Terms & Conditions
WHEREAS
(A) Jetquity has established the Protect Program to support aircraft owners in their financial planning by guaranteeing minimum residual values subject to compliance with agreed terms and conditions.
(B) The Customer would like to place the Aircraft Share onto the Protect Program on the terms and conditions set out herein.
IT IS AGREED AS FOLLOWS:
1.1 Definitions
The following definitions apply in this Agreement:
‘Aircraft’ means the aircraft identified in the Program Policy.
‘Airframe’ means the airframe identified in the Program Policy (excluding, for the avoidance of doubt, the Engine and APU).
‘‘APU’ means the auxiliary power unit installed on the aircraft identified in The Onboarding Form.
‘Assumed Annual Operation’ shall have the meaning set out in Schedule 1.
‘Customer’ shall mean the party that is purchasing the this Protect Program from Jetquity.
‘Dollar’, ‘dollar ', ‘USD’, ‘US$’ means the lawful currency of the United States of America from time to time.
‘Excessive Use’ means usage patterns or a level of usage of the Aircraft in excess of the Assumed Annual Operation the parameters for which are set out in Schedule 1.
‘Flight Hours’ means each hour or part thereof, measured to one decimal place, elapsing from the moment that the wheels of the Aircraft first leave the ground on take-off to the moment when the wheels of the Aircraft first thereafter touch the ground on landing.
‘Fractional Program Manager’ shall mean the party who serves as the fractional ownership program manager within the meaning of 14 C.F.R. Part 91, Subpart K.
‘Jetquity Account’ means the bank account of Jetquity or such other account as Jetquity may notify the Customer from time to time.
‘Manufacturer’ means (i) in relation to the Aircraft’s airframe, the Engines, and the APU the respective manufacturer identified and (ii) the respective manufacturer of each part, component, appliance, accessory, instrument, avionics and other item of whatever nature installed in or attached to the airframe, Engines or APU.
‘Material Damage’ means any loss or damage to the Aircraft the likely cost of rectification of which is US$$500,000 or more.
‘Program Fee’ shall have the meaning set out in The Program Policy.
‘Parts’ means all modules, appliances, parts, accessories, auxiliary power unit, instruments, navigational and communications equipment, furnishings, modules, components, and other items of equipment (other than complete Engines or engines).
‘Pre-Program Value’ shall have the meaning set out in The Program Policy.‘Protect Program’ means The Protect Program provided by Jetquity on the terms of this Agreement.
‘Restricted Party’ means a person that is (i) a target of, or owned or controlled by a person that is a target of, Sanctions or (ii) located in, incorporated under the laws of, or owned or (directly or indirectly) controlled by, or acting on behalf of, a person located in or organized under the laws of a country or territory that is the target of country-wide or territory-wide Sanctions.
‘Residual Value Guarantee Level’ Shall mean the value amount of the share guaranteed at the end of the 5 year term.
‘Sanctions’ means the economic sanctions laws, regulations, embargoes, or restrictive measures administered, enacted or enforced by (i) the United States government, (ii) the United Nations, (iii) the European Union, (iv) any country having jurisdiction over Aircraft or (v) the respective governmental institutions and agencies of any of the foregoing.
‘Service Program’ means a service program from the relevant Manufacturer or other service provider (e.g., JSSI) in respect of the Aircraft, its Engines, the APU or the avionics (as applicable).
‘Term’ means the period commencing on the date hereof and ending on the date falling 60 months later.
‘Total Loss’ means the occurrence of any of the following events:
(i) the actual or constructive total loss of the Aircraft;
(ii) the Aircraft being destroyed, damaged beyond repair, or otherwise ceasing to be usable in the normal course of business for a period exceeding sixty (60) days;
(iii) the compulsory acquisition or requisition of title of the Aircraft by any government entity or competent authority; or
(iv) the hijacking, theft, confiscation, capture, detention, seizure, or requisition for use or hire of the Aircraft which deprives the Fractional Program Manager or Customer of its use for more than thirty (30) days.
‘Ultimate Beneficial Owner’ or ‘UBO’ shall mean the individual identified.
“Quarter Date” means each of 31 March, 30 June, 30 September and 31 December;
“Requisition”
(a) any expropriation, confiscation, requisition or acquisition of the Aircraft, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority (excluding a requisition for hire for a fixed period not exceeding one year without any right to an extension); and / or
(b) any arrest, capture, seizure, sequestration, forfeiture, compulsory acquisition or detention of the Aircraft (including any hijacking or theft or disappearance),
in each case unless the Aircraft is redelivered to the full control of the Fractional Program Manager or Customer within thirty (30) days;
“State of Registration” means FAA REGISTRATION in relation to the Aircraft, or any other state or territory on whose national aircraft register the Aircraft is registered from time to time;
1.2 Interpretation
In this Agreement, unless a contrary indication appears:
(a) references to Clauses and Schedules are to be construed as references to the clauses of, and schedules to, this Agreement and references to this Agreement include its schedules.
