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Sample Business ContractsHome: Sample Business Contracts:
AIRBUS A320 PURCHASE AGREEMENT
Dated as of April 20, 1999
between
AVSA. S.A.R.L.,
SELLER
and
NEW AIR CORPORATION
BUYER
i
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CONTENTS
CLAUSES TITLE
0 DEFINITIONS
1 SALE AND PURCHASE
2 SPECIFICATION
3 PRICE
4 PRICE REVISION
5 PAYMENT TERMS
6 INSPECTION; PLANT REPRESENTATIVES
7 CERTIFICATION
8 BUYERS TECHNICAL ACCEPTANCE
9 DELIVERY
10 EXCUSABLE DELAY AND TOTAL LOSS
11 INEXCUSABLE DELAY
12 WARRANTIES AND SERVICE LIFE POLICY
13 PATENT AND COPYRIGHT INDEMNITY
14 TECHNICAL DATA AND DOCUMENTATION
15 FIELD ASSISTANCE
16 TRAINING AND TRAINING AIDS
17 EQUIPMENT SUPPLIER PRODUCT SUPPORT
18 BUYER FURNISHED EQUIPMENT AND DATA
ii
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CONTENTS
CLAUSES TITLE
19 INDEMNITIES AND INSURANCE
20 ASSIGNMENTS AND TRANSFERS
21 TERMINATION EVENTS
22 MISCELLANEOUS PROVISIONS
iii
<Page>
CONTENTS
EXHIBITS
EXHIBIT A STANDARD SPECIFICATION
APPENDIX I TO SCNs
EXHIBIT A
EXHIBIT B SCN FORM
EXHIBIT C SELLER SERVICE LIFE POLICY
EXHIBIT D CERTIFICATE OF ACCEPTANCE
EXHIBIT E BILL OF SALE
EXHIBIT F TECHNICAL DATA AND DOCUMENTATION
APPENDIX I TO LICENSE FOR USE OF THE PERFORMANCE ENGINEER'S
EXHIBIT F PROGRAM
APPENDIX 2 TO LICENSE FOR USE OF CD-ROM
EXHIBIT F
EXHIBIT G AIRFRAME PRICE REVISION FORMULA
EXHIBIT H INTERNATIONAL AERO ENGINES PRICE REVISION FORMULA
iv
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0 - DEFINITIONS
For all purposes of this agreement, except as otherwise expressly provided
or unless the context otherwise requires, the following terms will have
the following meanings:
A320 ADDITIONAL OPTION AIRCRAFT -- up to twenty-five (25) A320-200 model
aircraft other than Firm Aircraft and Option Aircraft that may be
purchased by the Seller and sold to the Buyer pursuant to this Agreement,
together with all components, equipment, parts and accessories installed
in or on such aircraft and the Propulsion Systems installed thereon upon
delivery.
AFFILIATE -- with respect to any person or entity, any other person or
entity directly or indirectly controlling, controlled by or under common
control with such person or entity, not including any of the Associated
Contractors.
AGREEMENT -- this Airbus A320 Purchase Agreement, including all exhibits
and appendixes attached hereto, as the same may be amended or modified and
in effect from time to time.
AIRCRAFT -- any or all of the Firm Aircraft or Option Aircraft that have
been converted to a firm order, to be sold by the Seller and purchased by
the Buyer pursuant to this Agreement, together with all components,
equipment, parts and accessories installed in or on such aircraft and the
Propulsion Systems installed thereon on delivery.
AIRFRAME -- any Aircraft, excluding the Propulsion Systems therefor.
AIRFRAME PRICE REVISION FORMULA -- the airframe price revision formula set
forth in Exhibit G hereto.
ASCO -- Airbus Service Company, Inc., a corporation organized and existing
under the Laws of Delaware, having its registered office located at 198
Van Buren Street, Suite 300, Herndon, VA 20170, or any successor thereto.
ASSOCIATED CONTRACTORS -- collectively, the members and, for certain
purposes, subcontractors of the Manufacturer from time to time, which
members presently are:
(1) AEROSPATIALE, SOCIETE NATIONALE INDUSTRIELLE
("Aerospatiale"), whose principal office is at
37, Boulevard de Montmorency
75016 Paris
France
2
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(2) BRITISH AEROSPACE (OPERATIONS) LTD, whose principal office is
at
Warwick House
P0 Box 87
Farnborough Aerospace Centre
Farnborough
Hants GU14 6YU
England
(3) CONSTRUCCIONES AERONAUTICAS, S.A., whose principal office is
at
404 Avenida de Aragon
28022 Madrid
Spain
(4) DAIMLERCHRYSLER AEROSPACE AIRBUS, GmbH ("DASA"),
whose principal office is at
Kreetslag 10
Postfach 95 01 09
21111 Hamburg
Germany
ATA SPECIFICATION 100 -- the specification issued by the Air Transport
Association of America relating to manufacturers' technical data.
ATA SPECIFICATION 101 -- the specification issued by the Air Transport
Association of America relating to ground equipment technical data
ATA SPECIFICATION 102 -- the specification issued by the Air Transport
Association of America relating to software programs.
ATA SPECIFICATION 200 -- the specification issued by the Air Transport
Association of America relating to integrated data processing.
ATA SPECIFICATION 300 -- the specification issued by the Air Transport
Association of America relating to the packaging of spare parts shipments.
ATA SPECIFICATION 2000 -- the specification issued by the Air Transport
Association of America relating to an industry-wide communication system
linking suppliers and users for the purposes of spares provisioning,
purchasing, order administration, invoicing and information or data
exchange.
ATA SPECIFICATION 2100 -- the specification issued by the Air Transport
Association of America relating to the standards for the presentation of
technical information prepared as digital media (magnetic tape or CD ROM).
3
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AVIATION AUTHORITY -- when used with respect to any jurisdiction, the
government entity that, under the laws of such jurisdiction, has control
over civil aviation or the registration, airworthiness or operation of
civil aircraft in such jurisdiction.
BALANCE OF THE FINAL CONTRACT PRICE -- means the amount payable by the
Buyer to the Seller on the Delivery Date for an Aircraft after deducting
from the Final Contract Price for such Aircraft the amount of all
Predelivery Payments received by the Seller from the Buyer in respect of
such Aircraft on or before the Delivery Date for such Aircraft.
BASE PRICE -- for any Aircraft, Airframe or Propulsion Systems, as more
completely defined in Clause 3.1 of this Agreement.
BUYER FURNISHED EQUIPMENT (BFE) -- for any Aircraft, all the items of
equipment that will be furnished by the Buyer and installed in the
Aircraft by the Seller, as defined in the Specification.
CUSTOMER ORIGINATED CHANGES (COC) -- Buyer-originated data that are
introduced into Seller's Technical Data and Documentation, as more
completely set forth in Clause 14.4.3 of this Agreement.
DELIVERY -- the transfer of title to the Aircraft from the Seller to the
Buyer, in accordance with Clause 9.
DELIVERY DATE -- the date on which Delivery will occur.
DELIVERY LOCATION -- the facilities of the Seller at the location of final
assembly of the Aircraft, which is currently at Aerospatiale's works in
Toulouse, France, for the A320 model aircraft, and at DASA's works in
Hamburg, Germany, for the A319 and A321 model aircraft.
DEVELOPMENT CHANGES -- as defined in Clause 2.1.3 of this Agreement.
DGAC -- the Direction Generale de l'Aviation Civile of France, or any
successor thereto.
EXCUSABLE DELAY -- delay in delivery or failure to deliver an Aircraft due
to causes specified in Clause 10.1 of this Agreement.
EXPORT AIRWORTHINESS CERTIFICATE -- an export certificate of airworthiness
issued by the Aviation Authority of the Delivery Location.
FAA -- the U.S. Federal Aviation Administration, or any successor thereto.
FINAL CONTRACT PRICE -- as defined in Clause 3.2 of this Agreement.
4
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FIRM AIRCRAFT -- any or all of the twenty-five (25) firm A320-200 aircraft
for which the delivery schedule is set forth in Clause 9.1.1 hereof to be
sold by the Seller and purchased by the Buyer pursuant to this Agreement,
together with all components, equipment, parts and accessories installed
in or on such aircraft and the Propulsion Systems installed thereon upon
delivery.
FREE CARRIER (FCA) -- defined in the April 1990 edition of publication No.
460, published by the International Chamber of Commerce.
IN-HOUSE WARRANTY -- as referred to in Clause 12.1.7 of this Agreement.
IN-HOUSE WARRANTY LABOR RATE -- as defined in Clause 12.1.7(v) of this
Agreement.
INTERFACE PROBLEM -- as defined in Clause 12.4.1 of this Agreement.
JAA -- Joint Aviation Authorities or any successor thereto.
LBA -- Luftfahrt-Bundesamt of Germany or any successor thereto.
LIBOR -- for each stated interest period, the rate determined on the basis
of the offered rates for deposits in US dollars, which appear on the
Reuters Screen LIBO Page as of 11:00 a.m., London time, on the day that is
two (2) days (other than a Saturday, Sunday or a day that is a legal
holiday or a day on which banking institutions are authorized to close in
the City of New York, New York, London, England, or Paris, France) before
the first day of an interest period. If at least two (2) such offered
rates appear on the Reuters Screen LIBO Page, the rate for that interest
period will be the arithmetic mean of such offered rates rounded to the
nearest basis point (0.5 rounds to 1). If only one (1) offered rate
appears, the rate for that interest period will be "LIBOR" as quoted by
National Westminster Bank, plc. "Reuters Screen LIBO Page" means the
display designated as page "LIBO" on the Reuters Monitor Money Rates
Service (or any successor to such page or service).
MANUFACTURER -- Airbus Industrie, a "GROUPEMENT D'INTERET ECONOMIQUE"
established under "ORDONNANCE" No. 67-821 dated September 23, 1967, of the
Republic of France.
OPTION AIRCRAFT -- any or all of the twenty-five (25) A320-200 aircraft on
option order, which may be sold by the Seller and purchased by the Buyer
pursuant to this Agreement, together with all components, equipment, parts
and accessories installed in or on such aircraft and the Propulsion
Systems installed thereon upon delivery.
PREDELIVERY PAYMENT -- any payment made against the Final Contract Price
of an Aircraft according to the schedule set forth in Clause 5.2.3 of this
Agreement.
5
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PREDELIVERY PAYMENT REFERENCE PRICE -- as defined in Clause 5.2.2 of this
Agreement.
PROPULSION SYSTEMS -- the two (2) International Aero Engines V2527-A5
powerplants installed on an Aircraft at delivery, each composed of the
powerplant (as such term is defined in Chapters 70-80 of ATA Specification
100 (Revision 21), but limited to the equipment, components, parts and
accessories included in the powerplant, as so defined) that have been sold
to the Manufacturer by International Aero Engines.
PROPULSION SYSTEMS PRICE REVISION FORMULA -- the Propulsion Systems price
revision formula set forth in Exhibit H hereto.
READY FOR DELIVERY -- the time when (i) the Technical Acceptance Process
has been successfully completed and (ii) the Export Airworthiness
Certificate has been issued.
REFERENCE PRICE -- as set forth in Clause 3.1.2 of the Agreement.
SCHEDULED DELIVERY MONTH -- as defined in Clause 9.1.1 of the Agreement.
SCN PREDELIVERY PAYMENT -- any payment made against the SCN price
according to the schedule set forth in Clause 5.2.5 of this Agreement.
SERVICE LIFE POLICY -- as referred to in Clause 12.2 of this Agreement.
SPECIFICATION -- the Standard Specification as amended by the SCNs set
forth in Appendix 1 to Exhibit A hereto as may be further amended or
modified in accordance with this Agreement.
SPECIFICATION CHANGE NOTICE (SCN) -- an agreement in writing between the
Seller and the Buyer amending the Specification pursuant to Clause 2.
