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V2500-Registered Trademark-
GENERAL TERMS OF SALE
BETWEEN
IAE INTERNATIONAL AERO ENGINES AG
AND
NEW AIR CORPORATION
Page 1 of 131
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INDEX
Commencement
Recitals
CLAUSE 1 DEFINITIONS
CLAUSE 2 SALE OF PURCHASED ITEMS
2.1 Intent
2.2 Agreement to Place Orders
2.3 Type Approval and Changes in Specification
2.4 Inspection and Acceptance
2.5 Delivery, Shipping, Title and Risk of Loss or Damage
2.6 Price
2.7 Payment
CLAUSE 3 SPARE PARTS PROVISIONS
3.1 Intent and Term
3.2 ATA Standards
3.3 Initial Provisioning
3.4 Change in Initial Provisioning Data
3.5 Discontinuance of Initial Provisioning Data,
Use of Procurement Data
3.6 Stocking of Spare Parts by IAE
3.7 Lead Times
3.8 Ordering Procedure
3.9 Modifications to Spare Parts
3.10 Inspection
3.11 Delivery and Packing
3.12 Prices
3.13 Payment
3.14 Purchase by New Air from Others
3.15 Special Tools, Ground Equipment and Consumable
Stores
3.16 Conflict
CLAUSE 4 WARRANTIES, GUARANTEES AND LIABILITIES
CLAUSE 5 PRODUCT SUPPORT
Page 2 of 131
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CLAUSE 6 MISCELLANEOUS
6.1 Delay in Delivery
6.2 Patents
6.3 Credit Reimbursement; Right of Setoff
6.4 Non-Disclosure and Non-Use
6.5 Taxes
6.6 Amendment
6.7 Assignment
6.8 Exhibits
6.9 Headings
6.10 Law
6.11 Notices
6.12 Exclusion of Other Provisions and Previous Understandings
6.13 Conditions Precedent
6.14 Termination
EXHIBIT A
CONTRACT SPECIFICATIONS
EXHIBIT B SCHEDULES
EXHIBIT B1 AIRCRAFT DELIVERY SCHEDULE
EXHIBIT B2 PURCHASED ITEMS, PRICE, ESCALATION
FORMULA AND DELIVERY
EXHIBIT C PRODUCT SUPPORT PLAN
EXHIBIT D WARRANTIES, GUARANTEES AND PLANS
D-1 V2500 ENGINE AND PARTS SERVICE POLICY
D-2 V2500 NACELLE AND PARTS SERVICE POLICY
D-3 V2500 NON-INSTALLATION ITEMS WARRANTY
D-4 V2500 REALIABILITY GUARANTEE
D-5 V2500 DELAY AND CANCELLATION GUARANTEE
D-6 V2500 INFLIGHT SHUTDOWN GUARANTEE
D-7 V2500 FUEL CONSUMPTION RETENTION GUARANTEE
D-8 V2500 EXHAUST GAS TEMPERATURE GUARANTEE
D-9 V2500 MAINTENANCE COST GUARANTEE
Page 3 of 131
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THIS CONTRACT is made this 4th day of May, 1999
BETWEEN
IAE INTERNATIONAL AERO ENGINES AG a joint stock company organized and
existing under the laws of
Switzerland, with a place of business
at 400 Main Street, M/S 121-10, East
Hartford, Connecticut 06108, USA,
(hereinafter called "IAE") and
NEW AIR CORPORATION a corporation organized and existing
under the laws of Delaware (hereinafter
called "New Air"), whose principal place
of business is at 6322 South 3000 East,
Suite L201, Salt Lake City, Utah 84121
WHEREAS:
A New Air has decided to acquire new A320 family aircraft to be powered
by IAE V2500 Propulsion Systems, and
B. IAE is prepared to supply to New Air V2500 engines, modules, spare
parts, special tools, ground equipment, product support services and
consumable stores for the support and operation of the V2500 Propulsion
Systems.
NOW THEREFORE IT IS AGREED AS FOLLOWS:
CLAUSE 1 DEFINITIONS
In this Contract unless the context otherwise requires:
1.1 "Aircraft" shall mean (i) the twenty-five (25) new Airbus A320-200
aircraft each powered by V2527-A5 series engines (the "Firm Aircraft"),
and (ii) New Air's right to purchase an additional fifty (50) Airbus
A320 family aircraft each powered by V2500-A5 series engines (the
"Option Aircraft"), comprising options to purchase twenty-five (25) new
Airbus A320 family aircraft each powered by V2500-A5 series engines
(the "Option A320 Family Aircraft") and reserve options to purchase
twenty-five (25) new Airbus A320 family aircraft each powered by
V2500-A5 series engines (the "Reserve Option A320 Family Aircraft"),
all for delivery as set forth in Exhibit B1 to this Contract.
1.2 "Aircraft Manufacturer" or "Airbus" shall mean Airbus Industrie G.I.E.,
a groupement d'interet economique, with its principal place of business
at 1, Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France,
together with its successors and assigns.
1.3 "Basic Contract Price" shall mean the basic price of each of the
Purchased Items as specified in Exhibit B2 to this Contract.
Page 4 of 131
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1.4 "Certification Authority" shall mean the regulatory authority referred
to in Exhibit A responsible for the type certification of the Engine.
1.5 "Engine(s)" shall mean the IAE V2500 aero engine described in the
Specifications.
1.6 "Initial Provisioning" Shall mean the establishment by New Air of an
initial stock of Spare Parts.
1.7 "Initial Provisioning Data" shall mean information supplied by IAE to
New Air for Initial Provisioning purposes.
1.8 "Initial Provisioning Orders" shall mean orders for Spare Parts for
Initial Provisioning purposes.
1.9 "Installation Items" shall mean Engines described in the
Specification, modules, accessories, exhaust systems, nacelles and all
ancillary equipment therefor which are being supplied pursuant to this
Contract for installation on the Aircraft.
1.10 "Lead Time" shall mean the period specified in the Spare Parts Catalog
which represents the minimum time required between acceptance by IAE of
an order by New Air for Supplies and commencement of delivery of
such Supplies.
1.11 "Leased Aircraft" shall mean the seven (7) ]eased A320 aircraft to be
acquired by New Air in accordance with the delivery schedule set forth
in Exhibit B1 to this Contract.
1.12 "Non-Installation Items" shall mean jigs, tools, handling and
transportation equipment and all equipment whatsoever to be supplied
pursuant to this Contract for use with the Installation Items and not
for installation on the Aircraft.
1.13 "Other Supplies" shall mean special tools, ground equipment and
consumable stores (e.g., oils, greases, dyes and penetrants).
1.14 "Procurement Data" shall mean information supplied by IAE to New Air
about Spare Parts required to replenish the initial stock.
1.15 "Purchased Items" shall mean those Installation Items and
Non-Installation Items specified in Exhibit B2 to this Contract.
1.16 "Service Bulletins" shall mean those service bulletins containing
advice and instructions issued by IAE to New Air from time to time in
respect of Engines.
1.17 "Spare Parts" shall mean spare parts for Engines excluding the items
listed in the Specification as being items of supply by New Air.
1.18 "Spare Parts Catalog" shall mean the catalog published by IAE from time
to time providing a description, Lead Time and price for Spare Parts,
tools and Vendor Parts available for purchase from IAE.
Page 5 of 131
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1.19 "Specification" shall mean the IAE Engine Specification Nos., S24A5/2,
S27A5/2 and S33A5/2 which form Exhibits A1, A2 and A3 respectively to
this Contract.
1.20 "Supplies" shall mean Installation Items, Non-Installation Items, Spare
Parts and any other goods or services supplied pursuant to this
Contract.
1.21 "Vendor Parts" shall mean Spare Parts described in Initial Provisioning
Data or Procurement Data which are not manufactured pursuant to the
detailed design and direction of IAE.
CLAUSE 2 SALE OF PURCHASED ITEMS
2.1 INTENT
IAE agrees to sell to New Air and New Air agrees to buy from IAE, the
Purchased Items, in accordance with the provisions of this Contract.
2.2 AGREEMENT TO PURCHASE
2.2.1 New Air agrees (i) to purchase from the Aircraft Manufacturer
no less than twenty-five (25) Firm Aircraft, and (ii) to
procure from the Aircraft Manufacturer options to purchase
twenty-five (25) Option A320 Family Aircraft and twenty-five
(25) Reserve Option A320 Family Aircraft, all to be powered by
new V2500-A5 Propulsion Systems for delivery according to the
schedule set forth in Exhibit B1 to this Contract.
2.2.2 New Air hereby places a firm and unconditional order with IAE
for the purchase of a minimum of five (5) new V2527-A5 spare
Engines (the "Firm Spare Engines") for delivery according to
the schedule set forth in Exhibit B2 to this Contract.
2.2.3 New Air agrees to place a firm and unconditional order with
IAE to purchase sufficient quantities and appropriate thrust
ratings of new spare Engines to support the Option Aircraft
purchased by New Air and to maintain a minimum direct ratio
(rounding up when the required number of option spare Engines
reaches a fractional value) of delivered new option spare
Engines to delivered new option installed V2500 Engines of
[****] for the V2524-A5, V2527-A5 and V2533-A5 powered
Option Aircraft, for delivery in accordance with the delivery
schedule set forth in Exhibit B2 to this Contract (the "Option
Spare Engines").
2.3 TYPE APPROVAL AND CHANGES IN SPECIFICATION
2.3.1 The Purchased Items will be manufactured to the standards set
forth in the Specification. After the date of this Contract
the Purchased Items may be varied from the standards set forth
in the Specification and other IAE manufacturing
specifications from time to time by Change Orders in writing
which shall set forth in detail:
----------
[****] 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.
Page 6 of 131
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2.3.1.1 The changes to be made in the Purchased Items and
2.3.1.2 The effect (if any) of such changes on the
Specification (including but not limited to
performance and weight), on interchangeability of the
Purchased Items in the airframe, on prices and on
dates of delivery of the Purchased Items.
Change Orders shall not be binding on either party until signed by IAE
and New Air but upon being so signed shall constitute amendments to
this Contract.
2.3.2 IAE may make any changes in the Purchased Items which do not
adversely affect the Specification, (including but not limited
to performance and weight), interchangeability of the
Purchased Items in the airframe, prices or dates of delivery
of the Purchased Items. In the case of such permitted changes,
a Change Order shall not be required or if issued shall not
be binding until signed by IAE and New Air.
2.3.3 At the time of delivery of the Purchased Items there is to be
in existence a Type Approval Certificate for the Purchased
Items in accordance with the provisions of the Specification.