(b) references to (or to any specified provision of) this Agreement or any other document shall include this Agreement, that document or the relevant provision as it may from time to time be amended.
(c) words importing the plural shall include the singular and vice versa, and words importing a gender include every gender.
(d) references to a person shall be construed as including references to an individual, firm, company, government entity (including university) corporation, unincorporated association or body of persons, whether or not having separate legal personality.
(e) references to any provision of law is a reference to such provision as applied, amended, extended or re-enacted and includes any subordinate legislation;
(f) a reference to “including” shall be construed as a reference to “including without limitation”, so that any list of items or matters appearing after the word “including” shall be deemed not to be an exhaustive list but shall be deemed rather to be a representative list, of those items or matters forming a part of the category described prior to the word “including”.
This Agreement shall commence on the date hereof and shall continue for the duration of the Term unless terminated earlier in accordance with Clause 8 (Termination).
3.1 On or prior to the date hereof, the Customer shall pay to Jetquity the Program Fee, either directly or via the Fractional Program Manager’s approved Escrow if the program is being purchased as part of a new share purchase.
3.2 All payments to be made by the Customer to Jetquity hereunder shall be made in full, without any set-off or counterclaim whatsoever and free and clear of any deductions or withholdings in US Dollars for value on the day on which payment is due to the Jetquity Account.
3.3 Payments shall be done in accordance with the payment terms in The Program Policy.
Throughout the Term, the Customer shall have entered into and remained a party to fractional aircraft program agreements with the Fractional Program Manager covering the Aircraft, as required by 14 C.F.R. Part 91, Subpart K. Such fractional program agreements shall be in a form reasonably acceptable to Jetquity, and Customer must reasonably cooperate with Jetquity and with the Fractional Program Manager to ensure satisfaction of the following conditions as well as those set forth in Schedule 2:
4.1 the Fractional Program Manager obtains and maintains in full force and effect all necessary certificates, licenses, permits and authorizations required for the use and operation of the Aircraft;
4.2 the Aircraft is used, operated and controlled in accordance with all applicable laws affecting the Aircraft in any jurisdiction and in accordance with all certificates, licenses, permits, authorizations and registrations relating to the Aircraft and so as not to invalidate any Manufacturer's warranties;
4.3 the Aircraft is subject to Insurances reasonably satisfactory to Jetquity, it being acknowledged by Customer that any lack of coverage for the Aircraft or other non-compliance with required insurance will result in cancellation of this Protect Program, with no further obligations on Jetquity;
4.4 the Aircraft will not be used for any purpose or in any manner not fully covered by the Insurances, or outside any geographical limit imposed by the Insurances, or for any illegal purpose or in an illegal manner;
4.5 the Aircraft will not be used for a purpose involving, or for the benefit of, a Restricted Party or in any other manner that would reasonably be expected to result in Jetquity being in breach of any Sanctions (if and to the extent applicable to them) or becoming a Restricted Party;
4.6 the Aircraft will not proceed to, or remain at, any location which is for the time being the subject of Sanctions, a prohibition order or any similar order, directive or restrictions;
4.7 the maintenance, service, repair, and overhaul of the Aircraft is performed by properly qualified and trained personnel and so as to:
(a) keep the Aircraft in good repair, condition and appearance and airworthy in all respects;
(b) comply with the applicable Manufacturer's maintenance, component maintenance or structural repair manuals and corrosion prevention programs and to comply with all mandatory modifications, airworthiness directives, service bulletins and similar requirements applicable to the Aircraft
4.8 The Airframe, Engines, APU and avionics remain subscribed to the relevant Service Programs and that all payments due under such Service Programs are made when due.
Customer may not agree to or permit any amendment of or variation to or give any discharge to waive under or terminate the Aircraft Operating Agreement or enter into any other agreement or arrangement for the operation and/or management of the Aircraft without first notifying Jetquity in writing and receiving Jetquity’s prior written approval, which may be delayed or denied by Jetquity reasonably in its discretion.
During the Term, the Customer shall:
6.1 provide, or procure that the Fractional Program Manager provides, Annual reports to Jetquity in the form set out in Schedule 3.