STANDARD SPECIFICATION -- the A320 standard specification document number
D.000.01000, Issue 5, dated January 30, 1998, published by the
Manufacturer, which includes an MTOW of 73.5 metric tons, a copy of which
is annexed as Exhibit A hereto.
SUPPLIER -- any supplier of Supplier Parts.
SUPPLIER PARTS -- any component, equipment, accessory or part installed in
an Aircraft at the time of Delivery thereof, not including the Propulsion
Systems or Buyer Furnished Equipment, for which there exists a Supplier
Product Support Agreement.
6
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SUPPLIER PRODUCT SUPPORT AGREEMENT -- an agreement between the Seller and
a Supplier containing enforceable and transferable warranties (and in the
case of landing gear suppliers, service life policies for selected
structural landing gear elements).
TECHNICAL DATA AND DOCUMENTATION -- as set forth in Exhibit F hereto.
TERMINATION EVENT -- as defined in Clause 21.1 of this Agreement.
TRAINING CONFERENCE -- as defined in Clause 16.4.1 of this Agreement.
WARRANTED PART -- as defined in Clause 12.1.1 of this Agreement.
WARRANTY CLAIM -- a defined in Clause 12.1.6(v) of this Agreement.
WORKING DAY -- with respect to any action to be taken hereunder, a day
other than a Saturday, Sunday or other day designated as a holiday in the
jurisdiction in which such action is required to be taken.
The terms "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement, and not a particular Clause thereof. The
definition of a singular in this Clause will apply to plurals of the same
words.
Technical and trade items not otherwise defined herein will have the
meanings assigned to them as generally accepted in the aircraft
manufacturing industry.
7
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1 - SALE AND PURCHASE
The Seller will cause to be manufactured and will sell and deliver, and
the Buyer will buy and take delivery of, the Aircraft at the Delivery
Location, subject to the terms and conditions in this Agreement.
8
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2 - SPECIFICATION
2.1 SPECIFICATION DOCUMENTS
The Aircraft will be manufactured in accordance with the Specification.
The Specification may be further modified from time to time pursuant to
the provisions of this Clause 2.
2.1.2 SPECIFICATION CHANGE NOTICE
The Specification may be amended by written agreement between the parties
in an SCN. Each SCN will be substantially in the form set out in Exhibit B
hereto and will set out in detail the particular change to be made to the
Specification and the effect, if any, of such change on design,
performance, weight, time of delivery of the Aircraft, and text of the
Specification. An SCN may result in an adjustment of the Base Price.
2.1.3 DEVELOPMENT CHANGES
The Specification may also be amended by the Seller without the Buyer's
consent when changes to be incorporated in the Specification do not
adversely affect price, time of delivery, weight or performance of the
Aircraft, interchangeability or replaceability requirements under the
Specification. These changes are hereinafter defined as "Development
Changes."
2.1.4 INCONSISTENCY
In the event of any inconsistency between the Specification set forth in
Exhibit A hereto and any other part of this Agreement, the Specification
will be superseded to the extent of such inconsistency.
2.2 PROPULSION SYSTEMS
The Aircraft will be equipped with the Propulsion Systems.
2.3 CUSTOMIZATION MILESTONES CHART
The Seller will provide the Buyer with a Customization Milestones Chart.
The Customization Milestones Chart will state the lead times before
Delivery needed for agreeing on items requested by the Buyer from the
specification changes catalogs made available to the Seller.
9
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3 - PRICE
3.1 BASE PRICE OF THE AIRCRAFT
The Base Price of each Aircraft is the sum of:
(i) the Base Price of the Airframe, and
(ii) the Base Price of the Propulsion Systems.
3.1.1 BASE PRICE OF THE AIRFRAME
3.1.1.1 The Base Price of the Airframe will be the sum of the Base Prices set
forth below in (i) and (ii):
(i) the Base Price of the Standard Airframe, as defined in the
Standard Specification (excluding Buyer Furnished Equipment,
Propulsion Systems and SCNs), at delivery conditions
prevailing in January 1999, which is:
US $ [****]
(US dollars--[****], and
(ii) the Base Price of any and all SCNs mutually agreed upon prior
to the signature of this Agreement and set forth in Appendix
1 to Exhibit A hereto, at delivery conditions prevailing in
January 1999, which is:
US $ [****]
(US dollars--[****].
3.1.1.2 The Base Price of the Airframe of each Aircraft will be revised to the
Delivery Date of such Aircraft in accordance with the Airframe Price
Revision Formula.
3.1.2 BASE PRICE OF THE PROPULSION SYSTEMS
The Base Price of a set of two (2) IAE V2527-A5 Propulsion Systems, at
delivery conditions prevailing in January 1999, is:
----------
[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
10
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US $ [****]
(US dollars--[****].
Said Base Price has been calculated from the Reference Price
indicated by International Aero Engines of US $ [****] (US
dollars--[****] in accordance with economic conditions
prevailing in September 1996.
Said Reference Price is subject to adjustment to the Delivery Date
in accordance with the International Aero Engines Price Revision
Formula set forth in Exhibit H hereto.
3.1.2.3 VALIDITY OF PROPULSION SYSTEMS PRICES
It is understood that the prices and Price Revision Formula cited above
for the Propulsion Systems and related equipment are based on
information received from International Aero Engines and remain subject
to any modification that might be communicated by International Aero
Engines to the Manufacturer, the Seller and/or the Buyer.
3.2 FINAL CONTRACT PRICE
The Final Contract Price of an Aircraft will be the sum of:
(i) the Base Price of the Airframe constituting a part of such
Aircraft, as adjusted to the Delivery Date of such Aircraft in
accordance with the Airframe Price Revision Formula;
(ii) the price (as of delivery conditions prevailing in January 1999)
of any SCNs entered into after the date of execution of this
Agreement, as adjusted to the Delivery Date of such Aircraft in
accordance with Subclause 4.1 of this Agreement;
(iii) the Reference Price of the installed Propulsion Systems
constituting a part of such Aircraft, as adjusted to the
Delivery Date in accordance with the Propulsion Systems Price
Revision Formula; and
(iv) any other amount resulting from any other provisions of this
Agreement and/or any other written agreement between the Buyer
and the Seller relating to the Aircraft.
----------
[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
11
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3.3 TAXES, DUTIES AND IMPOSTS
3.3.1 The Seller will bear and pay the amount of any and all taxes, duties,
imposts or similar charges of any nature whatsoever that are (i) imposed
upon the Buyer, (ii) imposed upon the Seller with an obligation on the
Buyer to withhold or collect the amount thereof from the Seller or (iii)
imposed upon the Buyer with an obligation on the Seller to withhold or
collect such amount from the Buyer, and that are levied, assessed,
charged or collected for or in connection with the fabrication,
manufacture, modification, assembly, sale, delivery, use of or payment
under this Agreement for any Aircraft, component, accessory, equipment
or part delivered or furnished hereunder, provided such taxes, duties,
imposts or similar charges have been promulgated and are enforceable
under the laws of the country of the Delivery Location.
3.3.2 The Buyer will bear and pay the amount of any and all taxes, duties,
imposts or similar charges of any nature whatsoever that are (i) imposed
upon the Seller, (ii) imposed upon the Buyer with an obligation on the
Seller to collect the amount thereof for the Buyer or (iii) imposed upon
the Seller with an obligation for the Buyer to withhold such amount from
the Seller, and that are levied, assessed, charged or collected for or
in connection with the fabrication, manufacture, modification, assembly,
sale, delivery or use of or payment under this Agreement for any
Aircraft, component, accessory, equipment or part delivered or furnished
hereunder, provided such taxes, duties, imposts or similar charges have
been levied, assessed, charged or collected under laws promulgated and
enforceable in countries other than the country of the Delivery
Location.
3.3.3 The Seller will arrange for the exportation of the Aircraft from the
country of the Delivery Location and will pay any customs duties, taxes
and fees required to be paid with respect to such exportation of the
Aircraft.
3.3.4 The Buyer will arrange for the importation of the Aircraft into any
country or jurisdiction and will pay any customs duties, taxes and fees
required to be paid with respect to such importation of the Aircraft.
12
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4 - PRICE REVISION
4.1 AIRFRAME PRICE REVISION FORMULA
The Base Price of the Airframe is subject to revision up to and
including the Delivery Date of such Aircraft, in accordance with the
Airframe Price Revision Formula.
4.2 PROPULSION SYSTEMS PRICE REVISION FORMULA
The Reference Price of the Propulsion Systems will be revised to the
Delivery Date corresponding to the Aircraft on which the Propulsion
Systems are installed, in accordance with the Propulsion Systems Price
Revision Formula.
13
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5 - PAYMENT TERMS
5.1 The Buyer will pay the Predelivery Payments, the balance or the Final
Contract Price and any other amount due hereunder in immediately
available funds in United States dollars to Credit Lyonnais, New York,
for transfer by Credit Lyonnais to the Seller's account with Credit
Lyonnais at 1, Esplanade Compans Caffarelli, 31000 Toulouse, France, or
to such other account as may be designated by the Seller.
5.2 Predelivery Payments
5.2.1 Predelivery Payments will be paid by the Buyer to the Seller for each
Aircraft and will, in the aggregate, amount to [****] of the
Predelivery Payment Reference Price of the Aircraft detained below
in Clause 5.2.2.
5.2.2 The Buyer will pay Predelivery Payments to the Seller calculated on the
Predelivery Payment Reference Price of each Aircraft. The Predelivery
Payment Reference Price is defined as:
A = Pb (1 + 0.04N)
where
A = the Predelivery Payment Reference Price for Aircraft to be
delivered in calendar year T.
Pb = the Base Price of the Aircraft as defined in Clause 3 above.
N = (T - 1999).
T = the year of delivery of the relevant Aircraft.
----------
[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
14
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5.2.3 Predelivery Payments will be paid according to the following schedule:
<Table>
<Caption>
PERCENTAGE OF AIRCRAFT
PREDELIVERY PAYMENT
PAYMENT DATE REFERENCE PRICE
------------ ---------------
<S> <C> <C>
No later than the first Working Day of the following
months:
[****]
--------------------------------------------------------------------------------
TOTAL PAYMENT PRIOR TO DELIVERY [****]
</Table>
5.2.4 If any Predelivery Payment is not received on the due date specified in
Clause 5.2.3, then, in addition to any other rights and remedies
available to the Seller, the Seller will have the right to set back the
Scheduled Delivery Month by a period of one (1) month for each aggregate
of thirty (30) days of delay in such payments.
Furthermore, if such delays in payment exceed sixty (60) days in the
aggregate, in addition to any other rights the Seller may have under
Clause 21, the Seller will have no obligation to deliver the Aircraft
within the Scheduled Delivery Month as modified pursuant to the
preceding paragraph. Upon receipt of the full amount of all late
Predelivery Payments, together with interest due under Clause 5.6,
provided that the Seller has not exercised its right of termination
under Clause 21, the Seller will inform the Buyer of a new Scheduled
Delivery Month consistent with Seller's other commitments and production
capabilities.
----------
[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
15
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5.2.5 SCN PREDELIVERY PAYMENTS
The Seller will be entitled to request SCN Predelivery Payments for each
SCN executed after signature of this Agreement.
(i) For each SCN executed before the first day of the eighteenth
(18th) month before the Scheduled Delivery Month, the Buyer will
make an SCN Predelivery Payment equal to fifteen percent (15%)
of the SCN price. This SCN Predelivery Payment will be paid on
the first day of the twelfth (12th) month before the Scheduled
Delivery Month.
(ii) For each SCN executed after the first day of the eighteenth
month (18th) and before the first day of the twelfth (12th)
month before the Scheduled Delivery Month, this SCN Predelivery
Payment will amount to thirty percent (30%) of the SCN price,
and for each SCN executed after the first day of the twelfth
(12th) month and before the first day of the ninth (9th) month
before the Scheduled Delivery Month this payment will amount to
fifty percent (50%) of the SCN price. These payments will be
paid on the first day of the sixth (6th) month before the
Scheduled Delivery Month.
