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Controladora Vuela Compania de Aviacion, S.A.B. de C.V. – IPO: ‘F-1/A’ on 6/20/13 – EX-10.11

On:  Thursday, 6/20/13, at 9:12am ET   ·   Accession #:  1193125-13-265084   ·   File #:  333-189121

Previous ‘F-1’:  ‘F-1’ on 6/6/13   ·   Next:  ‘F-1/A’ on 8/9/13   ·   Latest:  ‘F-1/A’ on 9/16/13   ·   6 References:   By:  Controladora Vuela Compania de Aviacion, S.A.B. de C.V. – ‘20-F’ on 4/29/24 for 12/31/23 By:  Controladora Vuela Compania de Aviacion, S.A.B. de C.V. – ‘20-F’ on 5/1/23 for 12/31/22 By:  Controladora Vuela Compania de Aviacion, S.A.B. de C.V. – ‘20-F’ on 4/27/22 for 12/31/21 By:  Controladora Vuela Compania de Aviacion, S.A.B. de C.V. – ‘20-F’ on 4/30/21 for 12/31/20 By:  Controladora Vuela Compania de Aviacion, S.A.B. de C.V. – ‘F-3/A’ on 11/27/20 By:  Controladora Vuela Compania de Aviacion, S.A.B. de C.V. – ‘F-3’ on 10/7/20 

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 6/20/13  Controladora Vuela Compania d… CV F-1/A                 66:61M                                    RR Donnelley/FA

Document/Exhibit                   Description                      Pages   Size 

 1: F-1/A       Amendment No.1 to Form F-1                          HTML   3.36M 
 2: EX-1.1      Underwriting Agreement                              HTML    205K 
 3: EX-3.1      Articles of Incorporation/Organization or By-Laws   HTML    250K 
 4: EX-4.1      Instrument Defining the Rights of Security Holders  HTML    217K 
 5: EX-4.2      Instrument Defining the Rights of Security Holders  HTML     49K 
 6: EX-4.3      Instrument Defining the Rights of Security Holders  HTML    121K 
 7: EX-4.4      Instrument Defining the Rights of Security Holders  HTML     63K 
 8: EX-4.5      Instrument Defining the Rights of Security Holders  HTML    261K 
 9: EX-5.1      Opinion re: Legality                                HTML     24K 
10: EX-10.1     Material Contract                                   HTML     46K 
19: EX-10.10    Material Contract                                   HTML   2.56M 
20: EX-10.11    Material Contract                                   HTML   1.03M 
21: EX-10.12    Material Contract                                   HTML   1.07M 
22: EX-10.13    Material Contract                                   HTML    620K 
23: EX-10.14    Material Contract                                   HTML    609K 
24: EX-10.15    Material Contract                                   HTML    670K 
25: EX-10.16    Material Contract                                   HTML    668K 
26: EX-10.17    Material Contract                                   HTML    784K 
27: EX-10.18    Material Contract                                   HTML   1.18M 
28: EX-10.19    Material Contract                                   HTML    796K 
11: EX-10.2     Material Contract                                   HTML     80K 
29: EX-10.20    Material Contract                                   HTML    704K 
30: EX-10.21    Material Contract                                   HTML    696K 
31: EX-10.22    Material Contract                                   HTML    713K 
32: EX-10.23    Material Contract                                   HTML   4.17M 
33: EX-10.24    Material Contract                                   HTML   1.37M 
34: EX-10.25    Material Contract                                   HTML    169K 
35: EX-10.26    Material Contract                                   HTML    176K 
36: EX-10.27    Material Contract                                   HTML    907K 
37: EX-10.28    Material Contract                                   HTML    955K 
38: EX-10.29    Material Contract                                   HTML    895K 
12: EX-10.3     Material Contract                                   HTML    301K 
39: EX-10.30    Material Contract                                   HTML    744K 
40: EX-10.31    Material Contract                                   HTML    913K 
41: EX-10.32    Material Contract                                   HTML    832K 
42: EX-10.33    Material Contract                                   HTML    834K 
43: EX-10.34    Material Contract                                   HTML    490K 
44: EX-10.35    Material Contract                                   HTML    130K 
45: EX-10.36    Material Contract                                   HTML    703K 
46: EX-10.37    Material Contract                                   HTML    648K 
47: EX-10.38    Material Contract                                   HTML    685K 
48: EX-10.39    Material Contract                                   HTML    670K 
13: EX-10.4     Material Contract                                   HTML     88K 
49: EX-10.40    Material Contract                                   HTML    684K 
50: EX-10.41    Material Contract                                   HTML    701K 
51: EX-10.42    Material Contract                                   HTML    719K 
52: EX-10.43    Material Contract                                   HTML    133K 
53: EX-10.44    Material Contract                                   HTML    146K 
54: EX-10.45    Material Contract                                   HTML    141K 
55: EX-10.46    Material Contract                                   HTML    155K 
56: EX-10.47    Material Contract                                   HTML   2.16M 
57: EX-10.48    Material Contract                                   HTML    150K 
58: EX-10.49    Material Contract                                   HTML    159K 
14: EX-10.5     Material Contract                                   HTML    273K 
59: EX-10.50    Material Contract                                   HTML    148K 
60: EX-10.51    Material Contract                                   HTML     46K 
61: EX-10.52    Material Contract                                   HTML    374K 
62: EX-10.53    Material Contract                                   HTML    747K 
63: EX-10.54    Material Contract                                   HTML   1.11M 
15: EX-10.6     Material Contract                                   HTML    128K 
16: EX-10.7     Material Contract                                   HTML    389K 
17: EX-10.8     Material Contract                                   HTML    117K 
18: EX-10.9     Material Contract                                   HTML    658K 
64: EX-21.1     Subsidiaries of the Registrant                      HTML     17K 
65: EX-23.1     Consent of Experts or Counsel                       HTML     18K 
66: EX-99.1     Miscellaneous Exhibit                               HTML     67K 

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*****]. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

Exhibit 10.11

AIRCRAFT LEASE AGREEMENT

Dated as of March 9, 2007

BETWEEN

CONCESIONARIA VUELA COMPANIA DE AVIACION, S.A. DE C.V.

as LESSEE

and

INTERNATIONAL LEASE FINANCE CORPORATION

as LESSOR

NEW AIRCRAFT NO. 1

TABLE OF CONTENTS

TABLE OF CONTENTS

TABLE OF CONTENTS

TABLE OF CONTENTS

TABLE OF CONTENTS

TABLE OF CONTENTS

TABLE OF CONTENTS

TABLE OF CONTENTS

AIRCRAFT LEASE AGREEMENT

THIS AIRCRAFT LEASE AGREEMENT (together with all Exhibits hereto, the “Lease”) is made and entered into as of March 9, 2007.