2.3.4 The Specification has been drawn with a view to the
requirements of the Certification Authority and the official
interpretations of such requirements in existence at the date
of this Contract (such requirements and interpretations being
hereinafter referred to as "Current Rules"). Subject to Clause
2.3.2 above, IAE and New Air agree that they will execute an
appropriate Change Order in respect of any change required to
the Purchased Items to enable such Purchased Items to conform
to the requirements of the Certification Authority and the
official interpretations of such requirements in force at the
date of delivery of such Purchased Items.
2.3.5 The price of any Change Order is to be borne:
2.3.5.1 in the case of changes required to conform to the
Current Rules - by IAE; and
2.3.5.2 in any other case - by New Air.
2.4 INSPECTION AND ACCEPTANCE
2.4.1 Conformance of Purchased Items which are Engines to the
Specification will be assured by IAE through the maintenance
of procedures, systems and records approved by the
Certification Authority. An Export Certificate of
Airworthiness or a Certificate of Conformity (as the case may
be) will be issued and signed by personnel authorized for such
purposes.
2.4.2 Conformance of Purchased Items which are Non-Installation
Items to the Specification will be assured by IAE conformance
documentation.
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2.4.3 Upon delivery pursuant to Clause 2.5.1 below and the issue of
an Export Certificate of Airworthiness or a Certificate of
Conformity pursuant to Clause 2.4.1 above or IAE conformance
documentation pursuant Clause 2.4.2 above, New Air shall be
deemed to have accepted the Purchased Items and that the
Purchased Items conform to the Specification. IAE shall, upon
written request from New Air and subject to the permission of
the appropriate governmental authorities, arrange for New Air
to have reasonable access to the appropriate premises in order
to examine the Purchased Items prior to the issue of
conformance documentation and to witness Engine acceptance
tests.
2.4.4 If New Air is unable to accept, refuses or otherwise hinders
delivery, or if IAE at New Air's written request agrees to
delay delivery, of any of the Purchased Items, New Air shall
nevertheless pay or cause IAE to be paid therefor as if, for
the purposes of payment only, the Purchased Items had been
delivered.
2.4.5 In any of the cases specified in Clause 2.4.4 above, New Air
shall also pay to IAE such reasonable sum as IAE shall require
in respect of storage, maintenance and insurance of those
Purchased Items.
2.5 DELIVERY, SHIPPING, TITLE AND RISK OF LOSS OR DAMAGE
2.5.1 IAE will deliver the Purchased Items, at its option, either
Ex-Works (INCOTERMS 1990) Connecticut, U. S. A. or Ex-Works
(INCOTERMS 1990) Derby, England, in accordance with the
delivery schedule set out in Exhibit B2 to this Contract.
2.5.2 Upon such delivery, title to and risk of loss of or damage to
the Purchased Items shall pass to New Air.
2.5.3 New Air will notify IAE at least four (4) weeks before the
scheduled time for delivery of the Purchased Items of its
instructions as to the marking and shipping of the Purchased
Items.
2.6 PRICE
The Purchase Price for each of the Purchased Items shall be the Basic
Contract Price, amended pursuant to Clause 2.3 above, and escalated in
accordance with the escalation formula contained in Exhibit B2 to this
Contract.
2.7 PAYMENT
2.7.1 New Air will make payment in United States Dollars as follows:
2.7.1.1 Upon signature of this Contract, to the extent that
such amount has not already been paid by New Air, New
Air shall pay to IAE a non-refundable deposit of
[****] of the Estimated Purchase Price of the
Purchased Items.
----------
[****] 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.
Page 8 of 131
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2.7.1.2 Eighteen (18) months before the scheduled delivery of
each of the Purchased Items, New Air shall pay to IAE
a further non-refundable deposit of [****] of the
Estimated Purchase Price of such item.
2.7.1.3 Twelve (12) months before the scheduled delivery of
each of the Purchased Items, New Air shall pay to IAE
a further non-refundable deposit of [****] of the
Estimated Purchase Price of such item.
2.7.1.4 Immediately prior to the delivery of each of the
Purchased Items, New Air shall pay to IAE the
balance of the Purchase Price of such item.
2.7.2 IAE shall have the right to require New Air to make
additional deposits in respect of price changes arising
from the provisions of Clause 2.3 above on a similar basis
to that specified in Clause 2.7.1 above.
2.7.3 New Air undertakes that IAE shall receive the full amount
of payments falling due under this Clause 2.7, without any
withholding or deduction whatsoever.
2.7.4 All payments under this Clause 2.7 shall be made by cable or
telegraphic transfer and shall be deposited not later than
the due date of payment with:
Fleet Bank N.A.
175 Water Street
New York, NY 10038-4924
Account No. 2982-00-8199
ABA No. 021200339
or as otherwise notified from time to time by IAE.
2.7.5 For the purpose of this Clause 2.7 "payment" shall only be
deemed to have been made to the extent cleared or good
value funds are received in the numbered IAE bank account
specified in Clause 2.7.4 above.
2.7.6 If New Air fails to make any payment for any Purchased
Item on or before the date when such payment is due, then,
without prejudice to any of IAE's other rights, IAE will
(a) be entitled to charge interest on the overdue amount,
at the rate of 1.5% per month, from the date such payment
was due to the date such payment is made and (b) have the
right (but not the obligation) to suspend work on the
manufacture of such Purchased Item pending the remedy of
such failure and to reschedule the date of delivery of such
Purchased Item following the cure of such failure.
2.7.7 For the purpose of this Clause 2.7, the "Estimated Purchase
Price" of any of the Purchased Items shall be calculated in
accordance with the following formula.
P = B x [****](N)
where:
P is the Estimated Purchase Price
----------
[****] 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.
Page 9 of 131
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B is the applicable Basic Contract Price
N is the year of scheduled delivery minus the
year for which the Basic Contract Price is
defined.
CLAUSE 3 SPARE PARTS PROVISIONS
3.1 INTENT AND TERM
3.1.1 For as long as New Air owns and operates one or more Aircraft
in regular commercial service and is not in breach of any of
its obligations to IAE under the Contract, IAE shall provide
that reasonably adequate supplies of Spare Parts are available
for sale to New Air under this Contract. In consideration
thereof, IAE shall sell to New Air and, except as hereinafter
provided, New Air shall buy from IAE, New Air's requirements
of the following Spare Parts:
3.1.1.1 All Spare Parts manufactured pursuant to the detailed
design and order of IAE where IAE is the only source
from which New Air can purchase such Spare Parts in
an unused condition and in quantities sufficient to
meet New Air's requirements; and
3.1.1.2 Vendor Parts for which direct supply arrangements
between the manufacturers of such Vendor Parts and
New Air cannot be established. Except for the
purposes of Initial Provisioning pursuant to Clause
3.3 below, New Air shall notify IAE in writing not
less than twelve (12) months before scheduled
delivery requested by New Air that New Air intends to
purchase such Vendor Parts from IAE.
3.1.2 In an emergency, IAE shall sell to New Air Vendor Parts which
it is not obliged to sell under this Contract, but which it
has in stock or otherwise has reasonably available to it.
3.2 ATA STANDARDS
The parties to this Contract shall comply with the requirements of ATA
Specifications 2000 and 300, provided that the parties shall be
entitled to negotiate reasonable changes in those procedures or
requirements of the said specifications which, if complied with
exactly, would result in an undue operating burden or unnecessary
economic penalty. In particular, on written notification by New Air to
IAE prior to placement of Initial Provisioning orders, IAE would agree
to the use of ATA Specification 200 instead of ATA Specification 2000.
3.3 INITIAL PROVISIONING
3.3.1 To assist New Air's Initial Provisioning, IAE shall supply New
Air with Initial Provisioning Data in accordance with ATA
Specification 2000, subject to Clause 3.2 above.
3.3.2 Details of the format and precise nature of the said Initial
Provisioning Data, including the applicable revision numbers
of ATA Specification 2000,
Page 10 of 131
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definition of Spare Parts Categories, and Lead Times, and
agreement on technical publications shall be agreed between
IAE and New Air at a preliminary meeting held for this
purpose at a time and place to be agreed.
3.3.3 The said Initial Provisioning Data shall cover all Spare
Parts, including agreed Vendor Parts, which in IAE's opinion
may be reasonably required for New Air's operation of the
Installation Items.
3.3.4 Before New Air places Initial Provisioning Orders, a
conference shall be held for the review of Initial
Provisioning Data supplied by IAE under Clause 3.3.1 above.
The said conference shall be held as soon as possible before
first Aircraft delivery and shall be attended by the
personnel of each party directly responsible for Initial
Provisioning.
3.4 CHANGE IN INITIAL PROVISIONING DATA
IAE shall, free of charge, progressively and promptly revise Initial
Provisioning Data in accordance with ATA Specification 2000 to take
into account any changes which may materially affect provisioning
decisions.
3.5 DISCONTINUANCE OF INITIAL PROVISIONING DATA - USE OF PROCUREMENT DATA
3.5.1 Use of Initial Provisioning Data shall be discontinued on a
date to be agreed by the parties hereto, but in any event no
later than the date of delivery of the last Aircraft firmly
ordered by New Air at the date of this Contract. On or before
the said date IAE shall furnish New Air with Procurement Data
complying with ATA Specification 2000 and shall revise, free
of charge, the said Procurement Data as a matter of routine
thereafter.
3.5.2 Procurement Data shall be used to enable New Air to continue
to order Spare Parts to support the Installation Items.
3.6 STOCKING OF SPARE PARTS
Upon request, New Air shall provide IAE with information reasonably
required to enable IAE to plan and organize the manufacture and
stocking of Spare Parts.
3.7 LEAD TIMES
3.7.1 Spare Parts for Initial Provisioning shall be delivered on or
before the dates specified in New Air's orders, provided that
the said dates comply with lead times and do not call for
delivery more than three (3) months before the scheduled date
of delivery of the first Leased Aircraft to New Air and
provided further that delivery of the total Initial
Provisioning quantity shall be effected in line with New Air's
fleet build up and Aircraft utilization.
3.7.2 Except as herein provided, replenishment Spare Parts shall be
delivered within the Lead Time specified In the IAE Spare
Parts Catalog, except for
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certain major Spare Parts which shall be designated in Initial
Provisioning Data and Procurement Data as being available at
prices and lead times to be quoted upon request.
3.7.3 If any order for replenishment Spare Parts shall call for a
quantity materially in excess of New Air's normal
requirements, IAE shall notify New Air and may request a
special delivery schedule. If New Air confirms that the full
quantity ordered is required, delivery of the order shall be
effected at delivery dates specified by IAE and the Lead Times
provided by this Clause shall not apply.