(iii) Each of the above SCN Predelivery Payments paid by the Buyer
will be credited against the Final Contract Price of the
relevant Aircraft.
5.3 DEPOSIT
The Seller acknowledges that it has already received from the Buyer the
sum of US$ [****] (US dollars--[****]), which represents a deposit of
US$ [****] (US dollars--[****]) for each Firm Aircraft and of US $[****]
(US dollars--[****]) for each Option Aircraft. The deposit paid with
respect to each particular Aircraft will be credited without interest
against the first Predelivery Payment for such Aircraft.
5.4 PAYMENT OF BALANCE OF THE FINAL CONTRACT PRICE
Concurrently with the delivery of each Aircraft, the Buyer will pay to
the Seller the Balance of the Final Contract Price for such Aircraft.
The Seller's receipt of the full amount of all Predelivery Payments and
of the Balance of the Final Contract Price, including any amounts due
under Clause 5.6, will be a condition precedent to the Seller's
obligation to deliver such Aircraft.
----------
[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
16
<Page>
5.5 PAYMENT OF OTHER AMOUNTS
5.5.1 Unless otherwise expressly provided for herein, any payments due
hereunder or in respect of an Aircraft in addition to those referred to
in Clauses 5.2 and 5.4 above will be paid by the Buyer concurrently with
the delivery of the corresponding Aircraft or, if the Seller elects to
invoice such amounts after delivery of such Aircraft, within one (1)
month after the invoice date.
5.5.2 Notwithstanding any other rights the Seller may have at contract or at
law, the Buyer and the Seller hereby agree that should any amount
(whether under this Agreement or under any other agreement between the
Buyer and the Seller and whether at the stated maturity of such amount,
by acceleration or otherwise) become due and payable by the Buyer or its
Affiliates, and not be paid in full in immediately available funds on
the date due, then the Seller will have the right to debit and apply, in
whole or in part, the unused amount of any credit made available by the
Seller to the Buyer against such unpaid amount. The Seller will promptly
notify the Buyer in writing after such debiting and application.
5.6 OVERDUE PAYMENTS
If any payment due the Seller is not received by the Seller on the date
or dates as agreed on between the Buyer and the Seller, the Seller will
have the right to claim from the Buyer and the Buyer will promptly pay
to the Seller on receipt of such claim interest at the rate of one and
one-half percent (1.5%) per month on the amount of such overdue payment,
to be calculated from and including the due date of such payment to (but
excluding) the date such payment is received by the Seller. Interest due
for any period less than one (I) month will be prorated The Seller's
right to receive such interest will be in addition to any other rights
of the Seller hereunder or at law.
5.7 REFUND OF PREDELIVERY PAYMENTS
The Buyer will have no right to any refund of any deposit. Predelivery
Payment or SCN Predelivery Payment received by the Seller, [****].
5.8 PROPRIETARY INTEREST
Notwithstanding any provision of law to the contrary, the Buyer will
not, by virtue of anything contained in this Agreement (including,
without limitation, any Predelivery Payments hereunder, or any
designation or identification by the Seller of a particular Aircraft as
an Aircraft to which any of the provisions of this Agreement refers)
acquire any proprietary,
----------
[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
17
<Page>
insurable or other interest whatsoever in any Aircraft before Delivery
of and payment for such Aircraft, as provided in this Agreement.
5.9 PAYMENT IN FULL
The Buyer's obligation to make payments to the Seller hereunder will not
be affected by and will be determined without regard to any setoff.
counterclaim, recoupment, defense or other right that the Buyer may have
against the Seller or any other person and all such payments will be
made without deduction or withholding of any kind. The Buyer will ensure
that the sums received by the Seller under this Agreement will be equal
to the full amounts expressed to be due the Seller hereunder, without
deduction or withholding on account of and free from any and all taxes,
levies, imposts, duties or charges of whatever nature, except that if
the Buyer is compelled by law to make any such deduction or withholding
the Buyer will pay such additional amounts as may be necessary so that
the net amount received by the Seller after such deduction or
withholding will equal the amounts that would have been received in the
absence of such deduction or withholding.
18
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6 - INSPECTION: PLANT REPRESENTATIVES
6.1 INSPECTION PROCEDURES
6.1.1 All work to be carried out on the Aircraft and all materials and parts
thereof will at all reasonable times during business hours be open to
inspection by duly authorized representatives of the Buyer or its
designee at the respective works of the Associated Contractors and, if
possible, at the works of their respective subcontractors to carry out
the aforesaid inspection. Such representatives will have access to such
relevant technical data as are reasonably necessary for this purpose
(except that, if access to any part of the respective works where
construction is in progress or materials or parts are stored is
restricted for security reasons, the Associated Contractors will be
allowed a reasonable time to make the items available for inspection
elsewhere). The actual detailed inspection of the Aircraft, materials
and parts thereof will take place only in the presence of the respective
inspection department personnel of the Associated Contractors or their
subcontractors. The procedures for such inspections will be agreed on
with the Buyer before any inspection.
6.1.2 All inspections, examinations and discussions with the Seller's, the
Associated Contractors' or their respective subcontractors engineering
or other personnel by the Buyer and its said representatives will be
performed in such a manner as not to delay or binder the work to be
carried out on the Aircraft or the proper performance of this Agreement.
In no event will the Buyer or its representatives be permitted to
inspect any aircraft other than the Aircraft.
6.2 REPRESENTATIVES
For the purposes of Clause 6.1 above, starting with the date of this
Agreement until Delivery of the last Aircraft, the Seller will furnish
free-of-charge adequate secretarial assistance and suitable space,
office equipment and facilities in or conveniently located with respect
to the Delivery Location for the use of not more than four (4)
representatives of the Buyer during the aforementioned period. The
Seller will provide telecommunications facilities at the Buyer's cost to
be invoiced on a monthly basis.
19
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7 - CERTIFICATION
Except as set forth in this Clause 7, the Seller will not be required to
obtain any other certificate or approval with respect to the Aircraft.
7.1 TYPE CERTIFICATION
The Aircraft has been type certificated under JAA procedures for joint
certification in the transport category. The Seller will obtain or cause
to be obtained the relevant type certificate (the "Type Certificate") to
allow the issuance of the Export Airworthiness Certificate.
7.2 EXPORT AIRWORTHINESS CERTIFICATE
Subject to the provisions of Clause 7.3, each Aircraft will be delivered
to the Buyer with the Certificate of Airworthiness for Export issued by
the DGAC, and in a condition enabling the Buyer (or an eligible person
under then applicable law) to obtain at the time of Delivery a Standard
Airworthiness Certificate issued pursuant to Part 21 of the US Federal
Aviation Regulations and a Certificate of Sanitary Construction issued
by the US Public Health Service Food and Drug Administration and in a
condition permitting the Buyer to operate such Aircraft under Part 121
of said Regulations, or any other successor certificate required under
US Federal Aviation Regulations. However, the Seller will have no
obligation, whether before, at or after Delivery of any Aircraft, to
make any alterations to such Aircraft to enable such Aircraft to meet
FAA requirements for specific operation on the Buyers routes, except as
may be provided for in this Agreement.
7.3 COST OF SCNs FOR EXPORT CERTIFICATION
7.3.1 If, any time before the date on which the Aircraft is Ready for
Delivery, any law or regulation is enacted, promulgated, becomes
effective and/or an interpretation of any law or regulation is issued
that requires any change to the Specification for the purposes of
obtaining the Export Airworthiness Certificate (a "Change in Law"), the
Seller will make the required modification and the parties hereto will
sign an SCN that specifies the effects, if any, on the guaranteed
performances, weights, interchangeability, Delivery Date, price of the
Aircraft and text of the Specification.
7.3.2 The Seller will as far as practicable (in its sole discretion and
without prejudice to Clause 7.3.3 (ii)) take into account the
information available to it concerning any proposed law, regulation or
interpretation that could become a Change in Law, in order to minimize
the costs of changes to the
20
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Specification as a result of such proposed law, regulation or
interpretation becoming effective before the applicable Aircraft is
Ready for Delivery.
7.3.3 The cost of implementing the modifications referred to in Clause 7.3.1
above will be
(i) for the account of the Seller if a Change in Law becomes
effective before the date of this Agreement, and
(ii) shared equally by the Seller and the Buyer if a Change in Law
becomes effective after the date of this Agreement,
provided, however, that any changes required specifically of the Buyer
in order to permit the Buyer to operate the Aircraft under Part 121 of
the US Federal Aviation Regulations are for the account of the Buyer.
7.3.4 Notwithstanding the provisions of Clauses 7.3.3 (i) and (ii), if a
Change in Law relates to the Propulsion Systems and, in particular, to
engine accessories, quick engine change units or thrust reversers, the
costs will be borne in accordance with such arrangements as may be made
separately between the Buyer and the Propulsion Systems manufacturer;
the Seller will have no obligation with respect thereto.
7.4 SPECIFICATION CHANGES AFTER DELIVERY
Clause 7.3 will not require the Seller to make any changes or
modifications to, or to make any payments or take any other action with
respect to, any Aircraft [****] any law or regulation referred to in
Clause 7.3 is to be complied with. Any such changes or modifications
made to an Aircraft [****] the Buyer will be at the Buyer's expense.
----------
[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
21
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8 - BUYER'S TECHNICAL ACCEPTANCE
8.1 TECHNICAL ACCEPTANCE PROCESS
8.1.1 Prior to Delivery, the Aircraft will undergo a technical acceptance
process proposed by the Seller (the "Technical Acceptance Process").
Completion of the Technical Acceptance Process will demonstrate the
satisfactory functioning of the Aircraft and will be deemed to
demonstrate compliance with the Specification. Should it be established
that the Aircraft fails to complete the Technical Acceptance Process
satisfactorily, the Seller will without hindrance from the Buyer be
entitled to carry out any necessary changes and, as soon as practicable
thereafter, resubmit the Aircraft in order to complete the Technical
Acceptance Process.
8.1.2 The Technical Acceptance Process will
(i) start on a date notified by the Seller to the Buyer at least
ten (10) days in advance,
(ii) take place at the Delivery Location,
(iii) be carried our by the personnel of the Seller, and
(iv) include a technical acceptance flight, which will not exceed
three (3) hours.
8.2 BUYER'S ATTENDANCE
8.2.1 The Buyer will be entitled to attend the Technical Acceptance Process.
8.2.2 If the Buyer elects to attend the Technical Acceptance Process, the
Buyer
(i) will cooperate in complying with the reasonable requirements of
the Seller, with the intention of completing the Technical
Acceptance Process within five (5) Working Days, and
(ii) may have a maximum of four (4) of its representatives (no more
than three (3) of whom will have access to the cockpit at any
one time) accompany the Seller's representatives on a technical
acceptance flight, during which the Buyer's representatives will
comply with the instructions of the Seller's representatives.
8.2.3 If the Buyer does not attend and/or fails to cooperate in the Technical
Acceptance Process, the Seller will be entitled to complete the
Technical Acceptance Process without the Buyer's attendance, and the
Buyer will be
22
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deemed to have accepted the Technical Acceptance Process as satisfactory
in all respects.
8.3 CERTIFICATE OF ACCEPTANCE
Upon successful completion of the Technical Acceptance Process, the
Buyer will, on or before the Delivery Date, sign and deliver to the
Seller a certificate of acceptance in respect of the Aircraft in the
form of Exhibit D (the "Certificate of Acceptance") hereto.
8.4 FINALITY OF ACCEPTANCE
The Buyer's acceptance of delivery of each Aircraft will constitute
waiver by the Buyer of any right it may have under the Uniform
Commercial Code as adopted by the State of New York or otherwise to
revoke such acceptance for any reason, whether known or unknown to the
Buyer at the time of acceptance.
8.5 AIRCRAFT UTILIZATION
The Seller will, without payment or other liability, be entitled to use
the Aircraft before Delivery if necessary to obtain the certificates
required under Clause 7. Such use will not prejudice the Buyer's
obligation to accept Delivery hereunder.
