EFTA01138594.pdf

EXECUTION VERSION AMENDED AND RESTATED AIRCRAFT MANAGEMENT AGREEMENT This Amended and Restated Aircraft Management Agreement (the "Agreement') is made and entered into as of August 31, 2013 by and among among (i) Jet Aviation Flight Services, Inc. ("Manage✓'), a Maryland corporation having its principal place of business at 112 Charles Lindbergh Drive, Teterboro, New Jersey 07608; (ii) Rance Acquisitions, LLC ("Owne✓'), a Delaware limited liability company; and (iii) Leon D. Black ("Operato✓'). RECITALS A. Manager, Owner and Avioneta Holdings LLC entered into that certain Aircraft Management Agreement dated as of August 31, 2011 (the "Original Agreement'). B. Avioneta Holdings has withdrawn as a party to the Original Agreement, and the Operator desires to evidence his role as operator of the Aircraft (as identified herein). C. Manager, Owner and Operator desire to amend and restate the Original Agreement in all respects, as more specifically set forth herein. SPECIFIC TERMS SCHEDULE I. Aircraft Identification • Aircraft Make and Model: Gulfstream V • Manufacturer's Serial Number: 681 • Aircraft Registration Number: N624N • Registered Owner of the Aircraft: Rance Acquisitions, LLC • Operator of the Aircraft: Leon D. Black • Name and Address of Secured Party: Banc of America Leasing & Capital, LLC One Financial Plaza, 5th Floor Providence, Rhode Island 02903 Attention: Director of Aircraft Operations II. Aircraft Operating Base • The Aircraft will be based at: Jet Aviation, Teterboro, NJ • Hangar Lease shall be entered into by: Manager III. Insurance Aircraft shall be insured on Manager's Fleet Policy in accordance with Section 10 (all amounts specified in USD): • Hull Stated Value: $ 28,000,000 • Liability Limit: $300,000,000 • War Risk: $250,000,000 686218.0002 EAST 1050104940 EFTA01138594 IV. Flight Support Personnel The initial number of Flight Support Personnel assigned to the Aircraft is as follows: • Pilots: Three (3) • Maintenance Technicians: None Cabin Attendants: One (1) V. Annual Management Fee, Operating Expense Fund, and Other Fees and Expenses (Note: all amounts listed below are subject to adjustment as a result of Manager's review occurring each January, commencing January 2014.) • Annual Management Fee: $93,768. 0 Payable in monthly installments, on the 1st day of each month during the Term, in the amount of: $7,814.00 • Annual Maintenance Coordination Fee: $67,584. 0 Payable in monthly installments, on the 1st day of each month during the Term, in the amount of: $5,632. • Operating Expense Fund: $522,539 • Operating Expenses and Non-recurring Expenses payable as provided in Section 9.6 of this Agreement. • Hangar rent: $27,040 per month VI. Agreement Term Effective Date: August 31, 2013 • Initial Term: (the "Initial Tenn") Two years, subject to earlier termination as set forth in the Standard Terms and Conditions. VII. Notifications To Owner: To Manager: Rance Acquisitions, LLC Jet Aviation Flight Services, Inc. do Wells Fargo Bank Northwest, N.A., 112 Charles A. Lindbergh Drive Owner Trustee, its sole member Teterboro, NJ 07608 260 North Charles Lindbergh Drive Attn: Donald Haloburdo, MAC U1240-026 VP & General Manager Salt Lake City, Utah 84116 Facsimile: Attn: Corporate Trust Services Facsimile: To Operator. Mr. Leon D. Black do Mr. John J. Hannan 9 W. 57t Street, 48th Floor New York, New York 10019 Facsimile: 2 EFTA01138595 VIII. Emergency Contact Information for Operator The following person is hereby designated as the Operators representative for Manager to contact in the unlikely event of an Aircraft or other emergency incident. The contact information provided by Operator will be kept confidential and used only in the event Manager cannot contact an Operator representative in the normal course of dealings. Name: Melanie Spinella Title: Executive Assistant to Leon Black Relationship to Operator: Employee Cell phone with 24 hour availability: Alternate contact phone number: Fax: E-mail: By signing below, Operator acknowledges that Operator has received a copy of and reviewed the attached Jet Aviation Flight Services, Inc. Aircraft Management Agreement Standard Terms and Conditions. The parties agree that such Standard Terms and Conditions (a) are an integral part of this Agreement, (b) are binding upon and enforceable against each party, and (c) combined with the Specific Terms Schedule, shall constitute the Agreement and govern the rights and obligations of the parties with respect to the subject matter of this Agreement. [SIGNATURE PAGE FOLLOWS] 3 EFTA01138596 IN WITNESS WHEREOF, the parties have executed this Aircraft Management Agreement as of the Effective Date set forth in Section VI above. RANCE ACQUISITIONS, LLC JET AVIATION FLIGHT SERVICES, INC. By: By: Name: Name: Donald Haloburdo Title: Title: Vice President/General Manager Leon D. Black Signature Page to Amended and Restated Aircraft Management Agreement (N624N) EFTA01138597  JET AVIATION FLIGHT SERVICES, INC AIRCRAFT MANAGEMENT AGREEMENT STANDARD TERMS AND CONDITIONS 1. Management 1.1 In consideration of the Fees