3.7.4 In an emergency, IAE shall endeavor to deliver Spare Parts,
including certain major Spare Parts referred to in Clause
3.7.2 above, within the time limits specified by New Air. The
action to be taken on such orders shall be advised as follows
within the following time periods from IAE's receipt of such
notice:
3.7.4.1 AOG (Aircraft on Ground) orders - within 4 hours;
3.7.4.2 Critical (imminent AOG or work stoppage) - within 24
hours;
3.7.4.3 Expedite (less than published or quoted lead time) -
within 7 days.
3.8 ORDERING PROCEDURE
3.8.1 After receipt of Initial Provisioning Data, New Air shall
place, its Initial Provisioning Orders in sufficient time to
allow IAE to commence delivery prior to delivery of the first
Aircraft. New Air shall use its best efforts to give priority
to ordering major items designated in the Initial Provisioning
Data.
3.8.2 Subsequent orders for Spare Parts shall be placed by New Air
from time to time as may be appropriate. New Air shall give
IAE as much notice as possible of any change in its operation,
including, but not limited to, changes in maintenance or
overhaul arrangements affecting its requirements of Spare
Parts, including Vendor Parts.
3.8.3 IAE shall promptly acknowledge receipt of each order for Spare
Parts in accordance with ATA Specification 2000 procedure.
Unless qualified, such acknowledgment, subject to variation in
accordance with Clause 3.7.3 above, shall constitute an
acceptance of the order under the terms of this Contract.
3.8.4 If IAE notifies New Air that certain Spare Parts are packed in
standard package quantities (hereinafter called "SPQs"), New
Air's subsequent orders for such Spare Parts shall be for SPQs
or multiples thereof.
3.8.5 Unless New Air shall have specified "Total Quantity Required"
on its orders, IAE shall be entitled to consider an order for
inexpensive Spare Parts
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complete if at least 90% of the quantity ordered is delivered.
For the purpose of this Clause the term "inexpensive" shall
mean a price listed in the IAE Spare Parts Catalog at less
than Ten U.S. Dollars ($10) per unit, but shall be subject to
change by IAE from time to time.
3.8.6 Not later than the time of placing Initial Provisioning
Orders, New Air shall provide IAE in writing with full
shipping instructions applicable to both Initial Provisioning
Orders and to subsequent standard replenishment orders for
Spare Parts to be placed by New Air.
3.9 MODIFICATIONS TO SPARE PARTS
3.9.1 IAE shall be entitled to make modifications or changes to the
Spare Parts ordered by New Air hereunder. IAE shall promptly
inform New Air by means of Initial Provisioning Data,
Procurement Data and Service Bulletins when such modified
Spare Parts (or Spare Parts introduced by a repair scheme)
become available for supply hereunder. Notification of such
availability shall be given to New Air before delivery.
3.9.2 Modified Spare Parts shall be substituted for Spare Parts
ordered unless the modifications stated in Service Bulletins,
in the recommended or optional category are considered by New
Air to be unacceptable and New Air so states in writing to IAE
within ninety (90) days of the transmittal date of a Service
Bulletin, in which case New Air shall be entitled to place a
single order for New Air's anticipated total requirement of
pre-modified Spare Parts, at a price and delivery schedule to
be agreed.
3.9.3 Unless New Air notifies IAE in writing under the provisions of
Clause 3.9.2 hereof IAE may supply at the expense of New Air a
modification of any Spare Part ordered (including any
additional Spare Part needed to ensure interchangeability),
provided that the said modification has received the approval
of the Certification Authority. The delivery of such Spare
Parts shall begin on dates indicated by Service Bulletin. The
delivery schedule shall be agreed at the time when orders
for modifications are accepted by IAE.
3.9.4 If Spare Parts required for incorporation of a modification
are not ordered as a kit, New Air's orders must distinguish
them from normal replacement Spare Parts in accordance with
ATA Specification 2000.
3.10 INSPECTION
3.10.1 Conformance to the Specification of Installation Items will be
assured by IAE through the maintenance of procedures, systems
and records approved by the Certification Authority.
Conformance documentation will be issued and signed by
personnel authorized for such purpose.
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3.10.2 Conformance of Non-Installation Items will be assured by IAE
conformance documentation.
3.10.3 Upon the issue of conformance documentation in accordance with
Clauses 3.10.1 or 3.10.2 above, New Air shall be deemed to
have accepted the Installation Items and Non-Installation
Items and that such Items conform to the applicable
specification.
3.11 DELIVERY AND PACKING
3.11.1 IAE shall deliver Spare parts and Other Supplies Ex-Works
(INCOTERMS 1990), the point of manufacture. Shipping documents
and invoices shall be in accordance with ATA Specification
2000.
3.11.2 Upon such delivery, title to and risk of loss of or damage to
the said Spare Parts and Other Supplies shall pass to New
Air.
3.11.3 In accordance with ATA Specification 2000 requirements, New
Air shall advise IAE at time of order of its instructions as
to the marking and shipping of the Spare Parts and Other
Supplies.
3.11.4 The packaging of Spare Parts shall normally be in accordance
with ATA Specification 300 Category 2 standard and shall be
free of charge to New Air. Category 1 standard packaging, if
required by New Air, shall be paid for by New Air.
3.12 PRICES
3.12.1 Subject to Clause 3.7.2 above, prices of all Spare Parts shall
be quoted in U.S. Dollars, in the IAE Spare Parts Price
Catalog, Initial Provisioning Data and Procurement Data. Such
prices shall represent net unit prices, Ex-Works (INCOTERMS
1990) the point of manufacture.
3.12.2 Prices applicable to each order placed by New Air hereunder
shall be the prices in effect on the date IAE receives such
order, except when delivery of Spare Parts against any order
is scheduled to take place after the Lead Time stated in the
IAE Spare Parts Price Catalog, in which event the prices for
such items shall be those prices in effect ninety (90) days
prior to the scheduled time for delivery in accordance with
Clause 3.12.3 below.
3.12.3 IAE may adjust its prices for Spare Parts upon not less than
ninety (90) days notice to New Air, except that prices for
Spare Parts quoted in Initial Provisioning Data shall be
firm, provided that:
3.12.3.1 Orders are placed within three (3) months of receipt
by New Air of Initial Provisioning Data, and
3.12.3.2 Ordered quantities are agreed by IAE, and
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3.12.3.3 Deliveries are scheduled to be made prior to the
scheduled date for delivery of the first Aircraft (as
it was scheduled at the date of supply by IAE of
Initial Provisioning Data).
If for any reason orders are placed or subsequently
rescheduled to specify delivery more than six (6) months
after the date of first Aircraft delivery (as it was scheduled
at the date of supply by IAE of Initial Provisioning Data),
then the prices for such items shall be those prices in effect
ninety (90) days prior to the scheduled time for delivery of
such items against a schedule commensurate with New Air fleet
build up and Aircraft utilization. Notwithstanding the above,
individual price errors in the calculation of prices may be
adjusted without advance notice to New Air.
3.12.4 On request by New Air, prices of Spare Parts or other
materials not included in the Spare Parts Price Catalog shall
be quoted within a reasonable time by IAE.
3.13 PAYMENT
3.13.1 Payment for all purchases under this Clause 3 shall be made by
New Air to IAE within thirty (30) days after the date of
delivery.
3.13.2 New Air undertakes that IAE shall receive payment in U.S.
Dollars of the full amount of payments falling due under this
Clause 3.13, without any withholding or deduction whatsoever.
3.13.3 All payments under this Clause 3.13 shall be made by cable or
telegraphic transfer to, and shall be deposited not later than
the due date of payment with:
Fleet Bank N.A.
175 Water Street
New York, NY 10038-4924
Account No. 2982-00-8199
ABA No. 021200339
or as otherwise notified from time to time by IAE.
3.13.4 For the purpose of this Clause 3.13, payment shall only be
deemed to have been made to the extent immediately available
funds are received in the account specified in sub-clause
3.13.3 above.
3.13.5 Notwithstanding Clause 3.13.1 above, payments for all
purchases shall be due from New Air upon delivery, or at IAE's
option prior to delivery of the purchased items upon the
occurrence of any of the following events: (a) a receiver or
trustee is appointed of any of New Air's property, or
(b) New Air is adjudicated or voluntarily becomes a bankrupt
under any bankruptcy or winding up laws or other similar
legislation, or (c) New Air becomes
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insolvent or makes an assignment for the benefit of creditors,
or (d) an execution is issued pursuant to a judgment rendered
against New Air, or (e) New Air is unable or refuses to make
payment to IAE in accordance with any of New Air's obligations
to IAE.
3.13.6 If New Air fails to make any payment for any Spare Parts or
Other Supplies on or before the date when such payment is due,
then, without prejudice to any other rights set forth herein
or under applicable law, IAE will be entitled to charge
interest on the overdue amount, at the rate of 1.5% per month,
from the date such payment was due to the date such payment is
made.
3.14 PURCHASE BY NEW AIR FROM OTHERS
3.14.1 New Air may purchase from another A320 family aircraft
operator Spare Parts, which by virtue of Clause 3.1 above are
required to be purchased from IAE:
3.14.1.1 on an occasional basis; or
3.14.1.2 where the said operator has published details of
excessive stock holdings of the Spare Parts
concerned; or
3.14.1.3 pursuant to a pooling arrangement or joint use
agreement between New Air and the said operator.
3.14.2 Subject to the conditions specified below, in the following
circumstances New Air may obtain from established and approved
sources, other than IAE or other Aircraft operators, Spare
Parts which by virtue of Clause 3.1 above are required to be
purchased from IAE:
3.14.2.1 as a temporary expedient in the event of a temporary
but material failure by IAE to supply Spare Parts as
required herein; or
3.14.2.2 during any period when IAE is hindered or prevented
from delivering Spare Parts due to circumstances
beyond its control provided New Air is thereby able
to obtain the Spare Parts it requires sooner than IAE
is able to supply them, and provided further that New
Air will not unreasonably thereby increase its stock
of the Spare Parts; or
3.14.2.3 where IAE identifies a Spare Part as a standard
part.
New Air's rights under Clause 3.14.2 above are subject to
New Air being unable to satisfy its requirements for Spare
Parts under the provisions of Clause 3.14.1 above.
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3.14.3 Nothing in this Clause 3.14 shall be deemed to extend the
obligations of IAE or to diminish the limitations upon such
obligations under the Warranties referred to in Clauses 4.1
and 4.2 below.
3.14.4 Notwithstanding any extension of the time of delivery in
accordance with the provisions of Clause 6.1.1 below, New Air
shall be entitled to cancel all or part of any order on IAE
for Spare Parts which, pursuant to the terms of Clauses
3.14.2.1 and 3.14.2.2 are purchased from another source by
giving reasonable written notice to IAE of cancellation of the
said order.
