aviationguard.comaviationguard.com/contracts/Model Aircraft Dry Lease Agreement... · Web viewAircraft Dry Lease Agreement ("Lease")! Your assistance is greatly appreciated and

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MEMO

3 TO: REVIEWERS OF THE4 MODEL AIRCRAFT DRY LEASE AGREEMENT56 FM: MICHAEL S. BAUM ( michael@secureav . com ) 7 Tel (650) 917-9430, Cell (650) 687-9492, Fax (650) 941-03518

9 DATE: AUGUST 5, 201110

1112 Dear Reviewer,

13 Thank you for offering your time and skills to provide an editorial review for the draft Model

14 Aircraft Dry Lease Agreement ("Lease")! Your assistance is greatly appreciated and invaluable

15 to the development of a useful and sustainable Lease.

16 The Lease will be made available as a free contribution to the aviation community. While the

17 first version is focused on the TBM, the Lease is being crafted with the expectation of supporting

18 other aircraft types -and should be edited accordingly.

19 Please consider the following points in undertaking your review:

20 1. Any and all comments are helpful -without exception!

2 1 2. Feel free to propose specific edits or new content.

22 3. Since the Lease will serve as an educational tool, please consider adding new annotations

23 (via footnote) to explain or give perspective on any issue you find helpful. Many of the

24 current annotations are undeveloped or merely placeholders -so, please jump in!

25 4. Ifpossible, please use the MS Word 's review ("Track Changes") feature.

26 Thanks in advance for your swift response. You may receive an updated draft to review if the

27 document changes before your edits are received.

28 Please communicate how you wish to be listed in the acknowledgements section (re: spelling,

29 title, affiliation(s), etc.)

30 Thank you again!

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Model Aircraft Dry Lease - For the TBM Commun ityFor Editorial Review Only -Not for Publ ication, I mplementation or Distribution .

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...,,...,, **D*R*A*F*T**34

35

36 MODEL37 AIRCRAFT DRY LEASE AGREEMENT38

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40 For Daher-Socata TBMAircraft41

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43 Draft Version 0.1444 August 5, 201145

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Model Aircraft Dry Lease -For the TBM CommunityFor Editorial Review Only -Not for Publication, Implementation or Distribution.

52 TABLE OF CONTENTS53

54 Introduction:55 A. Drafting Considerations56 B. Disclaimer57 C. Edits, Errata, Comments58 D. Acknowledgements59 Articles :60 1-Lease of Aircraft61 2 -Term62 3-Rent63 4 -Aircraft Scheduling64 5 -Operational Control and Pilots65 6 -Operating Expenses66 7 -Repairs, Maintenance and Alternations67 8 -Insurance68 9 -Title69 10 -Legal Use70 11-Inspection by Lessor71 12 -Taxes72 13 -Assignment73 14 -Accident and/or Incident74 15 -Permanent Hangar Location75 16 -Return of Aircraft to Lessor76 17 -Indemnification77 18 -Default78 19 -Remedies of Default79 20 -Miscellaneous80 20.1-Disclaimers81 20.2 -Notice82 20.3 Entire Contract83 20.4 -Relaonship of Parties84 20.5 -Governing Law85 20.6 -Counterparts86 20.7 -Headings87 20.8- Copy of Lease88 20.9 -Truth in Leasing89 21 -Schedules90 SCHEDULE A -Term Sheet91 SCHEDULE B -Prudent Operating Practices and92 Equipment-Specific Requirements93 SCHEDULE C- Condition of Aircraft94 SCHEDULE D -Use of Aircraft for Training95 Notes96

Model Aircraft Dry Lease - For the TBM Comm uni tyFor Editorial Review Only -Not for Publication , Implementation or Distribution.

9798 INTRODUCTION99

100 This Model Aircraft Dry Lease Agreement ("Lease") is provided to the aviation community as aI O I free service to assist all parties seeking to enter into a dry lease for the operation of TBM aircraft.102103 A dry lease provides for the lease of an aircraft without fuel, pilot, or other crew members.1104 Various leasing arrangements may utilize a dry lease, including time sharing, interchange, andI05 fractional ownership agreements -and each may implicate differing operational and taxI06 requirements which are beyond the scope of this Lease.2

107108 The Lease reflects the views, lessons learned , and expertise of the TBM community in a109 transparent and instructive manner. As a model, the Lease is drafted to facilitate, and users are110 encouraged to modify its terms to suit their particular requirements. The Lease seeks to:

1 1 1 • balance the needs and expectations of both lessor and lessee,

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1 131 14

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1 161 171181 19

• address issues that are both general and aircraft type-specific,

• reflect, to the extent appropriate, a synthesis of the positions taken in many instructive dry lease forms of agreement,

• enhance the ownership or use experience of the aircraft, and

• provide a rich resource of peer-reviewed content for dry lease development, implementation, and interpretation.

120 A. DRAFTI NG CONSIDERATIONS121122 The following should be considered in reviewing and implementing the Lease:123124 Brackete d Text - [Bracketed text] denotes the insertion of implementation-specific information.125 Insome instances, bracketed text represents alternatives presented in the Lease, while in other126 instances, the provisions are themselves presented as options. Nonetheless, the entire Lease is127 intended to be customized to suit the particul ar needs of each implementer. Specific amounts128 (such as dollars or time periods) or terms included in bracketed text (in italics) are provided129 merely as examples in the Lease, and are neither part of, nor shall bear on the operation of the130 Lease unless made part of the operative Lease.131

Footnotes are provided exclusively for convenience and shall have no interpretative or legal purpose in relation to the Lease.

1 See,for example, <htt::p: // en . w ikip ed i a . org/w iki / Aircra ft lease >.2 See, for example, Time Shari ng Agreements - 14 C.F.R. 91.50 I (c)( I ), Interchange Agreements 1 4 C.F.R.9 1.50I (c)(2), and Fractional Ownership Operations 14 C.F.R. 9 1 .100 I , et seq. Other potentia l ly important issues are not addressed in th is Lease, including but not limited to: cross-border leasing, financing, and securitization.

Model Aircraft Dry Lease - For the TBM Commun ityFor Editorial Review Only -Not for Publ ication, I mplementation or Distribution.

132 Aircraft Equipment - References to type- and model-specific equipment are contained in133 SCHEDULE B (Prudent Operating Practices and Equipment-Specific Requirements).134 Implementers should revise or supplement this schedule as necessary to reflect the particular135 equipment and requirements of the subject aircraft and implementation.136137 Footnotes -Footnotes provide selected annotation, explanation, drafting suggestions, and138 implementation considerations. Footnotes are provided for convenience and are neither part of,139 nor shall bear on the operation of the Lease. Recognizing that implementers have varying levels140 of expertise with aircraft leasing, selected back-ground education and references are included.141142143 B. DISCLAIMER 144

145 This Model Aircraft Dry Lease Agreement may be used as a resou rce for customized lease146 development although it is recommended that this be supported by independent research147 on the suitability of its content for the specific requirements of implementers. Itis not148 intended to provide legal advice and must not be relied upon as such. THIS LEASE IS149 PROVIDED "AS IS" AN D WITHOUT WARRANTIES (WHETH ER EXPRESS OR IMPLIED), AND ANY150 DAMAGES RESU LTING FROM ITS USE A RE DISCLAI MED. 151152153 C. EDITS, ERRATA, COMMENTS154155 The Lease is a living document, intended to be updated periodically to reflect changes in156 equipment and leasing practices, safety considerations, and the aviation environment. Please157 send your suggestions, edits, errata, questions, and comments to:158 <mode l -lea s e @s ecureav . com >.159160161 D. ACKNOWLEDG M ENTS 162163 The following persons are gratefully acknowledged for the suggestions, editorial comment164 and/or other valuable assistance they provided to the project. Of course, all reviewers do not165 necessarily concur with all positions taken in the Lease.166167 [TBD]168169 * *170