paid by Operator as set forth in Section V of the Specific Terms Schedule, Manager shall perform the following functions: (a) assist Operator to create a "Flight Program" for flight crew selection, monitoring, and training for the operation of the Aircraft by Operator under Part 91 of the Federal Aviation Administration's ("FAA") Federal Aviation Regulations ("FARs"); (b) employ and supervise flight and maintenance personnel assigned to Owner's Aircraft; (c) schedule and oversee all Aircraft maintenance; (d) monitor FAA directives and aircraft manufacturing bulletins to maintain compliance with the same; (e) secure Aircraft hangar, office, and shop facilities at the Operating Base and other airport locations, as requested; (f) provide record keeping, reporting, budgeting, payment of Aircraft-related invoices and other administrative requirements; (g) schedule Aircraft, passenger, and Flight Support Personnel and provide travel support services (for the avoidance of doubt, Manager understands and agrees that during Operator Flights (as hereinafter defined), all Aircraft, passenger and Flight Support Personnel scheduling shall be controlled solely by Operator); (h) provide management supervision of the operation and maintenance of the Aircraft; and () coordinate certain rights and obligations of Operator under any separate Dry Lease (as defined in Section 6.1 below) between Manager and Operator, if any, with respect to the FAR Part 135 use, operation and maintenance of the Aircraft in accordance with such separate Dry Lease, including, without limitation, the provision of pilots and other Flight Support Personnel as an Authorized Representative of Operator. 1.2 The Aircraft will be maintained in accordance with FAR Part 91 and any other applicable parts of the FARs, Manager's published policies and procedures, and any other laws and rules pertaining to the FAR Part 91 operation of the Aircraft. If required pursuant to a Dry Lease, the Aircraft will be maintained in EFTA01138598  accordance with the requirements of FAR Part 135 and as required under the terms of such Dry Lease. 2. Operational Control 2.1 Operator accepts and shall exercise Operational Control (as defined by 14 C.F.R. § 1.1) over all flights of the Aircraft by Operator during the term of this Agreement ("Operator Flights"), which flights shall be operated by Operator solely under FAR Part 91. Operator will, under the guidance of Manager, at Operator's cost, operate the Aircraft for all flights in compliance with all applicable FARs and other applicable laws, rules and regulations. Operator shall not dry lease the Aircraft to or allow the Aircraft to be operated by or on behalf of third parties under any dry lease, time share agreement or other arrangement permitted under the FARs, absent coordination with and the approval of Manager, such approval to not be unreasonably withheld. In no event shall Operator be considered in operational control of any flights operated by Manager in accordance with and under the provisions of any Dry Charter Lease, nor shall any flights conducted under this Agreement be operated as a charter flight by or for Operator. Operator shall provide reasonable advance notice to Manager of any and all operations of the Aircraft by or on behalf of Operator. 2.2 Owner and Operator acknowledge that Manager conducts all activities under a formal Safety Management System. Owner and Operator agree to support Manager's policies and procedures, regarding safe operations of the Aircraft and to inform Manager immediately of any issue or activity Owner or Operator observes which is prejudicial to the safety of passengers, crew or the Aircraft. 3. Flight Support Personnel 3.1 In the context of this Agreement, pilots (each of whom shall be dedicated to the Aircraft), cabin safety attendants employed by Manager and assigned to Owner's Aircraft are collectively referred to as "Flight Support Personnel." Flight Support Personnel will be employed by Manager and carried on the payroll of Manager so long as they meet Manager's employment requirements and the other specific terms of their employment, if any. Flight Support Personnel will be appropriately certified, rated, and trained as required by the FARs and Manager policies. 3.2 Manager supervisory personnel will conduct required training and flight checks to observe Flight Support Personnel performance. 3.3 Manager shall conduct an annual performance review for all Flight Support Personnel. Owner may provide comprehensive commentary in connection with such performance review. 