3.14.5 In the event that New Air purchases Spare Parts under Clause
3.14, New Air shall give written notice to IAE of the extent
of such purchase supported by any other technical information
which IAE may reasonably require.
3.15 SPECIAL TOOLS, GROUND EQUIPMENT AND CONSUMABLE STORES
By mutual agreement, IAE may sell Other Supplies to New Air subject to
the terms and conditions of this Contract, but the detailed procedures
of this Contract with regard to Initial Provisioning, Procurement Data,
prices, stocking and Lead Time shall not apply. Technical data for
special tools and ground equipment shall be in accordance with ATA
Specification 101.
3.16 CONFLICT
In the event of any conflict between the provisions of this Contract
and the provisions of ATA Specifications 101, 200, 2000 and 300, the
provisions of this Contract shall prevail.
CLAUSE 4 WARRANTIES, GUARANTEES AND LIABILITIES
4.1 IAE warrants to New Air that, at the time of delivery, the Supplies
sold hereunder will be free of defects in material and manufacture, and
will conform substantially to applicable specifications. IAE's
liability and New Air's remedies under this warranty are limited to
the repair or replacement, at IAE's election, of Supplies or parts
thereof returned to IAE at the factory of manufacture which are shown
to IAE's reasonable satisfaction to have been defective; provided, that
written notice of the defect shall have been given by New Air to IAE
within ninety (90) days after the first operation or use of the
Supplies (or if the Supplies are installed in new Aircraft, within
ninety (90) days after acceptance of such Aircraft by its first
operator) but in no event later than one (1) year after the date of
delivery of such Supplies by IAE. Transportation charges for the
return of Supplies to IAE pursuant to this Clause 4.1 and their
reshipment to New Air and the risk of loss thereof will be borne by
IAE only if the Supplies are returned in accordance with written
shipping instructions from IAE and judged by IAE to be defective.
4.2 In addition, IAE grants and New Air accepts the following:
4.2.1 V2500 Engine and Parts Service Policy
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4.2.2 V2500 Nacelle and Parts Service Policy
4.2.3 V2500 Non-Installation Items Warranty
4.2.4 V2500 Reliability Guarantee
4.2.5 V2500 Delay and Cancellation Guarantee
4.2.6 V2500 Inflight Shutdown Guarantee
4.2.7 V2500 Fuel Consumption Retention Guarantee
4.2.8 V2500 Exhaust Gas Temperature Guarantee
4.2.9 V2500 Maintenance Cost Guarantee
The Service Policies, Warranties and Guarantees referred to in this Clause 4.2
are hereinafter called the "Warranties". The above Service Policies, Warranties
and Guarantees together form Exhibit D to this Contract.
4.3 The parties agree that those of the Warranties set out in Clauses 4.2.1
and 4.2.2 above shall apply to any equipment which falls within the
type of equipment covered by those Warranties, which are manufactured,
supplied or inspected by IAE howsoever and whenever (whether before, on
or after the date first above written) acquired by New Air from
whatsoever source including but not limited to any V2500 aero engines
and any associated equipment therefor, and any parts for such engines
and associated equipment which form part of any aircraft acquired from
the manufacturer.
4.4 The Warranties are personal to New Air and the obligations of IAE
thereunder shall only apply insofar as New Air owns and operates the
Supplies covered thereunder.
4.5 New Air shall inform any entity to whom it intends to sell, lease,
loan or otherwise dispose of any of the Supplies or equipment referred
to in Clause 4.3 above that such entity may obtain from IAE a direct
warranty agreement incorporating those of the Warranties set out in
Clauses 4.2.1 and 4.2.2. New Air shall also use its reasonable
endeavors to ensure that such entity shall enter into a direct warranty
agreement with IAE prior to delivery of any of the Supplies or such
equipment to such entity.
4.6 IAE and New Air agree that the intent of the Warranties provided in
Clause 4.2 is to provide specified benefits or remedies to New Air as a
result of specified events. It is not the intent, however, to duplicate
benefits or remedies provided to New Air by IAE or another source
(e.g., another equipment manufacturer or lessor) as a result of the
same event or cause. Therefore, notwithstanding the terms of the
Warranties, New Air agrees that it shall not be eligible to receive
benefits or remedies from IAE if it stands to receive or has received
duplicate benefits or remedies from IAE or another source as a result
of the same event or cause. Furthermore, in no event shall
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IAE be required to provide duplicate benefits to New Air and any other
party such as a leasing company as a result of the same event or cause.
4.7 New Air accepts that the Warranties granted to New Air under Clauses
4.1, 4.2 and 4.3 above together with the express remedies provided to
New Air in respect of the Supplies in accordance with this Contract are
expressly in lieu of, and New Air hereby waives, all other remedies,
conditions and warranties, expressed or implied including without
limitation, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, and all other obligations and liabilities
whatsoever of IAE and of its shareholders whether in contract or in
tort or otherwise for any defect, deficiency, failure, malfunctioning
or failure to function of any item of the Supplies or of the equipment
referred to in Clause 4.3 above, howsoever and whenever acquired by New
Air from whatever sources. New Air agrees that neither IAE nor any of
its shareholders shall be liable to New Air upon any claim therefor or
upon any claim howsoever arising out of the manufacture or supply or
inspection by IAE or any of its shareholders of any item of the
Supplies or of such equipment or any other item of whatever nature,
whether in contract or in tort or otherwise, except as expressly
provided in the said Warranties, and New Air assumes all risk and
liability whatsoever not expressly assumed by IAE in the said
Warranties.
4.8 IAE and New Air agree that this Clause 4 has been the subject of
discussion and negotiation, is fully understood by the parties and the
price of the Supplies and other mutual agreements of the parties set
forth in this Contract are arrived at in consideration of:
4.8.1 the express Warranties of IAE and New Air's rights thereunder;
and
4.8.2 the exclusions, waivers and limitations set forth in Clause
4.7 above.
CLAUSE 5 PRODUCT SUPPORT SERVICES
5.1 IAE will make available to New Air the Product Support Services
described in Exhibit C to this Contract. Except when identified in
such Exhibit C as being at additional cost or as requiring separate
contractual arrangements, such Product Support Services shall be
supplied at no additional charge to New Air and subject to the
provisions of this Contract. IAE may delegate the performance of
product support services to an affiliated company or any of IAE's
shareholders.
5.2 New Air will provide to any IAE customer support representative(s)
working at its facility, free of charge:
(a) reasonable, secure office accommodation including furniture
and office equipment and
(b) access to telephone, facsimile and secretarial services and
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(c) access to such first-aid and emergency assistance as is
customarily provided to New Air's own employees and
(d) airfare, accommodations, and subsistence during any period in
which the customer support representative(s) is required by
New Air to travel away from such customer support
representative(s)' normal location at New Air.
New Air further agrees that such customer support representative(s)
will be entitled to all reasonable working benefits allowed pursuant to
normal IAE practice, including but not limited to, leaves of absence
relating to vacation, holiday and sick time.
CLAUSE 6 MISCELLANEOUS
6.1 DELAY IN DELIVERY
6.1.1 If IAE is hindered or prevented from performing any obligation
hereunder including but not limited to delivering any of the
Supplies within the time for delivery specified in this
Contract (as such time may be extended pursuant to the
provisions of this Contract) by reason of:
6.1.1.1 any cause beyond the reasonable control of IAE, or
6.1.1.2 fires, industrial disputes or introduction of
essential modifications
the time for delivery shall be extended by a period equal to
the period for which delivery shall have been so hindered or
prevented, and IAE shall not be under any liability
whatsoever in respect of such delay.
6.1.2 If, by reason of any of the causes embraced by Clause 6.1.1
above, IAE is hindered or prevented from delivering any goods
(which are the same as and include the Supplies) to purchasers
(including New Air) then IAE shall have the right to allocate
in good faith such goods, as they become available, at its own
discretion among all such purchasers and IAE shall not be
under any liability whatsoever to New Air for delay in
delivery to New Air resulting from such allocation by IAE and
the time for delivery shall be extended by a period equal to
the delay resulting from such allocation by IAE.
6.1.3 Should IAE inexcusably delay performance of any obligation
hereunder including but not limited to delivery of any item of
the Supplies beyond the time for delivery specified in this
Contract (as such time may be extended pursuant to the
provisions of this Contract), then in respect of the first two
(2) months of such delay, IAE shall not be under any liability
whatsoever and thereafter in respect of any further delay in
delivery the damages recoverable by New Air from IAE as New
Air's sole remedy shall be its reasonable actual damages in
an amount not to exceed [****] of the purchase price of the
item of Supplies so delayed in respect of each [****] such
further delay (and prorata for any period of less than
[****]) subject
----------
[****] 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.
Page 20 of 131
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to an overall maximum of [****] of the purchase price of the
item of the Supplies so delayed.
6.1.4 The right of New Air to claim damages shall be conditional
upon the submission of a written claim therefor, within
forty-five (45) days from the date on which IAE notifies New
Air that the item of the Supplies so delayed is ready for
delivery, or from the date on which New Air exercises the
right of cancellation in respect of such item conferred in
accordance with Clause 6.1.5 below, whichever date shall first
occur.
6.1.5 Should IAE delay performance of any obligation hereunder
including but not limited to delivery of any item of the
Supplies beyond twelve (12) months from the time for delivery
specified in this Contract (as such time may be extended
pursuant to the provisions of this Contract) then, in addition
to the right of New Air under Clause 6.1.3, New Air shall be
entitled to refuse to take delivery of such item on giving IAE
notice in writing within one (1) month after the expiration of
such period of twelve (12) months. Upon receipt of such notice
IAE shall be free from any obligation in respect of such item
except that IAE shall refund to New Air any deposits made in
respect of the purchase price of such item of the Supplies.
6.2 PATENTS
6.2.1 IAE shall, subject to the conditions set out in this Clause
and as the sole liability of IAE in respect of any claims for
infringement of industrial property rights, indemnify New Air
against any claim that the use of any of the Supplies by
New Air within any country to which at the date of such claim
the benefits of Article 27 of the Convention on International
Civil Aviation of 7th December 1944 (The Chicago Convention)
apply, infringes any patent, design, or model duly granted or
registered provided, however, that IAE shall not be liable to
New Air for any consequential damage or any loss of use of
the Supplies or of the Aircraft in which the Supplies may be
incorporated arising as a result directly or indirectly of any
such claim.
6.2.2 New Air will give immediate notice in writing to IAE of any
such claim whereupon IAE shall have the right at its own
expense to assume the defense of or to dispose of or to
settle such claim in its sole discretion and New Air will give
IAE all reasonable assistance and will not by any act or
omission do anything which may directly or indirectly
prejudice IAE in this connection.
