft inspection report

c. Aircraft Definition Report

d. Weighing report

3.               Copies of currentCertificates:

a. Airworthiness Certificate

b.  Noise limitation

c. Radio license

d. Interior material burn certificates

e. Certificate of Export

f. Aircraft deregistration confirmation

e. Aircraft Registration

4.               Letters signed andstamped by Quality Assurance:

a. Current aircraft hours and cycles

b. Current engines hours and cycles

c. Accident and Incident report

d. Summary of Maintenance Program

e.  ADcompliance during the lease term

5.               Aircraft log booksand Aircraft readiness log.

6.               Aircraft Hard Time(HT) inspection status.

7.               One year forecastfor HT inspection.

8.               AircraftModification status, including service bulletins.

9.               Last weighingreport prior to redelivery.

10.         AD compliance report withoriginal signoffs.

11.         Routine and non-routinejob cards of the last “C”, “4C/5Y” and “8C/10Y” checks.

12.         Past year pilots andmaintenance discrepancies.

13.         Major and Minorstructural repairs with applicable approvals.

14.         Compass Swing report ofthe last three years.

15.         Cabin Configurationdrawing (LOPA).

16.         Emergency equipmentlocation drawing.

17.         Last X-RAYs

 

164

----

 

ENGINES RECORDS

 

1.               Last test cell run reports.

2.               Life Limited Parts status andtraceability.

3.               AD compliance report with originalsignoffs.

4.               Engine Modification / service bulletin/inspection report and applicable forms.

5.               Last heavy maintenance records for eachmodule.

6.               Engine log books.

7.               Engine removal history.

8.               Past year trend monitoring reports.

9.               Historical borescope reports.

10.         Engine component report.

 

 

APU RECORDS

 

1.               APU status (FH, FC, limits).

2.               Life limited Part status andtraceability.

3.               AD compliance with original signoffs.

4.               Modification status.

5.               Last heavy maintenance documents.

6.               APU log books.

7.               Last test cell report.

 

COMPONENT RECORDS

 

1.               Aircraft component inventory.

2.               Hard time component inventory.

3.               All serviceable tags.

4.               Landing Gear status with last overhauland life limited Part status.

5.               AD compliance with original signoffs.

6.               Modification status.

 

165

----

 
| **EXHIBIT N** | **TECHNICAL EVALUATION REPORT** |
|--------------------|---------------------------------|

 

 

(SEE FOLLOWING SHEETS)

 

166

----

 

**TABLE OF CONTENTS**

 
| AIRCRAFT SUMMARY                                 |   |
|--------------------------------------------------|--------|
|                                             |   |
| MAINTENANCE & INSPECTION                |   |
|                                             |   |
| LANDING GEAR                                     |   |
|                                             |   |
| ENGINES                                          |   |
|                                             |   |
| AUXILIARY POWER UNIT (APU)                       |   |
|                                             |   |
| PASSENGER CABIN CONFIGURATION (Seating)          |   |
|                                             |   |
| GALLEY PROVISIONS                                |   |
|                                             |   |
| LAVATORIES, AUDIO/ENTERTAINMENT, CARGO, INTERIOR |   |
|                                             |   |
| HYDRAULIC, FUEL, WEIGHT & BALANCE       |   |
|                                             |   |
| AVIONICS SYSTEMS                                 |   |
|                                             |   |
| INSPECTOR RECORD                                 |   |

 

167

----

 
| **AIRCRAFT SUMMARY as of** | ** ** | **(date):** |   |   |   |
|----------------------------|------------|-------------|--------|--------|--------|
| ** **                 | ** ** | ** **  |   |   |   |

 

 

 
| Aircraft Make |   | Airbus Industries |   | Model  |   |
|---------------|--------|-------------------|--------|--------|--------|
|          |   |              |   |   |   |
| FUS No.       |   |              |   |   | S/N    |   |   |
|               |        |                   |        |        |        |  |  |

 

 
| MFG Date:                                 |      |     |   |               |   |   |
|-------------------------------------------|-----------|----------|--------|--------------------|--------|--------|
|                                      |      |     |   |               |   |   |
| Current  Registration:                    |      | Country: |   |               |
|                                      |      |     |
| Previous  Registration:                   |      | Country: |   |               |
|                                      |      |     |
| Annual  Utilization:                      |      |     |   | Hour/Cycle  Ratio: |   |   |
|                                      |      |     |   |               |
| Total Aircraft Time:                      | TAT (Hrs) |     |   | As of (date):      |   |   |
|                                      |      |     |   |               |   |   |
| Total Aircraft Cycles:                    | TAC (Cyc) |     |   |               |   |   |
|                                      |      |     |   |               |   |   |
| Time Since Last AC@ or  equivalent Check: | (Hrs)     |     |   | (Cyc)              |   |   |
|                                      |      |     |   |               |   |
| Time Since Last  Structural Check:        | (Hrs)     |     |   | (Cyc)              |   |   |   |
|                                           |           |          |        |                    |        |        |  |  |  |  |  |  |  |  |

 
| Engine Make: |   |   | Model: |   |   | Thrust Rating: |   |
|--------------|--------|--------|--------|--------|--------|----------------|--------|

 
| Engine:    |   | 1 S/N: |   | 2 S/N: |   |
|------------|--------|--------|--------|--------|--------|
|       |   |   |   |   |   |
| TSN: (Hrs) |   |   |   |   |   |
|       |   |   |   |   |   |
| CSN: (Cyc) |   |   |   |   |   |

 

1

----

 