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111 [MODEL]3 AmCRAFT DRY LEASE AREEMENT172173 This Aircraft Dry Lease Agreement (the "Lease") is made on the Effective Date between the174 Lessor and Lessee (collectively, the "Parties), as designated in SCHEDULE A (Term Sheet)175 herein.176177 WITNESSETH:178179 WHEREAS, Lessor owns and is the registered owner of an aircraft, as designated in180 Schedule A (Term Sheet) herein, including its engine, propeller, avionics, accessories,181 components, parts, manuals, and log books ("Aircraft")4; and182183 WHEREAS, Lessee desires to lease the Aircraft from Lessor in accordance with the184 terms and conditions set forth herein.185186 NOW THEREFORE, in consideration of the foregoing premises and the promises and187 covenants contained herein, and for other good and valuable consideration, the Parties hereby188 agree as follows:189190191 ARTICLE ONE192 LEASE OF AIRCRAFT193194 I .I Lessor agrees to lease the Aircraft to Lessee, and Lessor agrees to lease the Aircraft from195 Lessor in an airworthy condition5

[on a non-exclusive basis]6 subject to the availability of the196 Aircraft, and at the price, terms, and conditions herein contained.

3 "[Model]" is bracketed to indicate that it should be removed in an implementation since the Lease is then no longer a model.4 The Parties may desire to include a detailed schedule listing all equipment (including part and serial numbers).5 Lessor may seek to offer the aircraft "as is". The Parties may also desire to address aircraft inspection and acceptance such as with one of the following two provisions:

a. "Lessor knows of no mechanical condition or other facts which would prohibit or restrict Lessees use of the Aircraft."

b. "It shall be conclusively presumed between the Parties that Lessee has fully inspected the Aircraft having knowledge that it is in good condition and repair and that Lessee is satisfied with and has accepted the Aircraft in such condition and repair."

FAR 91.7 Civil Aircraft Airworthiness, states:

(a) No person may operate a civil aircraft unless it is in an airworthy condition.

(b) The pilot in command of a civil aircraft is responsible for determining whether that aircraft is in a condition for safe flight. The pilot in command shall discontinue the flight when unairworthy mechanical, electrical, or structural conditions occur.6 The Parties should consider whether their leasing arrangement is intended as (i) an exclusive lease for a period of time, (ii) the lease for a non-exclusive block of time (whether or not actuaUy used), or (iii) an hourly (or fraction thereof) lease. The nature of the arrangement will invariably direct the terms of the Lease.


197198199 ARTICLE TWO200 TERM201202 2.1 Period: This Lease shall commence when the Aircraft is delivered to Lessee at the203 Permanent [Hangar][Tie-Down ] Location or other location designated in SCHEDULE A {Term204 Sheet), and shall automatically be renewed from month to month thereafter under the same terms205 and conditions set forth herein, unless and until terminated by either party upon ten (10) days206 written notice, or as otherwise set forth in Articles 8 (Insurance) and 19 (Remedies of Default),207 below (the "Term").7

208209 2.2 Accounting and Settlement: Within thirty (30) days after the date of termination of this21o Lease, the Parties shall make a full accounting and settle all accounts between them.211212 2.3 Survival: The obligations under Sections 2.2 (Accounting and Settlement), and 17.1213 (Indemnification) of this Lease shall survive termination of this Lease.214215216 ARTICLE THREE217 RENT218219 3.1 Per Flight Hour: Lessee shall pay Lessor a charge per flight hour the Aircraft is used by220 Lessee as set forth in SCHEDULE A (Term Sheet).8 For purposes of this Article, hours shall be221 measured in hours and tenths of hours as shown by the Aircraft's Hobbs meter.9 Lessee222 acknowledges the accuracy and validity of all Hobbs data. Lessee agrees to pay an additional223 fifteen percent 10 (15%) reflecting an estimation of ground operations (start-up, taxi, run-up,224 configuration, ground holds, etc.). The charges specified in this Article may be adjusted225 periodically by the mutual consent of the Parties.

7 Among other possible changes, where the Parties desire a lease for single missions or similar limited use, they should consider revising the following articles:

o Article 2.1 Period -regarding automatic month-to-month renewal.

o Article 3.2 Term -regarding payment of a monthly rent. This provision can be revised to provide for a single rent payment. A fee based upon Hobbs time and associated costs can be substituted.

o Article 8.1(D)(2) Insurance -regarding obligation to secure certificates of insurance.

o SCHEDULE A.6 -regarding term.8 This Lease uses the term "Flight Hour". Alternatively, the Parties may agree to the use of "Block Time". For example, Block Time can be defined as the time from the moment the aircraft door closes at the departure airport until the moment the aircraft door opens at the arrival airport following its landing.9 See SCHEDULE B.3 (Hobbs Meter) identifying when time is recorded by the Aircraft's Hobbs meter.10 Alternatively, the Parties may prefer to increase the standard hourly rate to adjust for ground operations.

For leases contemplating training regimes, consider a twenty percent (20%) addition to hourly flight time (rather than the 15% example) to reflect the additional ground time resulting from anticipated closed traffic pattern work, operational ground instruction (with the engine running}, aircraft familiarity time on the tarmac, and comparative slow completion of checklists and other pre- and post-flight procedures.

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Model Aircraft Dry Lease - For the TBM CommunityFor Editor ial Review Only -Not for Publication , Implementation or Distribution.

226227 3.2 Per Term : Lessee shall pay Lessor a [monthly] rental amount as designated m228 SCHEDULE A (Term Sheet). 1 1

229230 3.3 Invoicing: Lessor shall provide Lessee, upon request , with [monthly] invoices for the23 1 Rent for Lessee's use of the Aircraft. Payment of the Rent is due within thirty (30) days of232 Lessor's sending of any such invoice.233234 4.4 Prepayment: The Lessee shall pay in advance the sum designated m SCHEDULE A235 (Term Sheet) herein.236237238 ARTICLE FOUR239 AIRCRAFT SCHEDULING24024 1 4.1 Avai labili ty : Duri ng the Term of this Lease, Lessor agrees to make the Aircraft242 available exclusively to Lessee during any properly scheduled time period , upon at least twenty243 four (24) hours notice. 12 Requests for flight time shall be mutually convenient to and agreed244 upon by the Parties. The Aircraft will be available for use by Lessee except when:

245 (a) the Aircraft is undergoing maintenance or inspection, or otherwise disabled,

246 (b) the Lessor (or other lessee, if any) is scheduled prior to any use request made by247 Lessee, or

248 (c) declined, at the sole discretion of the Lessor. However, Lessor will use reasonable249 efforts to accommodate Lessee's needs and enjoyment of the benefits of this Lease.250251 4.2 Req uests: Requests for flight time shall include at least the following information for252 each proposed flight prior to scheduled departure, or as required by the Lessor: proposed253 departure and destination points, estimated flight time, number of passengers , crew, date/time of254 return, and any special requirements.255256 ARTICLE FIVE257 OPERATIONAL CONTROL AND PILOTS258259 5.1 Exclusive Contro l : Lessee shall have exclusive operational control 3

260 the Aircraft at all times when Lessee i s using the Aircraft under this Lease.26 1

and possession of

11 Alternatively, the Parties may prefer to establ ish a "block t ime" at a predetermined rental rate per hour of operation, and other Parties may prefer, for example, a monthly (or some other periodic) rental arrangement. See End Notes 6 and 7, above (con sidering various leasing arrangements).12 The Parties should consider formalizing a schedul ing protocol which could include: a computer-based scheduling system, messaging, or possibly verbal communications.13 See FAA Notice 8000.347 (re: Operational Control), available at<http: // rgl.faa .go v / regu l atorv and guidance l i brary / rgorde r s . n sf / 0 / 2cb5effi3329af90f8625726000 7 8650e / $F I LE /N8 000 347 . pdf .> .

