Engine Stand Lease Agreement

1.             This Agreement specifies terms and conditions of Engine Transportation Base and / or Engine Cradle (hereinafter – the “Engine Stand”) lease, whereby Magnetic MRO AS (hereinafter – “Magnetic MRO”) leases to the Lessee its Engine Stand defined herein.

2.             Lease shall commence on agreed Lease Term start date or on the date when Engine Stand is ready for delivery, whichever comes later. Leased Engine Stand shall not be rented or leased or otherwise made available to any third party without prior written approval of Magnetic MRO. In case Lessee breaches this obligation, Lessee shall pay liquidated damages in the amount of 30 days’ Lease Fee (for each event of breach).

3.             At delivery Lessee shall sign and present to Magnetic MRO a Delivery Receipt in the form of Exhibit A. Lessee shall photograph Engine Stand upon receipt and present such photos to Magnetic MRO together with Delivery Receipt (in case Lessee fails to perform such obligation, it shall not rely on deficiencies of Engine Stand at Delivery).

4.             Whenever Engine Stand leaves Magnetic MRO facility, Lessee assumes risk of loss until it is redelivered to Magnetic MRO. Lessee agrees and warrants that title to, and ownership of, the Engine Stand shall remain with Magnetic MRO.

5.             Should Lessee wish to change customs status of the Engine Stand during the Lease it shall notify Magnetic MRO of its intention in advance. Notwithstanding Magnetic MRO’s consent, the Lessee shall be obliged to return the Engine Stand to Magnetic MRO in the same customs status as at delivery.

6.             Lessee agrees to return the Engine Stand to Magnetic MRO in the same condition as that supplied, all data specified in documents (weight, value, measurement, p/n, s/n) must be the same, customs status must be the same, otherwise Lessee shall reimburse Magnetic MRO any associated costs and losses. Should Lessee fail to return the Engine Stand to Magnetic MRO in the same customs status, it shall remain responsible for changing the customs status to the same as at delivery and provisions of clause 7(iv) shall apply. In case Lessee refuses to perform this obligation, it shall reimburse Magnetic MRO any associated costs and losses, including customs duties, taxes, etc.

7.             The Lease shall end on the later of: (i) the day the Engine Stand is returned to Magnetic MRO or on Lease Term expiry date (as may be extended upon mutual written agreement of the Parties), whichever comes later; (ii) if the Engine Stand is returned in an unserviceable condition – (a) the day on which the Engine Stand is returned to a serviceable condition or (b) if Engine Stand is determined to be BER by the Workshop – the day Lessee reimburses Magnetic MRO with the outright value of the Engine Stand; (iii) if the Engine Stand is returned incomplete – the day Lessee delivers all missing items and Lessor installs them on the Engine Stand or the day Lessee reimburses Lessor’s acquisition costs of such missing items; (iv) if the Engine Stand is returned in another customs status than delivered – the day on which the customs status of the Engine Stand is changed to the same as at delivery.

8.             In case Lessee wishes to extend Lease Term, it shall notify Magnetic MRO accordingly at least 5 days in advance, and such extension shall be subject to Magnetic MRO approval (including commercial terms of the extension).

9.             In case the Engine Stand is not redelivered to Magnetic MRO in 2 months from the Agreement termination / agreed Lease Term expiry day in accordance with requirements of this Agreement, (i) the Engine Stand may be deemed lost and Lessee shall in addition to the Lease Fees reimburse Magnetic MRO with the outright value of the Engine Stand; or, if agreed by Magnetic MRO (ii) the Lessee shall replace leased Engine Stand with another Engine Stand of the same or better type, condition and value.

10.           Lessee shall pay the Deposit (if applicable) 2 days prior to commencement of the Lease. Lessee shall pay Lease Fee for the agreed Lease Term in accordance with Payment terms specified herein. If the Lease does not end on agreed Lease Term expiry date (if not extended upon mutual written agreement of the Parties), escalated Lease Fee (150% of Lease Fee) might be applied at Magnetic MRO’s sole discretion. However, application of escalated Lease Fee shall not be deemed as Magnetic MRO consent to prolong Lease Term and in any case Lessee’s obligation to redeliver the Engine Stand in shortest possible time shall remain.