**IMPORTANT NOTE:  THE ENGINE SERIAL NUMBERS SPECIFIED ON THISREPORT REFLECT THE LESSOR OWNED ENGINE SERIAL NUMBERS.  IF THE ENGINE SERIAL NUMBERS ARE NOTIDENTIFIED ON THIS REPORT, THEN PLEASE PROVIDE DATA FOR THE ENGINES ORIGINALLYDELIVERED WITH THE AIRCRAFT (LESSOR OWNED ENGINES).**

 

2

----

 

**MAINTENANCE PROGRAM GENERAL**

 
| Aircraft Maintenance  Program Provided By:           | o Operator:    | o Other:           |   |   |
|------------------------------------------------------|----------------|--------------------|--------|--------|
|                                                 |           |               |   |   |
| Program Approved By  Authority Of:                   | o FAA Approved | o Other:           |   |   |
|                                                 |           |               |   |   |
| Repair Station Providing  Service:                   |           |               |   |   |
|                                                 |           |               |   |   |
| Repair Station Number:                               |           | o FAA Approved?    | o Yes  | o No   |
|                                                 |           |               |   |   |
|                                                 |           |               |   |   |
| Primary Line Maintenance  Provided By?:              | o Operator     | o Contract Service |   |   |
|                                                 |           |               |   |   |
| Reliability Controlled  Maintenance Program?         | o Yes          | o No               |   |   |   |
|                                                 |           |               |   |   |   |
| Component Tags Available  For Controlled Components: | o Yes          | o No               |   |   |   |

 
| ** **                | ** ** | **At Aircraft Delivery**                         | ** ** | **Currently Approved By  Local Aviation Authority** | ** ** | **Currently  Operated/Maintained**               |
|---------------------------|------------|--------------------------------------------------|------------|-----------------------------------------------------|------------|--------------------------------------------------|
|                      |       |                                             |       |                                                |       |                                             |
| ETOPS Qualification:      |       | Minutes                                          |       | Minutes                                             |       | Minutes                                          |
|                      |       |                                             |       |                                                |       |                                             |
| Auto Land Qualification:  |       | CAT  I, II, IIIa, IIIb, IIIc |       | CAT  I, II, IIIa, IIIb, IIIc    |       | CAT  I, II, IIIa, IIIb, IIIc |
| (Circle one that applies) |       |                                             |       |                                                |       |                                             |

 

**MAINTENANCE & INSPECTION PROGRAM DESCRIPTION**

 
| **Check**         | ** ** | **Operator’s  Nomenclature** | ** ** | **Calendar** | ** ** | **Frequency  Hours** | ** ** | **Cycles** | ** ** | **Number of  Phases** | ** ** |
|-------------------|------------|-----------------------------------|------------|--------------|------------|----------------------|------------|------------|------------|-----------------------|------------|
|              |       |                              |       |         |       |                 |       |       |       |                  |       |
| **“C”** |       |                              |       |         |       |                 |       |       |       |                  |       |
| ** **        |       |                              |       |         |       |                 |       |       |       |                  |       |

 

3

----

 
| **Check**                           | ** ** | **Operator’s  Nomenclature** | ** ** | **Calendar** | ** ** | **Frequency  Hours** | ** ** | **Cycles** | ** ** | **Number of  Phases** | ** ** |
|-------------------------------------|------------|-----------------------------------|------------|--------------|------------|----------------------|------------|------------|------------|-----------------------|------------|
| ** **                          |       |                              |       |         |       |                 |       |       |       |                  |       |
| **“D@ or  Structural Program** |       |                              |       |         |       |                 |       |       |       |                  |       |
| ** **                          |       |                              |       |         |       |                 |       |       |       |                  |       |

 

4

----

 

**MAINTENANCE & INSPECTION PROGRAM STATUS**

 
| ** **                               | ** ** | **Phase or  Equivalent** | ** ** | **Date** | ** ** | **Aircraft  TAT** | ** ** | **Aircraft  TAC** | ** ** |
|------------------------------------------|------------|--------------------------|------------|----------|------------|-------------------|------------|-------------------|------------|
| ** **                               |       |                     |       |     |       |              |       |              |       |
| Next “C” Phase or  Equivalent: |       |                     |       |     |       |              |       |              |       |
| ** **                               |       |                     |       |     |       |              |       |              |       |
| Last “C” Phase or  Equivalent: |       |                     |       |     |       |              |       |              |       |

 
| Time Remaining to Next  Phase:                             |   |   |   | **(Days)** | ** ** | **(Hrs)**   | ** ** | **(Cyc)**  |   |
|------------------------------------------------------------|--------|--------|--------|------------|------------|-------------|------------|------------|--------|
|                                                       |   |   |   |       |       |        |       |       |   |
| Structural Cards Worked  During Last “C” Phase?: |   |   |   |       |       | o  Yes |       | o  No |   |
| ** **                                                 |   |   |   |       |       |        |       |       |   |
| CPCP Cards Worked During  Last “C” Phase?:       |   |   |   |       |       | o  Yes |       | o  No |   |
| ** **                                                 |   |   |   |       |       |        |       |       |   |
| ** **                                                 |   |   |   |       |       |        |       |       |   |
| Next “D” Phase or  Equivalent Structural:        |   |   |   |       |       |        |       |       |   |
| ** **                                                 |   |   |   |       |       |        |       |       |   |
| Last “D” Phase or  Equivalent Structural:        |   |   |   |       |       |        |       |       |   |