BETWEEN:

CONCESIONARIA VUELA COMPANIA DE AVIACION, S.A. DE C.V., a Mexican company whose principal place of business is at Prolongacion Paseo de la Reforma No. 490, Piso 1 (Edificio GE), Santa Fe Pena Blanca, Del. Alvaro Obregon, Mexico, D.F., Mexico 01210 (“LESSEE”); and

INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation whose principal place of business is at 10250 Constellation Boulevard, 34^th Floor, Los Angeles, California 90067, United States of America (“LESSOR”).

The subject matter of this Lease is one (1) new Airbus A319-100 aircraft. In consideration of and subject to the mutual covenants, terms and conditions contained in this Lease, LESSOR hereby agrees to lease to LESSEE and LESSEE hereby agrees to lease from LESSOR the aircraft and the parties further agree as follows:

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

1.13 Description of Aircraft

One new Airbus A319-100 aircraft

1.14 Scheduled Delivery Date and Location

In the month of April 2008 in Hamburg, Germany

1.15 Initial Lease Term

10 years

1.16 Extension Lease Option

Two (2) lease extension options of one (1) year each

1.17 Security Deposit

***** payable as follows (in U.S. Dollars):

***** Confidential portions of the material have been omitted and filed separately with the Securities and Exchange Commission.

1.18 Transaction Fee

***** payable within 2 business days after execution of this Lease

1.19 Rent During Lease Term

Payable monthly in advance and equal to the sum of:

*The above base rent is expressed in January 2006 U.S. Dollars and will increase in accordance with Airbus’s announced escalation rates for the period from and including the 1^st day of January 2006 through and including the delivery month of the aircraft, compounded monthly provided, however, that the escalation of such base rent will not exceed a rate of ***** for each whole year following January 2006 or a proportional part of ***** for such lesser periods.

plus

plus

(c) the “LESSEE Customization Costs” amortized over the lease term, together with interest thereon at a rate equal to the prime rate in effect at delivery. The “LESSEE Customization Costs” consist of the cost of (i) all agreed-to BFE (whether buyer-furnished equipment or seller-purchased equipment) paid for by LESSOR in place of or in addition to LESSEE’s baseline BFE for the Aircraft as specified in Exhibit A and (ii) all other agreed-to changes to LESSEE’s baseline specification specified in Exhibit A paid for by LESSOR.

***** Confidential portions of the material have been omitted and filed separately with the Securities and Exchange Commission.

1.20 Reserves

1.21 Additional Rent for Excess Airframe and Engine Cycles

***** each cycle the airframe and ***** for each cycle an engine has operated, calculated as of the end of the lease term, in excess of the maximum number of cycles which would result from an hour/cycle ratio of 1.25 hours to 1 cycles

1.22 Country of Aircraft Registration

United States

***** Confidential portions of the material have been omitted and filed separately with the Securities and Exchange Commission.

1.23 Agreed Value of Aircraft

An amount equal to ***** of the manufacturer’s list price for the aircraft on the delivery date, which will be decreased by ***** of such amount on each yearly anniversary of the delivery date

1.24 LESSOR’s Bank Account

International Lease Finance Corporation Account No. ***** JPMorgan Chase Bank 270 Park Avenue New York, New York 10017 ABA# *****

***** Confidential portions of the material have been omitted and filed separately with the Securities and Exchange Commission.

Except where the context otherwise requires, the following words have the following meanings for all purposes of this Lease. The definitions are equally applicable to the singular and plural forms of the words. Any agreement defined below or in this Lease includes each amendment, modification, supplement and waiver thereto in effect from time to time.

2.3 General Definitions.

“Aircraft” means the Airframe, two (2) Engines, APU, Parts and Aircraft Documentation, collectively. As the context requires, “Aircraft” may also mean the Airframe, any Engine, the APU, any Part, the Aircraft Documentation or any part thereof individually. For example, in the context of return to LESSOR the term “Aircraft” means the Airframe, Engines, APU, Parts and Aircraft Documentation collectively, yet in the context of LESSEE not creating any Security Interests other than Permitted Liens on the Aircraft, the term “Aircraft” means any of the Airframe, any Engine, the APU, any Part or the Aircraft Documentation individually.

“Aircraft Documentation” means all (a) log books, Aircraft records, manuals and other documents provided to LESSEE in connection with the Aircraft, (b) documents listed in the Estoppel and Acceptance Certificate and Exhibit N and (c) any other documents required to be maintained during the Lease Term and until the Termination Date by the Aviation Authority, LESSEE’s Maintenance Program and this Lease.

“Airframe” means the airframe listed in the Estoppel and Acceptance Certificate executed at Delivery together with all Parts relating thereto (excluding each Basic Engine or engines and the APU).

“Airworthiness Directives” or “ADs” means all airworthiness directives (or equivalent) applicable to the Aircraft issued by any one or more of the Aviation Authority, DGAC, FAA and EASA.

“APU” means (a) the auxiliary power unit of the Aircraft listed in the Estoppel and Acceptance Certificate executed at Delivery, (b) any replacement auxiliary power unit acquired by LESSOR and leased to LESSEE pursuant to Article 19.6 following a Total Loss of the APU and (c) all Parts installed in or on such APU at Delivery (or substituted, renewed or replacement Parts in accordance with this Lease) so long as title thereto is or remains vested in LESSOR in accordance with the terms of Article 12.4.

“Aviation Authority” means the Federal Aviation Administration of the Department of Transportation or any successor thereto under the Laws of the United States of America or any Government Entity which under the Laws of the United States of America from time to time has control over civil aviation or the registration, airworthiness or operation of aircraft in the United States of America. If the Aircraft is registered in a country other than the United States of America, “Aviation Authority” means the agency which regulates civil aviation in such other country.

“Aviation Documents” means any or all of the following which at any time may be obtainable from the Aviation Authority: (a) if required, a temporary certificate of airworthiness from the Aviation Authority allowing the Aircraft to be flown after Delivery to the State of Registration, (b) an application for registration of the Aircraft with the appropriate authority in the State of Registration, (c) the certificate of registration for the Aircraft issued by the State of Registration, (d) a Standard Certificate of Airworthiness for the Aircraft specifying transport category (passenger), (e) an air transport license, (f) an air operator’s certificate, (g) such recordation of LESSOR’s title to the Aircraft and interest in this Lease as may be available in the State of Registration and (h) all such other authorizations, approvals, consents and certificates, if any, in the State of Registration as may be required to enable LESSEE lawfully to operate the Aircraft.

“Basic Engine” means, with respect to an Engine, the Engine Manufacturer’s engine modules, components and systems as specified in the Engine Manufacturer’s delivered bill of material for that engine model. The “Basic Engine” does not include the nacelle, installed components related to the Aircraft systems, thrust reversers, quick engine components (QEC), primary exhaust nozzle and any other Parts which are not considered by the Engine Manufacturer to be part of a “basic engine”.