11.           The Engine Stand is (might be) equipped with tracking device to enable monitoring of its movement. In case Tracking device is damaged or missing, Lessee shall reimburse Magnetic MRO with its outright value.

12.           In case Lessee wishes to change Engine Stand Redelivery incoterms and / or location, it shall notify Magnetic MRO accordingly at least 5 days in advance, and such change shall be subject to Magnetic MRO approval (including commercial terms of the change).

13.           In addition to the Lease Fee and escalated Lease Fee, Magnetic MRO reserves the right to charge the Lessee the following additional charges: (i) Should the Engine Stand be returned to Magnetic MRO in an unserviceable condition – inspection charges and either: (a) repair charges, in the event that the Engine Stand is repaired by the Workshop; or (b) the Outright Price of the Engine Stand, should the Engine Stand be deemed BER by the Workshop; (ii) Should the Engine Stand be returned to Magnetic MRO incomplete – remedies defined in Clause 7(iii) shall apply; (iii) any transportation costs Magnetic MRO may incur for the inspection or repair of the Engine Stand or acquisition of missing items; (iv) transportation costs – should Parties agree that Magnetic MRO shall arrange transportation of Engine Stand from Delivery Location to Destination address; (v) charges for customs duties and taxes for transporting, importing and exporting the Engine Stand; (vi) Administration fee; (vii) AOG fee. Any Disbursements made by Magnetic MRO due to inspection or repair of the Engine Stand or acquisition of missing items will be charged at cost price plus a 10% mark-up.

14.           If so specified in this Agreement, Magnetic MRO shall issue a proforma invoice for the Lease Fee for the agreed Lease Term and Lessee shall settle such invoice in 3 days and in any case prior to Delivery of the Engine Stand. After the end of the Lease (or on monthly basis, if Lease lasts longer than 1 month) Magnetic MRO shall issue invoice for the Lease Fee and escalated Lease Fee (if applicable) and any related disbursements (less any advance payments, if applicable) and such invoice is to be paid by the Lessee in 3 days. Magnetic MRO shall have the right to set off any invoice not paid by its due date against the Deposit. At the time of Lease end, Magnetic MRO shall arrange for the release of the Deposit within three (3) days, less any amounts due from the Lessee.

15.           Lessee will pay to Magnetic MRO a daily late payment charge of three percent (3%) per month on all late payment. Additionally, Magnetic MRO shall be entitled to increase the amount owed by adding collection, court and other recovery costs, including the costs of a lawyer, in terms of which such costs shall amount to at least 15% of the principal sum with a minimum of € 125.00, all amounts exclusive of VAT.

16.           All payments shall be effected in a contractual currency by bank transfer to Magnetic MRO account indicated in the invoice. Any fees charged by a bank in connection with the transfer of funds by the Lessee / related to Lessee’s transfer handling will be borne by the Lessee.

17.           All rates prescribed in this Agreement or addendums hereto do not include VAT (if such applies). Lessee shall pay any taxes, any levies and any other fees related to this Agreement.