 
| Time Remaining to Next  Phase:                       |   |   |   | **(Days)** | ** ** | **(Hrs)**   | ** ** | **(Cyc)**  |   |
|------------------------------------------------------|--------|--------|--------|------------|------------|-------------|------------|------------|--------|
| ** **                                           |   |   |   | ** ** | ** ** | ** **  | ** ** | ** ** |   |
| CPCP Cards Worked During  Last “D” Phase?: |   |   |   |       |       | o  Yes |       | o  No |   |
| ** **                                           |   |   |   |       |       |        |       |       |   |
| ** **                                           |   |   |   |       |       |        |       |       |   |
| Next CPCP Phase:                                     |   |   |   |       |       |        |       |       |   |
| ** **                                           |   |   |   |       |       |        |       |       |   |
| Last CPCP Phase:                                     |   |   |   |       |       |        |       |       |   |

 
| Time Remaining to Next  Phase:       |   |   |   | **(Days)** | ** ** | **(Hrs)**  | ** ** | **(Cyc)**  |   |
|--------------------------------------|--------|--------|--------|------------|------------|------------|------------|------------|--------|
|                                 |   |   |   | ** ** | ** ** | ** ** | ** ** | ** ** |   |
| Date of Last ATC  Transponder Test:  |   |   |   | #1         |       |       |       | #2         |   |   |   |   |
|                                 |   |   |   |       |       |       |       |       |   |
| Date of Last Flight  Recorder Check: |   |   |   |       |       |       |       |       |   |
|                                 |   |   |   |       |       |       |       |       |   |
| Date of Last Aircraft  Weighing:     |   |   |   |       |       |       |       |       |   |
|                                      |        |        |        |            |            |            |            |            |        |  |  |  |

 

5

----

 

**LANDING GEAR**

 

 
| MLG Tires: | (Size) |   |   | (MPH Rating) |   |   | (MFG) |   |
|------------|--------|--------|--------|--------------|--------|--------|-------|--------|
| NLG Tires: | (Size) |   |   | (MPH Rating) |   |   | (MFG) |   |

 
| Brake Manufacture: |   | Type:  | [  ] Steel | [  ] Carbon |
|--------------------|--------|--------|-----------------|------------------|
|               |   |   |            |             |

 
| **LEFT MAIN :**                   | **P/N**    | **S/N**    |   |       |   |
|-----------------------------------|------------|------------|--------|------------|--------|
| ** **                        | ** ** | ** ** |   | ** ** |   |
| Agency Performing Service:        |       |       |   | Cert #     |   |
|                              |       |       |   |       |
| Last Overhaul:                    | (Date)     |       |   | (Hrs)      |   |   | (Cyc) |   |
|                              |       |       |   |       |   |   |   |
| Approved Overhaul  Interval:      | (Hrs)      |       |   | (Cyc)      |   |
|                              |       |       |   |       |   |   |   |
| Time Since Last Overhaul:         | (Hrs)      |       |   | (Cyc)      |   |
|                              |       |       |   |       |   |   |   |
| Time Remaining to Next  Overhaul: | (Hrs)      |       |   | (Cyc)      |   |
|                                   |            |            |        |            |        |  |  |  |  |

 
| **RIGHT  MAIN  :**      | **P/N**    | **S/N**    |   |       |   |
|-----------------------------------|------------|------------|--------|------------|--------|
| ** **                        | ** ** | ** ** |   | ** ** |   |
| Agency Performing Service:        |       |       |   | Cert #     |   |
|                              |       |       |   |       |
| Last Overhaul:                    | (Date)     |       |   | (Hrs)      |   |   | (Cyc) |   |
|                              |       |       |   |       |   |   |   |
| Approved Overhaul  Interval:      | (Hrs)      |       |   | (Cyc)      |   |
|                              |       |       |   |       |   |   |   |
| Time Since Last Overhaul:         | (Hrs)      |       |   | (Cyc)      |   |
|                              |       |       |   |       |   |   |   |
| Time Remaining to Next  Overhaul: | (Hrs)      |       |   | (Cyc)      |   |
|                                   |            |            |        |            |        |  |  |  |  |

 
| **NOSE  MAIN  :**       | **P/N**    | **S/N**    |   |       |   |
|-----------------------------------|------------|------------|--------|------------|--------|
| ** **                        | ** ** | ** ** |   | ** ** |   |
| Agency Performing Service:        |       |       |   | Cert #     |   |
|                              |       |       |   |       |
| Last Overhaul:                    | (Date)     |       |   | (Hrs)      |   |   | (Cyc) |   |
|                              |       |       |   |       |   |   |   |
| Approved Overhaul  Interval:      | (Hrs)      |       |   | (Cyc)      |   |
|                              |       |       |   |       |   |   |   |
| Time Since Last Overhaul:         | (Hrs)      |       |   | (Cyc)      |   |
|                              |       |       |   |       |   |   |   |
| Time Remaining to Next  Overhaul: | (Hrs)      |       |   | (Cyc)      |   |
|                                   |            |            |        |            |        |  |  |  |  |

 

6

----

 

**ENGINES**

 

**ENGINE MAINTENANCE PROGRAM**

 

Engine Maintenance

Program Provided
| By:                |   |   |
|--------------------|--------|--------|
|               |   |   |
| Engine Condition   | o Yes  | o No   |   |
| Monitoring Trend   |   |   |   |
| Analysis Program?: |   |   |   |

 
| Engine Oil Type: |   |   |
|------------------|--------|--------|

 