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Model Aircraft Dry Lease - For the TBM CommunityFor Editorial Review Only -Not for Publication , I mplementation or Distr ibution.

262 5.2 Provision of Flight Crew : Lessee shall be solely responsible for providing flight crew for263 Lessee's :flights. The flight crew for the Aircraft shall be hi red by Lessee. 14

264265 5.3 Flight Crew Req uirements : Such flight crew shall : (a) meet all applicable Federal266 Aviation Administrat ion ("FAA"), any other applicable governmental requirement s, and267 insurance requirements, (b) have successfully completed [SIMCOM] [insurance-approved]268 initial (and/or recurrent) training, (c) be instrument current, (d) be incident and accident free, (e)269 have no arrests or convictions for alcohol or drugs, and no history of drug or alcohol abuse or270 dependency, and (f) have logged more than [fifteen hundred (1,500)] hours total time and more271 than [one hundred (100)] hours of PIC time in and be proficien t in the aircraft type, model, and272 configuration. 15 Lessee shall notify Lessor of all proposed flight crew, and also provide such273 flight crew's credentials and work experience. Lessor shall have the right to decline any274 proposed flight crew to operate the Aircraft. 16

275276 5.4 Part 91 Operations : Aircraft shall be operated exclusively in accordance with 14 C.F.R.277 Part 91. Lessee shall neither operate the Aircraft (a) such that it could be considered commercial278 air transportation or air transportation for hire 17

nor (b) for charter or lease to third parties.279 Lessee represents and acknowledges that it is leasing the Aircraft for either (i) personal280 transportation of Lessee and Lessee's guests where no charge, assessment or fee is made for such281 transportation ; or (ii) transportat ion of Lessee's officials, employees, guests and property where282 such transportation is within the scope of or incidental to Lessee 's business.283284 )..) Prudent Operating Practices : Lessee shall adhere to the Prudent Operating Practices in285 SCHEDULE B (Prudent Operating Practices and Equipment -Specific Requirements), herein.286 Such Prudent Operating Practices shall include, but are not limited to adherence to all applicable

14 Consider the propr iety of i ncl uding a provision whereby the Lessee acknowledges that Lessee will stay cuITent with all invoices for pi lot services, including p ilot outlays for fuel, food, alternative transportation , and hotels, and the like.15 PIC time requirements may vary from insurance requirements. The intent ion of the former, in part, is to accommodate the safety "comfort level" of the Parties, whereas insurance requirements mandate minimum experience levels as a precond ition of coverage.16 The Lessee has sole operational control of the aircraft (Article 5.1 ). Therefore, Lessor must not interfere with that control. However, as a practica l matter, there are some (otherwise permiss i ble) pilots that are known not to be safe - and the Lessor requ ires flexibi lity to preclude participation by known unsafe pilots.17 See generally FAA AC-2 1O- l 2A PRJVATE CA RRIAG E VERSUS COMMON CARRJAGE OF PERSONS ORPROPERTY (Apr. 24, 1986), available at<http : // www.faa . gov / documentLibrarv / medi a/ Advisorv C ircular / AC%20 I 20 - I 2A .pd f >. The Parties shall not "hold themse lves out"to the public to provide transportation. "A carrier becomes a common caITier when it 'holds itself out' or to a segment of the public, as willing to furnish transportat ion within the l imits of its facilities to any person who wants it. Absence of tariffs or rate schedules, transportation only pursuant to separately negotiated contracts, or occasional refusals to transport, are not conclusi ve proof that the carrier is not a common carrier. There are four elements in defin ing a common carrier; (I ) a holding out of a willingness to (2) transport persons or property (3) from place to place (4) for compensation. This 'holdin g out' wh ich makes a person a common caITier can be done in many ways and it does not matter how it is done."

See also FAR 61 .1 13, Private Pi lot Privi leges and Limitations: Pilot in Command; FAR 1 19 Certificat ion: Air Carriers and Commercia l Operators ( 1 19.3 Defin iti on s considers "holding out"). There shall be no avoidance of certificat ion requirements of FA R 135.5 and 135.25.


287 laws and regulations.288289 5.6 Pilot-in-Command Authority: Lessee acknowledges that the pilot(s) are the final290 authority on the safety of any flight undertaken with the Aircraft. 18 Lessee shall neither threaten291 nor challenge the pilot(s) decision, on the grounds of flight safety, to delay departures or arrivals,292 to cancel or terminate a flight, to use alternate airports, or any other related decision.293294 5.7 Lessor Not Pilot-In-Command: Should Lessee, in Lessee's exclusive discretion, invite295 Lessor to participate in any flight(s) in the Aircraft, the Parties acknowledge and agree that296 Lessor is a passenger, and neither pilot-in-command nor exercising operational control over the297 aircraft. The seating position of the Parties during such flight(s) shall not bear on this298 determination. 19

299300301 ARTICLE SIX302 OPERATING EXPENSES303304 6.1 Lessee shall be responsible for all operating expenses incurred in connection with its use305 of the Aircraft, including, but not limited to, fuel, oil, all assessments, fines, penalties, levies,306 attachments, or any other governmental charges on or arising out of Lessee's use or operation of307 the Aircraft and the cost of a qualified flight crew and all related expenses. In addition, Lessee308 shall pay all landing fees, ramp fees, hangar rental, aircraft cleaning, and related expenses away309 from the Permanent Hangar Location specified in Article 15 (Permanent Hangar Location).310311312 ARTICLE SEVEN313 REPAIRS, MAINTENANCE, AND ALTERATIONS314315 7.1 General: Lessor shall be responsible for securing maintenance, preventive maintenance,316 and required or otherwise necessary inspections of the Aircraft. No period of maintenance,317 preventive maintenance, or inspection shall be delayed or postponed for the purpose of318 scheduling the Aircraft, unless said maintenance or inspection can be safely [and cost319 effectively] conducted at a later time in compliance with all applicable laws and regulations.320 Lessee shall reiuest Lessor's prior [written] consent for any unscheduled maintenance or repair321 of the Aircraft.2

18 See generally FAR 91.3 Responsibility and authority of the pilot in command.19 This provision seeks to advance flexibility and support the unfettered lawful use of the aircraft by the Lessee. Recognizing that the Lease prohibits a "holding out" and that the Parties involved in the Lease often have a well established and trusted relationship, Article 5.7 seeks to ensure that the Parties are not unduly/artificially constrained from flying together. Correspondingly, the seating position of the Parties should be geared to provide maximum benefit/utility to the Lessee. Nonetheless, the Parties should understand that Article 5.7 may not necessarily (and is not intended to) provide protection from or otherwise avoid the operation of underlying legal requirements.20 The Parties should exercise caution in agreeing to unscheduled maintenance (including routine consumables) by the Lessor, particularly where the Aircraft is highly customized or where the Lessor maintains the Aircraft with brand-specific, premium parts, or at a particular heightened level/regime of care. Nonetheless, the Lease can be fashioned whereby the Lessee is obligated to pay for unscheduled repairs up to a specified dollar amount, perhaps with a credit against the monthly minimum lease payment.