6.2.3 IAE shall have the right to substitute for any allegedly
infringing Supplies substantially equivalent non-infringing
supplies.
6.2.4 The indemnity contained in Clause 6.2.1 above shall not apply
to claims for infringement in respect of (i) Supplies
manufactured to the specific design instructions of New Air;
(ii) Supplies not of IAE design (but IAE shall in the event of
any claim for infringement pass on to New Air so far as it has
the right to do so the benefits of any indemnity given to IAE
by the designer,
----------
[****] 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.
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manufacturer or supplier of such Supplies) (iii) the manner or method
in which any of the Supplies is installed in the Aircraft; or
(iv) any combination of any of the Supplies with any item or items
other than Supplies.
6.3 CREDIT REIMBURSEMENT AND ASSIGNMENT;
6.3.1 If New Air does not take delivery of the twenty-five (25) Firm
Aircraft, the five (5) Firm Spare Engines and, PRO RATA to the
extent that Option Aircraft are acquired, the eight (8) Option
Spare Engines (each Firm Aircraft, Firm Spare Engine and
Option Spare Engine equally a "Firm Item") in accordance with
the schedules described in Exhibit B to the Contract (as such
may be modified or supplemented pursuant to the terms of the
Contract) then, without prejudice to IAE's other rights and
remedies under the Contract or otherwise, the value of each
and every credit, benefit and other concession received by New
Air pursuant to the Contract (including all Side Letters and
amendments thereto) or from IAE via the Aircraft Manufacturer
will be adjusted to pro-rata amounts, based on the ratio of
the number of Firm Items (whether Aircraft or Spare Engines)
purchased in accordance with the schedules described in
Exhibit B to the Contract to the total number of Firm Items
scheduled to have been so purchased. So, for example, if IAE
is to issue credits on delivery of each Firm Item and New Air
takes delivery of only half the total number of such Firm
Items (whether or not with the consent of Airbus) the value of
each credit to be issued on the Firm Items actually taken and
all other credits (if any) will be reduced by half. Following
such adjustment, New Air will promptly reimburse IAE in an
amount equal to (a) the value of the credits benefits and
other concessions actually provided in excess of the adjusted
amounts, plus (b) the interest on such excess amounts
calculated from the time each respective amount was applied or
value received until reimbursement. Interest will be
calculated at [****] at the time each respective amount was
applied or value was received.
6.3.2 RIGHT OF SETOFF
IAE shall have the right to set off credits from time to time
made available by IAE under the Contract either directly to
New Air (or its affiliates) or via the Aircraft Manufacturer
or its affiliates, in respect of the failure by New Air (or
its affiliates), after any applicable grace period, to cure
any payment default under (x) the Contract or (y) any IAE
financing agreement with New Air for the Aircraft.
6.4 NON-DISCLOSURE AND NON-USE
6.4.1 Subject to Clause 6.4.3 below, New Air agrees not to disclose
to any third party (other than professional advisers of such
party who agree to abide in advance by the non-disclosure
requirements set forth in this Clause 6.4) any Information
which it acquires directly or indirectly from IAE and agrees
not to use the same other than for the purpose for which it
was disclosed without
----------
[****] 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.
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the written approval of IAE. The expression "Information" in
this Clause 6.4.1 includes but is not limited to all oral or
written information, know-how, data, reports, drawings and
specifications, and all provisions of this Contract.
6.4.2 New Air shall be responsible for the observance of the
provisions of Clause 6.4.1 above by its employees.
6.4.3 The provisions of Clause 6.4.1 above shall not apply to
information which is or becomes generally known in the aero
engine industry nor shall the provisions of Clause 6.4.1 above
prevent any necessary disclosure of information to enable New
Air itself to operate, maintain or overhaul Supplies.
6.4.4 New Air shall be responsible for obtaining any required
authorization including any export licenses, import licenses,
exchange permits or any other governmental authorizations
required in connection with the transactions contemplated
under this Contract. New Air shall restrict disclosure of all
information and data furnished under this Contract in
obtaining such licenses, permits, or authorizations. New Air
shall only ship the Supplies and information and data
furnished under this Contract to those destinations permitted
under such licenses, permits, or authorizations.
6.4.5 In the event that any of the Information as described in
Clause 6.4.1 is required to be disclosed by New Air through a
valid governmental, judicial or regulatory agency order, New
Air agrees to advise IAE of the need for disclosure (in
advance of such disclosure when possible) and to limit the
disclosure to only those portions of the Information
specifically required to be disclosed by such order, and to
maintain the confidentiality of as much of the Information as
legally possible.
6.5 TAXES
6.5.1 Subject to Clause 6.5.2 below, IAE shall pay all imposts,
duties, fees, taxes and other like charges levied by the
governments of the United Kingdom, the United States of
America, the Federal Republic of Germany, and Japan or any
agency thereof in connection with the Supplies prior to their
delivery.
6.5.2 All amounts stated to be payable by New Air pursuant to this
Contract exclude any value added tax, sales tax or taxes on
turnover. In the event that the supply of goods or services
under this Contract is chargeable to any value added tax,
sales tax or taxes on turnover such tax will be borne by New
Air. To ensure so far as possible that New Air is not charged
with European Community value added tax ("VAT"), New Air will
within 30 days of signature hereof, inform IAE of its VAT Code
(if any) for inclusion on IAE's invoices.
6.5.3 New Air shall pay all other imposts, duties, fees, taxes and
other like charges by whomsoever levied.
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6.6 AMENDMENT
This Contract shall not be amended in any way other than by written
agreement by the parties on or after the date of this Contract, which
agreement is expressly stated to amend this Contract.
6.7 ASSIGNMENT
Except as provided under Clause 5 above, neither party may assign any
of its rights or obligations hereunder without the written consent of
the other party (except that IAE may assign its rights to receive money
hereunder or its rights and obligations, or a portion thereof, to any
wholly owned subsidiary of IAE or to any of IAE's shareholders). Any
assignment made in violation of this Clause 6.7 shall be null and void.
6.8 EXHIBITS
In the event of any unresolved conflict or discrepancy between the
Exhibits (which are hereby expressly made a part of this Contract) and
Clauses of this Contract then the Clauses shall prevail.
6.9 HEADINGS
The Clause headings and the Index do not form a part of this Contract
and shall not govern or affect the interpretation of this Contract.
6.10 LAW
This Contract shall be subject to and interpreted and construed in
accordance with the laws of the State of Connecticut, United States of
America (excluding its conflicts of law provisions). The parties agree
to exclude the application of the United Nations Convention on
Contracts for the International Sale of Goods (1980).
6.11 NOTICES
Any notice to be served pursuant to this Contract shall be in the
English language and is to be sent by certified mail, recognized
international carrier or facsimile (with confirmation copy by any of
the other means) to:
In the case of IAE:
IAE International Aero Engines AG
400 Main Street, M/S 121-10,
East Hartford, Connecticut 06108, USA
Facsimile No. 860-565-5220
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Attention: Business Director and Chief Legal Officer
In the case of New Air:
New Air Corporation
6322 South 3000 East
Suite L201
Salt Lake City, Utah 84121
Facsimile No. 801-944-4840
Attention: Executive Vice President and General Counsel, Thomas Kelly
With a copy to the Chief Financial Officer, John Owen
or in each case to such other place of business as may be notified from
time to time by the receiving party.
6.12 EXCLUSION OF OTHER PROVISIONS AND PREVIOUS UNDERSTANDINGS
6.12.1 This Contract contains the only provisions governing the sale
and purchase of the Supplies and shall apply to the exclusion
of any other provisions on or attached to or otherwise forming
part of any order form of New Air, or any acknowledgment or
acceptance by IAE, or of any other document which may be
issued by either party relating to the sale and purchase of
the Supplies.
6.12.2 The parties agree that neither of them have placed any
reliance whatsoever on any representations, agreements,
statements or understandings made prior to the signature of
this Contract, whether orally or in writing, relating to the
Supplies, other than those expressly incorporated in this
Contract, which has been negotiated on the basis that its
provisions represent their entire agreement relating to the
Supplies and shall supersede all such representations,
agreements, statements and understandings.
6.13 CONDITIONS PRECEDENT
During the term of this Contract, the obligations of IAE to provide, or
cause to be provided Supplies or any other benefits to New Air pursuant
to the terms hereof, shall be subject to the non-existence of any of
the following events on the date when such Supplies or benefits become
due, and should any such event then exist IAE shall be under no
obligation to provide, or cause to be provided any Supplies or any
other benefits to New Air:
(a) A continuing event of default (taking into account any
applicable grace period) by New Air in (x) the payment of
[****] U.S. Dollars [****] or more of other amounts under
the Contract (including any exhibits and letter agreements
thereto), or (y) the payment of any scheduled amount of
principal, interest, lease rental or other similar payment
under any
----------
[****] 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.
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of the financings implemented pursuant to any IAE financing
agreement with New Air for the Aircraft- or
(b) Any event that is a Termination Event or would be a
Termination Event, but for lapse of time, shall have occurred,
6.14 TERMINATION EVENTS
Any of the following shall constitute a "Termination Event" under this
Contract:
(i) New Air commences my case, proceeding or other action with
respect to New Air or its property in an), jurisdiction
relating to bankruptcy, insolvency, reorganization,
dissolution, liquidation, winding-up, or relief from, or with
respect to, or readjustment of, debts or obligations; or
(ii) New Air seeks the appointment of a receiver, trustee,
custodian or other similar official for New Air for all or
substantially all of its assets, or New Air makes a general
assignment for the benefit of its creditors; or
(iii) New Air otherwise becomes the object of any case, proceeding
or action of the type referred to in the preceding CLAUSES (I)
or (ii) which remains unstayed, undismissed or undischarged
for a period of sixty (60) days; or
(iv) An ACTION IS commenced against New Air seeking issuance of a
warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which
remains unstayed, undismissed or undischarged for a period of
sixty (60) days; or
(v) A continuing event of default (taking into account any
applicable grace period) by New Air on an% payment of
principal or interest on any indebtedness hereunder or in the
payment of any guarantee obligation hereunder or under an),
IAE financing agreement with New AIR FOR th Aircraft, or any
other document related hereto to which New Air and IAE or
their respective' affiliates, are parties,
In the event of the occurrence of a Termination Event, New Air shall be deemed
to be in material breach of this Contract, and IAE shall at its option HAVE the
right to resort to any remedy under applicable law, including, without
limitation, the right by written notice, effective immediately, to terminate
this Contract; provided that, no such notice need be delivered, and this
Contract shall automatically terminate upon the occurrence of a Termination
Event specified in sub-Clause (i),(ii) or (III)
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IN WITNESS WHEREOF the parties hereto have caused this Contract to be signed on
their behalf by the hands of their authorized officers the day and year first
hefore written:
For IAE International Aero Engines AG [ILLEGIBLE]
In the presence of [ILLEGIBLE]
For New Air Corporation /s/ David Neckman, CEO
-----------------------
In the presence of /s/ Thomas E. Kelly
-----------------------
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EXHIBIT A1
V2500 TURBOFAN ENGINE MODEL SPECIFICATION
FAA Commerical Type Certificate E40NE Model V2524 - A5
Spec. No. IAE S24A5/2
SEA LEVEL STATIC RATINGS
(See General Notes)
Net
Thrust
lb
Take-off Rating (5min) 24,480
Maximum Continuous Rating 19,200
DESCRIPTION
Type - Dual rotor, axial flow, high bypass trubofan, single-stage fan,
four-stage low compressor, ten-stage high pressure compressor, annular
combustor, two-stage high pressure turbine, five-stage low pressure turbine.