Engine(s)operated at INCREASED or DECREASED Thrust Rating; Program limitations &required Mods. to operate at designated thrust rating

 
|   |
|--------|
|   |
|   |
|   |

 

7

----

 

**ENGINE SPECIFICATIONS**

**ENGINE NUMBER 1**

 

 
| Engine Make:                                    |   |         | Model:     |        |   S/N: |   |
|-------------------------------------------------|--------|--------------|------------|-------------|------------------|--------|
|                                            |   |         |       |        |             |   |
| Date of Mfg:                                    |   |         |       | Total Time: | (Hrs)            |   |   | (Cyc) |   |
|                                            |   |         |       |        |             |   |   |   |   |
| Time Since Last  Performance Restoration Visit: |   | (Visit Date) |       | (Hrs)       |             |   | (Cyc) |   |
|                                            |   |         |       |        |             |   |   |   |   |
| Time Since Last Shop  Visit:                    |   | (visit Date) |       | (Hrs)       |             |   | (Cyc) |   |
|                                            |   |         |       |        |             |   |   |   |
| Test Cell EGT Margin:                           |   |         |       |        |             |   |   |
|                                            |   |         |       |        |             |   |   |
| Work Scope of Last Shop  Visit:                 |   |         |       |        |             |   |   |
|                                            |   |         |       |        |             |   |   |
| Agency Performing Service:                      |   |         |       |        |             |   |   |
|                                            |   |         |       |        |             |   |   |
| Agency FAA Approved?:                           |   | o  Yes  | o  No |        | Cert. #:         |   |   |
|                                                 |        |              |            |             |                  |        |  |  |  |  |  |  |

 
| **1st  LIMITER*** | Part Name:            |   |   |   |   |   |   |   |
|-------------------|----------------------------|--------|--------|--------|--------|--------|--------|--------|
| ** **        |                       |   |   |   |   |   |   |   |
|              | Allowable Life/Insp Limit: |   |   | (Hrs)  |   |   | (Cyc)  |   |
|              |                       |   |   |   |   |   |   |   |
|              | Total Component Time:      |   |   | (Hrs)  |   |   | (Cyc)  |   |
|              |                       |   |   |   |   |   |   |   |
|              | Time Remaining:            |   |   | (Hrs)  |   |   | (Cyc)  |   |

 
| **2nd  LIMITER*** | Part Name:            |   |   |   |   |   |   |   |
|-------------------|----------------------------|--------|--------|--------|--------|--------|--------|--------|
| ** **        |                       |   |   |   |   |   |   |   |
|              | Allowable Life/Insp Limit: |   |   | (Hrs)  |   |   | (Cyc)  |   |
|              |                       |   |   |   |   |   |   |   |
|              | Total Component Time:      |   |   | (Hrs)  |   |   | (Cyc)  |   |
|              |                       |   |   |   |   |   |   |   |
|              | Time Remaining:            |   |   | (Hrs)  |   |   | (Cyc)  |   |

 

----

*Provide a copy of a currentDisk Sheet for all modules.

 

8

----

 

**ENGINE SPECIFICATIONS**

**ENGINE NUMBER 2**

 

 
| Engine Make:                                    |   |         | Model:     |        |   S/N: |   |
|-------------------------------------------------|--------|--------------|------------|-------------|------------------|--------|
|                                            |   |         |       |        |             |   |
| Date of Mfg:                                    |   |         |       | Total Time: | (Hrs)            |   |   | (Cyc) |   |
|                                            |   |         |       |        |             |   |   |   |   |
| Time Since Last  Performance Restoration Visit: |   | (Visit Date) |       | (Hrs)       |             |   | (Cyc) |   |
|                                            |   |         |       |        |             |   |   |   |   |
| Time Since Last Shop  Visit:                    |   | (Visit Date) |       | (Hrs)       |             |   | (Cyc) |   |
|                                            |   |         |       |        |             |   |   |   |
| Test Cell EGT Margin:                           |   |         |       |        |             |   |   |
|                                            |   |         |       |        |             |   |   |
| Work Scope of Last Shop  Visit:                 |   |         |       |        |             |   |   |
|                                            |   |         |       |        |             |   |   |
| Agency Performing Service:                      |   |         |       |        |             |   |   |
|                                            |   |         |       |        |             |   |   |
| Agency FAA Approved?:                           |   | o  Yes  | o  No |        | Cert. #:         |   |   |
|                                                 |        |              |            |             |                  |        |  |  |  |  |  |  |

 
| **1st  LIMITER*** | Part Name:            |   |   |   |   |   |   |   |
|-------------------|----------------------------|--------|--------|--------|--------|--------|--------|--------|
| ** **        |                       |   |   |   |   |   |   |   |
|              | Allowable Life/Insp Limit: |   |   | (Hrs)  |   |   | (Cyc)  |   |
|              |                       |   |   |   |   |   |   |   |
|              | Total Component Time:      |   |   | (Hrs)  |   |   | (Cyc)  |   |
|              |                       |   |   |   |   |   |   |   |
|              | Time Remaining:            |   |   | (Hrs)  |   |   | (Cyc)  |   |

 
| **2nd  LIMITER*** | Part Name:            |   |   |   |   |   |   |   |
|-------------------|----------------------------|--------|--------|--------|--------|--------|--------|--------|
| ** **        |                       |   |   |   |   |   |   |   |
|              | Allowable Life/Insp Limit: |   |   | (Hrs)  |   |   | (Cyc)  |   |
|              |                       |   |   |   |   |   |   |   |
|              | Total Component Time:      |   |   | (Hrs)  |   |   | (Cyc)  |   |
|              |                       |   |   |   |   |   |   |   |
|              | Time Remaining:            |   |   | (Hrs)  |   |   | (Cyc)  |   |

 

----

*Provide a copy of a currentDisk Sheet for all modules.