322323 7.2 Part 91 Maintenance: Lessor hereby certifies that the aircraft has been and will be324 maintained and inspected under 14 CFR Part 91, and has completed successfully an annual325 inspection less than one calendar year prior to the execution of this Lease.326327 7.3 Maintenance Records: Lessor will maintain all logs, books, and records pertaining to the328 Aircraft and its maintenance. Lessor shall make available documentation showing compliance329 with all recurring ADs. Lessee shall maintain, and make available upon request of Lessor, copies330 of logs, books, and records reflecting all flight operations, maintenance, and squawks undertaken331 by Lessee during the term of the Lease.332333 7.4 Alterations: Lessee shall not make alterations to the Aircraft without pnor written334 permission from the Lessor.335336337 ARTICLE EIGHT338 INSURANCE339340 8.1 Coverages: Prior to the commencement of this Lease, Lessor shall provide insurance341 coverages of the types, in the amounts, and including the special provisions set forth below:342343 (a) Aircraft Bodily Injury and Property Damage Liability Coverage, including344 Passenger Liability, in an amount not less than [Two Million]2 1 Dollars345 (US$[2,000,000.00]) combined single limit per occurrence.346347 (b) All Risks Hull (Physical Damage) Coverage, including War Risks and Allied348 Perils, with an agreed value of [Two Million] Dollars (US$[2,000,000.00]).349 Lessee acknowledges and accepts financial responsibility for any insurance350 deductible required under the Lessor's policy for the cost of repairs of any351 damage Lessee caused to the aircraft. The insurance company reserves the right to352 subrogate against the Lessee.22

353354 Lessee understands that the Lessor's insurance provides for bodily injury liability,355 passenger bodily injury liability and property damage liability insurance in the356 amount(s) noted above in Paragraph 8.1 (a), (b), and (c) to protect the Lessor and357 Lessee as outlined in the terms of the policy. The Lessee acknowledges and358 accepts financial responsibility for any amounts exceeding the insurance coverage359 or limits and for items not covered under the policy.360361 (c) Medical Expense, including flight crew, with limits of [Five Thousand] Dollars

21 The italicized insurance limits are provided as an example.22 Here, subrogation is undertaken by an insurance company seeking to recoup expenses for a claim it paid out to the Lessor when another party should have been responsible for paying at least a portion of that claim. Lessor and Lessee may want to include a provision in the Lease addressing subrogation. Such a provision may acknowledge that there are gray areas challenging a determination of when damage to the Aircraft happened and thus, responsibility (e.g., determination of when FOD damaged the engine).


362 (US$[5,000.00]) each person and [Thirty Thousand] Dollars (US$[30,000.00])363 each occurrence.364365 (d) All insurance required by this Section 8.1 shall:366367 (1) include a provision that such insurance shall cover the operation of the368 Aircraft for all approved uses of the Aircraft;369370 (2) name Lessee as an Additional Insured with respect to the coverage set forth371 in Article 8.l(a);372373 (3) be primary and without any right of contribution from any other insurance374 available to the Parties;375376 (4) contain a severability of interests clause providing that the insurance shall377 operate in all respects as if a separate policy had been issued covering each party378 insured;379380 (5) cover the following locations: United States (excluding Hawaii), [Canada,381 Mexico, the islands of the West Indies (excluding Cuba and Haiti) or while en382 route between these points]. 23 Additional locations shall require the prior written383 consent of Lessor. Should Lessee request, and the Lessor's insurance carrier384 approve additional locations, the Lessee shall be responsible for the cost of any385 additional insurance required for any such operation; and386387 (6) provide that not fewer than thirty (30) calendar days written notice shall be388 given to Lessee of cancellation by any Party or adverse material change or389 reduction in the limits of coverage applicable to Lessee under the policies except390 that ten (10) days advance written notice shall be given in the event of391 cancellation for non-payment of premium and such shorter notice period shall be392 given as is customarily available under war risk and allied perils coverage.393394 8.2 Certificate of Insurance: Immediately after the execution of this Lease, Lessor shall395 provide Lessee with a Certificate of Insurance evidencing the coverages, limits of liability, and396 special provisions required by Article 8.1 (Coverages), above.397398 8.3 Premiums; Lessee Insurance: Lessor shall be responsible for the insurance policy399 premiums for the insurance required under Article 8.1 (Coverages). Lessee acknowledges the400 limitations of insurance provided by the Lessor, that there is no guarantee of recovery, and that401 Lessee has the independent opportunity to purchase any additional insurance that Lessee deems402 necessary to manage its risk of loss.403

23 It is not unusual to insure U.S. Part 91 operations with limited foreign territorial endorsements (obtaining expanded territorial endorsements being the responsibility of the Lessee). To the extent available, the inclusion of international operations may increase Lessor's insurance costs, and make Lessor's exercise of his rights under this Lease more difficult -thereby increasing the risks to Lessor and possibly demanding a higher rental fee.


404 [Lessee shall obtain non-owned physical damage and liability insurance to cover, at a minimum,405 deductibles of the Lessor's above insurance [and US$ to cover any additional anticipated406 risk.]24

407408 8.4 Total Damage or Loss: In the event that, in the opinion of Lessor or insurance company,409 the Aircraft is lost, stolen, damaged beyond repair, confiscated, seized or its use appropriated by41o any government or instrumentality thereof, this Lease shall terminate and the proceeds of the411 insurance policy or policies shall be payable to Lessor. Lessee shall be responsible for any412 uninsured or insured but invalidated loss.413414 8.5 Partial Damage: In the event the Aircraft is partially damaged (in the opinion of Lessor or415 Lessor's insurance company), then this Lease shall remain in full force and effect and Lessor416 shall use the insurance proceeds to repair the Aircraft.417418 8.6 Economic Loss Damages: In any case, in the event the Aircraft is seriously damaged419 (whether repairable or not), the Parties acknowledge that the resale value of the Aircraft will420 have been permanently materially diminished, and Lessee agrees to pay to Lessor a liquidated421 sum of ten percent (10%) of the pre-damage value of the Aircraft as fair compensation for such422 economic loss. To assist in calculating such pre-damage value, the Parties agree that the stated423 value of the Aircraft on the Effective Date of the Lease is designated in SCHEDULE A {Term424 Sheet).25

425426427 ARTICLE NINE428 TITLE429430 9.1 General: Lessor is the owner of the Aircraft and has right, power, and authority to lease431 the Aircraft to Lessee in accordance with the terms of this Lease. Lessee has the right, power,432 and authority to lease the Aircraft from Lessor in accordance with the terms of this Lease. It is433 expressly understood and agreed that this is a contract of leasing, and that Lessee acquires no434 ownership, title, property rights or interests in or to the Aircraft leased pursuant to this Lease.435436 9.2 Liens: Lessee shall not directly or indirectly create, incur, assume or suffer to exist any437 liens on or with respect to the Aircraft. Lessee shall notify Lessor promptly upon learning of any438 liens. Lessee shall promptly, at Lessee's expense, take such action or any part thereof as may be439 necessary to discharge any such liens.

24 This provision is bracketed to reflect that Lessee may not necessarily be able to obtain Non-Owned Physical Damage and Liability coverage. Pricing, availability, and coverage vary by company. Non-Owned policies normally restrict coverage to fixed-wing aircraft with maximum seating and horsepower configurations. Additionally, some Non-Owned policies have restrictions on leased aircraft and the number of consecutive days the aircraft can be leased. The Parties are encouraged to discuss this with their respective aviation insurance specialists.