3.4 During the term of this Agreement, the Flight Support Personnel will remain employees of Manager and all of their compensation will be paid by Manager at a rate mutually agreed to by Manager and Operator. Operator shall reimburse Manager for all salary, payroll taxes, and benefits (per Section 3.5,) of Flight Support Personnel assigned to the Aircraft as specified in Section IV of the EFTA01138599  Specific Terms Schedule (the "Assigned Flight Support Personnel)"). All Flight Support Personnel and other employees performing services for the Aircraft or Operator shall comply with all applicable laws, including, but not limited to, those relating to substance abuse and workplace harassment. Subject to Section 3.6, Manager reserves the right to terminate or replace Assigned Flight Support Personnel for or without Cause. For purposes of this Agreement, "Cause" means a breach by one party of any of its duties or obligations hereunder, which breach extends beyond any applicable notice or cure periods. Operator reserves the right to request the termination of Flight Support Personnel for any reason not prohibited by law. 3.5 To cover the cost of benefits, Operator shall pay Manager 23% of the total salaries of the Flight Support Personnel (currently, 23% is the applicable benefit factor, and may be adjusted periodically by Manager based upon increases in benefit costs). 3.6 Upon expiration or termination of this Agreement, or upon termination of the employment or reassignment of any Flight Support Personnel: (a) pay Manager an amount equal to the accrued (through the date of the notice of termination) but unused paid time off for such Flight Support Personnel; and (b) reimburse Manager an amount equal to the amount paid to the Flight Support Personnel as separation pay, severance pay or regular compensation (the "Termination Compensation"). The Termination Compensation amount shall be derived from Manager's current employee severance policy, which policy is subject to change at Manager's discretion. 3.7 Manager may from time-to-time, with prior notice to and consent of Operator, cross-utilize Flight Support Personnel to support its other management contracts, provided that such utilization shall not (a) affect the availability of the Aircraft to Operator, (b) result in any additional expense to Operator, or (c) compromise crew duty limits (whether imposed by the FARs or Manager's flight standards). Operator will be reimbursed by Manager for all such other use of Flight Support Personnel at the day rate established by Manager for such reimbursement; provided that no such reimbursement shall apply if Flight Support Personnel are utilized for any flights of the Aircraft operated by Manager pursuant to the terms of any Charter Lease of the Aircraft as contemplated in Section 6.1. 3.8 In the event one or more of the Flight Support Personnel is unable to operate a requested flight due to circumstances such as sickness, training, vacation, personal emergency, or crew duty limits (whether imposed by governing regulations or Manager's flight standards), Manager will use reasonable efforts to supply qualified, substitute Flight Support Personnel. The cost of qualified substitute Flight Support Personnel shall be invoiced to Operator as an Operating Expense in accordance with Section 9 and on a day rate basis established by Manager for such substitute Flight Support Personnel. iii EFTA01138600 4. Flight Support Personnel Training and Qualification 4.1 Manager will conduct or contract for Flight Support Personnel training that meets or exceeds the requirements of Manager's published standards and the FARs governing the type of operation being conducted. Training will include, but not be limited to: Pilots: (a) initial aircraft qualification, if required (at Manager approved training centers); (b) aircraft specific, recurrent training (at Manager approved training centers); (c) Manager/FAA policy and procedures recurrent training; (d) emergency situations training; and (e) annual, in-house, recurrent training in Manager's policy and procedures; and (1) professional qualifications enhancement training, as required, such as cockpit resource management, international operations, and cabin medical safety and any other Manager-recommended training. Mechanics: (a) initial aircraft qualification, if required (at Manager approved training centers); (b) annual aircraft or system (engines, avionics, etc.), recurrent training (at Manager approved training centers); (c) annual, in-house, recurrent training and ongoing, supplemental training in Manager's policy and procedures; and (d) any training required by regulation or Manager's policy. Cabin Safety Attendants: (a) initial qualification, if required; (b) annual, in-house, recurrent training and ongoing, supplemental training in policy and procedures recommended by Manager; (c) annual Emergency Procedures, Evacuation Procedures and In-flight Medical Procedures training; and (d) any training required by regulation or recommended by Manager. 4.2 Manager supervisory personnel will require a reasonable amount of Aircraft flight time to accomplish pilot training, proficiency checks, and line checks as iv EFTA01138601  required by the FARs and Manager policy. Operator shall be responsible and pay for the cost of such training and flight time as an Operating Expense pursuant to Section 9. 4.3 Manager shall maintain a current training record for Flight Support Personnel documenting satisfactory completion of FAA and Manager training and currency requirements. 