 

9

----

 

**AUXILIARY POWER UNIT**

 

 
| APU Make:                  |   |                 | Model:                        |   |   S/N: |   |   |   |   |
|----------------------------|--------|----------------------|-------------------------------|--------|------------------|--------|--------|--------|--------|
|                       |   |                 |                          |   |             |   |   |
| Date of Mfg:               |   |                 | Total Time:   (Hrs) |   |             | (Cyc)  |   |   |
|                       |   |                 |                          |   |             |   |   |   |
| APU Times Are Recorded By: |   | o APU Clock or o A/C |                          | Ratio  | :                |
|                            |        |                      |                               |        |                  |        |        |        |        |  |

 
|                                         |        |       |          | Time   |     |   |   |   |
|----------------------------------------------|-------------|------------|---------------|--------|----------|--------|--------|--------|
|                                         |        |       |          |   |     |   |   |
| Time Between Overhaul:                       |        |       |          | (Hrs)  |     |   | (Cyc)  |   |
|                                         |        |       |          |   |     |   |   |   |
| Time @ Last Hot  Section Refurbishment: | (Date)      |       |          | (Hrs)  |     |   | (Cyc)  |   |
|                                         |        |       |          |   |     |   |   |   |
| Time @ Last Overhaul:                        | (Date)      |       |          | (Hrs)  |     |   | (Cyc)  |   |
|                                         |        |       |          |   |     |   |   |   |
| Time @ Last Shop Visit:                      | (Date)      |       |          | (Hrs)  |     |   | (Cyc)  |   |
|                                         |        |       |          |   |     |   |   |
| Work Scope:                                  |        |       |          |   |     |   |   |
|                                         |        |       |          |   |     |   |   |
| Agency Performing Service:                   |        | Location:  |          |   | Cert. #: |   |
|                                         |        |       |          |   |     |   |   |
| Agency FAA Approved?:                        | o  Yes | o  No | APU Oil Type: |   |     |
|                                              |             |            |               |        |          |        |        |        |  |  |  |  |  |  |  |  |  |  |  |

 

 
| **1st  LIMITER*** | Part Name:            |   |   |   |   |   |   |   |
|-------------------|----------------------------|--------|--------|--------|--------|--------|--------|--------|
| ** **        |                       |   |   |   |   |   |   |   |
|              | Allowable Life/Insp Limit: |   |   | (Hrs)  |   |   | (Cyc)  |   |
|              |                       |   |   |   |   |   |   |   |
|              | Total Component Time:      |   |   | (Hrs)  |   |   | (Cyc)  |   |
|              |                       |   |   |   |   |   |   |   |
|              | Time Remaining:            |   |   | (Hrs)  |   |   | (Cyc)  |   |

 
| **2nd  LIMITER*** | Part Name:            |   |   |   |   |   |   |   |
|-------------------|----------------------------|--------|--------|--------|--------|--------|--------|--------|
| ** **        |                       |   |   |   |   |   |   |   |
|              | Allowable Life/Insp Limit: |   |   | (Hrs)  |   |   | (Cyc)  |   |
|              |                       |   |   |   |   |   |   |   |
|              | Total Component Time:      |   |   | (Hrs)  |   |   | (Cyc)  |   |
|              |                       |   |   |   |   |   |   |   |
|              | Time Remaining:            |   |   | (Hrs)  |   |   | (Cyc)  |   |

 

10

----

 

**PASSENGER CABIN CONFIGURATION**

 

**SEATINGCONFIGURATION**

 
| Present Configuration Occupancy: |   |   | No. of Handicap Seats Installed: |   |
|----------------------------------|--------|--------|---------------------------------------|--------|

 
| Passenger Exit Door Configuration: |   |
|------------------------------------|--------|

 
| Air Stairs: | Installed / Partial Provision/ Full Provision (Circle One) |
|-------------|-----------------------------------------------------------------|

 

**FIRST CLASS**

 
| Pax Qty: |   |     Seat Mfg: |   |    Model: |   |   P/N: |   |
|----------|--------|-----------------------------------|--------|--------------------------|--------|------------------|--------|

 
| Seats Fireblocked? | o  Yes                   o  No | Color: |   |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|

 
| 16 G Seat  Installation:                 o   Yes                      o  No |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

**BUSINESS CLASS**

 
| Pax Qty: |   |     Seat Mfg: |   |    Model: |   |   P/N: |   |
|----------|--------|-----------------------------------|--------|--------------------------|--------|------------------|--------|

 
| Seats Fireblocked? | o  Yes                   o  No | Color: |   |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|

 
| 16 G Seat  Installation:                 o   Yes                      o  No |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

**COACH CLASS**

 
| Pax Qty: |   |     Seat Mfg: |   |    Model: |   |   P/N: |   |
|----------|--------|-----------------------------------|--------|--------------------------|--------|------------------|--------|

 
| Seats Fireblocked? | o  Yes                   o  No | Color: |   |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|

 
| 16 G Seat  Installation:                 o   Yes                      o  No |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 
| Provisions for Life Vests Under Seats?: | o  Yes |    o  No |
|-----------------------------------------|------------------|-----------------------------------|

 
| Entertainment Controls(PCU) Installed?: | o  Yes |    o  No |
|-----------------------------------------|------------------|-----------------------------------|

 
| Manufacturer: |   |   | Part Number: |   |
|---------------|--------|--------|-------------------|--------|

