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Investor Presentaiton

- 41 - Jazz trademark or licensing the Jazz trademark to third parties) upon the occurrence of certain events involving: (i) the expiration or termination of the Jazz CPA if, at such time, Jazz is no longer an affiliate of Air Canada; (ii) the occurrence of a change of control pursuant to which Jazz ceases to be an affiliate of Air Canada if, at or prior to such time, the Jazz CPA has expired or has been terminated; or (iii) the sale or transfer of all or substantially all of the assets or business of Jazz to a third party that is not an affiliate of Air Canada if, at or prior to such time, the Jazz CPA has expired or has been terminated. Jazz's Fleet Of the 58 CRJ-100s/200s in Jazz's fleet, 35 are subleased from Air Canada and 23 are subleased from Air Canada Capital Ltd., a subsidiary of Air Canada, with such subleases expiring between 2007 and 2024. All Bombardier CRJ- 705 aircraft currently in Jazz's fleet are subleased from Air Canada Capital Ltd., with such subleases expiring in 2022 and 2024. Of the 26 Dash 8-300s in Jazz's fleet, 19 are owned by Jazz and seven are leased from third parties, with such leases scheduled to expire in 2007. Of the 36 Dash 8-100 aircraft in Jazz's fleet, 34 are Covered Aircraft and two are aircraft operated independently by Jazz to provide charter services. Of such 36 aircraft, 29 are owned by Jazz and seven are leased from Air Canada Capital Ltd., with such leases expiring between 2007 and 2008. The Jazz CPA provides that upon the expiry or termination of the Jazz CPA, other than termination as a result of a default by Jazz or Air Canada, all leases between Jazz and Air Canada (or any affiliate of Air Canada) in respect of Covered Aircraft and spare engines shall automatically be terminated and Air Canada (or the affiliate of Air Canada) shall have the right to repossess the Covered Aircraft and the spare engines. In the event that the Jazz CPA is terminated as a result of Jazz's default, all such leases will not be terminated and Jazz will remain liable for its obligations under the aircraft leases. If the Jazz CPA is terminated as a result of a default by Air Canada, Jazz shall have the right to terminate any of such leases, which right must be exercised concurrently with the termination of the Jazz CPA. Scope Clauses Scope clauses are an industry norm for network carriers operating in conjunction with regional carriers and are usually found in collective agreements of pilot union groups of network carriers. Jazz, like many regional airlines, is restricted by scope provisions in the collective agreement between Air Canada and the ACPA. As a result of the CCAA process, an agreement was reached between Air Canada, Jazz, ACPA and Air Line Pilots Association ("ALPA"), the Jazz pilots association. The agreement, known as the Small Jets Settlement Agreement, modifies the existing scope clauses, provides a process to allocate the current orders of regional jets between Air Canada and Jazz, determines the types and number of jets that can be flown by Jazz and provides mechanisms for resolving disputes over future regional jet additions to either fleet. There are no limits to the number of turboprop aircraft that Jazz may operate. Pursuant to the Small Jets Settlement Agreement and related arbitration decisions: • • • Jazz may maintain a fleet of 58 CRJ-100s/200s and 15 CRJ-705s made up as follows: (i) 33 CRJ-200s and 15 CRJ-705s and (ii) 25 CRJ-100s originally operated by Air Canada, all of which have been transferred to Jazz by way of sublease. If either Air Canada or Jazz seeks to increase the fleet beyond what is outlined above, they must notify ACPA and ALPA in writing of the proposed increase and then meet with ACPA and ALPA to discuss and, if possible, agree on the increase and any terms in connection therewith. Where no agreement is reached, the matter is referred to a mediator, and, should the mediation fail, an arbitrator who will then make a decision, taking into account the business case put forward by the respective parties and the impact of the matter at hand on the respective pilot groups. Jazz may not operate the CRJ-705 aircraft if configured in excess of 75 seats, inclusive of all classes. As was previously the case, Air Canada must ensure that a minimum of ASMS is flown by Air Canada compared to the ASMs flown by Jazz.
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