6.2 inform Jetquity, as soon as reasonably possible, if there is any breach of Clause 4 (Aircraft Operation and Maintenance Obligations);
6.3 provide to Jetquity in a timely manner all documents, information and materials required by Jetquity in connection with this Agreement or the transactions contemplated thereby;
6.4 permit, and procure that the Fractional Program Manager shall permit, Jetquity and/or its agent or representatives to inspect the Aircraft at any time upon giving the Customer reasonable notice;
6.5 inform Jetquity 3 months prior to the expiration of their share, if they wish to sell their share and the price offered to them by the operator or a 3rd party.
7.1 Provided the customer has complied with its obligations, and all conditions have been met, Jetquity shall at the end of the share term, pay the financial difference between the residual value guarantee level, minus any excessive use and operator fees, and the price actually paid by the operator or 3rd party if the residual value guarantee level is higher than the operator or 3rd party’s offer.
7.2 If Jetquity's performance of its obligations under this Agreement is prevented or delayed by any act or omission of the Customer, its agents, subcontractors, consultants, or employees, then, without prejudice to any other right or remedy it may have, Jetquity shall be allowed an extension of time to perform its obligations equal to the delay caused by the Customer.
8.1 Without affecting any other right or remedy available to it, Jetquity may terminate this Agreement with immediate effect by giving written notice to the Customer if:
(a) the Customer fails to pay any amount due under this Agreement on the due date for payment and remains in default not less than five (5) business days after being notified to make such payment;
(b) the Aircraft does not have valid up-to date insurance or is operated in a manner not permitted by the terms of the Insurances;
(c) the Aircraft is used for a use other than as permitted under Clause 4.2;
(d) a Total Loss or Material Damage occurs;
(e) the Aircraft is operated to a country that is a target of Sanctions or considered a war zone;
(f) the Aircraft or the Ultimate Beneficial Owner is or becomes a target of Sanctions, and such condition is not cured within 10 days.
(g) the Aircraft is used to transport any individual who is a target of Sanctions, and such action is not cured within 10 days.
(h) the Aircraft is used in the course of criminal activity (or Jetquity reasonably believes that the Aircraft has been, or is likely to be, so used);
(i) the Ultimate Beneficial Owner is found by a court of first instance to be an accessory to, or a participant in, criminal activity; or
(j) there is any breach by the Customer of its obligations under this Agreement and such breach is not remedied within ten (10) business days of Jetquity giving notice to the Customer of such breach, obligations are terminated if the customer is no longer a fractional owner.
and, for the avoidance of doubt, there will be no refund of the Program Fee upon such termination.
8.2 Without affecting any other right or remedy available to it, the Customer may terminate this Agreement with immediate effect by giving written notice to Jetquity:
(a) at any time prior to the date falling 60 months after the date of this Agreement, in which case no further payments shall be due from the Customer or Jetquity.
and, for the avoidance of doubt, there will be no refund of the Program Fee upon such termination.
8.3 Without affecting any other right or remedy available to it, either party may terminate this Agreement with immediate effect by giving written notice to the other party if:
(a) the other party suspends, or threatens to suspend, payment of its debts or is unable to pay its debts as they fall due or admits inability to pay its debts or is deemed unable to pay its debts;
(b) the other party commences negotiations with all or any class of its creditors with a view to rescheduling any of its debts, or makes a proposal for or enters into any compromise or arrangement with any of its creditors;
(c) a petition is filed, a notice is given, a resolution is passed, or an order is made, for or in connection with the winding up of that other party (being a company);
(d) an application is made to court, or an order is made, for the appointment of an administrator, or a notice of intention to appoint an administrator is given or if an administrator is appointed, over the other party (being a company, partnership or limited liability partnership);
(e) any event occurs, or proceeding is taken, with respect to the other party in any jurisdiction to which it is subject that has an effect equivalent or similar to any of the events mentioned in Clause 8.3(a) to Clause 8.3(d) (inclusive);
(f) the other party suspends or ceases, or threatens to suspend or cease, carrying on all or a substantial part of its business; or
(g) the other party's financial position deteriorates so far as to reasonably justify the opinion that its ability to give effect to the terms of this Agreement is in jeopardy.
9.1 Each party undertakes that it shall not at any time during this Agreement, and for a period of two years after termination or expiry of this Agreement, disclose to any person any confidential information concerning the business, affairs, customers, clients, or suppliers of the other party except as permitted by Clause 9.2.
9.2 Each party may disclose the other party's confidential information:
(a) to its employees, officers, representatives, contractors, subcontractors, or advisers who need to know such information for the purposes of exercising the party's rights or carrying out its obligations under or in connection with this Agreement. Each party shall ensure that its employees, officers, representatives, contractors, subcontractors, or advisers to whom it discloses the other party's confidential information comply with this Clause 9; and
(b) as may be required by law, a court of competent jurisdiction or any governmental or regulatory authority.