4.4 Flight Support Personnel shall be enrolled, as required, in a drug and alcohol testing program. Operator shall reimburse Manager for third-party fees related to the administration of the program with respect to the Flight Support Personnel, which shall be considered an Operating Expense and payable in accordance with Section 9. 5. Aircraft Maintenance 5.1 Manager shall enroll and maintain the Aircraft in an inspection program consistent with the rules under 14 C.F.R. §§ 91.409 or 135.411, as applicable, and will conduct, contract for, or supervise Aircraft maintenance services to comply with all applicable regulations. 5.2 Manager will obtain FAA authorization for use of the Minimum Equipment List ("MEL") for the Aircraft under the provisions of 14 C.F.R. §§ 91.213 or 135.179, as applicable. 5.3 Manager will maintain records on the Aircraft, engines and systems in accordance with the applicable FARs and Manager's published maintenance procedures. Such records will be considered part of the Aircraft and, as such, will remain the property of Owner. Manager may retain copies for its own records. 5.4 Manager will schedule Aircraft maintenance, and keep Operator apprised of the Aircraft's maintenance schedule and maintenance status. 5.5 On Operator's behalf, Manager will always attempt to obtain parts and services that may be available to Operator under the Aircraft's warranties and to negotiate with vendors to gain the most favorable prices for maintenance parts and services. 6. Dry Lease 6.1 Operator acknowledges that Owner and Manager, or an affiliate of Manager, may enter or may have entered into an Aircraft Dry Lease and Commercial Operations Agreement ("Dry Leese) pursuant to which Manager may operate charter flights of the Aircraft under FAR Part 135, including related non-charter flights as may be provided in such Dry Lease. Operator acknowledges that Manager may utilize Flight Support Personnel for such flights under the Dry Lease and that Manager will, on behalf of Owner, coordinate certain rights and obligations of the parties under the Dry Lease as applicable to the operation and maintenance of the Aircraft. v EFTA01138602 7. Records and Administration 7.1 Manager shall maintain facilities for storage of Flight Support Personnel records and Aircraft records, flight operations supervision, scheduling assistance, and accounting support. 7.2 Manager will supply Operator with an annual estimated budget and monthly reports summarizing financial and flight activity. 7.3 Manager will keep all flight, passenger, and cost records neat and up-to-date in accordance with good accounting practices. 7.4 All maintenance, flight, accounting and other records pertaining to the performance of Manager's services hereunder will be open for review and audit by Owner or Operator at Manager's Teterboro office upon not less than forty- eight (48) hours' notice throughout the term of this Agreement, and for the period ending two (2) years after the termination thereof. Manager will not destroy such records prior to the time when Owner or Operator's right to inspect and audit terminates. The provisions of this Section will survive the termination or expiration of this Agreement. 8. Hangar and Office at Operating Base 8.1 Manager shall provide appropriate hangar, office, and shop space for the Aircraft and Assigned Flight Personnel ("Hangar Lease) at appropriate airport locations. 8.2 Manager shall assist Operator in negotiation of such leases for space as are described in Section 8.1 above (each, a Hangar Lease, which shall be executed in Operator's name. Manager and Operator shall seek to minimize any potential liabilities to Operator and Manager, and shall acknowledge the authority of Manager to access such hangar, office and shop space as necessary to perform the duties and responsibilities of Manager under this Agreement. The legal review of the terms and conditions of any Hangar Lease shall be performed at Operator's cost by Operator's counsel. Operator acknowledges that each Hangar Lease must be approved by Manager's insurance carrier, and Operator agrees to supply Manager with a copy of such Hangar Lease promptly upon execution thereof. 8.3 If requested by Operator, Manager shall act as paying agent with respect to the rental amounts due in regard to any Hangar Lease and shall invoice Operator therefore as an Operating Expense in accordance with Section 9.3. 8.4 Manager shall provision the Operating Base to support the operation and maintenance of the Aircraft subject to budget approval by Operator and any necessary adjustment to the Operating Expense Fund. vi EFTA01138603 9. Fees, Expenses, Operating Expense Fund and Billing Procedures 9.1 The annual Management Fee to be charged to Operator specified in Section VI of the Specific Terms Schedule will be invoiced to and payable by Operator in monthly installments in arrears. 