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

“Business Day” means a day other than a Saturday or Sunday on which the banks in the city where LESSOR’s Bank is located are open for the transaction of business of the type required by this Lease and except in respect of payments of Rent, Mexico City, Mexico.

“Cape Town Convention” means both the Convention and the Protocol.

“Consolidated Text” means the Consolidated Text of the Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Aircraft Equipment.

“Convention” means the Convention on International Interests in Mobile Equipment which was adopted on November 16, 2001 at a diplomatic conference held in Cape Town, South Africa as it may be amended from time to time.

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

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

“Default” means any event which, upon the giving of notice, the lapse of time and/or a relevant determination, would constitute an Event of Default.

“Delivery” means the delivery of the Aircraft from LESSOR to LESSEE pursuant to Articles 3 and 6.

“Delivery Date” means the date on which Delivery takes place.

“DGAC” means the French Direction Générale de l’Aviation Civile or any successor thereto.

“Dollars”, “$” and “US$” mean the lawful currency of the U.S.

“EASA” means the European Aviation Safety Agency or any successor thereto. Where it is stated in this Lease that a repair station or a repair, overhaul or maintenance facility will be an “EASA-approved” station or facility, such station or facility must be approved by EASA to perform maintenance and repair work on the Aircraft, an Engine or Part submitted to it for maintenance or repair, as applicable.

“Engine” means (a) each of the engines listed on the Estoppel and Acceptance Certificate; (b) any replacement engine acquired by LESSOR and leased to LESSEE pursuant to Article 19.5 following a Total Loss of an Engine; and (c) all Parts installed in or on any of such engines at Delivery (or substituted, renewed or replacement Parts in accordance with this Lease) so long as title thereto is or remains vested in LESSOR in accordance with the terms of Article 12.4.

“Eurocontrol” means the European Organization for the Safety of Air Navigation established by the Convention related to the Co-operation for the Safety of Air Navigation (Eurocontrol) signed on December 13, 1960, as amended.

“Engine Manufacturer” means IAE International Engines A.G.

“Event of Default” means any of the events referred to in Article 25.2.

“FAA” means the Federal Aviation Administration of the U.S. Department of Transportation or any successor thereto under the Laws of the U.S. Where it is stated in this Lease that a repair station or a repair, overhaul or maintenance facility will be an “FAA-approved” station or facility, such station or facility must be approved by the FAA to perform maintenance and repair work on the Aircraft, an Engine or Part, as applicable.

“FARs” means the U.S. Federal Aviation Regulations embodied in Title 14 of the U.S. Code of Federal Regulations, as amended from time to time, or any successor regulations thereto.

“Geneva Convention” means the Convention on 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 or (c) association, organization or institution of which any of the entities listed in (a) or (b) is a member or to whose jurisdiction any such entity is subject.

“International Registry” means the international registration facilities established for the purposes of the Cape Town Convention.

“JAA” means the Joint Aviation Authorities, an associated body of the European Civil Aviation Conference.

“JARs” means the EASA/JAA regulations, as amended from time to time, or any successor regulations thereto.

“Landing Gear” means the installed main and nose landing gear, components and their associated actuators, side braces and parts.

“Law” means any (a) statute, decree, constitution, regulation, order or any directive of any Government Entity, (b) treaty, pact, compact or other agreement to which any Government Entity is a signatory or party, (c) judicial or administrative interpretation or application of any of the foregoing or (d) any binding judicial precedent having the force of law.

“LESSOR’s Lien” means any Security Interest created by or through LESSOR.

“Maintenance Program” means LESSEE’s maintenance program as approved by the Aviation Authority or such other maintenance program as LESSOR may, acting reasonably accept in writing.

“Manufacturer” means Airbus S.A.S. “Mexico” means the United Mexican States.

“MPD” means the then-current Maintenance Planning Document published by Manufacturer and applicable to the Aircraft. With respect to the hour/cycle/calendar time limitation of Parts and inspections, references to the MPD mean the most restrictive limitation set forth therein.

“Overhaul” means the full reconditioning of the Aircraft, an Engine, the APU, Landing Gear, module or Part, as the case may be, in which such equipment has been fully disassembled, cleaned, thoroughly inspected and returned to the highest standard specified by the applicable manufacturer’s manual.

“Part” means any part, component, appliance, system module, engine module, accessory, material, instrument, communications equipment, furnishing, LESSEE-furnished or LESSOR-purchased equipment or other item of equipment (other than complete Engines or engines or the APU) for the time being installed in or attached to the Airframe, any Engine or the APU or which, having been removed from the Airframe, any Engine or the APU, remains the property of LESSOR in accordance with Article 12.4.

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

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

“Prime Rate” means the rate of interest from time to time announced by JPMorgan Chase Bank in New York as its prime commercial lending rate.

“Prohibited Country” means any country other than Mexico to which the export and/or use of an Airbus A319-100 aircraft with V2524 engines attached thereto is not permitted under (a) any United Nations sanctions, (b) the Council Regulation (EC) No. 149/2003 which updates and amends Council Regulation (EC) 1334/2000, (c) the United States Export Administration Act 1979 (as amended) or any successor legislation and/or the Export Administration Regulations promulgated thereunder, (d) where applicable, the various regulations administered from time to time by the Office of Foreign Assets Control of the U.S. Treasury Department, (e) any similar or corresponding legislation then in effect in the U.S., the United Kingdom, France, Spain or Germany or (f) any subsequent United Nations Sanctions Orders the effect of which prohibits or restricts the export and/or use of Airbus A319-100 aircraft with V2524 engines attached thereto to such country. Prohibited Country will be defined by applicable regulations as modified, amended or superceded from time to time.

“Protocol” means the Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Aircraft Equipment which was adopted on November 16, 2001 at a diplomatic conference held in Cape Town, South Africa, as it may be amended from time to time.

“Return Check” means the accomplishment of the subsequent “C” check (or equivalent) of the Aircraft in accordance with the MPD (including all non-routine work generated as a result of performance of such MPD tasks) to clear the Aircraft for the next 20 months, 6,000 hours and 4,500 cycles of operation from the Termination Date. For avoidance of doubt, if the inspection interval pursuant to the MPD for a particular task only refers to one or two of the three measurements above (i.e. months, hours or cycles), then only those particular measurements referred to in the MPD will be utilized in determining whether the task must be performed.

“Qualified Performance Restoration” means that the gaspath core major module of an Engine shall have, as a minimum, a Refurbishment accomplished in accordance with the Engine Manufacturer’s current V2500 Maintenance Management Plan recommendations. The gaspath core major module shall consist of the high pressure compressor module, diffuser/combustor group, outer/inner combustion chambers, No. 4 bearing, high pressure turbine stage one nozzle vane group and high pressure turbine module. For the sole purposes of this paragraph, the term “Refurbishment” means the Engine Manufacturer’s definition of a refurbishment as stated in the then-current V2500 Maintenance Management Plan recommendations at the time of the applicable shop visit.

