Reserve Rate. 3.1 In addition to installments of Rent, Lessee shall pay to Lessor the Reserve Rate as follows: (a) by way of an Airframe maintenance accrual, the sum of {***} hours check until the 12,000 hours check shall have been executed. After execution of such check, 100% (one hundred percent) of the Airframe Maintenance Accrual shall be accrued for the 24,000 hours check for each Flight Hour the Aircraft is operated during the Term ("Airframe Maintenance Accrual"); and (b) by way of an Engine maintenance accrual, in respect of each Engine the sum of {***} for each Flight Hour operated by each Engine during the Term ("Engine Maintenance Accrual"). The percentage of the various maintenance activities shall be agreed between the parties after signing of this Agreement; and (c) by way of a landing gear maintenance accrual, the sum of {***} for each Cycle operated by the landing gear during the Term ("Landing Gear Maintenance Accrual"). The Airframe, Engine and Landing Gear Maintenance Accruals accruing in any Rental Period shall be paid by Lessee to Lessor not later than ten (10) days after the end of the calendar month in which such Rental Period shall end; provided that Lessee shall be relieved of its obligation to pay the Engine Maintenance Accrual or Landing Gear Maintenance Accrual with respect to any Engine or Landing Gear, as the case may be, during any period that an Aircraft Maintenance Agreement is in effect with respect to such Engine or Landing Gear. Concurrently with the payment thereof, Lessee shall report to Lessor (in accordance with Article 7.1 (e)) the number of Flight Hours and Cycles accumulated in respect of the period for which payment is being made. The Reserve Rate will be subject to adjustment every six (6) months during the Term by reference for 65% to the Employment and Earnings Index for U.S.A. labor cost average hourly earnings of production (Aircraft Equipment) SIC 3728, table C-2 and for 35% to the Producer Price Index for U.S.A. material cost commodity groupings (Machinery and Equipment) Code 11/table 6. In addition the Engine Maintenance Accrual, if any, will be subject to adjustment every six (6) months during the Term having regard to the Engine Manufacturer recommendations, industry experience and any change in the operational environment of the Aircraft. Any Reserve Rate shall, if requested by either Lessor or (unless an Event of Default shall have occurred and be continuing) Lessee, be adjusted to take into account any changes in the maintenance intervals upon which Reserve Rates are based. 3.2 Maintenance Accruals as defined in paragraph 3.1 above and received by Lessor shall respectively be credited to funds (collectively "Maintenance Funds") to be known as the "Airframe Maintenance Fund", the "Engine Maintenance Fund" and the "Landing Gear Maintenance Fund" which funds shall reduce as monies are released to Lessee therefrom in accordance with Article 7.4.
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Reserve Rate. 3.1 In addition to installments of Rent, Lessee shall pay to Lessor the Reserve Rate as follows:
(a) by way of an Airframe maintenance accrual, the sum of {[***} ] of which [***] shall be accrued for the 12,000 hour check and [***] shall be accrued for the 24,000 hours check until the 12,000 hours check shall have been executed. After execution of such check, 100% (one hundred percent) of the Airframe Maintenance Accrual shall be accrued for the 24,000 hours check for each Flight Hour the Aircraft is operated during the Term ("Airframe Maintenance Accrual"); and
(b) by way of an Engine maintenance accrual, in respect of each Engine the sum of {[***} ] for each Flight Hour operated by each Engine during the Term ("Engine Maintenance Accrual"). The percentage of the various maintenance activities shall be agreed between the parties after signing of this Agreement; and
(c) by way of a landing gear maintenance accrual, the sum of {[***} ] for each Cycle operated by the landing gear during the Term ("Landing Gear Maintenance Accrual"). The Airframe, Engine and Landing Gear Maintenance Accruals accruing in any Rental Period shall be paid by Lessee to Lessor not later than ten (10) days after the end of the calendar month in which such Rental Period shall end; provided that Lessee shall be relieved of its obligation to pay the Engine Maintenance Accrual or Landing Gear Maintenance Accrual with respect to any Engine or Landing Gear, as the case may be, during any period that an Aircraft Maintenance Agreement is in effect with respect to such Engine or Landing Gear. Concurrently with the payment thereof, Lessee shall report to Lessor (in accordance with Article 7.1 (e7.1(e)) the number of Flight Hours and Cycles accumulated in respect of the period for which payment is being made. The Reserve Rate will be subject to adjustment every six (6) months during the Term by reference for 65% to the Employment and Earnings Index for U.S.A. labor cost average hourly earnings of production (Aircraft Equipment) SIC 3728, table C-2 and for 35% to the Producer Price Index for U.S.A. material cost commodity groupings (Machinery and Equipment) Code 11/table 6. In addition the Engine Maintenance Accrual, if any, will be subject to adjustment every six (6) months during the Term having regard to the Engine Manufacturer recommendations, industry experience and any change in the operational environment of the Aircraft. Any Reserve Rate shall, if requested by either Lessor or (unless an Event of Default shall have occurred and be continuing) Lessee, be adjusted to take into account any changes in the maintenance intervals upon which Reserve Rates are based.
3.2 Maintenance Accruals as defined in paragraph 3.1 above and received by Lessor shall respectively be credited to funds (collectively "Maintenance Funds") to be known as the "Airframe Maintenance Fund", the "Engine Maintenance Fund" and the "Landing Gear Maintenance Fund" which funds shall reduce as monies are released to Lessee therefrom in accordance with Article 7.4.Article
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