 

11

----

 
| Emergency Escape Path  Lighting: | o  Floor Mounted |   | o  Seat Mounted |
|----------------------------------|----------------------------|--------|---------------------------|
|                             |                       |   |                      |   |
| Configuration Drawing Number:    |                       |   | Source:                   |   |
|                                  |                            |        |                           |  |  |

 
| Engineering Order / Installation Document: |   |
|--------------------------------------------|--------|

 
| Installation FAA Approved?: | o  Yes | o  No |   | Method of Approval: |   |
|-----------------------------|------------------|-----------------|--------|---------------------|--------|

 

12

----

 

**GALLEY PROVISIONS**

 

 

GALLEY’s ARE (Checkone):          oAtlas Standard          oKSSU Standard          o Other

 
| ** ** | ** ** | **GALLEY  LOCATION** | ** ** | **MANUFACTURER** | ** ** | **MODEL NUMBER** | ** ** | **PART NUMBER** | ** ** | **EQUIPPED  WaterPower**   | ** **                 |
|------------|------------|----------------------|------------|------------------|------------|------------------|------------|----------------------|------------|----------------------------|----------------------------|
| 1.         |       |                 |       |             |       |             |       |                 |       | [    ] | [    ] |   |
| 2.         |       |                 |       |             |       |             |       |                 |       | [    ] | [    ] |   |
| 3.         |       |                 |       |             |       |             |       |                 |       | [    ] | [    ] |   |
| 4.         |       |                 |       |             |       |             |       |                 |       | [    ] | [    ] |   |
| 5.         |       |                 |       |             |       |             |       |                 |       | [    ] | [    ] |   |
| 6.         |       |                 |       |             |       |             |       |                 |       | [    ] | [    ] |   |
| 7.         |       |                 |       |             |       |             |       |                 |       | [    ] | [    ] |   |
| 8.         |       |                 |       |             |       |             |       |                 |       | [    ] | [    ] |   |
| 9.         |       |                 |       |             |       |             |       |                 |       | [    ] | [    ] |   |
| 10.        |       |                 |       |             |       |             |       |                 |       | [    ] | [    ] |   |

 

NOTE:  Galley Locations per Spec or LOPA drawingi.e., G1, G2 etc.

GalleyLocation numbers above correspond to the numbers below.

 
| ** ** | ** ** | **OVENS** | ** ** | **GALLEY  INSERTS** | ** ** | **REFER  UNITS** | ** ** | **CHILLERS** | ** ** | **COFFEE  MAKERS** | ** ** | **WATER  BOILERS** | ** ** | **HOT  JUGS** | ** ** | **HOT  CUPS** | ** ** | **BEV  JUGS** | ** ** |
|------------|------------|-----------|------------|---------------------|------------|------------------|------------|--------------|------------|--------------------|------------|--------------------|------------|---------------|------------|---------------|------------|---------------|------------|
| 1.         |       |      |       |                |       |             |       |         |       |               |       |               |       |          |       |          |       |          |       |
| 2.         |       |      |       |                |       |             |       |         |       |               |       |               |       |          |       |          |       |          |       |
| 3.         |       |      |       |                |       |             |       |         |       |               |       |               |       |          |       |          |       |          |       |
| 4.         |       |      |       |                |       |             |       |         |       |               |       |               |       |          |       |          |       |          |       |
| 5.         |       |      |       |                |       |             |       |         |       |               |       |               |       |          |       |          |       |          |       |
| 6.         |       |      |       |                |       |             |       |         |       |               |       |               |       |          |       |          |       |          |       |
| 7.         |       |      |       |                |       |             |       |         |       |               |       |               |       |          |       |          |       |          |       |
| 8.         |       |      |       |                |       |             |       |         |       |               |       |               |       |          |       |          |       |          |       |
| 9.         |       |      |       |                |       |             |       |         |       |               |       |               |       |          |       |          |       |          |       |
| 10.        |       |      |       |                |       |             |       |         |       |               |       |               |       |          |       |          |       |          |       |

 

13

----

 

**LAVOTORIES**

 

 
| Number of Lavatories: |   |   Handicap Provisions?: |   | o  Yes | o  No |
|-----------------------|--------|-----------------------------------|--------|------------------|-----------------|
|                  |   |                              |   |             |            |
| Locations:            |   |                              |   |             |

 

**IN-FLIGHTAUDIO & ENTERTAINMENT SYSTEM**

 

 
| Boarding Music:                  |   | o  Yes |   | o  No |
|----------------------------------|--------|------------------|--------|-----------------|
| Auto Evac & Warning:    |   | o  Yes |   | o  No |
| Pre-Recorded Announcement:       |   | o  Yes |   | o  No |
| Passenger Entertainment (Audio): |   | o  Yes |   | o  No |
| Passenger Entertainment (Video): |   | o  Yes |   | o  No |

 
| VTR Format:                  |   | o  VHS         |   | oHi-8                     |   | o  Other   |
|------------------------------|--------|--------------------------|--------|---------------------------|--------|----------------------|
|                         |   |                     |   |                      |   |                 |
| o  Projector  |   | o  PSU Monitor |   | o  Isle Monitor |   | o  In-Seat |
| (Check All That Apply)       |   |                     |   |                      |   |                 |

 
| Passenger En-Route Information Display: |   | o  Yes | o  No |
|-----------------------------------------|--------|------------------|-----------------|

 
| Telephone: |   | o  Yes | o  No | o  Leased | o  Owned |   | Satellite: |   | o  Yes |   | o  No |
|------------|--------|------------------|-----------------|---------------------|--------------------|--------|------------|--------|------------------|--------|-----------------|