“Security Interest” means any encumbrance or security interest, however and wherever created or arising including (without prejudice to the generality of the foregoing) any right of ownership, 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 the U.S. or such other country or state of registration of the Aircraft as LESSOR may, in its absolute discretion, approve in writing.

“U.S.” or “U.S.A.” means the United States of America.

2.4 Specific Definitions. The following terms are defined in the Articles referenced below:

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

3.8 Scheduled Delivery Date. As of the date of this Lease, delivery of the Aircraft from Manufacturer to LESSOR and LESSOR to LESSEE is scheduled to occur in the month of April 2008. LESSOR will notify LESSEE from time to time and in a timely manner of the exact date on which LESSOR expects Delivery to take place (the “Scheduled Delivery Date”).

3.9 Delivery subject to Manufacturer Delivery. LESSOR and LESSEE expressly acknowledge that Delivery of the Aircraft to LESSEE is subject to and conditioned upon delivery of the Aircraft by Manufacturer to LESSOR.

3.10 No LESSOR Liability. LESSOR will not be liable for any loss or expense, or any loss of profit, arising from any delay or failure in Delivery to LESSEE unless such delay or failure arises as a direct consequence of the willful misconduct of LESSOR, and in no event will LESSOR be liable for any delay or failure which is caused by any breach or delay on the part of Manufacturer or any BFE supplier.

3.11 Total Loss of Aircraft prior to Delivery. If a Total Loss of the Aircraft occurs prior to Delivery, neither party will have any further liability to the other except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent.

3.12 Cancellation for Delay. Promptly after LESSOR becomes aware that in Manufacturer’s opinion a delay will cause Delivery to be delayed beyond October 30, 2008, LESSOR will notify LESSEE. By written notice given within ten (10) Business Days after LESSEE’s receipt of such LESSOR notice, either party may by written notice to the other party terminate this Lease and this Lease will terminate on the date of receipt of such notice. In the event of such termination, neither party will have any further liability to the other party except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent, and if LESSOR subsequently collects (at its discretion) from Manufacturer monetary damages as compensation for such delay, LESSOR shall share such compensation (minus any out of pocket costs incurred by LESSOR in pursuing such damages) equally with LESSEE. If neither party gives notice of termination within such ten (10) Business Days, both parties lose all right to terminate under this Article 3.6 unless otherwise agreed in writing by the parties.

4.5 Initial Lease Term. The term of leasing of the Aircraft will commence on the Delivery Date and continue for an initial lease term of ten (10) years (“Initial Lease Term”).

4.6 Lease Extension Option. So long as no Default or Event of Default has occurred and is continuing hereunder on the date of exercise of the option, LESSEE will have two (2) options to extend the term of the Lease for a period of one (1) year each from the then-existing Expiration Date (the “Extension Lease Term”). In order to exercise an option, LESSEE must give written notice to LESSOR not less than ten (10) months prior to the then-existing Expiration Date of this Lease. Any notice given by LESSEE in accordance herewith will be irrevocable.

4.7 “Lease Term” and “Expiration Date”. “Lease Term” means the term of leasing commencing on the Delivery Date and terminating on the Expiration Date. “Expiration Date” means the date on which LESSEE is required to redeliver the Aircraft to LESSOR in the condition required by this Lease on the last day of the Initial Lease Term or Extension Lease Term, if and as applicable.

4.8 “Termination Date”. If LESSEE returns the Aircraft to LESSOR on the Expiration Date in the condition required by Article 23, then “Termination Date” has the same meaning as “Expiration Date”. If LESSEE does not do so, then “Termination Date” means the date on which the first of the following events occurs:

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

(b) cancellation of this Lease occurs pursuant to Article 3.6;

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

(d) prior to the Expiration Date, LESSOR repossesses the Aircraft or otherwise terminates this Lease and recovers possession and control of the Aircraft following an Event of Default;

(e) an Event of Default occurs hereunder by LESSEE returning the Aircraft in the condition required by this Lease after the Expiration Date; or

(f) after the Expiration Date, LESSOR repossesses the Aircraft or otherwise terminates this Lease and recovers possession and control of the Aircraft following an Event of Default.

5.15 Security Deposit.

***** Confidential portions of the material have been omitted and filed separately with the Securities and Exchange Commission.

5.16 Transaction Fee. Within two (2) Business Days after execution of this Lease, LESSEE will pay LESSOR a nonrefundable transaction fee of ***** (the “Transaction Fee”).

5.17 Rent.

Lease Term: Payable monthly in advance and equal to the sum of:

*The above base rent is expressed in January 2006 U.S. Dollars and will increase in accordance with Airbus’s announced escalation rates for the period from and including the 1^st day of January 2006 through and including the delivery month of the aircraft, compounded monthly; provided, however, that the escalation of such base rent will not exceed a rate of ***** for each whole year following January 2006 or a proportional part of ***** for such lesser periods.

plus

plus

(c) the “LESSEE Customization Costs” amortized over the Lease Term, together with interest thereon at a rate equal to the Prime Rate in effect at Delivery

***** Confidential portions of the material have been omitted and filed separately with the Securities and Exchange Commission.

The “LESSEE Customization Costs” consist of the cost of (i) all agreed-to BFE (whether buyer-furnished equipment or seller-purchased equipment) paid for by LESSOR in place of or in addition to LESSEE’s baseline BFE for the Aircraft as specified in Exhibit A and (ii) all other agreed-to changes to LESSEE’s baseline specification specified in Exhibit A paid for by LESSOR.

Any increases to the above base rent will be calculated immediately prior to Delivery.

5.18 Reserves.

***** Confidential portions of the material have been omitted and filed separately with the Securities and Exchange Commission.

5.19 Additional Rent for Excess Cycles. If on the Termination Date the Airframe or any Engine has operated more cycles than the maximum number of cycles which would result from an hour/cycle ratio of 1.25 hours to 1 cycle over the period of the Lease Term, LESSEE will pay LESSOR as additional Rent ***** for each Airframe cycle and ***** for each Engine cycle the Airframe and any Engine actually operated during the Lease Term in excess of the number of cycles which result from an hour/cycle ratio of 1.25 hours to 1 cycle. A calculation will be made by LESSOR as of the Termination Date and such additional Rent will be due and payable by LESSEE within three (3) Business Days following the date LESSEE receives such calculation, in writing, from LESSOR.

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

International Lease Finance Corporation Account No. ***** JPMorgan

Chase Bank 270 Park Avenue New York, New York 10017 ABA# *****

***** Confidential portions of the material have been omitted and filed separately with the Securities and Exchange Commission.