18.           Magnetic MRO expressly disclaims and makes no representations or warranties, express or implied, as to any matter, whatsoever, including, without limitation, the selection, capacity, age, airworthiness, description, its merchantability, the operation or performance of the Engine Stand, or the maintenance thereof. Magnetic MRO shall not be liable for any damage to, or loss of, property including the aircraft and Engines, or injury or death or any other damage directly or indirectly caused to the Lessee or third parties during or after, due to, or in connection with, or in consequence of the performance or non–performance of this Agreement between Magnetic MRO and the Lessee, unless caused by wilful misconduct or gross negligence of Magnetic MRO, and the Lessee shall indemnify and hold harmless Magnetic MRO and its subcontractors against any and all such claims including costs and expenses. Magnetic MRO’s total liability for any and all demands, pretensions or claims, whether in contract between Magnetic MRO and the Lessee, warranty, tort, product liability, patent infringement or otherwise, for any damages arising out or connected with, or resulting from the performance, or non–performance of any service will not exceed the price allocable to the services which give rise to the demand, pretension or claim. In no event, whether as a result of breach of Agreement, warranty, tort, product liability, patent infringement, or otherwise, Magnetic MRO will be liable for any special, consequential, incidental, resultant or indirect damage (including, without limitation, loss of use, revenue, good will) or punitive or exemplary damages.

19.           The Lessee warrants and confirms that the Lessee has thoroughly inspected the Engine Stand at delivery and warrants and confirms that:

1. The Engine Stand is in satisfactory condition for its intended use;

2. The Lessee accepts responsibility for any damage to or loss of the Engine Stand howsoever caused;

3. Magnetic MRO shall not bear any responsibility for damage to any engine once it has been installed on the Engine Stand, or any process of installing or uninstalling any engine whatsoever.

20.           At all times during this Agreement the Lessee shall maintain in full force and effect policies of insurance protecting Magnetic MRO and the property of Magnetic MRO providing Comprehensive General Liability Insurance and/or Comprehensive Airline Liability Insurance and/or Comprehensive Aviation Insurance to cover the liability exposures of the Lessee from any and all occurrences with limits of not less than US$20,000,000 any one occurrence and in the aggregate with respect of Products and Personal Injury.

21.           The party who is the importer or exporter of the Engine Stand will be responsible for obtaining any licence, exchange permit or other required governmental authorisation relating to the shipment of the Engine Stand and shall be responsible for complying with all licensing and reporting requirements in connection with this Agreement. The Lessee shall be responsible for all customs issues if not otherwise agreed by the Parties. Export of Engine Stand pursuant to this Agreement may be subject to U.S. or EU Export Regulations and Lessee agrees to comply with such regulations. At execution of this Agreement and in any case prior to delivery of Engine Stand the Lessee shall complete an End Use / End User statement.

22.           No-Russia clause. (1) The Lessee shall not sell, export or re-export, directly or indirectly, to the Russian Federation or for use in the Russian Federation any goods supplied under or in connection with this Agreement that fall under the scope of Article 12g of Council Regulation (EU) No 833/2014. (2) The Lessee shall undertake its best efforts to ensure that the purpose of paragraph (1) is not frustrated by any third parties further down the commercial chain, including by possible resellers. (3) The Lessee shall set up and maintain an adequate monitoring mechanism to detect conduct by any third parties further down the commercial chain, including by possible resellers, that would frustrate the purpose of paragraph (1). (4) Any violation of paragraphs (1), (2) or (3) shall constitute a material breach of an essential element of the Agreement, and Magnetic MRO shall be entitled to seek appropriate remedies, including, but not limited to, termination of the Agreement. (5) The Lessee shall immediately inform Magnetic MRO about any problems in applying paragraphs (1), (2) or (3), including any relevant activities by third parties that could frustrate the purpose of paragraph (1). The Lessee shall make available to Magnetic MRO information concerning compliance with the obligations under paragraph (1), (2) and (3) within 3 business days of the simple request of such information.

23.           In case of breach of this Agreement, the aggrieved Party shall be entitled to terminate the Lease by delivering 10 days prior written notice, in case such breach is not remedied within notification period. Engine Stand shall be redelivered immediately (in no case longer than in 10 days) after such termination.

24.           It is further agreed that legal action required regarding this transaction will be subject to the laws of the Republic of Estonia and the disputes shall be settled by competent courts of the Republic of Estonia.

25.           It is likewise agreed that a fax / scanned signature is acceptable and binding. However non return of a signed Agreement but acting in accordance with this Agreement will be taken as full acceptance of conditions above.