9.3 Neither party shall use the other party's confidential information for any purpose other than to exercise its rights and perform its obligations under or in connection with this Agreement.
10.1 This Agreement is personal to the Customer and the Customer shall not assign, transfer, mortgage, declare a trust over or deal in any other manner with any of its rights and obligations under this Agreement without Jetquity’s prior written consent.
10.2 In the event of the death of the Customer (if an individual), this Agreement will be assigned automatically to their estate.
10.3 Jetquity may at any time assign, transfer, mortgage, charge, declare a trust over or deal in any other manner with any or all of its rights under this Agreement.
11.1 Any notice given to a party under or in connection with this Agreement shall be in writing and shall be:
(a) delivered by hand or by courier at its registered office; or
(b) sent by email to the address specified below:
(i) in the case of Jetquity, info@jetquity.com
11.2 Any notice shall be deemed to have been received:
(a) if delivered by hand or by courier, at the time the notice is left at the proper address;
(b) if sent by email, at the time of transmission, or, if this time falls outside business hours in the place of receipt, when business hours resume.
11.3 The service of any proceedings or any documents in any legal action or notices regarding arbitration or other method of dispute resolution may not be given by email but must be delivered by hand or by courier.
No Amendment of this Agreement shall be effective unless it is in writing and signed by the parties (or their authorized representatives).
13.1 A waiver of any right or remedy under this Agreement or by law is only effective if given in writing and shall not be deemed a waiver of any subsequent right or remedy.
13.2 A failure or delay by a party to exercise any right or remedy provided under this Agreement or by law shall not constitute a waiver of that or any other right or remedy, nor shall it prevent or restrict any further exercise of that or any other right or remedy. No single or partial exercise of any right or remedy provided under this Agreement or by law shall prevent or restrict the further exercise of that or any other right or remedy.
The rights and remedies provided under this Agreement are in addition to, and not exclusive of, any rights or remedies provided by law.
15.1 If any provision or part-provision of this Agreement is or becomes invalid, illegal, or unenforceable, it shall be deemed deleted, but that shall not affect the validity and enforceability of the rest of this Agreement.
15.2 If any provision or part-provision of this Agreement is deemed deleted under Clause 15.1 the parties shall negotiate in good faith to agree a replacement provision that, to the greatest extent possible, achieves the intended commercial result of the original provision.
This Agreement constitutes the entire agreement between the parties and supersedes and extinguishes all previous agreements, promises, assurances, warranties, representations, and understandings between them, whether written or oral, relating to its subject matter.
This Agreement may be executed in any number of counterparts, electronic (including signatures) or physical, each of which shall constitute a duplicate original, but all the counterparts shall together constitute the one agreement.
18.1 In the event of a dispute arising out of or relating to this Agreement, the parties shall first seek settlement of that dispute by mediation in accordance with the American Arbitration Association (AAA) Mediation Rules, which Rules are deemed to be incorporated by reference into this clause.
18.2 If the dispute is not settled by mediation within 30 business days of the commencement of the mediation, or such further period as the parties shall agree in writing, the dispute shall be referred to and finally resolved by arbitration under the AAA Rules, which Rules are deemed to be incorporated by reference into this clause.
18.3 The language to be used in the mediation and in the arbitration shall be English.
18.4 In any arbitration commenced pursuant to this Clause 18,
(a) the number of arbitrators shall be one; and
(b) the seat, or legal place, of arbitration shall be New York City.
This Agreement and any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with it or its subject matter or formation shall be governed by and construed in accordance with the law of The State of New York.
20.1 Each party irrevocably agrees that the courts of The State of New York shall have non-exclusive jurisdiction to settle any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with this Agreement or its subject matter or formation.
20.2 The parties irrevocably waive any rights they may have to a trial by jury or the determination of any factual issues by a jury.
Customer acknowledges and agrees that Jetquity’s payment obligations under this Agreement are conditioned on there not occurring an event of force majeure for which market pricing cannot reasonably be predicted or risk managed. Accordingly, Jetquity will have no payment obligation to Customer under this Program Policy in the event that any of the following occurs during the term of this Agreement: (a) the occurrence of any event or series of events in the world that renders aviation liability and aircraft hull insurance for war and terrorism risks to become commercially unavailable for the fractional program covering the Aircraft; or (b) the liquidation in bankruptcy of the manufacturer of the Aircraft’s airframe or engines.