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

5.21 Default Interest. If LESSOR’s Bank does not receive the Rent or any other amount on or before the specific date when due, LESSOR will suffer loss and damage the exact nature and amount 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 and unpaid amounts payable by LESSEE under this Lease. Interest will be calculated at a per annum rate (based on a 360 day year) which is equal to ***** plus the Prime Rate in effect on the date on which the amount was originally due for the period from the date the amount originally was due through the date the amount actually is received at LESSOR’s Bank or, in the case of LESSOR’s performance of LESSEE’s obligations hereunder, from the date of payment by LESSOR through the date of LESSEE’s repayment to LESSOR (“Default Interest”). Default Interest will accrue on a day-to-day basis and be compounded monthly.

5.22 No Deductions or Withholdings. All payments by LESSEE under this Lease, including the Security Deposit, Transaction Fee, Rent, Reserves, Default Interest, fees, indemnities or any other item, will be made in full without any deduction or withholding whether in respect of set-off, counterclaim, duties, or Taxes (as defined in Article 16) imposed in the State of Registration or any jurisdiction from which such payments are made unless LESSEE is prohibited by Law from doing so, in which event LESSEE will gross up the payment amount such that the net payment received by LESSOR after any deduction or withholding equals the amounts called for under this Lease. LESSEE will also do all of the following:

(a) Ensure that the deduction or withholding does not exceed the minimum amount legally required;

(b) Pay to the relevant Government Entities within the period for payment permitted by applicable Law the full amount of the deduction or withholding (including the full amount of any deduction or withholding from any additional amount paid pursuant hereto) unless the same is being reasonably contested in good faith by LESSEE in accordance with applicable Law so long as such contest poses no likelihood of seizure or impairment of, or the imposition of a Security Interest on, the Aircraft or any other property of LESSOR; and

(c) Furnish to LESSOR within thirty (30) days after each payment a certified copy of an official receipt of the relevant Government Entities involved, if available, or other evidence of payment reasonably accepted by LESSOR for all amounts so deducted or withheld.

***** Confidential portions of the material have been omitted and filed separately with the Securities and Exchange Commission.

5.23 Value Added Taxes. The Rent and other amounts payable by LESSEE under this Lease are exclusive of any value added tax or similar tax or duty.

5.24 Wire Transfer Disbursement Report. At the time of each Rent or other payment, LESSEE will advise LESSOR (including by way of a reference included in a bank transfer instruction that is available to LESSOR) in writing of the payment being made by LESSEE 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 the event LESSEE is in default under this Lease, LESSOR will have complete discretion to allocate LESSEE’s payments as LESSOR determines.

5.25 Net Lease.

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

(b) unavailability or interruption in use of the Aircraft for any reason, including a requisition thereof or any prohibition or interference with or other restriction against LESSEE’s use, operation or possession 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, the ineligibility of the Aircraft for any particular use or trade or for registration under the Laws of an jurisdiction or Total Loss of the Aircraft;

(c) insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation, receivership, administration or similar proceedings by or against LESSOR, LESSEE, Manufacturer, the Engine Manufacturer or any other Person;

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

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

(f) any other circumstance which but for this provision would or might have the effect of terminating or in any other way affecting any obligation of LESSEE hereunder.

5.26 Currency Indemnity. If under any applicable Law, whether as a result of a judgment against LESSEE or the liquidation of LESSEE or for any other reason, any payment hereunder is required to be made or recovered in a currency other than Dollars then, to the extent that the payment (when converted into Dollars at the “rate of exchange” on the date of payment or, in the case of a liquidation, the latest date for the determination of liabilities permitted by the applicable Law) falls short of the amount payable under this Lease, LESSEE will as a separate and independent obligation, fully indemnify LESSOR against the amount of the shortfall. If the amount received by LESSOR upon converting the payment into Dollars exceeds the amount payable under this Lease, LESSOR will remit such excess to LESSEE. For the purposes of this paragraph “rate of exchange” means the rate at which LESSOR is able on the relevant date to purchase Dollars in New York or London (at LESSOR’s option) with such other currency.

5.27 LESSOR Performance of LESSEE Obligation. If LESSEE fails to make any payment under this Lease to a third party in connection with the Aircraft or fails to perform any other obligation required under this Lease, LESSOR may (but is not required to) at its election, after the expiry of any applicable cure or similar period and without waiver of its rights perform such obligation and/or pay such amount unless the same is being reasonably contested in good faith by LESSEE in accordance with applicable Law so long as such contest poses no likelihood of seizure or impairment of, or the imposition of a Security Interest on, the Aircraft or any other property of LESSOR.

5.28 Consideration for Rent and other Amounts. The amount of the Rent and other payments contained in this Lease are in consideration of LESSEE’s waiver of warranties and acceptance of the disclaimers and LESSEE’s provision of indemnities set forth in Articles 8 and 17, respectively, and the other provisions of this Lease.

6.9 LESSEE Selection of Aircraft. LESSEE ACKNOWLEDGES THAT THE DESCRIPTION OF THE AIRCRAFT SET FORTH IN THIS LEASE IS BASED UPON INFORMATION SUPPLIED BY MANUFACTURER. LESSEE COVENANTS TO LESSOR THAT LESSEE HAS USED ITS OWN JUDGMENT IN SELECTING THE AIRCRAFT AND HAS DONE SO BASED ON ITS SIZE, DESIGN AND TYPE. LESSEE ACKNOWLEDGES THAT LESSOR IS NOT A MANUFACTURER, REPAIRER OR SERVICING AGENT OF THE AIRCRAFT.

6.10 Participation Agreement. LESSEE has the right to inspect the Aircraft during the manufacture process and to attend and observe the acceptance tests of the Aircraft pursuant to the terms of a Participation Agreement to be entered into between LESSEE and LESSOR in the form set forth in Exhibit B.

6.11 Procurement of BFE. LESSOR will procure all BFE for the Aircraft in accordance with the Aircraft specification set forth in Exhibit A. With respect to any additional BFE not part of such specifications, LESSOR and LESSEE agree to use commercially reasonable efforts to procure such BFE under the supplier contract of LESSOR or LESSEE which provides the most favorable pricing, unless LESSOR is prohibited from doing so or unless any such change could cause, in LESSOR’s reasonable opinion, a delay in Delivery of the Aircraft.

6.12 Assignment of Training. LESSOR agrees to give LESSEE a product support allowance as set forth in Appendix 3 of the Participation Agreement to be entered into between LESSEE and LESSOR in the form set forth in Exhibit B. If LESSEE fails to take Delivery of the Aircraft when tendered in accordance with Article 6.7, LESSEE will immediately pay to LESSOR an amount equal to the Dollar value of any goods or services used under the Participation Agreement.

6.13 LESSEE Inspection of Aircraft. During the course of final assembly of the Aircraft, and at Delivery, LESSEE will have its own representative present to inspect the Aircraft and to ensure its conformity with LESSEE’s needs and the terms of this Lease. LESSEE will have ground inspection and acceptance flight rights with respect to the Aircraft. LESSEE acknowledges that, as between LESSEE and LESSOR, in accepting the Aircraft LESSEE is relying on its own inspection and knowledge of the Aircraft in determining whether the Aircraft meets the requirements of this Lease.