[****]
----------
[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
23
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9 - DELIVERY
9.1 DELIVERY SCHEDULE
9.1.1 Subject to Clauses 2, 7, 8, 10 and 18, the Seller will have the Aircraft
Ready for Delivery at the Delivery Location within the following months
(each a "Scheduled Delivery Month"). Where no month is specified below
the Seller will
(i) in the case of a quarter, notify the Buyer of the Scheduled
Delivery Month by twenty-four (24) months before the beginning
of the quarter,
(ii) in the case of a half of a year, notify the Buyer of the
Scheduled Delivery Month by twenty-four (24) months before the
beginning of the half of the year,
(iii) in the case of a year, notify the Buyer of the quarter by
twenty-four (24) months before the beginning of the year and
then notify the Buyer of the Scheduled Delivery Month by
twenty-four (24) months before the beginning of the quarter.
Firm Aircraft
-------------
Firm Aircraft No 1 [****] 2000
Firm Aircraft No 2 [****] 2000
Firm Aircraft No 3 [****] 2000
Firm Aircraft No 4 [****] 2000
Firm Aircraft No 5 [****] 2000
Firm Aircraft No 6 [****] 2000
Firm Aircraft No 7 [****] 2001
Firm Aircraft No 8 [****] 2001
Firm Aircraft No 9 [****] 2001
Firm Aircraft No 10 [****] 2001
Firm Aircraft No 11 [****] 2001
Firm Aircraft No 12 [****] 2001
Firm Aircraft No 13 [****] 2002
Firm Aircraft No 14 [****] 2002
Firm Aircraft No 15 [****] 2002
Firm Aircraft No 16 [****] 2002
Firm Aircraft No 17 [****] 2002
Firm Aircraft No 18 [****] 2002
Firm Aircraft No 19 [****] 2002
Firm Aircraft No 20 [****] 2002
Firm Aircraft No 21 [****] 2003
Firm Aircraft No 22 [****] 2003
Firm Aircraft No 23 [****] 2003
----------
[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
24
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Firm Aircraft No 24 [****] 2003
Firm Aircraft No 25 [****] 2003
Option Aircraft
---------------
Option Aircraft No 26 [****] 2003
Option Aircraft No 27 [****] 2003
Option Aircraft No 28 [****] 2003
Option Aircraft No 29 [****] 2004
Option Aircraft No 30 [****] 2004
Option Aircraft No 31 [****] 2004
Option Aircraft No 32 [****] 2004
Option Aircraft No 33 [****] 2004
Option Aircraft No 34 [****] 2005
Option Aircraft No 35 [****] 2005
Option Aircraft No 36 [****] 2005
Option Aircraft No 37 [****] 2005
Option Aircraft No 38 [****] 2005
Option Aircraft No 39 [****] 2006
Option Aircraft No 40 [****] 2006
Option Aircraft No 41 [****] 2006
Option Aircraft No 42 [****] 2006
Option Aircraft No 43 [****] 2006
Option Aircraft No 44 [****] 2006
Option Aircraft No 45 [****] 2007
Option Aircraft No 46 [****] 2007
Option Aircraft No 47 [****] 2007
Option Aircraft No 48 [****] 2007
Option Aircraft No 49 [****] 2007
Option Aircraft No 50 [****] 2007
9.1.2 [****]
[****] the Seller will give the Buyer at least thirty (30) days'
written notice of the anticipated date on which the Aircraft will be
Ready for Delivery [****]. [****] the Seller will notify the Buyer of
any change in such date necessitated by the conditions of manufacture
or flight.
9.2 DELIVERY
9.2.1 The Buyer will send its representatives to the Delivery Location to take
Delivery within seven (7) days after the date on which the Aircraft is
Ready for Delivery.
----------
[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
25
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9.2.2 The Seller will transfer title to the Aircraft to the Buyer free and
clear of all encumbrances, provided that the Balance of the Final
Contract Price has been paid by the Buyer pursuant to Clause 5.4 and
that the Certificate of Acceptance has been signed and delivered to the
Seller pursuant to Clause 8.3. The Seller will provide the Buyer with a
bill of sale in the form of Exhibit E hereto and/or such other
documentation confirming transfer of title and receipt of the Final
Contract Price as may reasonably be requested by the Buyer. Title to,
property interest in and risk of loss or damage to the Aircraft will be
transferred to the Buyer on Delivery.
9.2.3 Should the Buyer fail to
(i) deliver the signed Certificate of Acceptance to the Seller on or
before the Delivery Date, or
(ii) pay the Balance of the Final Contract Price for the Aircraft to
the Seller on the Delivery Date.
then the Buyer will be deemed to have rejected Delivery without warrant
when the Aircraft was duly tendered to the Buyer hereunder. In the event
the Buyer rejects the Aircraft, the Seller will retain title to the
Aircraft and the Buyer will be deemed to assume and will bear all risk
of loss or damage to the Aircraft and will indemnify and hold the Seller
harmless against any and all costs (including but not limited to any
parking, storage, and insurance costs) and consequences resulting from
the Buyer's rejection, it being understood that the Seller will be under
no duty to store, park, insure, or otherwise protect the Aircraft. These
rights of the Seller will be in addition to the Seller's other rights
and remedies in this Agreement.
9.3 FLYAWAY
9.3.1 The Buyer and the Seller will cooperate to obtain any licenses that may
be required by the Aviation Authority of the Delivery Location for the
purpose of exporting the Aircraft.
9.3.2 All expenses of, or connected with, flying the Aircraft from the
Delivery Location after Delivery will be borne by the Buyer. The Buyer
will make direct arrangements with the supplying companies for the fuel
and oil required for all post-Delivery flights.
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10 - EXCUSABLE DELAY AND TOTAL LOSS
10.1 SCOPE OF EXCUSABLE DELAY
Neither the Seller nor the Manufacturer will be responsible for or be
deemed to be in default on account of delays in delivery or failure to
deliver or otherwise in the performance of this Agreement or any part
hereof due to causes reasonably beyond the Seller's, the Manufacturer's
or any Associated Contractor's control or not occasioned by the
Seller's, the Manufacturer's or any Associated Contractor's fault or
negligence ("Excusable Delay"), including, but not limited to: (i) acts
of God or the public enemy, natural disasters, fires, floods, storms
beyond ordinary strength, explosions or earthquakes; epidemics or
quarantine restrictions; serious accidents; total or constructive total
loss; any law, decision, regulation, directive or other act (whether or
not having the force of law) of any government or of the Council of the
European Community or the Commission of the European Community or of any
national, Federal, State, municipal or other governmental department,
commission, board, bureau, agency, court or instrumentality, domestic or
foreign; governmental priorities, regulations or orders affecting
allocation of materials, facilities or a completed Aircraft; war, civil
war or warlike operations, terrorism, insurrection or riots; failure of
transportation; strikes or labor troubles causing cessation, slow down
or interruption of work; delay in obtaining any airworthiness or type
certification; inability after due and timely diligence to procure
materials, accessories, equipment or parts; general hindrance in
transportation; or failure of a subcontractor or Supplier to furnish
materials, components, accessories, equipment or parts; (ii) any delay
caused directly or indirectly by the action or inaction of the Buyer;
and (iii) delay in delivery or otherwise in the performance of this
Agreement by the Seller due in whole or in part to any delay in or
failure of the delivery of, or any other event or circumstance relating
to, the Propulsion Systems or Buyer Furnished Equipment.
10.2 CONSEQUENCES OF EXCUSABLE DELAY
10.2.1 If an Excusable Delay occurs the Seller will
(i) notify the Buyer of such Excusable Delay as soon as practicable
after becoming aware of the same;
(ii) not be deemed to be in default in the performance of its
obligations hereunder as a result of such Excusable Delay;
(iii) not be responsible for any damages arising from or in connection
with such Excusable Delay suffered or incurred by the Buyer;
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(iv) use reasonable efforts to remove the cause(s) within its
control and minimize any delay; and
(v) as soon as practicable after the removal of the cause of
the delay resume performance of its obligations under
this Agreement and in particular will notify the Buyer
of the revised Scheduled Delivery Month.
10.2.2 If an Excusable Delay is due to the action or inaction of the Buyer,
then the Buyer will use reasonable efforts to remove the cause(s) within
its control and minimize any delay.
10.3 TERMINATION ON EXCUSABLE DELAY
10.3.1 If the Delivery of any Aircraft is delayed as a result of an Excusable
Delay for a period of more than twelve (12) months after the last day of
the Scheduled Delivery Month, then either party may terminate this
Agreement with respect to the affected Aircraft, by giving written
notice to the other party within thirty (30) days after the expiration
of such twelve (12) month period. However, the Buyer will not be
entitled to terminate this Agreement pursuant to this Clause if the
Excusable Delay is caused directly or indirectly by the action or
inaction of the Buyer. [****]
10.3.2 In the event that the Seller notifies the Buyer of a revised Scheduled
Delivery Month pursuant to Clause 10.2(v), in respect of a delay in
Delivery of an Aircraft of more than twelve (12) months after the last
day of the Scheduled Delivery Month, then either party may terminate
this Agreement with respect to the affected Aircraft. Termination will
be made by giving written notice to the other party within thirty (30)
days after the Buyer's receipt of the notice of a revised Scheduled
Delivery Month. [****]
10.3.3 If this Agreement is not terminated under the terms of Clause 10.3.1 or
10.3.2 above, then the Seller will be entitled to reschedule Delivery.
The Seller will notify the Buyer of the new Scheduled Delivery Month
after the thirty (30) day period referred to in Clause 10.3.1 or 10.3.2,
and this new Scheduled Delivery Month will be binding on the parties.
10.3.4 [****]
----------
[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
28
<Page>
[****]
10.4 TOTAL LOSS; LOST, DESTROYED OR DAMAGED AIRCRAFT
If, before delivery thereof, in the reasonable opinion of the Seller, an
Aircraft is lost, destroyed or damaged beyond economic repair ("Total
Loss"), then the Seller will notify the Buyer to this effect as soon as
reasonably possible. The Seller will include in its notice, or as soon
after the notice as possible, the earliest date that an aircraft to
replace the Aircraft may be delivered to the Buyer. The notice will also
state a revised Scheduled Delivery Month for the replacement aircraft.
However, in the event the specified revised Scheduled Delivery Month is
more than twelve (12) months after the last day of the originated
Scheduled Delivery Month, then this Agreement will terminate unless
(i) the Buyer notifies the Seller within one (1) month of the date
of receipt of the Sellerls notice that it desires the Seller to
provide a replacement aircraft during the month quoted in the
Seller's notice, and
(ii) the parties execute an amendment to this Agreement recording the
variation in the Scheduled Delivery Month.
Notwithstanding the above, nothing herein will require the Seller to
manufacture and deliver a replacement aircraft if manufacture would
require the reactivation of the Manufacturer's production line for the
model or series of aircraft that includes the Aircraft.
10.5 TERMINATION RIGHTS EXCLUSIVE
In the event that this Agreement is terminated as provided for under the
terms of Clauses 10.3 or 10.4, such termination will discharge all
obligations and liabilities of the parties hereunder with respect to
such affected Aircraft and undelivered material, services, data or
other items applicable thereto and to be furnished hereunder and neither
party will have any claim against the other for any loss resulting from
such nondelivery. The Seller will in no circumstances have any liability
whatsoever for Excusable Delay other than as set forth in this Clause
10.