9.2 Manager and Operator agree that the Annual Management Fee and Annual Maintenance Coordination Fee (including Maintenance Management fee, and any other fixed fees specified in this Agreement) shall be adjusted each January during the term of this Agreement including the Initial Term by multiplying the annual amount for the preceding year by the change in the Consumer Price Index for all Urban Wage Earners and Clerical Workers of the Bureau of Labor Statistics of the United States Department of Labor, for the New York-Northeastern New Jersey area (referred to as the "CPI) as published for the 12th month of the preceding year. Example: (1 + % change in CPI) Current Management Fee = Following year's Management Fee 9.3 Operating expenses payable by Operator in accordance with Section 9.6 shall be based on actual costs and include, but are not limited to, the following items incurred by Manager on Operator's behalf (-Operating Expenses"): (a) fuel, oil, and additives (Manager shall utilize the Jet Aviation Fuel Desk and attempt to obtain best fuel pricing at all fixed-base operators, not just those operated by Manager or its affiliates); (b) replacement and consumable parts (including shipping costs and core charges for parts and components), maintenance labor (other than the cost of maintenance labor performed by Flight Support Personnel, or the maintenance coordinator), and third- party service fees for technical support of the Aircraft; (c) engine and airframe maintenance service plan fees, as applicable, if requested by Operator; (d) landing, parking, handling, customs, airways, and overflight fees, hangar fees and expenses at locations other than the Operating Base, and computer flight plans; (e) navigation, operations, and maintenance publications; (f) catering, supplies, and in-flight entertainment materials; (g) Flight Support Personnel and Manager supervisory personnel travel expenses properly incurred in support of the operation of the Aircraft; (h) communications charges and outside computer services related to Aircraft operations and maintenance; vii EFTA01138604  (i) charges from professional aviation search firms to recruit, test, and hire initial and replacement Assigned Flight Support Personnel; (j) substitute Flight Support Personnel; (k) required annual medical examinations, alcohol and drug testing of Flight Support Personnel; (I) Flight Support Personnel salaries (including all applicable payroll taxes), as provided in Section 3.4, including any Termination Compensation, as applicable; (m) Flight Support Personnel benefits, as provided in Section 3.5; (n) Operating Base hangar/office/shop rent, utilities and related expenses; (o) Medlink subscription at Manager's fleet discount cost; (p) Assigned Flight Support Personnel professional training in accordance with Section 4.1, and related travel expenses, including that required of Management supervisory personnel in accordance with Section 4.2; (q) all reasonable travel and other expenses for Manager employees, or contractors to conduct the certification and conformity inspection and Flight Support Personnel training. Initial certification training is for up to three (3) flight crewmembers and one (1) maintenance person. Additional training of new flight crewmembers, additional crewmembers above the three covered in the one-time fee, or replacement crewmembers on the account or maintenance personnel will be billed to the Operator at the rate of $100.00 per hour/per person for all other personnel trained in addition to those listed above. (r) research and analysis as requested in writing by Operator will be charged at $150 per hour, plus any reasonable related out-of-pocket expenses or as otherwise agreed between Operator and Manager. Manager's Client Vice Presidents supervise the preparation of annual budgets, approve related invoices, and respond to client account- related questions. The research and analysis referred to in this section relates to activities outside this normal level of service or beyond what is reasonable and provided as part of the monthly package. 9.4 Non-recurring expenses include, but are not limited to, such items as Aircraft paint and refurbishing, major maintenance items such as engine overhaul and airframe modifications, personnel relocation expenses, maintenance ground support equipment, initial spare parts provisioning and inventories, office and shop equipment, communications and computer equipment for Flight Support Personnel, as appropriate, and special training requirements ("Non-recurring Expenses-). Non-recurring Expenses will be invoiced to and payable by Operator in accordance with Section 9.6, except that any Non-recurring Expense in excess of $25,000 may, at Manager's option, be required to be paid viii EFTA01138605  by Operator directly to the vendor, or invoiced to Operator at Managers net cost on a supplemental invoice which will be due upon receipt. 