6.14 Aircraft at Delivery. At Delivery, the Aircraft will be as set forth in Exhibit A, as such description may be modified by any change requests agreed to among LESSEE, LESSOR

and Manufacturer (which will be reflected in amendment(s) to this Lease). In the event of any discrepancies, LESSEE and LESSOR will cooperate in good faith with one another and with Manufacturer and the Engine and other manufacturers, as applicable, in order to arrive at a mutually acceptable resolution of any such discrepancies.

6.15 Delivery of the Aircraft to LESSEE. Subject to LESSEE having performed all of the conditions precedent to Delivery set forth in this Lease (or LESSOR’s waiver of one or more of such conditions precedent), immediately following delivery of the Aircraft from Manufacturer to LESSOR, LESSOR will deliver the Aircraft to LESSEE at the Delivery Location. Upon tender of the Aircraft by LESSOR to LESSEE in the condition required by Article 6.6, LESSEE will accept the Aircraft and the date of tender by LESSOR to LESSEE will be deemed to be the Delivery Date for all purposes under this Lease, including the commencement of LESSEE’s obligation to pay Rent hereunder. However, nothing in this Lease will obligate LESSOR to deliver the Aircraft to LESSEE if LESSEE has not complied with the conditions contained in Articles 7.1 and 7.2.

6.16 LESSEE Acceptance of Aircraft. If LESSEE fails to (a) comply with its obligations set forth in the Participation Agreement pursuant to Article 6.2, (b) comply with the conditions contained in Articles 7.1 and 7.2 so as to allow Delivery to take place immediately following delivery of the Aircraft by Manufacturer to LESSOR or (c) take delivery of the Aircraft when properly tendered for delivery by LESSOR in the condition required hereunder, LESSEE will indemnify LESSOR for all out-of-pocket costs and expenses incurred by LESSOR as a result thereof including (without limitation) any payments other than the purchase price which LESSOR becomes obliged to make to Manufacturer which result directly from LESSEE’s failure to comply with said conditions.

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

(a) copies of resolutions of the Board of Directors of LESSEE or other written evidence of appropriate action, duly certifying and authorizing the lease of the Aircraft hereunder and the execution, delivery and performance of this Lease, together with an incumbency certificate as to the person or persons authorized to execute and deliver documents on behalf of LESSEE hereunder. Such resolutions or other written evidence must also specifically grant the individual executing this Lease on behalf of LESSEE with the authority and power to commit and bind LESSEE to the arbitration clause contained in Article 27 under the Laws of Mexico;

(b) a letter from the Aviation Authority in the form and substance of Exhibit E (if available); and

(c) an opinion of counsel in substantially the form and substance of Exhibit G such as LESSOR accepts from third party legal counsel in Mexico in the course of LESSOR’s business.

(a) pay to LESSOR the first monthly installment of Rent in accordance with Article 5.3.7;

(b) to the extent required, provide LESSOR with documents evidencing that LESSEE has obtained any necessary licenses for the importation and ferrying of the Aircraft into Mexico and that all applicable customs duties and sales taxes in respect

of the Aircraft, if any, have been discharged by LESSEE (or arrangements satisfactory to LESSOR have been made for obtaining or paying for the same), such that at return of the Aircraft to LESSOR no additional fees, duties or taxes will be payable in order to export the Aircraft from Mexico;

(c) provide LESSOR with documents reasonably requested by LESSOR evidencing the issuance of each approval, license and consent, if any, which may be required in connection with the remittance to LESSOR of any amount payable under this Lease or the performance by LESSEE of any of its obligations hereunder (including without limitation any exchange control approval);

(d) provide LESSOR with a copy of such Aviation Documents as may be available prior to the Scheduled Delivery Date;

(e) provide LESSOR with a power of attorney empowering LESSEE’s representative, who may be an officer or employee of LESSEE, to accept the Aircraft on behalf of LESSEE;

(f) provide LESSOR with a power of attorney in substantially the form of Exhibit H;

(g) provide LESSOR with a power of attorney for purposes of the Cape Town Convention in the form of Exhibit I; and

(h) provide LESSOR with such other documents as LESSOR may reasonably request.

7.5 Delivery Requirements. On the Delivery Date of the Aircraft, each of the following will occur:

(a) the representations and warranties contained in Article 20 are true and

accurate on and as of the Delivery Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date); and

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

7.6 Post-Delivery Requirements.

(a) procure registration of the Aircraft in the register of aircraft of the State of Registration showing LESSOR as the owner and provide evidence of the same to LESSOR;

(b) cause the interests of LESSOR in the Aircraft (including in the Engines, if possible), this Lease and the other Operative Documents to be registered in the International Registry to the fullest extent such interests may be registered, including by consenting to or causing such registration via a “designated entry point” (as such term is defined in the Cape Town Convention) in the United States;

(c) provide LESSOR with copies of all Aviation Documents not previously delivered; and

(d) if the Aircraft could not be registered at Delivery, provide LESSOR with a follow-up opinion of counsel advising that the Aircraft has been registered in the State of Registration and that all necessary filings have been made.

ANY COMMITMENT OR COVENANT ON THE PART OF LESSOR REGARDING THE CONDITION OF THE AIRCRAFT EXPIRES AFTER DELIVERY AND THE DISCLAIMERS AND WAIVERS SET FORTH IN THIS ARTICLE 8 REGARDING THE CONDITION OF THE AIRCRAFT WILL THEN APPLY. THUS, FROM AND AFTER THE TIME OF LESSEE’S ACCEPTANCE OF THE AIRCRAFT AND EXECUTION OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE, AS BETWEEN LESSOR AND LESSEE:

8.8 “As Is, Where Is”. LESSEE AGREES THAT IT IS LEASING THE AIRCRAFT “AS IS, WHERE IS”. LESSEE UNCONDITIONALLY ACKNOWLEDGES AND AGREES THAT NEITHER LESSOR NOR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES HAVE MADE OR WILL BE DEEMED TO HAVE MADE ANY TERM, CONDITION, REPRESENTATION, WARRANTY OR COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE) AS TO, AND LESSEE HEREBY WAIVES ANY EXPRESS OR IMPLIED WARRANTY OR COVENANT (WHETHER STATUTORY OR OTHERWISE) AS TO (a) THE CAPACITY, AGE, AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONFORMITY TO THE PROVISIONS OF THIS LEASE, DESCRIPTION. CONDITION (WHETHER OF THE AIRCRAFT, ANY ENGINE, ANY PART THEREOF OR 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 OR REGISTER THE AIRCRAFT OR USE THE AIRCRAFT DOCUMENTATION IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY PART THEREOF, OR THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY RIGHTS, (c) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (d) ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND EXTINGUISHED.