10.6 REMEDIES
THIS CLAUSE 10 SETS FORTH THE SOLE AND EXCLUSIVE REMEDY OF THE BUYER FOR
DELAYS IN DELIVERY OR FAILURE TO DELIVER, OTHER THAN SUCH DELAYS AS ARE
COVERED BY CLAUSE 11, AND THE BUYER HEREBY WAIVES
----------
[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
29
<Page>
ALL RIGHTS TO WHICH IT WOULD OTHERWISE BE ENTITLED IN RESPECT THEREOF,
INCLUDING, WITHOUT LIMITATION, ANY RIGHTS TO INCIDENTAL AND
CONSEQUENTIAL DAMAGES OR SPECIFIC PERFORMANCE. THE BUYER WILL NOT BE
ENTITLED TO CLAIM THE REMEDIES AND RECEIVE THE BENEFITS PROVIDED IN THIS
CLAUSE 10 TO THE EXTENT THE DELAY REFERRED TO IN THIS CLAUSE 10 IS
CAUSED BY THE NEGLIGENCE OR FAULT OF THE BUYER OR ITS REPRESENTATIVES.
30
<Page>
11 - INEXCUSABLE DELAY
11.1 LIQUIDATED DAMAGES
Should an Aircraft not be Ready for Delivery to the Buyer within thirty
(30) days after the last day of the Scheduled Delivery Month (as such
month may be changed pursuant to Clauses 2, 7 or 10) (the "Delivery
Period") and such delay is not as a result of an Excusable Delay or
Total Loss, then such loss will be termed an "Inexcusable Delay." In the
event of an Inexcusable Delay, the Buyer will have the right to claim,
and the Seller will pay the Buyer liquidated damages of US $[****] (US
dollars--[****]) for each day of delay in the Delivery, starting
thirty-one (31) days after the last day of the Scheduled Delivery
Month.
The amount of liquidated damages will in no event exceed the total of US
[****] (US dollars--[****]) in respect of any one Aircraft.
The Buyer's right to liquidated damages in respect of an Aircraft is
conditional on the Buyer's submitting a written claim for liquidated
damages to the Seller by, as applicable, thirty (30) days after Delivery
or thirty (30) days after a termination under Clause 11.3 below.
11.2 RENEGOTIATION
If as a result of an Inexcusable Delay, Delivery does not occur within
six (6) months after the Delivery Period, the Buyer will have the right
exercisable by written notice to the Seller given between fifteen (15)
days and one (1) month after the six (6) months to require from the
Seller a renegotiation of the Scheduled Delivery Month for the affected
Aircraft. Unless otherwise agreed between the Seller and the Buyer
during such renegotiation, the said renegotiation will not prejudice the
Buyer's right to receive liquidated damages in accordance with Clause
11.1 during the period of Inexcusable Delay.
11.3 TERMINATION
If as a result of an Inexcusable Delay, Delivery does not occur within
twelve (12) months after the Delivery Period and the parties have not
renegotiated the Delivery Date pursuant to Clause 11.2, then both
parties will have the right exercisable by written notice to the other
party, given between one (1) and two (2) months after the twelve (12)
months to terminate this Agreement in respect of the affected Aircraft.
In the event of termination, neither party will have any claim against
the other, except that the Seller will pay to the Buyer any amounts due
pursuant to Clause 11.1 and will repay the Buyer the Predelivery
Payments and SCN
----------
[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
31
<Page>
[****]
11.4 [****]
11.5 SETOFF PAYMENTS
Notwithstanding anything to the contrary contained herein, the Seller
will have the right to apply any and all sums previously paid by the
Buyer to the Seller with respect to a terminated Aircraft first to the
payment of any other amounts owing from the Buyer to the Seller or any
Affiliate thereof under any agreement between them.
11.6 REMEDIES
THIS CLAUSE 11 SETS FORTH THE SOLE AND EXCLUSIVE REMEDY OF THE BUYER FOR
DELAYS IN DELIVERY OR FAILURE TO DELIVER. OTHER THAN SUCH DELAYS AS ARE
COVERED BY CLAUSE 10, AND THE BUYER HEREBY WAIVES ALL RIGHTS TO WHICH
IT WOULD OTHERWISE BE ENTITLED IN RESPECT THEREOF, INCLUDING WITHOUT
LIMITATION ANY RIGHTS TO INCIDENTAL AND CONSEQUENTIAL DAMAGES OR
SPECIFIC PERFORMANCE. THE BUYER WILL NOT BE ENTITLED TO CLAIM THE
REMEDIES AND RECEIVE THE BENEFITS PROVIDED IN THIS CLAUSE 11 WHERE THE
DELAY REFERRED TO IN THIS CLAUSE 11 IS CAUSED BY THE NEGLIGENCE OR FAULT
OF THE BUYER OR ITS REPRESENTATIVES.
----------
[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
32
<Page>
12- WARRANTIES AND SERVICE LIFE POLICY
The Seller has negotiated and obtained the following Standard Warranty,
Service Life Policy, Supplier Warranties and Interface Commitment from
the Manufacturer with respect to the Aircraft, subject to the terms,
conditions, limitations and restrictions (including, but not limited to,
the Exclusivity of Warranties and General Limitations of Liability and
Duplicate Remedies provisions) all as hereinafter set out. The Seller
hereby assigns to the Buyer, and the Buyer hereby accepts, all of the
rights and obligations of the Seller under the said Standard Warranty,
Service Life Policy, Supplier Warranties and Interface Commitment, and
the Seller subrogates to the Buyer all such rights and obligations in
respect of the Aircraft. The Seller hereby warrants to the Buyer that it
has all requisite authority to make the foregoing assignment and effect
the foregoing subrogation to and in favor of the Buyer and that it will
not enter into any amendment of the provisions so assigned without the
prior written consent of the Buyer.
It is understood that, in the provisions below between the words QUOTE
and UNQUOTE, capitalized terms have the meanings assigned thereto in
this Agreement, except that the term Seller refers to the Manufacturer
and the term Buyer means the Seller.
QUOTE
12.1 STANDARD WARRANTY
12.1.1 NATURE OF WARRANTY
Subject to the limitations and conditions as hereinafter provided, and
except as provided in Clause 12.1.2. the Seller warrants to the Buyer
that each Aircraft and each Warranted Part will at the time of delivery
to the Buyer:
(i) be free from defects in material,
(ii) be free from defects in workmanship, including, without
limitation, processes of manufacture,
(iii) be free from defects in design (including, without limitation,
selection of materials) having regard to the state of the art at
the date of such design, and
(iv) be free from defects arising from failure to conform to the
Specification, except as to those portions of the Specification
that are expressly stated in the Specification to be estimates
or approximations or design aims.
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For the purposes of this Agreement, the term "Warranted Part" will mean
any Seller proprietary component, equipment, accessory or part that at
the time of delivery of an Aircraft (a) is installed on such Aircraft,
(b) is manufactured to the detail design of the Seller or a
subcontractor of it and (c) bears a part number of the Seller.
12.1.2 EXCEPTIONS
The warranties set forth in Clause 12.1.1 will not apply to Buyer
Furnished Equipment, nor to the Propulsion Systems, nor to any
component, accessory, equipment or part purchased by the Buyer that is
not a Warranted Part, provided, however, that:
(i) any defect in the Seller's workmanship in respect of the
installation of such items in the Aircraft, including any
failure by the Seller to conform to the installation
instructions of the manufacturers of such items that invalidates
any applicable warranty from such manufacturers, will constitute
a defect in workmanship for the purpose of this Clause 12.1 and
be covered by the warranty set forth in Clause 12.1.1(ii), and
(ii) any defect inherent in the Seller's design of the installation,
in view of the state of the art at the date of such design, that
impairs the use of such items will constitute a defect in design
for the purposes of this Clause 12.1 and be covered by the
warranty set forth in Clause 12.1.1(iii).
12.1.3 WARRANTY PERIODS
The warranties described in Clauses 12.1.1 and 12.1.2 hereinabove will
be limited to those defects that become apparent within thirty-six (36)
months after delivery of the affected Aircraft.
12.1.4 BUYER'S REMEDY AND SELLER'S OBLIGATION
12.1.4.1 The Buyer's remedy and the Seller's obligation and liability under
Clauses 12.1.1 and 12.1.2 hereinabove are limited to, at the Seller's
expense and option, the repair, replacement or correction of, or the
supply of modification kits, [****] to eliminate the defect to, any
defective Warranted Part. Alternatively, the Seller may, at its option,
furnish a credit to the Buyer for the future purchase of Material equal
to the price at which the Buyer is then entitled to acquire a
replacement for the defective Warranted Part. Nothing herein contained
will obligate the Seller to correct any failure to conform to the
Specification with
----------
[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
34
<Page>
respect to components, equipment, accessories or parts that the parties
agree in writing at the time of delivery of the affected Aircraft are
acceptable deviations or have no material adverse effect on the use,
operation or performance of an Aircraft.
12.1.4.2 In the event a defect covered by Clause 12.1.1(iii) becomes apparent
within the applicable period set forth in Clause 12.1.3 and the Seller
is obligated to correct such defect, the Seller will also, if so
requested by the Buyer in writing, make such correction in any Aircraft
that has not already been delivered to the Buyer. However, the Seller
will not be responsible nor deemed to be in default on account of any
delay in delivery of any Aircraft or otherwise, in respect of
performance of this Agreement, due to the Seller's undertaking to make
such correction and, rather than accept a delay in delivery of any such
Aircraft, the Buyer and the Seller may agree to deliver such Aircraft
with subsequent correction of the defect by the Buyer at the Seller's
expense, or the Buyer may elect to accept delivery and thereafter file
a Warranty Claim as though the defect had become apparent immediately
after delivery of such Aircraft.
12.1.5 WARRANTY CLAIM REQUIREMENTS
The Buyer's remedy and the Seller's obligation and liability under this
Clause 12.1, with respect to each claimed defect, are subject to the
following conditions precedent:
(i) the existence of a defect covered by the provisions of this
Clause 12.1,
(ii) the defect's having become apparent within the applicable
warranty period, as set forth in Clause 12.1.3,
(iii) the Buyer's having submitted to the Seller proof reasonably
satisfactory to the Seller that the claimed defect is due to a
matter embraced within this Clause 12.1, and that such defect
did not result from any act or omission of the Buyer,
including, but not limited to, any failure to operate and
maintain the affected Aircraft or part thereof in accordance
with the standards or any matter set forth or covered in
Clause 12.1.10,
(iv) the Buyer's having returned as soon as reasonably practicable
the Warranted Part claimed to be defective to such repair
facilities as may be designated by the Seller, except where
the Buyer elects to repair a defective Warranted Part in
accordance with the provisions of Clause 12.1.7, and
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(v) the Seller's having received a Warranty Claim fulfilling the
conditions of and in accordance with the provisions of Clause
12.1.6 below.
12.1.6 WARRANTY ADMINISTRATION
The warranties set forth in Clause 12.1 will be administered as
hereinafter provided:
(i) CLAIM DETERMINATION
Warranty Claim determination by the Seller will be reasonably
based on the claim details, reports from the Seller's regional
representative, historical data logs, inspections, tests,
findings during repair, defect analysis and other suitable
documents and information.
(ii) TRANSPORTATION COSTS
Transportation costs associated with the sending of a
defective Warranted Part to the facilities designated by the
Seller and for the return therefrom of a repaired or
replacement Warranted Part will be borne by the Seller,
provided, however, that the Buyer will use its best efforts to
minimize such costs, particularly by using its own airfreight
system for transportation at no charge to the Seller.
(iii) RETURN OF AN AIRCRAFT
In the event that the Buyer desires to return an Aircraft to
the Seller for consideration of a Warranty Claim, the Buyer
will notify the Seller of its intention to do so and the
Seller will, before such return, have the right to inspect
such Aircraft and thereafter, without prejudice to its rights
hereunder, to repair such Aircraft, at its sole option, either
at the Buyer's facilities or at another place acceptable to
the Seller. Return of any Aircraft by the Buyer to the Seller
and return of such Aircraft to the Buyer's facilities will be
at the Buyer's expense.
(iv) ON-AIRCRAFT WORK BY THE SELLER
A defect subject to this Clause 12.1 may justify the dispatch
by the Seller of a working team to repair or correct such
defect through the embodiment of one or more Seller's Service
Bulletins at the
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Buyer's facilities, or the Seller may accept the return of an
Aircraft to perform or have performed such repair or
correction.