9.5 Notwithstanding anything to the contrary, Manager will make no expenditure hereunder in excess of $25,000 without the prior approval of Operator, except that Manager shall have the authority to incur an expense greater than $25,000 if the expense is reasonable and necessary and if Manager has attempted to contact Operator and the part/item or the immediate performance of the service to which such expense relates is required in order to perform any scheduled mission of the Aircraft or secure or return the Aircraft to the Operating Base. Except as otherwise specifically provided in this Agreement, all goods, support services, parts, labor, fuel, materials and any other items purchased by Manager to support Operator's flight activities will be passed on to Operator at Manager's actual cost, with no markup, rebate, commission or other fee received or retained by Manager. Manager shall attempt to secure discounts on all purchases made on behalf of Operator, and all such discounts will be credited in full to Operator's account. 9.6 Operating Expenses and, except as otherwise provided in Section 9.4, Non- recurring Expenses will first be paid by Manager on behalf of Operator, and then re-invoiced to Operator at Manager's net cost. Manager will issue to Operator an invoice detailing all charges to Operator's account for the preceding month. This invoice will be due 30 days from the invoice date. 9.7 Upon execution of the Original Agreement, Owner deposited funds into the Operating Expense Fund to cover the Aircraft's working capital requirements. (a) Operator and Manager will reset the amount of the Operating Expense Fund annually during the term of this Agreement (including renewal terms) so that the new Operating Expense Fund amount is equal to two (2) times the average budgeted monthly Aircraft expense, which is calculated by taking the aggregate budgeted operating expense for the forecasted twelve (12) months and dividing by six (6). Upon resetting the Operating Expense Fund, Operator shall transfer to Manager, or Manager shall refund to Operator, an amount equal to the difference between the amount calculated as the original or most recently calculated Operating Expense Fund and the newly reset Operating Expense Fund. (b) If at any time the amount in the Operating Expense Fund shall be less than $25,000, Manager may notify Operator of that fact and request that Operator transfer to Manager an amount equal to the aggregate amount of all incurred but not invoiced operating and Non-recurring Expenses, plus any invoiced amounts which have not yet been paid. At no time will the Start-up Working Fund drop below zero, at which time, Manager reserves the right to cease the operation of the Aircraft until the Operating Expense Fund has been replenished in accordance with this Agreement. Notwithstanding the foregoing, if Manager in its reasonable judgment determines that the amount in the Operating Expense Fund will continue to drop below $25,000 due to Aircraft usage or other factors, Manager may recalculate the Operating Expense Fund based on the provisions of Section 9.7(a) hereof and also request that Operator ix EFTA01138606  transfer an additional amount equal to the difference between the amount calculated as the original or most recently calculated Operating Expense Fund and the newly reset Operating Expense Fund. Operator shall transfer amounts due under this paragraph to Manager within ten (10) business days of Manager's notice. 9.8 No later than ninety (90) days following the expiration or termination of this Agreement, Manager will provide Operator a final statement of the Operating Expense Fund and any Fees, Operating Expenses and Non-recurring Expenses to which funds from the Operating Expense Fund have been applied since the last statement provided by Manager. During such ninety (90) day period, and notwithstanding the termination or expiration of this Agreement, Manager may apply any available funds from the Operating Expense Fund to reimburse Manager for or directly pay (a) any Operating Expenses or Non- recurring Expenses incurred pursuant to this Agreement, and (b) any other unpaid amounts due Manager, including, without limitation, Annual Management Fees, Annual Maintenance Coordination Fees, and Maintenance Management Fees. Concurrently with the issuance of such final statement, Manager will refund to Operator the remaining balance of the Operating Expense Fund, if any. Notwithstanding the foregoing, upon receipt of invoice from Manager, Operator shall promptly reimburse or pay all Operating Expenses, Non-recurring Expenses, and any other unpaid amounts due Manager under this Agreement which exceed any remaining balance of the Operating Expense Fund, or which remain unpaid following issuance of the final statement and refund of any amounts in the Operating Expense Fund to Operator. For clarification, issuance of the final statement and refund of any remaining balance of the Operating Expense Fund shall not constitute a waiver of the right of Manager to collect, or the obligation of Operator to pay, any unpaid amounts due Manager under this Agreement, including any Operating Expenses or Non-recurring Expenses properly incurred by Manager on Operator's behalf pursuant to this Agreement. The provisions of this Section will survive the termination or expiration of this Agreement. 9.9 Any amount not paid by Operator when due under this Agreement shall bear interest at a rate equal to one and one-half percent (1 1/2%) per month. 