Installation Drawing No. 4W6199. The Engine Installation Drawing shows the
Enigne envelope and provides dimensions an data for the eninge installation
interfaces.
FUEL AND OIL
Fuel - Specification: MIL-T-5624, MIL-T-83133 or ASTM-D-1655
Oil - Specification: MIL-L-23699 Type II
Oil Consumption: Maximum (as measured over a 10-hour period) -.15 U.S.
gal/hr
STANDARD EQUIPMENT
(Included in Engine Price)
FUEL SYSTEM AND CONTROL SYSTEM COMPRISING:
LP/HP Fuel Pump, Fuel Filter Element, Fuel Temperature Sensor, Fuel
Diverter/Back to Tank Value, Fuel Distribtuion Value, P2T2 Probe, Relay Box,
Electronic Engine Control, Dedicated Generator, {4.9 Sensors and Manifold,
Woodward Governor Company Fuel Metering Unit, Fuel Supply Pipe.
PAGE 28 OF 131
<Page>
IGNITION SYSTEM COMPRISING
Ignition Exciter, Igniter Plug, Ign tion Lead (2 each).
AIR SYSTEM COMPRISING
No. 4 BEARING COMPARTMENT Heat Exchanger, HP/LP Active Clearance Control Valve,
Active CLEARANCE CONTROL VALVE Actuator, LP Compressor Bleed Valve Master
Actuator, LP Compressor Bleed Valve Slave Actuator, Variable Stator Vane
Actuator, HP Compressor Bleed Valve$, HP Compressor Bleed Valve Solenoids.
ENGINE NDICATING SYSTEM COMPRISING:
Exhaust Gas Temperature (EGT) Thermocouples, EGT Harness and Junction Box.
OIL SYSTEM COMPRISING:
Oil Tank, Air Cooled Oil Cooler, Fuel Cooled Oil Cooler, Pressure Oil Filter
Element, Air Cooled Oil Cooler Modulating Valve, Scavenge Oil Filter Housing
Assembly and Element, No. 4 Bearing Compartment Scavenge Valve, No. 4 Bearing
Scavenge Pressure Transducer, IDG Fuel Cooled Oil Cooler.
MISCELLANEOUS:
Electrical EEC Harnesses - Fan and Core, Nose Spinner, PART - Drains, If
Intertwined With Engine parts, Airframe Accessory Mounting Pads and Drives, PART
- Brackets on Working Flanges for attachment of Aircraft Equipment and EBU, PART
- IDG Piping, where Intertwined with Engine Paris.
ADDITIONAL EQUIPMENT
Available at Increased Price
Engine Storage Bag Engine Transportation Stand Enhanced Engine Condition
Monitoring Instrumentation
Items of ADDITIONAL EQUIPMENT should be ordered at the time of engine
procurement in order to assure availability of this equipment at the time of
engine shipment.
PAGE 29 OF 131
<Page>
GENERAL NOTES
The specified Sea Level Static Rat ngs are ideal and are based on U.S. Standard
Atmosphere 19 conditions, the specified FUEL and oil, an ideal inlet pressure
recovery, no fan or compressor air bleed or load on accessory drives, a mixed
exhaust system having NO INTERNAL pressure losses and with a mixed primary
nozzle velocity coefficient equal to 1 .0.
Take-off rating is- the maximum thrust certified for take-off operation.
Take-off thrust is available at and below ISA plus 400C (72 degrees F) ambient
temperatures,
Maximum Continuous Rating is the maximum thrust CERTIFIED FOR CONTINUOUS
operation. The specified THRUST IS AVAILABLE AT and below ISA plus I 18
degrees F (I OOC) ambient temperature.
Maximum Climb Rating is the maximum thrust approved for normal climb
operation.
Maximum Cruise Rating is the maximum thrust approved for normal cruise
operation,
Unless otherwise SPECIFIED, engines will be supplied with the STANDARD
EQUIPMENT listed.
PAGE 30 OF 131
<Page>
EXHIBIT A2
V2500 TURBOFAN ENGINE MODEL SPECIFICATION
FAA Commercial Type Certificate E4ONE Model V2527 - A5
Spec. No. IAE S27A5/2
SEA LEVEL STATIC RATINGS
(See General Notes)
Net
Thrust
lb
Take-off Rating (5 min) 24,800
Maximum Continuous Rating 22,240
DESCRIPTION
Type - Dual rotor, axial flow, high bypass turbofan, single-stage fan,
four-stage low compressor, ten-stage high pressure compressor, annular
combustor, two-stage high pressure turbine, five-stage low pressure turbine.
Installation Drawing No. 4W6199. The Engine Installation Drawing shows the
Engine envelope and provides dimensions and data for the engine installation
interfaces.
FUEL AND OIL
Fuel - Specification: MIL-T-5624, MIL-T-83133 or ASTM-D-1655
Oil - Specification: MIL-L-23699 Type II
Oil Consumption: Maximum (as measured over a 10-hour period) 0.15 U.S.
gal/hr
STANDARD EQUIPMENT
(Included in Engine Price)
FUEL SYSTEM AND CONTROL SYSTEM COMPRISING:
LP/HP Fuel Pump, Fuel Filter Element, Fuel Temperature Sensor, Fuel
Diverter/Back to Tank Valve, Fuel Distribution Valve, P2T2 Probe, Relay Box,
Electronic Engine Control, Dedicated Generator, P4.9 Sensors and Manifold,
Woodward Governor Company Fuel Metering Unit, Fuel Supply Pipe.
Page 31 of 131
<Page>
IGNITION SYSTEM COMPRISING:
Ignition Exciter, Igniter Plug, Ignition Lead (2 each).
AIR SYSTEM COMPRISING:
No. 4 Bearing Compartment Heat Exchanger, HP/LP Active Clearance Control
Valve, Active Clearance Control Valve Actuator, LP Compressor Bleed Valve
Master Actuator, LP Compressor Bleed Valve Slave Actuator, Variable Stator
Vane Actuator, HP Compressor Bleed Valves, HP Compressor Bleed Valve
Solenoids.
ENGINE INDICATING SYSTEM COMPRISING:
Exhaust Gas Temperature (EGT) Thermocouples, EGT Harness and Junction Box.
OIL SYSTEM COMPRISING:
Oil Tank, Air Cooled Oil Cooler, Fuel Cooled Oil Cooler, Pressure Oil Filter
Element, Air Cooled Oil Cooler Modulating Valve, Scavenge Oil Filter Housing
Assembly and Element, No. 4 Bearing Compartment Scavenge Valve, No. 4 Bearing
Scavenge Pressure Transducer, IDG Fuel Cooled Oil Cooler.
MISCELLANEOUS:
Electrical EEC Harnesses - Fan and Core, Nose Spinner, PART - Drains, If
Intertwined With Engine parts, Airframe Accessory Mounting Pads and Drives,
PART - Brackets on Working Flanges for attachment of Aircraft Equipment and
EBU, PART - IDG Piping, where Intertwined with Engine Parts.
ADDITIONAL EQUIPMENT
Available at Increased Price
Engine Storage Bag
Engine Transportation Stand
Enhanced Engine Condition Monitoring Instrumentation
Items of ADDITIONAL EQUIPMENT should be ordered at the time of engine
procurement in order to assure availability of this equipment at the time of
engine shipment.
Page 32 of 131
<Page>
GENERAL NOTES
The specified Sea Level Static Ratings are ideal and are based on U.S.
Standard Atmosphere 1962 conditions, the specified fuel and oil, an ideal
inlet pressure recovery, no fan or compressor air bleed or load on accessory
drives, a mixed exhaust system having no internal pressure losses and with a
mixed primary nozzle velocity coefficient equal to 1.0.
Take-off rating is the maximum thrust certified for take-off operation.
Take-off thrust is available at and below ISA plus 40DEG.C (72DEG.F) ambient
temperatures.
Maximum Continuous Rating is the maximum thrust certified for continuous
operation. The specified thrust is available at and below ISA plus 18DEG.F
(10DEG.C) ambient temperature.
Maximum Climb Rating is the maximum thrust approved for normal climb
operation.
Maximum Cruise Rating is the maximum thrust approved for normal cruise
operation.
Unless otherwise specified, engines will be supplied with the STANDARD
EQUIPMENT listed.
Page 33 of 131
<Page>
EXHIBIT A3
V2500 TURBOFAN ENGINE MODEL SPECIFICATION
FAA Commercial Type Certificate E4ONE Model V2533 - A5
Spec. No. IAE S33A5/2
SEA LEVEL STATIC RATINGS
(See General Notes)
Net
Thrust
lb
Take-off Rating (5 min) 31,600
Maximum Continuous Rating 26,950
DESCRIPTION
Type - Dual rotor, axial flow, high bypass turbofan, single-stage fan,
four-stage low compressor, ten-stage high pressure compressor, annular
combustor, two-stage high pressure turbine, five-stage low pressure turbine.
Installation Drawing No. 4W6199. The Engine Installation Drawing shows the
Engine envelope and provides dimensions and data for the engine installation
interfaces.
FUEL AND OIL
Fuel - Specification: MIL-T-5624, MIL-T-83133 or ASTM-D-1655
Oil - Specification: MIL-L-23699 Type II
Oil Consumption: Maximum (as measured over a 10-hour period) 0.15 U.S.
gal/hr
STANDARD EQUIPMENT
(Included in Engine Price)
FUEL SYSTEM AND CONTROL SYSTEM COMPRISING:
LP/HP Fuel Pump, Fuel Filter Element, Fuel Temperature Sensor, Fuel
Diverter/Back to Tank Valve, Fuel Distribution Valve, P2T2 Probe, Relay Box,
Electronic Engine Control, Dedicated Generator, P4.9 Sensors and Manifold,
Woodward Governor Company Fuel Metering Unit, Fuel Supply Pipe.