If, in the Seller's opinion, the work necessitates the
technical expertise of the Seller, then, if the Buyer
requests the Seller to perform the work, the Seller and the
Buyer will agree on a schedule and place for the work to be
performed.
If, in the Seller's opinion, the work does not necessitate the
technical expertise of the Seller, but the Buyer nevertheless
requests the Seller to perform the work, the Seller and the
Buyer will agree on a schedule and place for the work to be
performed, and all related expenses, including but not limited
to travel and living expenses, in excess of labor costs
defined in Clause 12.l.7(v)(a), incurred in performing such
repair or correction, will be borne by the Buyer.
(v) WARRANTY CLAIM SUBSTANTIATION
For each claim under this Clause 12.1, within sixty (60) days
after a defect becomes apparent, the Buyer will give written
notice to the Seller that contains at least the following data
with respect to a part or Aircraft, as applicable ("Warranty
Claim"):
(a) description of defect and action taken, if any,
(b) date of incident and/or of removal,
(c) description of the defective part,
(d) part number,
(e) serial number (if applicable),
(f) position on Aircraft, according to Catalog Sequence
Number (CSN) of the Illustrated Parts Catalog,
Component Maintenance Manual or Structural Repair
Manual (as such documents are defined in Clause 14
and Exhibit F hereto) as applicable,
(g) total flying hours or calendar times, as applicable,
at the date of appearance of a defect,
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(h) time since last shop visit at the date of defect
appearance.
(i) Manufacturer's serial number of the Aircraft and/or
its registration number,
(j) Aircraft total flying hours and/or number of landings
at the date of defect appearance,
(k) claim number,
(l) date of claim, and
(m) date of delivery of an Aircraft or part to the Buyer.
Claims are to be addressed as follows:
AIRBUS INDUSTRIE
CUSTOMER SERVICE DIVISION SG-C
WARRANTY ADMINISTRATION
1, ROND-POINT MAURICE BELLONTE
B.P. 33
F-31707 BLAGNAC
FRANCE
(vi) REPLACEMENTS
Replacements made pursuant to this Clause 12.1 will be made
within the lead time defined in the Seller's Spare Parts Price
List. Replaced components, equipment, accessories or parts
will become the Seller's property.
Title to and risk of loss of any Aircraft, component,
accessory, equipment or part returned by the Buyer to the
Seller will at all times remain with the Buyer, except that
(i) when the Seller has possession of a returned Aircraft,
component, accessory, equipment or part to which the Buyer has
title, the Seller will have such responsibility therefor as is
chargeable by law to a bailee for hire, but the Seller will
not be liable for loss of use, and (ii) title to and risk of
loss of a returned component, accessory, equipment or part
will pass to the Seller on shipment by the Seller to the Buyer
of any item furnished by the Seller to the Buyer as a
replacement therefor. Upon the Seller's shipment to the Buyer
of any replacement component, accessory, equipment or part
provided by the Seller pursuant to this Clause
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12.1, title to and risk of loss of such component, accessory,
equipment or part will pass to the Buyer.
(vii) REJECTION
The Seller will provide reasonable written substantiation in
case of rejection of a claim. In such event the Buyer will pay
to the Seller reasonable inspection and test charges incurred
by the Seller in connection with the investigation and
processing of such claim. Transportation to the ASCO Spares
Center in Ashburn, VA, insurance, and any other costs
associated with the sending of any Warranted Part or any other
item, equipment, component or part for which the Buyer's
warranty claim is rejected by the Seller will be borne by the
Buyer.
(viii) INSPECTION
The Seller will have the right to inspect the affected
Aircraft and documents and other records relating thereto in
the event of any claim under this Clause 12.1.
12.1.7 IN-HOUSE WARRANTY
(i) AUTHORIZATION
The Buyer is hereby authorized to perform the repair of
Warranted Parts, subject to the terms of this Clause 12.1.7
("In-house Warranty"). The Buyer will notify the Seller's
representative of its decision to perform any in-house repairs
before such repairs are commenced, unless it is not practical
to do so, in which case the Buyer will notify the Seller of
the in-house repair as soon as reasonably practicable.
(ii) CONDITIONS OF AUTHORIZATION
The Buyer will be entitled to the benefits under this Clause
12.1.7 for repair of Warranted Parts:
(a) only if adequate facilities and qualified personnel
are available to the Buyer,
(b) in accordance with the Seller's written instructions
set forth in documents such as the Aircraft
Maintenance Manual, Component Maintenance Manual
(Manufacturer), Component Maintenance Manual (Vendor)
and Structural Repair Manual, and
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(c) only to the extent specified by the Seller, or, in the
absence of such specification, to the extent reasonably
necessary to correct the defect, in accordance with the
standards set forth in Clause 12.1.10.
(iii) SELLER'S RIGHTS
The Seller will have the right to have any Warranted Part, or
any part removed therefrom, which is claimed to be defective,
returned to the Seller, as set forth in Clause 12.16(ii), if,
in the judgment of the Seller, the nature of the defect
requires technical investigation.
The Seller will further have the right to have a
representative present during the disassembly, inspection and
testing of any Warranted Part claimed to be defective.
(iv) IN-HOUSE WARRANTY CLAIM SUBSTANTIATION
Claims for In-house Warranty credit will be filed within the
time period set forth in and will contain the same information
required in Warranty Claims under Clause 12.1.6(v) and in
addition will include:
(a) a report of technical findings with respect to the
defect,
(b) for parts required to remedy the defect:
- part numbers,
- serial numbers (if applicable),
- description of the parts,
- quantity of parts,
- unit price of parts,
- total price of parts,
- related Seller's or third party's invoices (if
applicable),
(c) detailed number of labor hours,
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(d) agreed In-house Warranty Labor Rate (defined below in
Clause 12.1.7(v)(a)), and
(e) total claim value.
(v) CREDIT
The Buyers sole remedy, and the Seller's sole obligation and
liability, in respect of In-house Warranty claims, will be a
credit to the Buyer's account. The credit to the Buyer's
account will be equal to the direct labor cost expended in
performing a repair and to the direct cost of materials
incorporated in the repair. Such costs will be determined as
set forth below.
(a) To determine direct labor costs, only manhours spent
on disassembly, inspection, repair, reassembly. and
final inspection and test (including flight tests if
flight tests prove necessary to complete a repair
under the In-house Warranty) of the Warranted Part
alone will be counted. Manhours required for
maintenance work concurrently being carried out on
the Aircraft or Warranted Part will not be included.
The manhours counted as set forth above will be
multiplied by an agreed labor rate representing the
Buyer's composite average hourly labor rate
(excluding all fringe benefits, premium time
allowances, social security charges, business taxes
and similar items) paid to the Buyer's employees
whose jobs are directly related to the performance of
the repair (the "In-house Warranty Labor Rate"). It
is agreed that for the purpose hereof the In-house
Warranty Labor Rate is US$ 45 (US
dollars--forty-five) at economic conditions
prevailing in January 1999.
Such In-house Warranty Labor Rate is subject to
adjustment annually by multiplying by the ratio
HEn/HEb. For the purposes of this Subclause 12.1.7(v)
only, HEn is equal to the Labor Index defined in
Exhibit G hereto for January of the year in which
manhours are spent and HEb is equal to such Labor
Index for January 1999.
(b) Direct material costs are determined by the prices at
which the Buyer acquired such material, excluding any
parts and materials used for overhaul furnished free
of charge by the Seller.
(vi) LIMITATION ON CREDIT
The Buyer will in no event be credited for repair costs
(including labor and material) for any Warranted Part
exceeding sixty-five percent (65%) of the Seller's current
catalog price for a replacement of such defective Warranted
Part
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or exceeding those costs which would have resulted if repairs
had been carried out at the Seller's facilities.
Such cost will be substantiated in writing by the Seller on
reasonable request by the Buyer.
(vii) SCRAPPED MATERIAL
The Buyer may, with the agreement of the Seller's Resident
Customer Support Representative, scrap any such defective
parts that are beyond economic repair and not required for
technical evaluation.
If the Buyer does not obtain the agreement of the Seller's
Resident Customer Support Representative to scrap a Warranted
Part defective beyond economic repair, then the Buyer will
retain such Warranted Part and any defective part removed from
a Warranted Part during repair for a period of either one
hundred and twenty (120) days after the date of completion of
repair or ninety (90) days after submission of a claim for
In-house Warranty credit relating thereto, whichever is
longer. Such parts will be returned to the Seller within
thirty (30) days of receipt of the Seller's request to that
effect.
Scrapped Warranted Parts will be evidenced by a record of
scrapped material certified by an authorized representative of
the Buyer, which will be kept in the Buyer's file for at least
the duration of the warranty periods set forth in this Clause
12.1.
(viii) LIMITATIONS ON LIABILITY OF SELLER
THE SELLER WILL NOT BE LIABLE FOR ANY RIGHT, CLAIM OR REMEDY,
AND THE BUYER WILL INDEMNIFY THE SELLER AGAINST THE CLAIMS OF
ANY THIRD PARTIES FOR ANY DEFECT, NONCONFORMANCE OR PROBLEM OF
ANY KIND, ARISING OUT OF OR IN CONNECTION WITH ANY REPAIR OF
WARRANTED PARTS UNDERTAKEN BY THE BUYER UNDER THIS SUBCLAUSE
12.1.7 OR ANY OTHER ACTIONS UNDERTAKEN BY THIS BUYER UNDER
THIS SUBCLAUSE 12.1.7, INCLUDING BUT NOT LIMITED TO (I)
LIABILITY IN CONTRACT OR TORT, (II) LIABILITY ARISING FROM THE
BUYER'S ACTUAL OR IMPUTED NEGLIGENCE, INTENTIONAL TORTS AND/OR
STRICT LIABILITY, AND/OR (III) LIABILITY TO ANY THIRD PARTIES.
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12.1.8 STANDARD WARRANTY TRANSFERABILITY
The warranties provided for in this Clause 12.1 for any Warranted Part
will accrue to the benefit of any airline in revenue service other than
the Buyer, if the Warranted Part enters into the possession of any such
airline as a result of a pooling agreement between such airline and the
Buyer, in accordance with the terms and subject to the limitations and
exclusions of the foregoing warranties and to applicable laws or
regulations.
12.1.9 WARRANTY FOR CORRECTED, REPLACEMENT OR REPAIRED WARRANTED PARTS
Whenever any Warranted Part that contains a defect for which the Seller
is liable under Clause 12.1 has been corrected, repaired or replaced
pursuant to the terms of this Clause 12, the period of the Seller's
warranty with respect to such corrected, repaired or replacement
Warranted Part, whichever may be the case, will be the remaining
portion of the original warranty in respect of such corrected, repaired
or replacement Warranted Part. In the event that a defect is
attributable to a defective repair or replacement by the Buyer, a
Warranty Claim with respect to such defect will not be allowable,
notwithstanding any subsequent correction or repairs, and will
immediately terminate the remaining warranties under this Clause 12.1
in respect of the affected Warranted Part.
12.1.10 GOOD AIRLINE OPERATION - NORMAL WEAR AND TEAR
The Buyer's rights under this Clause 12.1 are subject to the Aircraft
and each component, equipment, accessory and part thereof being
maintained, overhauled, repaired and operated in accordance with good
commercial airline practice, all technical documentation and any other
instructions issued by the Seller, the Suppliers or the manufacturer of
the Propulsion Systems and all applicable rules, regulations and
directives of the relevant Aviation Authorities.
The Seller's liability under this Clause 12.1 will not extend to normal
wear and tear nor to
(i) any Aircraft or component, equipment, accessory or part
thereof that has been repaired, altered or modified after
delivery by any party in a manner other than that approved by
the Seller;
(ii) any Aircraft or component, equipment, accessory or part
thereof that has been knowingly operated in a damaged state;
or
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(iii) any component, equipment, accessory or part from which the
trademark, trade name, part or serial number or other
identification marks have been intentionally removed.