The recommended limits of Non-Owned Physical Damage and Liability coverage should generally be equal to those provided by the Lessor's insurance policy.25 The Parties may also desire to address "betterment" issues precipitating from Aircraft damage. In the event the Lessee damages the Aircraft and repairs are completed, portions of the repair may invariably improve the aircraft beyond its prior condition, and/or address "wear and tear" not covered by insurance.


440441 9.3 Subordination: The rights of the Lessee or other party claiming through Lessee with442 respect to the Aircraft shall be subject and subordinate in all respects to any Aircraft Security443 Agreement that may now or in the future encumber Lessor's rights, title, and interests in the444 Aircraft.445446447 ARTICLE TEN448 LEGAL USE449450 10.1 Adherence to Law and Regulation: Neither party shall maintain, use, operate or store the451 Aircraft in violation of any law or any rule, regulation, ordinance, or order of any government or452 governmental authority having jurisdiction (domestic or foreign), or in violation of any453 airworthiness certificate, license or registration relating to the Aircraft or its use, or in violation454 or breach of any representation or warranty made with respect to the insurance on the Aircraft or455 any term or condition of such insurance policy.456457 10. 2 No Use for Hire : Lessee may use the Aircraft only for and on account of its own purposes458 and will neither use the Aircraft for the purposes of providing transportation of passengers or459 cargo in air commerce for compensation or hire, nor use the aircraft in any way that will460 invalidate the insurance.461462 10.3 Areas of Operation: The Aircraft will not be operated or located in (a) any area excluded463 from coverage by the terms of any applicable insurance pursuant to the terms of this Lease or (b)464 any recognized or threatened area of hostilities, unless fully covered to Lessor's satisfaction by465 war risk insurance or where the government of the United States of America has assumed466 liability for (i) any damage, loss, destruction or failure to return possession of the Aircraft, and467 (ii) injury to persons or damage to property of others.468469 10.4 Qualified Pilots: The Aircraft will, at all times when used by Lessee during the Term, be470 operated by duly qualified pilots whose certificates are in good standing, who meet the471 requirements established and specified by the insurance policies required hereunder and by the472 FAA, and who satisfy the requirements of Article 5.3 (Flight Crew Requirements), above.473474 10.5 Confiscation: The Lessee shall not voluntarily subject the Aircraft to confiscation.26 In475 the event of confiscation, the Lessee agrees to reimburse the Lessor for the excess of the fair476 market value of the Aircraft confiscated over any insurance proceeds received, together with477 such other costs (including attorneys fees and costs), expenses, and loss of income the Lessor478 may incur as a result thereof.27

479

26 Confiscation is most often a function of illegal use, property damage in a foreign country, or illegal border crossing.27 The Parties can pre-agree, or adjustment downward, an agreed value as a function of use. Or periodically (e.g., every half year) agree on a new value, or undergo an appraisal.

Model Aircraft Dry Lease - For the TBM CommunityFor Editorial Review Only -Not for Publication, Implementation or Distribution.

480481 ARTICLE ELEVEN482 INSPECTION BY LESSOR483484 11.1 Lessee agrees to permit Lessor or any authorized agent of Lessor to inspect the Aircraft at485 any reasonable time and to furnish any information with respect to the Aircraft and Lessee's use486 that Lessor may reasonably request.487488489 ARTICLE TWELVE490 TAXES491492 12.1 Lessor Taxes: Lessor shall pay or cause to be paid all taxes incurred by reason of its493 ownership or its use, as the case may be, of the Aircraft during the Term of this Lease, including494 personal property taxes.495496 12.2 Lessee Taxes: Lessee shall pay all taxes associated with Lessee's use of the Aircraft,497 including sales and use tax, landing fees, and any other taxes or fees which may be assessed498 against any use of the Aircraft by the Lessee.28

499500 12.3 Reporting & Remitting: Lessee shall assist and cooperate with Lessor in reporting and501 remitting to the appropriate taxing authority(ies) sales and use taxes29 with respect of the502 Aircraft, including executing, acknowledging, and delivering such further instruments and503 documents, and taking all such further acts as may be requested by Lessor in connection with504 Lessor complying with applicable sales and use tax requirements.505506 12.4 Itemization: Without limiting the foregoing, (i) Lessor shall timely provide to Lessee an507 itemized statement of any state and local sales or use taxes arising from Lessee's use of the508 Aircraft, (ii) Lessee shall promptly pay to Lessor the amount of any such statement (unless509 contested in good faith), and provide to Lessor a related remittance advice identifying the510 Lessor's statement(s) to which such payment is to be applied, and (iii) Lessor shall remit any51 1 such amounts it receives from Lessee to the appropriate taxing authority.512513514 ARTICLE THIRTEEN515 ASSIGNMENT516517 13.1 Lessee shall not assign, pledge or sublet this Lease or any interest in the Aircraft, or518 sublet the Aircraft. Subject to the foregoing, this Lease inures to the benefit of, and is binding on,519 the heirs, legal representatives, successors, and assigns of the Parties.

28 Consider a prohibition (or notice to Lessee) from flying into any [designated] "troubled" states that seek to impose large sales and use charge. Have Lessee acknowledge responsibility of such charges.29 The Parties should consider applicable state sales and use tax laws and understand that this Lease does not guarantee sales or use tax obligation avoidance. Additionally, to the extent that the operative state's tax laws require an annual pre-payment of sales and use taxes (e.g., New Jersey), the Parties should consider including an express Lease provision addressing such responsibilities hereunder.


520521 13.2 Lessor shall also be free to perform any or all of its duties hereunder through the service522 of subcontractors, agents, or other independent contractors. All rights of Lessor hereunder may523 be assigned or otherwise transferred by the Lessor, and such rights succeeded to by the assignee524 or assignees under any such assignment.30

525526527 ARTICLE FOURTEEN528 ACCIDENT AND/OR INCIDENT529530 14.1 Lessee shall immediately notify Lessor of any accident, incident, or damage to or531 involving the Aircraft, which notification shall specify the time, place, and nature of the accident532 or incident or damage, other aircraft or vehicles involved, the names and addresses of parties533 involved, persons injured, witnesses, and owners of properties damaged, and such other534 information as may be known. Lessee shall advise Lessor of, and provide Lessor copies of all535 correspondence, papers, notices, and documents whatsoever received or generated by Lessee in536 connection with any claim or demand involving or relating to the Aircraft or its operation, and537 shall aid in any investigation instituted by Lessor or Lessor's insurance company and in the538 recovery of damages from third persons liable thereof. Such notification shall include539 notification and other communications with the National Transportation Safety Board (NTSB),540 and other Federal, state, and local officials.541542543 ARTICLE FIFTEEN544 PERMANENT HANGAR LOCATION545546 15.1 The Aircraft is permanently based at the "Permanent [Hangar] [Tie-Down] Location"31

547 designated in SCHEDULE A (Term Sheet) and shall be hangared there at all times when not in548 use at Lessor's expense. Lessor may, upon at least ten (10) days prior written notice to Lessee,549 change the Permanent Hangar Location to such other location specified in such notice, provided550 such other location is at the same airport.551552 15.2 Lessor grants Lessee a non-exclusive right to access the Permanent Hangar Location for553 the limited purpose of accessing and returning the Aircraft thereto during the Term of the Lease.554555 ARTICLE SIXTEEN556 RETURN OF AIRCRAFT TO LESSOR557558 16.1 Following each Lessee trip, and upon the expiration of the Term of this Lease, or upon its559 termination by default or otherwise, Lessee shall at its expense return the Aircraft to Lessor at560 the Permanent Hangar Location or other location mutually agreed by the Parties. At the561 conclusion of this Lease, Lessee shall return the aircraft in as good a condition as when it was

30 The Parties may consider drafting "wind-down" provisions. The Parties may also consider the complexity and acceptability of continuation of the Lease following transfer of Aircraft ownership.31 Where the aircraft will use a tie-down rather than hangar, the Parties may substitute the former term.