8.9 Waiver of Warranty of Description. LESSEE HEREBY AGREES THAT ITS ACCEPTANCE OF THE AIRCRAFT AT DELIVERY AND ITS EXECUTION AND DELIVERY OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE CONSTITUTE LESSEE’S WAIVER OF THE WARRANTY OF DESCRIPTION, ANY CLAIMS LESSEE

MAY HAVE AGAINST LESSOR BASED UPON THE FAILURE OF THE AIRCRAFT TO CONFORM WITH SUCH DESCRIPTION AND ANY AND ALL RIGHTS IT MAY HAVE TO THE REMEDIES SET FORTH IN SECTIONS 10508 THROUGH 10522 OF THE CALIFORNIA COMMERCIAL CODE. EVEN IF AT ANY TIME AFTER DELIVERY, THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION SUBSTANTIALLY IMPAIRS THE VALUE AND UTILITY OF THE AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THE AIRCRAFT BASED ON A REASONABLE ASSUMPTION THAT THE NONCONFORMITY WOULD BE CURED AND IT WAS NOT SEASONABLY CURED OR (ii) LESSEE ACCEPTED THE AIRCRAFT WITHOUT DISCOVERING THE NONCONFORMITY BUT LESSEE’S ACCEPTANCE OF THE AIRCRAFT WAS REASONABLY INDUCED EITHER BY LESSORS ASSURANCES OR BY THE DIFFICULTY OF DISCOVERING ANY DEFECT PRIOR TO ACCEPTANCE, LESSEE AGREES NOT TO LOOK TO LESSOR FOR DAMAGES OR RELIEF ARISING OUT OF THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION. NOTWITHSTANDING THE FOREGOING, NOTHING HEREIN SHALL INVALIDATE ANY AGREEMENT BETWEEN LESSOR AND MANUFACTURER TO RECTIFY DISCREPANCIES DISCOVERED PRIOR TO DELIVERY.

8.10 LESSEE Waiver. LESSEE HEREBY WAIVES AS BETWEEN ITSELF AND LESSOR AND AGREES NOT TO SEEK TO ESTABLISH OR ENFORCE ANY RIGHTS OR REMEDIES, EXPRESS OR IMPLIED (WHETHER STATUTORY, IN CONTRACT OR TORT OR UNDER ANY STRICT LIABILITY OR OTHER THEORY) AGAINST LESSOR OR THE AIRCRAFT RELATING TO ANY OF THE MATTERS MENTIONED IN ARTICLES 8.1 OR 8.2, REGARDLESS OF THE NEGLIGENCE, ACTIVE OR PASSIVE OR ANY OTHER TYPE, OF LESSOR.

8.11 Conclusive Proof. DELIVERY BY LESSEE TO LESSOR OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE WILL BE CONCLUSIVE PROOF AS BETWEEN LESSOR AND LESSEE THAT LESSEE’S TECHNICAL EXPERTS HAVE EXAMINED AND INVESTIGATED THE AIRCRAFT AND ENGINES AND (a) EACH IS AIRWORTHY AND IN GOOD WORKING ORDER AND REPAIR AND (b) THE AIRCRAFT AND ENGINES AND THE AIRCRAFT DOCUMENTATION ARE WITHOUT DEFECT (WHETHER OR NOT DISCOVERABLE AT DELIVERY) AND IN EVERY WAY SATISFACTORY TO LESSEE.

8.12 No Liability to Repair or Replace. LESSOR will not be liable for any expense in repairing or replacing any item of the Aircraft or be liable to supply another aircraft or any item in lieu of the Aircraft or any Part thereof if the same is lost, confiscated, damaged, destroyed or otherwise rendered unfit for use.

8.6 No Waiver. Nothing in this Article 8 or elsewhere in this Lease will be deemed to be a waiver by LESSEE of any rights it may have against Manufacturer, the Engine Manufacturer or any other Person.

8.7 Consideration for Waivers. LESSEE’s waiver of warranties and acceptance of the disclaimers expressly set forth in this Article 8 are made in consideration of (a) LESSEE’s rights hereunder to inspect the Aircraft, (b) LESSOR’s assignment to LESSEE of any existing and assignable warranties of Manufacturer and the Engine Manufacturer and (c) the amount of the Rent and other payments contained in this Lease.

9.4 Warranties. As set forth in Article 7.2.6, at Delivery LESSOR will assign to LESSEE for the duration of the Lease Term the benefit of all warranties and indemnities given to LESSOR by Manufacturer and the Engine Manufacturer. Effective on the Delivery Date, all other assignable vendor warranties with respect to the Aircraft are hereby assigned by LESSOR to LESSEE.

9.5 Reassignment. On the Termination Date, the benefit of any warranty assigned by LESSOR to LESSEE pursuant to Articles 7.2.6 and 9.1 will be reassigned automatically to LESSOR or its designee except to the extent of any amounts received by LESSOR and due to LESSEE as a result of out of pocket costs incurred by LESSEE as a result of such claims. At LESSOR’s election, LESSEE’s rights under such warranties (including LESSEE’s claims and rights to payment thereunder) will revert to LESSOR during any period in which an Event of Default is continuing. Similarly, any additional warranties received by LESSEE from Manufacturer, the Engine Manufacturer and any other vendor or repair facility for work performed on the Aircraft, Engine or any Part during the Lease Term will be automatically assigned by LESSEE to LESSOR or its designee on the Termination Date except to the extent of any amounts received by LESSOR and due to LESSEE as a result of out of pocket costs incurred by LESSEE as a result of such claims. LESSEE at its own cost and expense will do all such things and execute such documents as may be required for these purposes.

9.6 Warranty Claims. LESSEE will diligently and promptly pursue any valid claims it may have against Manufacturer and others under such warranties with respect to the Aircraft.

10.6 Costs of Operation. LESSEE will pay all costs incurred in the operation of the Aircraft during the Lease Term and until the Termination Date, for profit or otherwise, including the costs of flight crews, cabin personnel, fuel, oil, lubricants, maintenance, insurance, storage, landing and navigation fees, airport charges, passenger service and any and all other expenses of any kind or nature, directly or indirectly, in connection with or related to the use, movement and operation of the Aircraft.

10.7 Compliance with Laws. Except as otherwise explicitly provided in this Lease, LESSEE agrees throughout the Lease Term and until the Termination Date to maintain operational control of the Aircraft and use the Aircraft in accordance with applicable Laws of the State of Registration and of any country, state, territory or municipality into or over which LESSEE may operate. LESSEE will not employ, suffer or cause the Aircraft to be used in any business which is forbidden by Law or in any manner which may render it liable to condemnation, destruction, seizure, or confiscation by any authority. LESSEE will not permit the Aircraft to fly to any airport or country if so doing would cause LESSEE or LESSOR to be in violation of any Law applicable to either of them or the Aircraft, except as may be reasonably required to preserve the Aircraft or the safety, well being or life of passengers or crew; provided, however, in such case, LESSEE shall immediately notify LESSOR and undertake its best efforts to remove the Aircraft from such airport or country as soon as reasonably possible.