Page 34 of 131
<Page>
IGNITION SYSTEM COMPRISING:
Ignition Exciter, Igniter Plug, Ignition Lead (2 each).
AIR SYSTEM COMPRISING:
No. 4 Bearing Compartment Heat Exchanger, HP/LP Active Clearance Control
Valve, Active Clearance Control Valve Actuator, LP Compressor Bleed Valve
Master Actuator, LP Compressor Bleed Valve Slave Actuator, Variable Stator
Vane Actuator, HP Compressor Bleed Valves, HP Compressor Bleed Valve
Solenoids.
ENGINE INDICATING SYSTEM COMPRISING:
Exhaust Gas Temperature (EGT) Thermocouples, EGT Harness and Junction Box.
OIL SYSTEM COMPRISING:
Oil Tank, Air Cooled Oil Cooler, Fuel Cooled Oil Cooler, Pressure Oil Filter
Element, Air Cooled Oil Cooler Modulating Valve, Scavenge Oil Filter Housing
Assembly and Element, No. 4 Bearing Compartment Scavenge Valve, No. 4 Bearing
Scavenge Pressure Transducer, IDG Fuel Cooled Oil Cooler.
MISCELLANEOUS:
Electrical EEC Harnesses - Fan and Core, Nose Spinner, PART - Drains, If
Intertwined With Engine parts, Airframe Accessory Mounting Pads and Drives,
PART - Brackets on Working Flanges for attachment of Aircraft Equipment and
EBU, PART - IDG Piping, where Intertwined with Engine Parts.
ADDITIONAL EQUIPMENT
Available at Increased Price
Engine Storage Bag
Engine Transportation Stand
Enhanced Engine Condition Monitoring Instrumentation
Items of ADDITIONAL EQUIPMENT should be ordered at the time of engine
procurement in order to assure availability of this equipment at the time of
engine shipment.
Page 35 of 131
<Page>
GENERAL NOTES
The specified Sea Level Static Ratings are ideal and are based on U.S.
Standard Atmosphere 1962 conditions, the specified fuel and oil, an ideal
inlet pressure recovery, no fan or compressor air bleed or load on accessory
drives, a mixed exhaust system having no internal pressure losses and with a
mixed primary nozzle velocity coefficient equal to 1.0.
Take-off rating is the maximum thrust certified for take-off operation.
Take-off thrust is available at and below ISA plus 40DEG.C (72DEG.F) ambient
temperatures.
Maximum Continuous Rating is the maximum thrust certified for continuous
operation. The specified thrust is available at and below ISA plus 18DEG.F
(10DEG.C) ambient temperature.
Maximum Climb Rating is the maximum thrust approved for normal climb
operation.
Maximum Cruise Rating is the maximum thrust approved for normal cruise
operation.
Unless otherwise specified, engines will be supplied with the STANDARD
EQUIPMENT listed.
Page 36 of 131
<Page>
EXHIBIT B
SCHEDULES
<Page>
EXHIBIT B1
AIRCRAFT DELIVERY SCHEDULES
<Table>
<Caption>
FIRM A320 AIRCRAFT
YEAR NUMBER DELIVERY PERIOD
---- ------ ---------------
<S> <C> <C>
2000 6 (1)[****];(1)[****];(1)[****]
(1)[****];(2)[****]
2001 6 (3)[****];(3)[****]
2002 8 (2)[****];(6)[****]
2003 5
TOTAL 25
</Table>
All twenty-five (25) Firm A320 Aircraft have no deferral or conversion
rights.
<Table>
<Caption>
OPTION A320 AIRCRAFT
YEAR NUMBER
---- ------
<S> <C>
2003 3
2004 5
2005 5
2006 6
2007 6
TOTAL 25
</Table>
RESERVE OPTION A320 FAMILY AIRCRAFT
Under the terms of its purchase agreement with Airbus for the Aircraft, New
Air has the right to receive delivery positions for Reserve Option A320
Family Aircraft equal to the number of Option A320 Family Aircraft as to
which New Air has exercised its purchase rights. Because New Air has options
with Airbus for twenty-five (25) Option A320 Family Aircraft, it
correspondingly has rights with Airbus to receive delivery positions for up
to twenty-five (25) Reserve Option A320 Family Aircraft. No dates are
specified for delivery of these Reserve Option A320 Family Aircraft. Such
delivery dates will be determined at the time options are exercised by New
Air. The agreement between New Air and Airbus anticipates that all Reserve
Option A320 Family Aircraft will be delivered prior to the end of 2007.
Airbus has also granted New Air conversion rights for each of the twenty-five
(25) Option A320 Family Aircraft and the twenty-five (25) Reserve Option A320
Family Aircraft to the A321-200 or A319 aircraft type on twenty-one months
notice to Airbus.
<Table>
<Caption>
LEASED AIRCRAFT
YEAR NUMBER DELIVERY PERIOD
---- ------ ---------------
<S> <C> <C>
1999 1 [****]
2000 3 (1)[****];(1)[****];(1)[****]
2001 3 (1)[****];(1)[****];(1)[****]
TOTAL 7
</Table>
----------
[****] 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.
Page 38 of 131
<Page>
EXHIBIT B2
PURCHASED ITEMS, PRICE,
ESCALATION FORMULA AND DELIVERY
<Table>
<Caption>
Basic Contract Price
Purchased Item U.S. Dollars (January 1999) Qty. Delivery Date
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
V2527-A5 spare Engine: [****] 1 [****]99
V2527-A5 spare Engine: [****] 1 [****]00
V2527-A5 spare Engine: [****] 1 [****]01
V2527-A5 spare Engine: [****] 1 [****]02
V2527-A5 spare Engine: [****] 1 [****]03
OPTION SPARE ENGINES
----------------------
V2524-A5 spare Engine: [****]
V2527-A5 spare Engine: [****]
V2533-A5 spare Engine: [****]
</Table>
----------
[****] 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.
Page 39 of 131
<Page>
IAE ESCALATION FORMULA
1. Any unit base price or other sum expressed to be subject to escalation
from a base month to a month of delivery or other date of determination
in accordance with the IAE Escalation Formula will be subject to
escalation in accordance with the following formula:
P=Pb ([****] L + [****] M + [****] E)
--- --- ---
Lo Mo Eo
Where:
P = the invoiced purchase price or escalated sum rounded to the nearest
U.S. Dollar.
Pb = unit base price or other sum.
Lo = the "Average Hourly Earnings of Aircraft Engine and Engine Parts
Production Workers" SIC Code 3724 published by the Bureau of Labor
Statistics in the U.S. Department of Labor for the month preceding the
base month by four months.
L = the "Average Hourly Earnings of Aircraft Engine and Engine Parts
Production Workers" SIC Code 3724 for the month preceding the month of
delivery or other date of determination by four months.
Mo = the "Producer Price Index, Code 10, for Metals and Metal Products"
published by the Bureau of Labor Statistics in the U.S. Department of
Labor for the month preceding the base month by four months.
M = the "Producer Price Index, Code 10, for Metals and Metal Products"
for the month preceding the month of delivery or other date of
determination by four months.
Eo = the "Producer Price Index, Code 5, for Fuel and Related Products
and Power" published by the Bureau of Labor Statistics in the U.S.
Department of Labor for the month preceding the base month by four
months.
E = the "Producer Price Index, Code 5, for Fuel and Related Products and
Power" for the month preceding the month of delivery or other date of
determination by four months.
2. The values of the factors [****] L and [****] M and [****] E
--- --- ---
Lo Mo Eo
respectively, shall be determined to the nearest fourth decimal place.
If the fifth decimal is five or more, the fourth decimal place shall be
raised to the next higher number.
3. If the U.S. Department of Labor ceases to publish the above statistics
or modifies the basis of their calculation, then IAE may substitute any
officially recognized and substantially equivalent statistics.
----------
[****] 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.
Page 40 of 131
<Page>
4. The Basic Contract Prices contained in this Exhibit B are subject to
escalation from a Base Month of January 1999 to the month of delivery
using Lo, Mo and Eo values for September 1998.
5. If the application of the formula contained in this Exhibit B results in
a Purchase Price which is lower than the Basic Contract Price, the Basic
Contract Price will be deemed to be the Purchase Price for such Supplies.
Page 41 of 131
<PAGE>
EXHIBIT C
PRODUCT SUPPORT PLAN
Page 42 of 131
<PAGE>
PRODUCT SUPPORT
FOR THE
V2500 ENGINE
IAE INTERNATIONAL AERO ENGINES AG
Page 43 of 131
<PAGE>
TABLE OF CONTENTS
1. INTRODUCTION ....................................................46
2. CUSTOMER SUPPORT ................................................47
2.1 Customer Support Manager
2.2 Customer Support Representatives
2.3 Customer Training
2.4 Engine Maintenance Management
2.5 Operations Monitoring
2.6 Special Programs
3. BUSINESS SUPPORT ................................................51
3.1 Engine Warranty Services
3.2 Maintenance Center Support
3.3 Maintenance Facilities Planning Service
3.4 Engine Reliability and Economic Forecasts
3.5 Logistics Support Studies
3.6 Lease Engine Program
4. TECHNICAL SERVICES ..............................................54
4.1 Technical Services
4.2 Powerplant Maintenance
4.3 Customer Performance
4.4 Diagnostic Systems
4.5 Human Factors
4.6 Flight Operations
4.7 Repair Services
4.8 Tooling and Support Equipment Services
4.9 Product Support Technical Publications
5. SPARE PARTS .....................................................65
5.1 Spare Parts Support
PRODSUP
Page 44 of 131
<Page>
1.0 INTRODUCTION
IAE International Aero Engines AG (IAE) will make the following support
personnel and services available to the V2500 engine customer: Flight
Operations, Customer Performance, Customer Support Representatives,
Customer Maintenance Support, Technical Services, Powerplant
Maintenance, Service Data Analysis, Human Factors, Repair Services,
Warranty Administration, Maintenance Facilities Planning, Tooling and
Support Equipment Services, Product Support Technical Publications,
Customer Training, Spare Parts Support and Maintenance Center Support.
In general, these services are provided at no charge to V2500
customers, however, some specific customized services as noted in the
descriptions below, may be purchased from IAE.
To make these support services readily available to you, our customer,
in the most efficient manner, the Customer Support Group has been
established and assigned primary responsibility within IAE for
customer liaison. A Customer Support Manager is assigned to maintain
direct liaison with each individual Customer. A description of the
various product support services available to each customer follows.