562 delivered, normal wear and tear excepted, and in an undamaged and airworthy condition, with all563 systems functioning properly, and all applicable maintenance complied with. Any exceptions or564 deviations shall be noted and listed separately in SCHEDULE C (Condition of Aircraft).565566567 ARTICLE SEVENTEEN568 INDEMNIFICATION569570 17.1 Lessee hereby agrees to indemnify, defend, and hold harmless Lessor, its members,571 managers, officers, directors, employees, shareholders and agents from and against any and all572 claims, damages, losses, liabilities (including, without limitation, bodily injury or death),573 demands, suits, judgments, causes of action, legal proceedings, attorney's fees whether civil or574 criminal, penalties, fines, other sanctions, and any costs and expenses in connection therewith,575 including attorneys' fees and expenses which arise out of or are in any way caused by the Lessee576 or the Lessee's agents' or appointees' acts or failures to act, including breach of Lessee's577 obligations under this Agreement, and further including but not limited to any negligence and578 intentional misconduct.579580 17.2 The provisions of Article 17.1 (Indemnification) are not intended to modify, and shall not581 be construed as modifying the respective rights and responsibilities set forth in this Lease.582583584 ARTICLE EIGHTEEN585 DEFAULT586587 18.1 Lessee shall be in default hereunder if at any time during the Term of this Lease, Lessee:

588 (a) is delinquent in making any rental payments for a period of more than ten (10) days; or

589 (b) is adjudicated bankrupt or insolvent; or

590 (c) files a voluntary petition in bankruptcy or for reorganization; or

591 (d) makes an assignment of the Aircraft for the benefit of creditors; or

592 (e) suffers a receivership to be appointed for Lessee's assets; or

593 (f) does not perform any or all of the requirements on Lessee's part to be performed under594 this Lease or is in breach of all or any of the covenants herein contained whatsoever and595 fails, within five (5) days to cure any delinquent payment or fails, within thirty (30) days596 after notice from Lessor, to cure any other such nonperformance or breach.

597598599 ARTICLE NINETEEN600 REMEDIES OF DEFAULT601602 19.1 If any of the events set forth in Article 18 (Default) occur, Lessor shall at its sole603 discretion have any one or more of the following remedies, without further notice to Lessee:604 (a) Lessor may sue to collect any and all sums which may be due to Lessor


605 hereunder together with any and all damages (including any attorneys fees and606 costs) which may accrue by reason of Lessee's breach of this Lease.607608 (b) By notice in writing, immediately terminate this Lease without further notice, 609 whereupon all rights of Lessee to the use of the Aircraft or any part thereof shall 610 absolutely cease and terminate but Lessee shall remain liable as hereinafter 611 provided; and thereupon Lessee, if so requested by Lessor, shall at its expense 612 promptly return the Aircraft as required by Article 16 (Return of Aircraft to 613 Lessor) hereof, or Lessor, at its option, may enter upon the premises where the 614 Aircraft is located and take immediate possession of and remove the same. 615 Lessee specifically authorizes Lessor's entry upon any premises where the 616 Aircraft may be located for the purpose of, and waives any cause of action it 617 may have arising from a peaceful retaking of the Aircraft. Lessee shall, without 618 further demand, forthwith pay to Lessor as liquidated damages for loss of a 619 bargain and not as a penalty, an amount equal to the total accrued and unpaid 620 Rent, plus all other accrued and unpaid amounts due hereunder, including all 621 damages related to the default, and all costs and expenses associated with such 622 recovery.623624 (c) Perform or cause to be performed any obligation, covenant or agreement of 625 Lessee hereunder. Lessee agrees to pay all costs and expenses incurred by 626 Lessor for such performance as additional rent hereunder and acknowledges that 627 such performance by Lessor shall not be deemed to cure said event of default.628629 (d) Lessor may exercise any other rights or remedies which may be available under 630 the provisions of this Lease, under any of the laws of the United States or under 631 any of the laws of any of the states of the United States.632633634 ARTICLE TWENTY635 MISCELLANEOUS636637 20.1 Disclaimers: EXCEPT AS OTHERWISE PROVIDED IN THIS LEASE, THE638 AIRCRAFT IS LEASED UNDER THIS LEASE "AS IS." LESSOR DISCLAIMS

ALL639 EXPRESS AND/OR IMPLIED WARRANTIES OF ANY KIND WHATSOEVER WITH640 RESPECT TO THE PHYSICAL CONDITION, MERCHANTABILITY OR FITNESS OF641 THE AIRCRAFT FOR ANY PARTICULAR USE OR PURPOSE. LESSOR IS NOT THE642 MANUFACTUER OR ITS AGENT. LESSEE AGREES THAT IT HAS NOT RELIED643 UPON ANY REPRESENTATION, EXPRESSED OR IMPLIED, BY LESSOR OR644 ANYONE ACTING ON THE LESSOR'S BEHALF, WITH RESPECT TO THE645 PHYSICAL CONDITION, MERCHANTABILITY OR FITNESS OF THE AIRCRAFT646 FOR ANY PARTICULAR USE OR PURPOSE.647648 20.2 Notice: Any notice required or permitted under this Lease shall be given in writing and 649 shall be effective for all purposes if hand-delivered to the party designated below or if sent by (a) 650 certified or registered United States Postal Service (USPS) mail, postage prepaid; or (b)

Model Aircraft Dry Lease - For the TBM Commun ityFor Editorial Review On ly -Not for Publ ication, I mplementation or Distribution .

65 1 expedited delivery service, either commercial or USPS, with proof of delivery addressed to the 652 Lessor or Lessee at their respective addresses designated in SCHEDULE A (Term Sheet), or to 653 such other address and person as shall be designated from time to time by Lessee or Lessor, as 654 the case may be, in a written notice to the other in the manner provided for in this paragraph. The 655 notice shall be deemed to have been given at the time of delivery if emailed or hand delivered, or 656 in the case of registered or certified mail, three (3) business days after deposit in the USPS mail, 657 or i f by expedited delivery, upon first attempted delivery on a business day. A party receiving 658 actual notice which does not comply with the technical requirements for notice under this 659 paragraph shall nevertheless be treated as i f the notice was properly given.660661 20.3 E n t ir e Co n tract : This Lease, including its Schedules, cannot be changed orally and 662 constitutes the entire contract between the Lessor and the Lessee hereto regarding the subject 663 matter hereof. It shall neither be modified nor changed by any expressed or implied promises, 664 warranties, guarantees, representations or other information unless expressly and specifically set 665 forth in this Lease or any addendum thereto properly executed by the Parties.666667 20.4 R e l a ti o n s h i p of P ar ti es : The relationship of the Parties is strictly that of Lessor and 668 Lessee. Nothing in the Agreement is intended, nor shall it be construed so as, to constitute either 669 party as the partner or joint venture or agent of the other party. All persons furnished by Lessee 670 for the performance of the operations and other activities contemplated by this Agreement shall 67 1 at all times and for all purposes be Lessee's employees or agents, and Lessee shall be solely 672 responsible for their performance or failure to perform.673674 20.5 G o ve rnin g Law : Lease shall be governed by and construed in all respects in accordance 675 with the laws of the [State of California] , County of [San Mateo]. Any legal action arising from 676 or relating to this Lease, whether brought by Lessee or Lessor, shall be brought, if at all, in a 677 court of competent jurisdiction sitti ng within the [State of California].678679 20.6 Co unt e rp a r ts : The Parties agree that this Lease may be executed in any number of 680 counterparts, each of which, when duly executed, whether by facsimile or otherwise, shall 68 1 constitute an original hereof.682683 20.7 H ea din gs : Headings of sections and subsections, Table of Contents, Introduction, and any 684 notes associates with this Lease are provided exclusively for convenience and shall have no 685 interpretative or legal purpose.686687 20.8 Co p y of Lease : Lessee shall keep a legible copy of this Lease in the Aircraft at all times688 during the term of this Lease.689690 20.9 T ruth in Leas in g :32

69 1

32 FAR 9 1 .23-Truth-in-l easing clause requirement i n leases and conditional sales contracts, available at

<http : // n:d.faa . 2:ov / Regu latory a nd G u idance Librar v / rgFA R . n sf / O / afae5 a 4bd 1b5d l 5b86?56a6900532b6c! OpenDo cumen t >. Note: Th is clause is required in respect of large civil aircraft weigh ing in excess of 12,500 lbs. maximum certi ficated take-off weight. Nonetheless, it i s incl uded in this Model Lease because it provides enhanced notice to Lessee.