This waiver of the Seller's liability by the Buyer will not apply in
the cases of Clause 12.1.10(i) and Clause 12.1.10(ii) above if the
Buyer submits evidence satisfactory to the Seller that the defect did
not arise from nor was contributed to by either of said cases.
12.2 SELLER SERVICE LIFE POLICY
In addition to the warranties set forth in Clause 12.1 above, the
Seller further agrees that should a Failure occur in any Item, then,
subject to the general conditions and limitations set forth in Clause
12.2.4 below, the provisions of this Clause 12.2 will apply.
12.2.1 DEFINITIONS
For the purposes of this Clause 12.2, the following definitions will
apply:
12.2.1.1 "Item" means any of the Seller components, equipment, accessories or
parts listed in Exhibit C hereto which are installed on an Aircraft at
any time during the period of effectiveness of the Service Life Policy
as defined below in Clause 12.2.2.
12.2.1.2 "Failure" means any breakage of, or defect in, an Item that materially
impairs the utility or safety of the Item, provided that any such
breakage of, or defect in, any Item did not result from any breakage or
defect in any other Aircraft part or component or from any other
extrinsic force.
12.2.2 PERIODS AND SELLER'S UNDERTAKING
Subject to the general conditions and limitations set forth in Clause
12.2.4 below, the Seller agrees that if a Failure occurs in an Item
within twelve (12) years after the delivery of the applicable said
Aircraft to the Buyer, whichever will first occur, the Seller will, at
its own discretion, as promptly as practicable and for a price that
reflects the Seller's financial participation as hereinafter provided,
either:
12.2.2.1 design and furnish to the Buyer a correction for such Item subject to a
Failure and provide any parts required for such correction (including
Seller designed standard parts but excluding industry standard parts),
or,
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12.2.2.2 replace such Item.
12.2.3 SELLER'S PARTICIPATION IN THE COST
Any part or Item that the Seller is required to furnish to the Buyer
under this Service Life Policy in connection with the correction or
replacement of an Item will be furnished to the Buyer at the Seller's
current sales price therefor, less the Seller's financial
participation, which will be determined in accordance with the
following formula:
C (N - T)
---------
P = N
where
P: financial participation of the Seller,
C: the Seller's then current sales price for the required Item
or required Seller designed parts,
T: total time in months since delivery of the particular Aircraft
in which the Item subject to a Failure was originally
installed,
and,
N: one hundred and forty-four (144) months.
12.2.4 GENERAL CONDITIONS AND LIMITATIONS
12.2.4.1 Notwithstanding Clause 12.2.3, the undertakings given in this Clause
12.2 will not be valid during the period applicable to an Item under
Clause 12.1.
12.2.4.2 The Buyer's remedy and the Seller's obligation and liability under this
Service Life Policy are subject to compliance by the Buyer with the
following conditions precedent:
(i) The Buyer will maintain log books and other historical records
with respect to each Item adequate to enable determination as
to whether the alleged Failure is covered by this Service Life
Policy and, if so, to define the portion of the cost to be
borne by the Seller in accordance with Clause 12.2.3 above.
(ii) The Buyer will keep the Seller informed of any significant
incidents relating to an Aircraft, howsoever occurring or
recorded.
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(iii) The conditions of Clause 12.1.10 will have been complied with.
(iv) The Buyer will carry out specific structural inspection
programs for monitoring purposes as may be established from
time to time by the Seller. Such programs will be, to the
extent possible, compatible with the Buyer's operational
requirements and will be carried out at the Buyer's expense.
Reports relating thereto will be regularly furnished to the
Seller.
(v) In the case of any breakage or defect, the Buyer will report
the same in writing to the Seller within ninety (90) days
after any breakage or defect in an Item becomes apparent,
whether or not said breakage or defect can reasonably be
expected to occur in any other Aircraft, and the Buyer will
inform the Seller in sufficient detail about the breakage or
defect to enable the Seller to determine whether said breakage
or defect is subject to this Service Life Policy.
12.2.4.3 Except as otherwise provided in this Clause 12.2, any claim under this
Service Life Policy will be administered as provided in, and will be
subject to the terms and conditions of, Clause 12.1.6.
12.2.4.4 In the event that the Seller has issued a modification applicable to an
Aircraft, the purpose of which is to avoid a Failure, the Seller may
elect to supply the necessary modification kit free of charge or under
a pro rata formula established by the Seller. If such a kit is so
offered to the Buyer, then, in respect of such Failure and any Failures
that could ensue therefrom, the validity of the Seller's commitment
under this Clause 12.2 will be subject to the Buyer's incorporating
such modification in the relevant Aircraft, within a reasonable time,
as promulgated by the Seller and in accordance with the Seller's
instructions.
12.2.4.5 THIS SERVICE LIFE POLICY IS NEITHER A WARRANTY, PERFORMANCE GUARANTEE,
NOR AN AGREEMENT TO MODIFY ANY AIRCRAFT OR AIRFRAME COMPONENTS TO
CONFORM TO NEW DEVELOPMENTS OCCURRING IN THE STATE OF AIRFRAME DESIGN
AND MANUFACTURING ART. THE SELLER'S OBLIGATION UNDER THIS SUBCLAUSE
12.2 IS TO MAKE ONLY THOSE CORRECTIONS TO THE ITEMS OR FURNISH
REPLACEMENTS THEREFOR AS PROVIDED IN THIS SUBCLAUSE 12.2. THE BUYER'S
SOLE REMEDY AND RELIEF FOR THE NONPERFORMANCE OF ANY OBLIGATION OR
LIABILITY OF THE SELLER ARISING UNDER OR BY VIRTUE OF THIS SERVICE LIFE
POLICY WILL BE IN MONETARY DAMAGES, LIMITED TO THE AMOUNT THE BUYER
REASONABLY EXPENDS IN PROCURING A CORRECTION OR REPLACEMENT FOR ANY
ITEM THAT IS THE SUBJECT OF A FAILURE COVERED BY THIS SERVICE LIFE
POLICY AND TO WHICH SUCH
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NONPERFORMANCE IS RELATED, LESS THE AMOUNT THAT THE BUYER OTHERWISE
WOULD HAVE BEEN REQUIRED TO PAY UNDER THIS SUBCLAUSE 12.2 IN RESPECT OF
SUCH CORRECTED OR REPLACEMENT ITEM. WITHOUT LIMITING THE EXCLUSIVITY OF
WARRANTIES AND GENERAL LIMITATIONS OF LIABILITY PROVISIONS SET FORTH IN
SUBCLAUSE 12.5, THE BUYER HEREBY WAIVES, RELEASES AND RENOUNCES ALL
CLAIMS TO ANY FURTHER DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
INCLUDING LOSS OF PROFITS AND ALL OTHER RIGHTS, CLAIMS AND REMEDIES,
ARISING UNDER OR BY VIRTUE OF THIS SERVICE LIFE POLICY.
12.2.5 TRANSFERABILITY
The Buyer's rights under this Clause 12.2 will not be assigned, sold,
leased, transferred or otherwise alienated by operation of law or
otherwise, without the Seller's prior written consent, not to be
unreasonably withheld.
Any unauthorized assignment, sale, lease, transfer or other alienation
of the Buyer's rights under this Service Life Policy will, as to the
particular Aircraft involved, immediately void this Service Life Policy
in its entirety.
12.3 SUPPLIER WARRANTIES
12.3.1 SELLER'S SUPPORT
Prior to delivery of the first Aircraft, the Seller will provide the
Buyer with the warranties and service life policies that the Seller has
obtained pursuant to the Supplier Product Support Agreements.
12.3.2 SUPPLIER'S DEFAULT
12.3.2.1 In the event that any Supplier under any standard warranty obtained by
the Seller pursuant to Clause 12.3.1 hereof defaults in the performance
of any material obligation under such warranty with respect to a
Supplier Part, and the Buyer submits within a reasonable time to the
Seller reasonable proof that such default has occurred, then Clause
12.1 this Agreement will apply to the extent it would have applied had
such Supplier Part been a Warranted Part except that, for obligations
covered under Clause 12.1, the shorter of (i) the Supplier's warranty
period indicated in the Supplier Product Support Agreements manual and
(ii) the Seller's warranty period indicated in Clause 12.1.3 of this
Agreement will apply.
12.3.2.2 In the event that any Supplier under any Supplier service life policy
obtained by the Seller pursuant to Clause 12.3.1 hereof defaults in the
performance of any material
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obligation with respect thereto, and the Buyer submits within
reasonable time to the Seller reasonable proof that such default has
occurred, then Clause 12.2 of this Agreement will apply to the extent
the same would have applied had such component, equipment, accessory or
part been listed in Exhibit C hereto.
12.3.2.3 At the Seller's request, the Buyer will assign to the Seller, and the
Seller will be subrogated to, all of the Buyer's rights against the
relevant Supplier, with respect to and arising by reason of such
default and the Buyer will provide reasonable assistance to enable the
Seller to enforce the rights so assigned.
12.4 INTERFACE COMMITMENT
12.4.1 INTERFACE PROBLEM
If the Buyer experiences any technical problem in the operation of an
Aircraft or its systems due to a malfunction, the cause of which, after
due and reasonable investigation, is not readily identifiable by the
Buyer, but which the Buyer reasonably believes to be attributable to
the design characteristics of one or more components of the Aircraft
(an "Interface Problem"), the Seller will, if requested by the Buyer,
and without additional charge to the Buyer, except for transportation
of the Seller's personnel to the Buyer's facilities, promptly conduct
or have conducted an investigation and analysis of such problem to
determine, if possible, the cause or causes of the problem and to
recommend such corrective action as may be feasible, provided, however,
that if the Seller determines, after such due and reasonable
investigation, that the Interface Problem was due to or caused by any
act or omission of the Buyer in performance of its obligations
hereunder, the Buyer will pay to the Seller all reasonable costs and
expenses incurred by the Seller during such investigation. The Buyer
will furnish to the Seller all data and information in the Buyer's
possession relevant to the Interface Problem and will cooperate with
the Seller in the conduct of the Seller's investigations and such tests
as may be required. At the conclusion of such investigation the Seller
will promptly advise the Buyer in writing of the Seller's opinion as to
the cause or causes of the Interface Problem and the Seller's
recommendations as to corrective action.
12.4.2 SELLER'S RESPONSIBILITY
If the Seller determines that the Interface Problem is primarily
attributable to the design of a Warranted Part, the Seller will, if
requested by the Buyer, correct the design of such Warranted Part,
pursuant to the terms and conditions of Clause 12.1.
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12.4.3 SUPPLIER'S RESPONSIBILITY
If the Seller determines that the Interface Problem is primarily
attributable to the design of any Supplier Part, the Seller will, if
requested by the Buyer, reasonably assist the Buyer in processing any
warranty claim the Buyer may have against the manufacturer of such
Supplier Part.
12.4.4 JOINT RESPONSIBILITY
If the Seller determines that the Interface Problem is attributable
partially to the design of a Warranted Part and partially to the design
of any Supplier Part, the Seller will, if requested by the Buyer, seek
a solution to the Interface Problem through cooperative efforts of the
Seller and any Supplier involved. The Seller will promptly advise the
Buyer of any corrective action proposed by the Seller and any such
Supplier. Such proposal will be consistent with any then existing
obligations of the Seller hereunder and of any such Supplier to the
Buyer. Such corrective action, unless reasonably rejected by the Buyer,
will constitute full satisfaction of any claim the Buyer may have
against either the Seller or any such Supplier with respect to such
Interface Problem.
12.4.5 GENERAL
12.4.5.1 All requests under this Clause 12.4 will be directed both to the Seller
and the affected Suppliers.
12.4.5.2 Except as specifically set forth in this Clause 12.4, this Clause 12.4
will not be deemed to impose on the Seller any obligations not
expressly set forth elsewhere in this Agreement.