10.8 Training. LESSEE will not use the Aircraft for testing or for training of flight crew members other than LESSEE crew members and will not use the Aircraft for training any more than it utilizes for training the other aircraft in its fleet.

10.9 No Violation of Insurance Policies. LESSEE will not use or permit the Aircraft to be used in any manner or for any purpose which is not covered by the insurance policies LESSEE is required to carry and maintain as set forth in this Lease. LESSEE will not carry any goods of any description excepted or exempted from such policies or do any other act or permit to be done anything which could reasonably be expected to invalidate or limit any such insurance policies.

10.10 Flight and Airport Charges.

11.9 No Sublease without LESSOR Consent. LESSEE WILL NOT SUBLEASE OR PART WITH POSSESSION OF THE AIRCRAFT (EXCEPT FOR MAINTENANCE AND REPAIR) AT ANY TIME WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (NOT TO BE UNREASONABLY WITHHELD) AND IN ACCORDANCE WITH SUCH REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN WRITING BETWEEN LESSOR AND LESSEE. NO SUBLEASING OF AN ENGINE WILL BE PERMITTED.

11.10 LESSOR Costs. LESSEE will indemnify LESSOR on demand for all reasonable out-of-pocket expenses (including legal fees) incurred in connection with LESSOR’s assessment of the subleasing proposal (whether or not LESSOR’s consent to such sublease is ultimately given) and implementation of the sublease.

11.11 Permitted Sublessees. LESSOR hereby acknowledges that upon a request by LESSEE for a sublease in accordance with this Article 11 to one of the following entities, LESSOR shall consent to such sublease, such consent not to be unreasonably withheld or delayed: TACA International Airlines, S.A.; Lineas Aereas Costarricenses, S.A.; AVIATECA, S.A.; TACA Costa Rica, S.A.; and Trans American Airlines, S.A. (d/b/a TACA PERU); provided, however, that at the time of such consent such entity has not suffered such a material deterioration in its condition such that a sublease to it would reasonably be expected to result in the operation or maintenance of the Aircraft in contravention of one or more terms of this Lease, and that nothing herein shall limit the terms and requirements otherwise set forth in this Article 11.

11.12 Any Approved Sublease. Any sublease approved by LESSOR will be for a term no greater than the remaining Lease Term. The applicable sublease agreement will contain provisions consistent with this Lease protecting LESSOR’s title to the Aircraft, providing appropriate LESSOR disclaimers and indemnities, regarding the maintenance and repair standards for the Aircraft and concerning the insurances which will be carried by the sublessee and the circumstances which constitute a Total Loss of the Aircraft. Any such sublease will be subject and subordinate to this Lease. LESSOR will have an opportunity to review the proposed sublease agreement in advance in order to determine that it meets the requirements of this Article 11.4. In its sole discretion, LESSOR may require an opinion of counsel in connection with such sublease, including LESSOR’s right to repossess the Aircraft in the event of an Event of Default hereunder and LESSEE’s and LESSOR’s rights to repossession in the case of an event of default under such sublease. LESSEE will not amend the terms of any approved sublease agreement without the prior written consent of LESSOR, which will not be unreasonably withheld.

11.13 Assignment of Sublease. Any approved sublease will be assigned to LESSOR as security. LESSEE will deliver the original counterpart of the sublease to LESSOR and make any filings necessary to protect LESSOR’s security interest.

11.14 Application of Cape Town Convention. At LESSOR’s request, LESSEE will cause such sublease and LESSEE’s assignment of such sublease to LESSOR to be registered in the International Registry to the fullest extent such interests may be registered. In addition, LESSEE will obtain in favor of LESSOR a power of attorney from the approved sublessee for purposes of the Cape Town Convention in the form of Exhibit I.

11.15 Wet Leases. The wet leasing of the Aircraft during the Lease Term (in which LESSEE and its crews retain operational control of the Aircraft) will not be considered a sublease of the Aircraft and will be permitted without LESSOR’s consent, provided that (a) the Aircraft remains registered in the State of Registration, (b) the Aircraft will neither be based in nor operated in or to a Prohibited Country, (c) LESSEE provides LESSOR with either a certified copy of the applicable provisions from the wet lease agreement or an officer’s certificate confirming that LESSEE or the wet lessee will be responsible for maintaining the primary passenger, baggage and cargo liability insurance relating to operation under the wet lease unless LESSEE shall be responsible under the Wet Lease for maintaining the same and (d) LESSEE complies with Article 18.10.

11.16 Continued Responsibility of LESSEE. LESSEE will continue to be responsible for performance of its obligations under this Lease during any period of sublease or wet lease.

12.14 General Obligation. During the Lease Term and until the Termination Date, LESSEE alone has the obligation, at its expense, to maintain and repair the Aircraft, Engines, APU and all of the Parts (a) in accordance with the Maintenance Program, (b) in accordance with the rules and regulations of the Aviation Authority, (c) in accordance with Manufacturer’s type design, (d) in accordance with any other regulations or requirements necessary in order to maintain a valid Certificate of Airworthiness for the Aircraft and meet the requirements at all times during the Lease Term and upon return of the Aircraft to LESSOR for issuance of a Standard Certificate of Airworthiness for transport category aircraft issued by the FAA in accordance with FAR Part 21 (except during those periods when the Aircraft is undergoing maintenance or repairs as required or permitted by this Lease and to the extent in conflict with the requirements of the Aviation Authority) and (e) in the same manner and with the same care as used by LESSEE with respect to similar aircraft and engines operated by LESSEE and without in any way discriminating against the Aircraft as compared to such other aircraft.

12.15 Specific Engine Requirements.

(a) build the Engine life-limited Parts to at least 6,000 cycles remaining and

(b) perform, at a minimum, a workscope sufficient to allow such Engine to achieve at least 10,000 hours and 6,000 cycles of operation following such shop visit.

(a) LESSOR will receive and retain the Engine Performance Restoration Reserves paid by LESSEE with respect to an Engine until an Engine shop visit has been completed and the applicable Engine has been released to LESSEE;

(b) LESSEE will pay the Engine maintenance facility directly for any costs in excess of the amount reimbursable from the Engine Performance Restoration Reserves, including any differential between the hourly Engine Performance Restoration Reserves payable by LESSEE to LESSOR and the hourly rates charged by the Engine maintenance facility; and

(c) LESSEE will pay the Engine maintenance facility directly for any services provided by the Engine maintenance facility over and above repair of the Engines, such as trend monitoring, spare engines or spare parts.

12.16 Specific Obligations. Without limiting Article 12.1, LESSEE agrees that such maintenance and repairs will include but will not be limited to the specific items set forth in this Article 12.3.

12.17 Replacement of Parts.