This Agreement has been entered into on the date stated in the Program Policy.
EXCESSIVE USE PARAMETERS
The Aircraft will be flown 800 hours per 12-month period OR 4000 Hours over 5 years, inclusive of the program (the “Assumed Annual Operation”).
For every 100 hours above this limit, there shall be a 2% deduction from the minimum purchase value.
For example, 4099 hours after 5 years would not be subject to adjustments, but 4100 would be.
OPERATIONAL AND MAINTENANCE COVENANTS
1 Operational and maintenance undertakings
1.1 The Client shall ensure that the Fractional Program Manager will:
1.1.1 keep the Aircraft in good and airworthy condition and maintain and repair the Aircraft, the Engines and all Parts in accordance with (i) the Maintenance Program, (ii) all mandatory rules and regulations of the Aviation Authority to the standard required by the Aviation Authority and (iii) any other regulations or requirements necessary in order to enable the Aircraft at any time to obtain a certificate of airworthiness issued by the Aviation Authority plus a valid annual release to service stamp issued by the Maintenance Performer;
1.1.2 maintain or cause to be maintained (in writing and in English) all logbooks, maintenance records, record books and other documents as are required by the Aviation Authority to the standard required by the Aviation Authority or the Maintenance Program to be maintained with respect to the Aircraft;
1.1.3 replace or cause to be replaced promptly any Part of the Aircraft or any Engine in respect of which a Total Loss occurs with a replacement Part or Engine which shall be (i) owned by the Customer free and clear of all Encumbrances and (ii) in such operating condition as, and of equivalent or better value to, the replaced Part or Engine was (or would have been if it had been maintained in accordance with the terms hereof);
1.1.4 make or cause to be made all mandatory or recommended alterations and modifications and additions to the Aircraft and the Engines as may from time to time be required by the Aviation Authority within the time period required by the Aviation Authority or any other relevant authority or the manufacturer of the Aircraft or any Engine;
1.1.5 comply with all mandatory airworthiness directives from time to time issued by the Aviation Authority or any other relevant authority and any modification recommended by the manufacturer of the Aircraft or any Engine in a mandatory service bulletin (unless such mandatory service bulletin is excluded by the Aviation Authority);
1.1.6 ensure that all inspections (in connection with maintenance), services, repairs, overhauls, tests and modifications to be made or carried out to or on the Aircraft are made or carried out by a maintenance performer approved by the Aviation Authority;
1.1.7 not suffer any arrest, detention, exercise of a possessory lien, execution, distress or other legal process to be levied or sued out against the Aircraft and in the event of an arrest, detention, exercise of a possessory lien, execution, distress or other legal process as aforesaid, the Customer shall notify Jetquity immediately and shall take all steps necessary to ensure or procure that the Aircraft is promptly released therefrom;
1.1.8 ensure that such crew and engineers as are employed in connection with the operation and maintenance of the Aircraft have such qualifications and hold such licenses as are required by the Aviation Authority and by all other applicable laws and regulations;
1.1.9 operate the Aircraft or cause the Aircraft to be operated only in the ordinary course of its business and not operate or permit the Aircraft to be operated for testing (other than for maintenance), training (other than of in-house pilots), racing, experimental flying or any other purpose for which it is not designated or reasonably suitable;
1.1.10 at any time upon giving reasonable notice make available to Jetquity for inspection the Manuals and Technical Records and other log books of the Aircraft and all other repair, maintenance, modification, overhaul or other records kept by the Customer or any other person in respect of the Aircraft; and
1.1.11 on request, promptly furnish to Jetquity all such information regarding the operation, maintenance, and condition of the Aircraft as Jetquity may reasonably request.
1.2 The Fractional Program Manager shall promptly notify Jetquity:
1.2.1 of any material alterations in or material modifications or additions to the Aircraft;
1.2.2 of any Encumbrance arising on the Aircraft and exercised over the Aircraft or any part thereof;
1.2.3 (if Jetquity so requests) the location of the Aircraft and of any Engine which is not, for the time being, installed on or attached to the Aircraft.
1.3 The existence of any agreement for maintenance of the Aircraft shall not in any way absolve, negate, reduce, or mitigate the Fractional Program Manager's obligations to maintain the Aircraft in the manner required under this Agreement.
ANNUAL REPORT FORMAT
Aircraft (airframe) Manufacturer
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Aircraft Model
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Aircraft Serial Number
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Aircraft Total Time
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Engine Model
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Engine Serial Numbers
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Engine Total Time
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Engine Cycles
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APU Time
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Recent Inspections:
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Incidents/Accident Report
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