 

**CARGOCOMPARTMENT**

 

 
| Cargo Loading System Installed:        |   | o  Yes |   | o  No |
|----------------------------------------|--------|------------------|--------|-----------------|
| Smoke\Fire Detection System installed: |   | o  Yes |   | o  No |
| Fire Suppression System installed:     |   | o  Yes |   | o  No |

 

14

----

 

**INTERIORCOLORS**

 

 
| Interior Color Scheme: |   |   | Carpets: |   |   | Curtains: |   |
|------------------------|--------|--------|----------|--------|--------|-----------|--------|

 

**PLACARDS& LIGHTED SIGNS**

 

 
| English?:       |   | o  Yes |   | o  No  |   | Bi-Lingual?: |   | o  Yes |   | o  No |
|-----------------|--------|------------------|--------|------------------|--------|--------------|--------|------------------|--------|-----------------|
|            |   |             |   |             |   |         |   |             |   |            |
| First Language: |   |             |   | Second Language: |   |         |

 

15

----

 

**HYDRAULIC SYSTEM**

 

 
| Type of Hydraulic Fluid Used: |   |   | (MFG): |   |
|-------------------------------|--------|--------|--------|--------|

 

**FUEL SYSTEM**

 

 
| Total Fuel Capacity: |   |   U.S. gallons |   |   o lbs or o kilos |
|----------------------|--------|--------------------------|--------|-----------------------------------|

 
| Number of Tanks: |   |   Auxiliary Tanks Installed?: | o Yes  o No |
|------------------|--------|-----------------------------------------|----------------------------|

 
| Auxiliary Tank Capacity: |   |   | U.S. gallons |   |   o lbs or o kilos |
|--------------------------|--------|--------|--------------|--------|------------------------------|

 
| Fuel Instrumentation / Calibration: | o  U.S. pounds | o  kilograms |
|-------------------------------------|--------------------------|------------------------|

 

**WEIGHT & BALANCE**

 

 
| Has Aircraft Been Modified For Increased Gross Weight by Current  Lessee?: | o Yes | o No |
|----------------------------------------------------------------------------|-------|------|

 
| From |   |   MTOGW | To |   |   | MTOGW |
|------|--------|-------------------|----|--------|--------|-------|

 
| Weight & Balance Manual Document No.: |   |   Rev: |   |   |
|------------------------------------------------|--------|------------------|--------|--------|

 

**For the below weights specify AFM approvedlimits:**

 
| ** **                        | ** ** | ** ** | **POUNDS** | ** ** | **KILOS** | ** ** |
|-----------------------------------|------------|------------|------------|------------|-----------|------------|
| Maximum Takeoff Gross Weight:     | (MTOGW)    |       |       | /          |      |       |
| Maximum Taxi Weight:              | (MTW)      |       |       | /          |      |       |
| Maximum Landing Weight:           | (MLW)      |       |       | /          |      |       |
| Manufacturer’s Empty Weight: | (MEW)      |       |       | /          |      |       |
| Maximum Zero Fuel Weight:         | (MZFW)     |       |       | /          |      |       |
| Operational Empty Weight:         | (OEW)      |       |       | /          |      |       |

 

16

----

 

**AVIONICS SYSTEMS**

 

 

**22  AUTO FLIGHT**

 
| **QTY** | ** ** | **COMPONENT**                                           | ** ** | **MANUFACTURER** | ** ** | **MODEL or PART  NUMBER** | ** ** |
|---------|------------|---------------------------------------------------------|------------|------------------|------------|---------------------------|------------|
|    |       | FMGC - Flight Management &  Guidance Computer: |       |             |       |                      |       |
|    |       | FAC - Flight Augmentation Computer:                     |       |             |       |                      |       |
|    |       | FCU - Flight Control Unit:                              |       |             |       |                      |       |
|    |       | MCDU - Multipurpose Control Display Unit:               |       |             |       |                      |       |

 

**23  COMMUNICATIONS**

 
| **QTY** | ** ** | **COMPONENT**                                          | ** ** | **MANUFACTURER** | ** ** | **MODEL or PART  NUMBER** | ** ** |
|---------|------------|--------------------------------------------------------|------------|------------------|------------|---------------------------|------------|
|    |       | CIDS Director - Cabin Intercommunications  Data System |       |             |       |                      |       |
|    |       | HF Transceiver:                                        |       |             |       |                      |       |
|    |       | VHF Transceiver:                                       |       |             |       |                      |       |
|    |       | Cockpit Voice Recorder:                                |       |             |       |                      |       |
|    |       | PRAM Tape Reproducer (Pre-Recorded PAX  Address):      |       |             |       |                      |       |
|    |       | MPES Tape Reproducer (Audio Entertainment):            |       |             |       |                      |       |
|    |       | Tape Reproducer (Video Entertainment):                 |       |             |       |                      |       |
|    |       | Audio management unit/SELCAL Decoder:                  |       |             |       |                      |       |
|    |       | ACARS Management Unit:                                 |       |             |       |                      |       |
|    |       | RMP - Radio Management Panel:                          |       |             |       |                      |       |

 

17

----

 