9.10 Manager will pass through to Operator the benefit of discounts available to Manager and applicable to the Aircraft due to volume purchasing of flight training, fuel, OEM parts, insurance, and related services. 10. Insurance and Indemnity 10.1 Manager shall obtain, at Operator's sole cost and expense, aircraft and incidental airport premises liability insurance, including war and allied perils, for the benefit of Operator and Manager in connection with the use of the Aircraft. Such coverages shall be in such amounts and subject to such minimums as specified in Section III of the Specific Terms Schedule. 10.2 Manager shall obtain, at Operator's sole cost and expense, all risks ground and flight aircraft hull physical damage, including hull war risk and allied perils, insurance in the amount of the full replacement value of the Aircraft, which the x EFTA01138607  parties agree shall be in an amount specified as the Hull Value in Section III of the Specific Terms Schedule. Such insurance shall name Operator, Owner and any lessor or lien holder as loss payees as their interests may appear and include a waiver of subrogation clause in favor of the Manager and Jet Aviation Holdings USA, Inc., including their respective subsidiaries and affiliated companies as well as each of their respective officers, directors, shareholders, employees, and agents (collectively, "Jet), and insure the interest of Owner, Operator and Jet regardless of any breach or violation by the other of any warranties, declarations, or conditions contained in such policies. 10.3 Each of Manager and Owner shall maintain Workers' Compensation insurance that provides applicable statutory benefits for all of its employees performing services under this Agreement and Employer's Liability insurance of not less than One Million United States Dollars (USD$1,000,000.00) for bodily injury by accident or disease. 10.4 Owner and Manager agree to provide each other with certificates of insurance evidencing coverage as required herein upon execution of this Agreement and annually thereafter or immediately upon request at any time thereafter. 10.5 Such liability insurance coverage as required under Section 10.1 (a) shall name Owner and Operator, and their respective affiliates, successors and assigns, and Jet as named insureds, insure the interest of Owner, Operator and Jet regardless of any breach or violation by the other of any warranties, declarations, or conditions contained in such policies, (b) shall be primary without any right of contribution from any other insurance maintained by the parties, and (c) shall insure contractual liability as assumed herein as set out in Section 10.8 to the extent coverage is afforded under such liability insurance coverage. The geographic limits, if any, contained in each and every such policy of insurance shall include at a minimum all territories over which Manager, Owner or Operator will operate the Aircraft for which the insurance is placed. Each policy shall contain an agreement by the insurer to provide each party with thirty (30) days (or such lesser time as may be customary in the aviation industry in the case of war risk insurance, if such war risk insurance so requires, and no less than ten (10) days in the case of any nonpayment of premium) advance written notice of any deletion, cancellation, or adverse material change in coverage made by the Insurer. 10.6 Each insurance policy required under this Section 10 shall be issued by a company or companies who are qualified to do business in the United States and who (i) will submit to the jurisdiction of any competent state or federal court in the United States with regard to any dispute arising out of the policy of insurance or concerning the parties herein; and (ii) will respond to any claim or judgment against Owner or Operator in any competent state or federal court in the United States or its territories. 10.7 In the event an insurance policy satisfying all the requirements of this Section 10 cannot reasonably be obtained, the parties agree to amend the requirements of this Section 10 to the extent reasonably necessary to conform to the requirements of this Section 10 to the terms and conditions of available insurance. Unless otherwise agreed by the parties, any such amendment shall xi EFTA01138608  only apply until insurance may again be reasonably obtained that satisfies the requirements of this Section 10 as of the Agreement Effective Date. 10.8 As among Owner, Operator and Manager, the insurance coverages to be provided pursuant to this Section 10 shall be the sole recourse and remedy of Owner, Operator and Manager, respectively, with respect to any and all loss or damage to the Aircraft or other property of Owner, Operator or Manager, or due to injury or death of persons, except in the case where such loss or damages (a) are not the subject of a covered claim under the applicable insurance coverages to be maintained hereunder, or (b) are a result of the gross negligence or willful misconduct of Owner, Operator or Manager, as applicable (collectively "Excess Damages"). Owner, Operator and Manager shall (each, an "Indemnifying Party') indemnify and hold harmless each other and their respective affiliates, officers, directors, managers, agents, servants, and employees (each, an "Indemnified Party') from and against any and all liabilities, claims, demands, suits, judgments, damages, losses, costs, and expenses (including reasonable legal expenses and attorneys' fees) (collectively, "Indemnified Claims') which constitute Excess Damages on account of or in any way connected with injury to or death of any third parties or loss of or damage to the property of any third party property and resulting from or arising out of the operation of the Aircraft when specified under this Agreement to be under the operational control of such Indemnifying Party. 10.9 EXCEPT AS SET FORTH IN SECTION 10.8, EACH PARTY WAIVES ANY RIGHT TO RECOVER ANY DAMAGE, LOSS, OR EXPENSE ARISING OUT OF THIS AGREEMENT. IN NO EVENT WILL EITHER PARTY BE LIABLE FOR OR HAVE ANY DUTY FOR INDEMNIFICATION OR CONTRIBUTION TO THE OTHER PARTY FOR ANY INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES, OR FOR ANY DAMAGES FOR LOSS OF USE, REVENUE, PROFIT (EXCLUDING DIRECT DAMAGES FOR FEES OR EXPENSES DUE MANAGER PURSUANT TO THIS AGREEMENT), BUSINESS OPPORTUNITIES AND THE LIKE, OR LOSS OR DAMAGE TO OR DEPRECIATION OF VALUE OF THE AIRCRAFT, OR INSURANCE DEDUCTIBLE, EVEN IF THE PARTY HAD BEEN ADVISED, OR KNEW OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH DAMAGES. 10.10 The provisions of Section 10.8 and 10.9 will survive the termination or expiration of this Agreement. 11. Optional Charter Services 11.1 In the event that Operator desires to receive charter air transportation services from Manager, Manager shall provide such services to Operator pursuant to the Charter Services Agreement incorporated herein as Exhibit A, the terms and conditions of which shall be binding upon Operator and Manager. Nothing in this Section 11.1 is intended to create any obligation for Operator to acquire charter air transportation services from Manager. xii EFTA01138609 12. Duration and Termination The Initial Term of this Agreement is as set forth in Section VI of the Specific Terms Schedule. Upon expiration of the Initial Term and any Successive Term (as hereafter defined), this Agreement will be automatically extended for an additional twelve (12) month term (each such period, a "Successive Term"), unless no later than sixty (60) days prior to the expiration of the Initial Term or the then current Successive Term, Operator provides Manager with irrevocable written notice of its intent to terminate the Agreement, whereupon this Agreement shall terminate at the end of the Initial Term or the then applicable Successive Term. Notwithstanding the foregoing, (a) Operator may terminate this Agreement at any time upon no less than sixty (60) days prior written notice to Manager, (b) in the event that Owner sells the Aircraft to a third party, Operator may terminate this agreement with thirty (30) days prior written notice to Manager, (c) without Cause, Manager may terminate this Agreement upon the earlier of (i) one hundred twenty (120) days written notice to the Owner and Operator, or (ii) the date that the Aircraft is subject to a management agreement with another air carrier and certificated for use by such air carrier in commercial charter for hire in accordance with Federal Aviation Regulations Part 135, or (d) any Party may terminate this Agreement upon written notice to the other Party if (i) the Aircraft suffers a total loss, or (ii) the Aircraft suffers damage requiring it to be out of service for repairs for more than sixty (60) days and Manager, Operator and Owner are unable, within ten (10) days of such written notice, to mutually agree upon revised terms and conditions in this Agreement during such repair. 12.1 This Agreement may be terminated upon written notice by either party (the "Non- Defaulting Party') if (a) the other party shall fail to make any payment due hereunder within ten (10) days of written notice from the Non-Defaulting Party that such payment is past due, (b) the other party shall fail or refuse to comply with and perform any other material agreement or obligation of such party set forth in this Agreement, or if Owner chooses not to accept Manager's recommendations hereunder which would otherwise render the aircraft non- airworthy, or (c) any representation or warranty of such party set forth in this Agreement shall fail at any time to be true and correct, which failure, refusal, breach or default, if curable, shall not be cured within thirty (30) days after receipt by such party of written notice from the Non- Defaulting Party specifying such failure, refusal, breach or default. In addition, this Agreement may be terminated upon written notice by the Non-Defaulting Party if (d) the other party becomes insolvent or is unable to pay its debts in the ordinary course of business, (e) the other party makes an assignment for the benefit of its creditors, (f) a receiver, liquidator, custodian, tru