692 (a) LESSEE HAS REVIEWED THE AIRCRAFT'S MAINTENANCE RECORDS AND693 OPERATION LOGS AND HAS FOUND THAT, DURING THE TWELVE MONTHS694 PRECEDING THE DATE OF THIS LEASE, THE AIRCRAFT HAS BEEN MAINTAINED695 AND INSPECTED UNDER PART 91 OF THE FEDERAL AVIATION REGULATIONS696 (FAR). LESSEE ACKNOWLEDGES THAT THE AIRCRAFT WILL BE MAINTAINED AND697 INSPECTED UNDER FAR PART 91 FOR OPERATIONS TO BE CONDUCTED UNDER698 THIS LEASE.699100 (b) LESSEE ACKNOWLEDGES THAT LESSEE IS RESPONSIBLE FOR OPERATIONAL101 CONTROL OF THE AIRCRAFT UNDER THIS LEASE DURING THE LEASE TERM;102 PROVIDED, HOWEVER, THAT LESSEE SHALL NOT BE RESPONSIBLE FOR703 OPERATIONAL CONTROL OF THE AIRCRAFT FOR SO LONG AS THE AIRCRAFT IS704 IN THE POSSESSION OF ANY OTHER LESSEE. LESSEE FURTHER CERTIFIES THAT705 LESSEE UNDERSTANDS ITS RESPONSIBILITY FOR COMPLIANCE WITH706 APPLICABLE FEDERAL AVIATION REGULATIONS.707708 NAME OF LESSEE: 709 ADDRESS OF LESSEE: 710711 SIGNATURE OF LESSEE: 712713 (c) LESSEE UNDERSTANDS THAT AN EXPLANATION OF FACTORS BEARING ON714 OPERATIONAL CONTROL AND THE PERTINENT FEDERAL AVIATION715 REGULATIONS CAN BE OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS716 DISTRICT OFFICE.717718719 IN WITNESS WHEREOF, the Parties hereto have executed this Lease as of the720 Effective Date designated in SCHEDULE A {Term Sheet).721722723 LESSOR: LESSEE:724725 [Insert Lessor name]726727728

By:---------729

[Insert lessee name]

By: ---------

730 Name: -------- Name: ---------731732 Title: Title: 733


734

735736 1. The Parties -737738 Lessor:739740741742

SCHEDULE A

TERM SHEET

Name, Title: Company: Address: Address: City, State:

743 Phone: 744 Cell: 745 Email: 746747 Emergency748 Contact: 749750 Lessor: Name, Title: 751 Company: 752 Address: 753 Address: 754 City, State: 755 Phone: 756 Cell: 757 Email: 758759 Emergency760 Contact: 761 2. The Aircraft -762 Type and Model: 763 Tail Number: 764 Aircraft & Engine Serial #s: 765 Stated Value of Aircraft: 766767 3. Permanent Hangar Location: 768769 4. Effective Date: 770771 5. Lease Term: 772773 6. Rental Rate -774 Monthly Rate: [insert amount or "NIA"]775776 Hourly Rate: The Hourly Rent shall be [One Thousand] Dollars777 (US$ 1,000.00)3 3 per Hobbs hour Lessee operates the Aircraft during the Lease.

33 The hourly fee [contained in the bracketed text] reflects the synthesis of opinions from consulted TBM owners and operators. The hourly rate resolved between the Parties is, of course, a function of bargaining power.Notwithstanding, to assist determination of a fair rate, the following non-exclusive list of considerations may be helpful:


778779 Prepayment: [Insert amount or NIA]780781782 Lessor: ----- Lessee: -----

a. Relative costs at the Permanent Hangar Location (including hangar rent, property taxes, maintenance),

b. Level of aircraft maintenance (e.g., whether voluntary I 00 hour inspections are undertaken), squawks promptly resolved, etc.),

c. Aircraft condition, avionics, data subscriptions, optional equipment,

d. Term of the Lease. Generally, a long-term lease would substantiate a reduced rental rate,

e. Insurance coverages and deductibles, and

f. Overhaul provision.

Model Aircraft Dry Lease - For the TBM CommunityFor Editorial Review Only -Not for Publication , Implementation or Distribution.

783 SCHEDULE B

784 PRUDENT OPERATING PRACTICES AN D EQUI PMENT-SPECI FIC REQUIREMENTS785786 In addition to the foregoing, Lessee shall adhere to the following prudent operating practices:787

788 1. Engine Trend Moni tor:

789 (a) Lessee shall operate the Aircraft with the Shadin Engine Trend Monitor 34

("Shadin") 790 operating correctly at all times. Lessee shall confirm that engine data is being duly 791 recorded , and that ample data storage is available on the Shadin Key for all

792 operations. Lessee shall notify owner as soon as practicable upon Shadin failure or793 dysfunction .794 (b) Lessee acknowledges the accuracy and validity of the Shadin data and corresponding795 [Trend Group]35 data analysis. Lessee shall make Shadin data available to Lessor796 within twenty four (24) hours of request; and Lessor shall provide Lessee any797 requested and available [Trend Group] data anal ysi s within twenty four (24) hours of 798 request. Lessee is unilaterally responsible for inspection and/or repair/replacement 799 costs precipitating from any exceedences occurring during the leasehold.800 (c) Lessee shall neither remove, tamper with, nor disable the data key from the Shadin 801 without Lessor's prior written permission. Should Lessee operate the Aircraft without 802 correct Shadin operation, any resulting damage to the Aircraft during the leasehold 803 shall be presumed the Lessee 's responsibility.

804 2. Engine Parameters : Except where required for safe operation, Lessee shall operate at a805 maximum of the lower of ninety five percent (95%) torque, and below the Pilot Operating 806 Hand book (POH) recommended cruise and climb values, and while always operating below 807 800 ITT, whichever is lowest.

808 3. Hobbs Meter : The Hobbs meter records [only flight ] [ground and fli ght] time .36

809 4. Inoperable Equipment : Lessee shall not operate the aircraft with inoperable equipment810 unless expressly permitted in the POH or approved MEL.

81 1 5. Squawks : Lessee shall communicate immediately all airworthiness squawks to Lessor upon 812 discovery, or within one hour oflanding. Lessee shall communicate all non-airworthiness 813 squawks to Lessor within twenty four (24) hours of discovery. Lessee shall record and814 communicate such squawks to Lessor on SCHEDULE C (and include addenda, as815 necessary).