**27FLIGHT CONTROL COMPUTER**

 
| **QTY** | ** ** | **COMPONENT**                            | ** ** | **MANUFACTURER** | ** ** | **MODEL or PART  NUMBER** | ** ** |
|---------|------------|------------------------------------------|------------|------------------|------------|---------------------------|------------|
|    |       | ELAC - Elevator/Aileron Computer:        |       |             |       |                      |       |
|    |       | SFCC - Slat/flap Control Computer:       |       |             |       |                      |       |
|    |       | SEC - Spoiler/Elevator Computer:         |       |             |       |                      |       |
|    |       | FCDC - Flight Control Data Concentrator: |       |             |       |                      |       |

 

 

**31  INDICATING AND RECORDING**

 
| **QTY**                            | ** ** | **COMPONENT**                                   | ** ** | **MANUFACTURER**                         | ** ** | **MODEL or PART  NUMBER** | ** ** |
|------------------------------------|------------|-------------------------------------------------|------------|------------------------------------------|------------|---------------------------|------------|
|                               |       | Multifunction Printer:                          |       |                                     |       |                      |       |
|                               |       | DFDR - Flight Data Recorder:                    |       |                                     |       |                      |       |
|                               |       | FDIU - Digital Flight Data Interface Unit:      |       |                                     |       |                      |       |
|                               |       | Accelerometer:                                  |       |                                     |       |                      |       |
|                               |       | FWC - Flight Warning Computers:                 |       |                                     |       |                      |       |
|                               |       | Windshear Activated:                            |       | o Yes     o  No |       |                      |       |
|                               |       | QAR - Quick Access Recorder:                    |       |                                     |       |                      |       |
|                               |       | AIDS - Aircraft Integrated Data System:         |       |                                     |       |                      |       |
|                               |       |                                            |       |                                     |       |                      |       |
| ELECTRONIC INSTRUMENT SYSTEM (EIS) |       |                                            |       |                                     |       |
|                               |       | PFD - Primary Flight Display:                   |       |                                     |       |                      |       |
|                               |       | ND - Navigation Display:                        |       |                                     |       |                      |       |
|                               |       | SDACS - System Data Acquisition  Concentrators: |       |                                     |       |                      |       |
|                               |       | Display Management Computers:                   |       |                                     |       |                      |       |
|                               |       | EWD - Engine/Warning Display:                   |       |                                     |       |                      |       |
|                               |       | SD - System Display:                            |       |                                     |       |                      |       |

 

18

----

 
| **QTY** | ** ** | **COMPONENT**                                 | ** ** | **MANUFACTURER** | ** ** | **MODEL or PART  NUMBER** | ** ** |
|---------|------------|-----------------------------------------------|------------|------------------|------------|---------------------------|------------|
|    |       | CFDIU - Centralized Fault Display  Interface: |       |             |       |                      |       |

 

**34  NAVIGATION**

 
| **QTY** | ** ** | **COMPONENT**                                                  | ** ** | **MANUFACTURER** | ** ** | **MODEL or PART  NUMBER** | ** ** |
|---------|------------|----------------------------------------------------------------|------------|------------------|------------|---------------------------|------------|
|    |       | ADIRU - Air Data/Inertial Reference System:                    |       |             |       |                      |       |
|    |       | DME - Distance Measuring Equipment  Interrogators:             |       |             |       |                      |       |
|    |       | VHF VOR/Marker Beacon Receiver:                                |       |             |       |                      |       |
|    |       | VHF ILS Receiver:                                              |       |             |       |                      |       |
|    |       | DDRMI - Digital Distance & Radio  Magnetic Indicator: |       |             |       |                      |       |
|    |       | Radio Altimeter Transceiver:                                   |       |             |       |                      |       |
|    |       | Weather Radar Transceiver:                                     |       |             |       |                      |       |
|    |       | TCAS - Traffic Alert and Collision  Avoidance System Computer: |       |             |       |                      |       |
|    |       | ATC - Air Traffic Control System  Transponder:                 |       |             |       |                      |       |
|    |       | Microwave Landing Receiver:                                    |       |             |       |                      |       |
|    |       | GPWS - Ground Proximity Warning System:                        |       |             |       |                      |       |
|    |       | ADF - Automatic Direction Finder Receiver:                     |       |             |       |                      |       |

 

19

----

 

**INSPECTOR RECORD**

 

 
| INSPECTED BY:          |   |   |   DATE:             |     |   |
|------------------------|--------|--------|-------------------------------|----------|--------|
|                   |   |   |
| OPERATOR:              |   |   |   REGISTERED OWNER: |     |   |
|                   |   |   |
| ADDRESS OF OPERATOR:   |   |   |                          |
|                   |   |   |                          |
|                   |   |   |                          |
|                   |   |   |                          |
|                   |   |   |                          |
|                   |   |   |
| CONTACT  (Name/Title): |   |   |                          |
|                   |   |   |
| TELEPHONE:             |   |   |                          | TELEFAX: |   |   |
|                   |   |   |
| Email Address:         |   |   |                          |
|                        |        |        |                               |          |        |  |  |  |  |  |

 
| **Department Contact**         | ** ** | **Name** | ** ** | **Phone** | ** ** | **Fax** | ** ** | **Email** | ** ** |
|--------------------------------|------------|----------|------------|-----------|------------|---------|------------|-----------|------------|
| Quality Control:               |       |     |       |      |       |    |       |      |       |
|                           |       |     |       |      |       |    |       |      |       |
| Power Plant Engineering:       |       |     |       |      |       |    |       |      |       |
|                           |       |     |       |      |       |    |       |      |       |
| Maintenance Programs/Planning: |       |     |       |      |       |    |       |      |       |

 

20

----