12.4.5.3 All reports, recommendations, data and other documents furnished by the
Seller to the Buyer pursuant to this Clause 12.4 will be deemed to be
delivered under this Agreement and will be subject to the terms,
covenants and conditions set forth in this Clause 12 and in Clause
22.5.
12.5 EXCLUSIVITY OF WARRANTIES AND GENERAL LIMITATIONS OF LIABILITY
THIS CLAUSE 12 (INCLUDING ITS SUBPROVISIONS) SETS FORTH THE EXCLUSIVE
WARRANTIES, EXCLUSIVE LIABILITIES AND EXCLUSIVE OBLIGATIONS OF THE
SELLER, AND THE EXCLUSIVE REMEDIES AVAILABLE TO THE BUYER, WHETHER
UNDER THIS AGREEMENT OR OTHERWISE, ARISING FROM ANY DEFECT OR
NONCONFORMITY OR PROBLEM OF ANY KIND IN ANY AIRCRAFT, COMPONENT,
EQUIPMENT, ACCESSORY, PART OR SERVICE DELIVERED UNDER THIS AGREEMENT.
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THE BUYER RECOGNIZES THAT THE RIGHTS, WARRANTIES AND REMEDIES IN THIS
CLAUSE 12 ARE ADEQUATE AND SUFFICIENT TO PROTECT THE BUYER FROM ANY
DEFECT OR NONCONFORMITY OR PROBLEM OF ANY KIND IN THE GOODS AND
SERVICES SUPPLIED UNDER THIS AGREEMENT. THE BUYER HEREBY WAIVES,
RELEASES AND RENOUNCES ALL OTHER WARRANTIES, OBLIGATIONS, GUARANTEES
AND LIABILITIES OF THE SELLER AND ALL OTHER RIGHTS, CLAIMS AND REMEDIES
OF THE BUYER AGAINST THE SELLER, WHETHER EXPRESS OR IMPLIED BY
CONTRACT, TORT, OR STATUTORY LAW OR OTHERWISE, WITH RESPECT TO ANY
NONCONFORMITY OR DEFECT OR PROBLEM OF ANY KIND IN ANY AIRCRAFT,
COMPONENT, EQUIPMENT, ACCESSORY, PART OR SERVICE DELIVERED UNDER THIS
AGREEMENT, INCLUDING BUT NOT LIMITED TO:
(1) ANY IMPLIED WARRANTY OF MERCHANTABILITY AND/OR FITNESS FOR ANY
GENERAL OR PARTICULAR PURPOSE;
(2) ANY IMPLIED OR EXPRESS WARRANTY ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE;
(3) ANY RIGHT, CLAIM OR REMEDY FOR BREACH OF CONTRACT;
(4) ANY RIGHT, CLAIM OR REMEDY FOR TORT, UNDER ANY THEORY OF
LIABILITY, HOWEVER ALLEGED, INCLUDING, BUT NOT LIMITED TO,
ACTIONS AND/OR CLAIMS FOR NEGLIGENCE, GROSS NEGLIGENCE,
INTENTIONAL ACTS, WILLFUL DISREGARD, IMPLIED WARRANTY, PRODUCT
LIABILITY, STRICT LIABILITY OR FAILURE TO WARN;
(5) ANY RIGHT, CLAIM OR REMEDY ARISING UNDER THE UNIFORM
COMMERCIAL CODE OR ANY OTHER STATE OR FEDERAL STATUTE;
(6) ANY RIGHT, CLAIM OR REMEDY ARISING UNDER ANY REGULATIONS OR
STANDARDS IMPOSED BY ANY INTERNATIONAL, NATIONAL, STATE OR
LOCAL STATUTE OR AGENCY;
(7) ANY RIGHT, CLAIM OR REMEDY TO RECOVER OR BE COMPENSATED FOR:
(a) LOSS OF USE OR REPLACEMENT OF ANY AIRCRAFT,
COMPONENT, EQUIPMENT, ACCESSORY OR PART PROVIDED
UNDER THIS AGREEMENT;
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(b) LOSS OF, OR DAMAGE OF ANY KIND TO, ANY AIRCRAFT,
COMPONENT, EQUIPMENT, ACCESSORY OR PART PROVIDED
UNDER THIS AGREEMENT;
(c) LOSS OF PROFITS AND/OR REVENUES;
(d) ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGE.
THE ABOVE LIMITATIONS WILL NOT BE INTERPRETED TO IMPAIR THE WARRANTIES
GRANTED TO THE BUYER HEREUNDER.
THE WARRANTIES AND SERVICE LIFE POLICY PROVIDED BY THIS AGREEMENT WILL
NOT BE EXTENDED, ALTERED OR VARIED EXCEPT BY A WRITTEN INSTRUMENT
SIGNED BY THE SELLER AND THE BUYER. IN THE EVENT THAT ANY PROVISION OF
THIS CLAUSE 12 SHOULD FOR ANY REASON BE HELD UNLAWFUL, OR OTHERWISE
UNENFORCEABLE, THE REMAINDER OF THIS CLAUSE 12 WILL REMAIN IN FULL
FORCE AND EFFECT.
12.6 DUPLICATE REMEDIES
The remedies provided to the Buyer under this Clause 12 as to any
defect in respect of the Aircraft or any part thereof are mutually
exclusive and not cumulative. The Buyer will be entitled to the remedy
that provides the maximum benefit to it, as the Buyer may elect,
pursuant to the terms and conditions of this Clause 12 for any such
particular defect for which remedies are provided under this Clause 12;
provided, however, that the Buyer will not be entitled to elect a
remedy under one part of this Clause 12 that constitutes a duplication
of any remedy elected by it under any other part hereof for the same
defect. The Buyer's rights and remedies herein for the nonperformance
of any obligations or liabilities of the Seller arising under these
warranties will be in monetary damages limited to the amount the Buyer
expends in procuring a correction or replacement for any covered part
subject to a defect or nonperformance covered by this Clause 12, and
the Buyer will not have any right to require specific performance by
the Seller.
UNQUOTE
In consideration of the assignment and subrogation by the Seller under
this Clause 12 in favor of the Buyer in respect of the Seller's rights
against and obligations to the Manufacturer under the provisions quoted
above, the Buyer hereby accepts such assignment and subrogation and
agrees to be bound by all of the terms, conditions and limitations
therein contained, specifically including, without limitation, the
Exclusivity
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of Warranties and General Limitations of Liability provisions and
Duplicate Remedies provisions.
THIS CLAUSE 12 (INCLUDING ITS SUBPROVISIONS) SETS FORTH THE EXCLUSIVE
WARRANTIES, EXCLUSIVE LIABILITIES AND EXCLUSIVE OBLIGATIONS OF THE
SELLER, AND THE EXCLUSIVE REMEDIES AVAILABLE TO THE BUYER, WHETHER
UNDER THIS AGREEMENT OR OTHERWISE, ARISING FROM ANY DEFECT OR
NONCONFORMITY OR PROBLEM OF ANY KIND IN ANY AIRCRAFT, COMPONENT,
EQUIPMENT, ACCESSORY, PART OR SERVICE DELIVERED UNDER THIS AGREEMENT.
THE BUYER RECOGNIZES THAT THE RIGHTS, WARRANTIES AND REMEDIES IN THIS
CLAUSE 12 ARE ADEQUATE AND SUFFICIENT TO PROTECT THE BUYER FROM ANY
DEFECT OR NONCONFORMITY OR PROBLEM OF ANY KIND IN THE GOODS AND
SERVICES SUPPLIED UNDER THIS AGREEMENT. THE BUYER HEREBY WAIVES,
RELEASES AND RENOUNCES ALL OTHER WARRANTIES, OBLIGATIONS, GUARANTEES
AND LIABILITIES OF THE SELLER AND ALL OTHER RIGHTS, CLAIMS AND REMEDIES
OF THE BUYER AGAINST THE SELLER, WHETHER EXPRESS OR IMPLIED BY
CONTRACT, TORT, OR STATUTORY LAW OR OTHERWISE, WITH RESPECT TO ANY
NONCONFORMITY OR DEFECT OR PROBLEM OF ANY KIND IN ANY AIRCRAFT,
COMPONENT, EQUIPMENT, ACCESSORY, PART OR SERVICE DELIVERED UNDER THIS
AGREEMENT, INCLUDING BUT NOT LIMITED TO:
(1) ANY IMPLIED WARRANTY OF MERCHANTABILITY AND/OR FITNESS FOR ANY
GENERAL OR PARTICULAR PURPOSE;
(2) ANY IMPLIED OR EXPRESS WARRANTY ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE;
(3) ANY RIGHT, CLAIM OR REMEDY FOR BREACH OF CONTRACT;
(4) ANY RIGHT, CLAIM OR REMEDY FOR TORT, UNDER ANY THEORY OF
LIABILITY, HOWEVER ALLEGED, INCLUDING, BUT NOT LIMITED TO,
ACTIONS AND/OR CLAIMS FOR NEGLIGENCE, GROSS NEGLIGENCE,
INTENTIONAL ACTS, WILLFUL DISREGARD, IMPLIED WARRANTY, PRODUCT
LIABILITY, STRICT LIABILITY OR FAILURE TO WARN;
(5) ANY RIGHT, CLAIM OR REMEDY ARISING UNDER THE UNIFORM
COMMERCIAL CODE OR ANY OTHER STATE OR FEDERAL STATUTE;
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(6) ANY RIGHT, CLAIM OR REMEDY ARISING UNDER ANY REGULATIONS OR
STANDARDS IMPOSED BY ANY INTERNATIONAL, NATIONAL, STATE OR LOCAL
STATUTE OR AGENCY;
(7) ANY RIGHT, CLAIM OR REMEDY TO RECOVER OR BE COMPENSATED FOR:
(a) LOSS OF USE OR REPLACEMENT OF ANY AIRCRAFT, COMPONENT,
EQUIPMENT, ACCESSORY OR PART PROVIDED UNDER THIS AGREEMENT;
(b) LOSS OF, DAMAGE OF ANY KIND TO, ANY AIRCRAFT, COMPONENT,
EQUIPMENT, ACCESSORY OR PART PROVIDED UNDER THIS AGREEMENT;
(c) LOSS OF PROFITS AND/OR REVENUES;
(d) ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGE.
THE ABOVE LIMITATIONS WILL NOT BE INTERPRETED TO IMPAIR THE WARRANTIES
GRANTED TO THE BUYER HEREUNDER.
THE WARRANTIES AND SERVICE LIFE POLICY PROVIDED BY THIS AGREEMENT WILL NOT
BE EXTENDED, ALTERED OR VARIED EXCEPT BY A WRITTEN INSTRUMENT SIGNED BY
THE SELLER AND THE BUYER. IN THE EVENT THAT ANY PROVISION OF THIS CLAUSE
12 SHOULD FOR ANY REASON BE HELD UNLAWFUL, OR OTHERWISE UNENFORCEABLE, THE
REMAINDER OF THIS CLAUSE 12 WILL REMAIN IN FULL FORCE AND EFFECT.
The remedies provided to the Buyer under this Clause 12 as to any defect
in respect of the Aircraft or any part thereof are mutually exclusive and
not cumulative. The Buyer will be entitled to the remedy that provides the
maximum benefit to it, as the Buyer may elect, pursuant to the terms and
conditions of this Clause 12 for any such particular defect for which
remedies are provided under this Clause 12; provided, however, that the
Buyer will not be entitled to elect a remedy under one part of this Clause
12 that constitutes a duplication of any remedy elected by it under any
other part hereof for the same defect. The Buyer's rights and remedies
herein for the nonperformance of any obligations or liabilities of the
Seller arising under these warranties will be in monetary damages limited
to the amount the Buyer expends in procuring a correction or replacement
for any covered part subject to a defect or nonperformance covered by this
Clause 12, and the Buyer will not have any right to require specific
performance by the Seller.
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