816 6. POH. Documentation. Regulations: Lessee shall operate the aircraft i n conformance with the817 POH, manufacturers ' recommendations , insurance requirement s, and applicable laws, and

34 See <http: // www.shadin.com / service / manua ls/P i lotsG u i de . pd f >. Aircraft with other data recording systems should modify SCHEDU LE B (Prudent Operating Practices and Equipment- Specific Requirements) accordingly.35 See,fo r example, <http: // www . thetrendgroup . com / >.36 Alternativ ely, "fjli ght and ground]" time.


818 regulations.37

819 7. Oil: Lessee shall check the oil before each flight and ensure it is at least 3.5 quarts full.

Fuel, Fueling, and Fuel Reserves :

a. Lessee shall not use any fuel in the aircraft except Jet A with Prist.38

b. Lessee shall sump all fuel drains following refueling where more than eight (8) hours have elapsed since refueling to assure the fuel is the correct type and is not contaminated. Lessee is responsible for environmentally sound disposal of any dumped fuel.

c. Except in a declared emergency, Lessee shall not operate the aircraft (in either VMC or IMC conditions) with less than _ gallons of fuel.39

Runways: Lessee shall neither operate at a non-improved airfield, nor on a runway under [3,500] ft., except in an emergency, at the Aircraft's Permanent Hangar Location, or with the prior written permission of the Lessor.

831 10. Flight Rules :

832 Except in a declared emergency,

833 a. Lessee shall operate the aircraft under Instrument Flight Rules (IFR), or with ATC834 Traffic Advisories (flight following), and squawk a discrete transponder code.

835 b. Visual Flight Rules (VFR) flight operations shall not be undertaken in (i) marginal836 visual meteorological conditions (VMC) conditions,40 or nighttime.

837 c. Adhere to IFR departure procedures (including obstacle departure procedures) unless838 otherwise directed by ATC.

839 d. Lessee shall not attempt: (i) instrument approaches in conditions below applicable840 IFR approach minimums; and (ii) departure in conditions below IFR approach841 minimums at the departure airport unless there is an appropriate alternative departure842 airport with an available instrument approach above IFR minimums and within843 fifteen (15) nautical miles of the departure airport.

844 11. Duty Time: No pilot may schedule, operate, or otherwise serve as crew in the Aircraft 845 during the twenty-four (24) consecutive hours preceding the completion of any flight 846 segment without a rest period during those twenty four (24) hours of at least eight (8)

37 Except to the extent that the Lease provides for more stringent requirements, provided that such requirements do not compromise safety and are not inconsistent with the POH. Also, for example, the pilot shall emphasize use of the inertial separator to avoid FOO damage.38 Prist shall be used per the POH. Use of protective fueling mats is recommended to protect upper wing surfaces; and the aircraft shall be properly grounded as per the POH during all refueling operations.39 Required reserves purposefully are greater than provided in FAR 91.167 Fuel Requirements for Flight in IFR Conditions.40 This Lease adopts a definition for "marginal VFR" of ceilings between 1,000 and 3,000 feet and/or three to five miles visibility.

820 8.821

822823824825

826827

828 9.829830

Model Aircraft Dry Lease - For the TBM Commun ityFor Editorial Review Only - Not for Publication , Implementation or Distribution.

847 hours.41

848 12. Securing the Aircraft: Lessee shall chock and properly secure the Aircraft at all times when849 not in operation.

850 13. Brake Allowance Fee (For Training Purpo ses Only) : The Parties acknowledge that the851 TBM aircraft brakes are particularl y wear-sensitive and that training historically places an 852 extraordinary burden on brake lifecycle. Consequently, should the Aircraft be used for take- 853 off/landing training or practice, a "brake allowance fee" shall apply as follows: the hours of 854 training or practice operations shall be divided by one hundred (I00). The result shall be 855 multiplied by Three Thousand One Hundred [$3,I00] representing the approximate pro-rata856 cost of accelerated disk brake replacement [(hours of training operation/ I 00)*$3, I OO=Brake857 Allowance Fee].

858 14. Aircraft Cleaning: In order to protect the Aircraft, Lessee shall maintain the Aircraft in a 859 clean condition. Cleaning supplies shall be approved by the Lessor. The Lessee shall use 860 best efforts to hangar the aircraft overnight when not at the Permanent Hangar Location.

861 15. Records and Reports : Lessee shall maintain all records, logs, and other materials required 862 by the FAA or any applicable law, rule, and regulation in respect of the operation of the 863 Aircraft by Lessee during the term of this Lease. Not later than three (3) days after the end864 of each Lease Term, Lessee shall provide to Lessor a statement showing all flight activity by 865 Lessee (including time, date, airports, Hobbs time, fuel and oil added, and any noteworthy 866 irregularities) during such Lease.42

867 16. Aviators Model Code of Conduct : To advance flight safety and ethical dealings, the Parties 868 shall consider the applicable provisions of the Aviators Model Code of Conduct, available at 869 <www.secureav . com >.

870 Lessor: ----- Lessee: -----871

41 See FAR 12 1.471(b), FAR I 35.265(b), and FA R 9 1 .1057 (Fl ight, duty and rest time requirements: All

crewmembers) , available at <http: // www . ri s irnwp. co m / fa r s / info / part9 I - I 05 7 - FA R . shtm >. [Alt: No pilot may schedule, operate, or otherwise serve as crew in the Aircraft during twenty-four (24) consecutive hours based on a fourteen (14) hour duty day not to exceed eight (8) hours.] See FAA, Fact Sheet - Pilot Flight Time, Rest, and Fatigue, (Jan. 27, 20 I 0) <http: // www . faa . gov / news / fact sheets / new s s tor v . cfm?news l d = 6762 >.42 Consider using SCHEDU LE C (Condition of Aircraft) for such statements.

***


872 SCHEDULE C 873 CONDITION OF AIRCRAFT874 Complete a New Schedule C at Commencement of Lease and Prior to Each Flight875876 Condition of Aircraft at [Commencement of Lease] [Prior to Each Flight]877878 Next Annual Inspection Due:879 Last Annual Inspection:880 Possession Date:881 Hobbs Time:882 Fuel:883 Maintenance Status:884 Avionics:885 Paint:886 Interior:887 Windshield:888 Windows:889 Tires:890 Damage History:891 Certificate of Airworthiness:892 Aircraft Registration:893 Keys (Aircraft, Hangar, Tow,

Other):894 Other (include Squawks):895

896 Lessor:

-----897

898

Lessee: -----

899 Condition of Aircraft at [Conclusion of Lease] [Following Each Flight]900901 Date Possession Relinquished:902 Hobbs Time:903 Fuel:904 Maintenance Status:905 Avionics:906 Paint:907 Interior:908 Windshield:909 Windows:910 Tires:911 Damage History:912 Certificate of Airworthiness:913 Aircraft Registration:914 Other (include Squawks):915

916 Lessor: ----- Lessee: -----917


918 SCHEDULE D 919 USE OF AIRCRAFT FOR TRAINING920921 [Temporary Editorial Note: This Schedule D is merely an incomplete initial subject outline. Your suggestions for922 drafting its substantive content are respectfully solicited.]923924925 Supplemental provisions for training may include, but not be limited to:926927 I. A brake allowance Fee (more here?). See SCHEDULE B.13.

928 2. Additional rent (e.g., a supplemental 10%) compensating for anticipated greater929 ground time required during training. See Article 3.1.

930 3. Restrictions on runways or airports. See SCHEDULE B.9.

931 4. Restrictions on simulated emergencies.

932 5. Restrictions on carriage of passengers during training.

933 6. Minimum trainer qualifications and requirements.

934 7. Restricting fight training to the Lessee.

935 8. No formation flight/training.936

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