IAE reserves the right to withdraw or modify the services described
herein at any time at its sole discretion. No such withdrawal or
modification shall diminish the level of services and support which the
Customer may be entitled to receive with respect to V2500 engines for
which an acceptable order has been placed with IAE or with respect to
aircraft with installed V2500 engines for which a firm and
unconditional order has been placed with the aircraft manufacturer,
prior to the announcement of any such withdrawal or modification.
Page 45 of 131
<Page>
2.0 CUSTOMER SUPPORT
2.1 CUSTOMER SUPPORT MANAGER
The Customer Support Manager provides a direct liaison
between the airline customer's Engineering, Maintenance,
Operations, Logistics, Commercial and Financial
organizations and the corresponding functions within IAE.
The Customer Support Manager assigned to each airline is
responsible for coordinating and monitoring the effort of
the Product Support Department functional organization to
achieve timely and responsive support for the airline.
The Customer Support Manager provides the following specific
services to the airline customer:
- Readiness Program and planning prior to EIS
- Technical recommendations and information.
- Engine Maintenance Management Plans
- Refurbishment, Modification and Conversion program
planning assistance.
- Coordination of customer repair, maintenance and
logistics requirements with the appropriate Product
Support functional groups.
- Assist with critical engine warranty/service policy
claims.
The Customer Support Manager will represent the airline
customer in IAE internal discussions to ensure that the best
interests of the customer and IAE are considered when making
recommendations to initiate a program, implement a change or
improvement in the V2500 engine.
2.2 CUSTOMER SUPPORT REPRESENTATIVES
IAE Customer Support Representatives provide the following
services to the airline customer:
- 24 Hour Support
- Maintenance Action Recommendations
- Daily Reporting on Engine Technical Situations
- On-The-Job Training
- Service Policy Preparation Assistance
- Prompt Communication with IAE
2.2.1 ENGINE MAINTENANCE SUPPORT SERVICE:
Customer Support Representatives assist airline
customer personnel in the necessary preparation for
engine operation and maintenance. The Representative,
teamed with a Customer Support Manager will work
closely with the airplane manufacturer's support team
particularly during the initial period of aircraft
operation. Representatives are in frequent contact
with the IAE offices on technical matters.
Information and guidance received from
Page 46 of 131
<Page>
the home office is transmitted promptly to the
airline which allows the airline to share in all
related industry experience.
The practice permits immediate use of the most
effective procedures and avoidance of unsuccessful
techniques. The IAE office contact ensures
that IAE Representatives know, in detail, the latest
and most effective engine maintenance procedures and
equipment being used for maintenance and overhaul of
V2500 engines. They offer technical information and
recommendations to airline personnel on all aspects
of maintenance, repair, assembly, balancing, testing,
and spare parts support of IAE.
2.2.2 ON THE JOB TRAINING:
Customer Support Representatives will conduct
on-the-job training for the airline's maintenance
personnel. This training continues until the
maintenance personnel have achieved the necessary
level of proficiency. Training of new maintenance
personnel will be conducted on a continuing basis.
2.2.3 SERVICE POLICY ADMINISTRATION:
Customer Support Representatives will provide
administrative and technical assistance in the
application of the IAE Engine and Parts Service
Policy to ensure expeditious and accurate processing
of airline customer claims.
2.3 CUSTOMER TRAINING:
2.3.1 IAE Customer Training offers airline customers the
following support:
- Technical Training at Purpose Built
Facilities
- On-site Technical Training
- Technical Training Consulting Service
- Training Aids and Materials
2.3.2 TRAINING PROGRAM:
The IAE Customer Training Center has an experienced
full-time training staff which conducts formal
training programs in English for airline customers'
maintenance, training and engineering personnel. The
standard training programs are designed to prepare
customer personnel, prior to the delivery of the
first aircraft, to operate and maintain the installed
engines. Standard courses in engine operation, line
maintenance, modular maintenance, performance and
trouble-shooting are also available throughout the
production life of the engine. The courses utilize
the latest teaching technology, training aids and
student handouts. IAE Customer Support will
coordinate the scheduling of specific courses as
required. Training at the Customer Training Center
is provided to a limit of fifty (50)
Page 47 of 131
<Page>
man-days per aircraft. The following is the
curriculum of standard courses available. On-site
technical training, technical training consulting
services and customized courses may be provided upon
customer request and subject to separate contractual
arrangements.
2.3.3 GENERAL V2500 FAMILIARIZATION:
This two day course is designed for experienced gas
turbine personnel who will be responsible for
planning, provisioning and maintenance of the V2500
engine. This course is also designed to appropriately
familiarize key staff, supervisory and operations
planning personnel and flight crews. Discussions are
concentrated in the following subject areas:
- Engine construction features internal and
external hardware.
- Engine systems operation, major components
accessibility for removal/replacement.
- Operational procedures
- Performance characteristics
- Maintenance concepts, repair and replacement
requirements and special tooling.
The course is normally conducted in preparation for
fleet introductory discussions in the provisioning of
spares and tooling, training and line maintenance
areas to acquaint the customer with the engine, its
systems, operations and procedures.
2.3.4 LINE MAINTENANCE AND TROUBLESHOOTING:
This course is designed for key line maintenance and
troubleshooting personnel who have not received
previous formal training on the V2500 engine. The
classroom phases provide the student with the
information essential for timely completion of line
maintenance activities and the procedures for
effective troubleshooting and correction of
malfunctions in the V2500 engine systems and the
engine/airframe interfaces. Classroom and shop
training are provided for in the following areas:
- Engine Description
- Systems Operation
- Applied Performance
- Ground Operations
- Troubleshooting Procedures
- Practical Phase Line Maintenance Tasks
Additional courses are available in Borescope
utilization and Engine Conditioning Monitoring (ECM)
Page 48 of 131
<Page>
2.3.5 V2500 FAMILIARIZATION AND MODULAR MAINTENANCE:
Provides experienced heavy maintenance personnel with
engine modular disassembly and assembly training.
The training is concentrated in the following
subject areas:
- Engine Description Overview
- Engine Systems Overview
- Heavy Maintenance Tasks*
* Course duration and "hands-on" coverage are
contingent on the availability of an engine
and required tooling.
2.4 ENGINE MAINTENANCE MANAGEMENT
Planning documents, tailored for individual operators, are
developed to serve as Engine Maintenance Management Program
criteria and should reflect the FAA requirements under which
New Air will operate. These are directed toward the objective
of ensuring cost-effective operation with acceptable post-
repair test performance, providing engine reliability to
achieve maximum time between shop visits, and minimizing the
adverse effects to operation of inflight shutdowns and
delays/cancellations. Through the institution of specific
maintenance recommendations, proper engine performance,
durability, and hot section parts lives can be achieved.
2.4.1 OPERATIONS MONITORING:
The following information is available to the airline
customer from the IAE Product Information
Process (IP) (2) Group:
2.4.2 OPERATION EXPERIENCE REPORTS:
IAE maintains V2500 Service Data System (SDS) data
base from which selected engine operations and
reliability summary reports will be developed and
made available on a scheduled basis to each airline
customer. Data reported by IAE Customer Support
Representatives serve as input to this data base.
This computerized data maintenance and retrieval
system will permit:
- A pooling and exchange of service experience
for the benefit of the entire airline
industry.
- A common statistical base.
- The selective querying of computer data
files for answers to customer inquiries,
Page 49 of 131
<Page>
In addition to providing operations, reliability and
VIS reports, SDS serves in-house programs directed at
improving engine design and enhancing overall
customer support, including spare parts provisioning
and warranty administration.
2.5 SPECIAL PROGRAMS
2.5.1 ENGINE HARDWARE RETROFIT:
Engine Retrofits are carried out to provide
modification of engine hardware configuration when
required on delivered engines. This involves
assisting in the marshaling of hardware, special
tools, manpower and the scheduling of engine and
material to modification sites.
2.5.2 CONTROLLED SERVICE USE PROGRAMS AND MATERIAL:
IAE shall assume responsibility for the planning,
sourcing, scheduling and delivery of Controlled
Service Use material, warranty replacement material,
service campaign material and program support
material subject to the terms of special contracts
with customers.
Urgent customer shipments, both inbound and outbound,
are monitored, traced, routed and expedited as
required. The receipt and movement of customer owned
material returned to IAE is carefully, controlled,
thus assuring an accurate accounting at all times.
3.0 BUSINESS SUPPORT
The Business Support Group is dedicated to providing prompt and
accurate assistance to you, our V2500 airline customer. This Group
provides the following categories of assistance and support to the
V2500 airline customer:
- Engine Warranty Services
- Maintenance Support
- Lease Engine Program
- Engine Reliability and Economic Forecasts
- Logistic Support Studies
Page 50 of 131
<Page>
3.1 ENGINE WARRANTY SERVICES
Engine Warranty Services will provide the following support
for the V2500 engine airline customer:
- Prompt administration of claims concerning Engine
Warranty, Service Policy, other support programs and
Guarantee Plans.
- Investigation of part condition and part failure.
- Material provisioning administration for Controlled
Service Use programs and other material support.
3.1.1 PROMPT ADMINISTRATION:
Each airline customer is assigned a Warranty Analyst
whose job is to provide individual attention and
obtain prompt and effective settlements of Warranty
and Service Policy claims. A typical claim properly
submitted is generally settled, including issuance
of applicable credit memo, within thirty days.
Experience generated by much of the data derived from
such claims often enables IAE to monitor trends in
operating experience and to address and often
eliminate potential problems.
3.1.2 INVESTIGATION AND REPORTS:
Parts returned to IAE pursuant to the terms of the
Service Policy are investigated in appropriate detail
to analyze and evaluate part condition and cause of
part failure. A report of findings is prepared and
forwarded to the airline customer and to all IAE
departments involved. In the case of vendor parts,
the vendor is promptly informed. Where relevant,
reports will include recommendations to preclude
repetition of the problem.
3.2 MAINTENANCE CENTER SUPPORT
IAE has arranged for the establishment of Maintenance Centers
which are available to accomplish repairs, modifications and
conversions, as well as the complete overhaul of the V2500
engine subject to IAE's standard terms and conditions for such
work.
Through the use of the IAE established Maintenance Centers and
their capabilities, an operator can minimize or eliminate the
need for investment in engine support areas depending on the
level of maintenance he elects the Maintenance Center to
perform. Savings in specific engine support areas, such as
spare parts inventory, maintenance and test tooling, support
equipment and test facilities, can be demonstrated. Use of
Maintenance Centers can also minimize the need for off-wing
maintenance and test personnel with their associated overhead.
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3.3 MAINTENANCE FACILITIES PLANNING SERVICE
Maintenance Facilities Planning Service offers the following
support to IAE customer:
- General Maintenance Facility Planning Publications
- Customized Facility Plans
- Maintenance Facility and Test Cell Planning
Consultation Services