Form 10-Q/A AIR LEASE CORP For: Mar 31

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

Amendment No. 1

 

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2015

 

OR

 

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from         to

 

Commission file number 001-35121

AIR LEASE CORPORATION

(Exact name of registrant as specified in its charter)

 

 

Registrant’s telephone number, including area code: (310) 553-0555

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒  No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ☒

 

At May 7, 2015, there were 102,578,955 shares of Air Lease Corporation’s Class A common stock outstanding.

 

 

 

EXPLANATORY NOTE

 

Air Lease Corporation (the “Company”) is filing this Amendment No. 1 to its Quarterly Report on Form 10-Q/A (this “Amendment”) to its Quarterly Report for the quarter ended March 31, 2015 (the “Original 10-Q”), originally filed by the Company with the Securities and Exchange Commission on May 7, 2015, as an exhibit-only filing in response to comments received from the staff of the Securities and Exchange Commission regarding a request for confidential treatment of certain portions of Exhibits 10.1 and 10.4 originally filed with the Original 10-Q.  This Amendment is being filed solely to re-file Exhibits 10.1 and 10.4 to the Original 10-Q.

 

In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, new certifications by the Company’s principal executive officer and principal financial officer are filed as exhibits to this Amendment. The Company is not including certifications pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as no financial statements are being filed with this Amendment.  

 

This Amendment is limited in scope to the items identified above.  This Amendment does not reflect events occurring after the filing of the Original 10-Q and no revisions are being made pursuant to this Amendment to the Company’s financial statements or any other disclosure in the Original 10-Q, including those that may have been affected by subsequent events.  This Amendment should be read in conjunction with the Original 10-Q and the Company’s filings made with the Securities and Exchange Commission subsequent to the filing of the Original 10-Q.

 

 

ITEM 6.  EXHIBITS

 

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

 

 

INDEX TO EXHIBITS

 

 

 

 

 

EXHIBIT 10.1

 

Confidential Treatment

Requested Pursuant to Rule 24b-2

 

 

 

 

 

 

 

 

 

 

A330-900neo

 

 

 

P U R C H A S E   A G R E E M E N T

 

 

B E T W E E N

 

 

A I R B U S  S.A.S.

 

as Seller

 

 

A N D

 

AIR LEASE CORPORATION

 

as Buyer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reference :CLC-CT1405166/

 

C O N T E N T S

 

 

 

C O N T E N T S

 

 

A330-900neo PURCHASE AGREEMENT

 

 

This A330-900 Purchase Agreement (the “Agreement”) is made this 3rd day of March 2015.

 

BETWEEN:

 

AIRBUS S.A.S., a société par actions simplifiée, created and existing under French law having its registered office at 1 Rond-Point Maurice Bellonte, 31707 Blagnac-Cedex, France and registered with the Toulouse Registre du Commerce under number RCS Toulouse 383 474 814 (the “Seller”),

 

and

 

AIR LEASE CORPORATION a corporation organised and existing under the laws of the State of Delaware, U.S.A. having its principal place of business at  2000 Avenue of the Stars, Suite 1000N, Los Angeles, California 90067, U.S.A. (the “Buyer”).

 

WHEREAS subject to the terms and conditions of this Agreement, the Seller desires to sell the Aircraft to the Buyer and the Buyer desires to purchase the Aircraft from the Seller.

 

NOW THEREFORE IT IS AGREED AS FOLLOWS:

 

0                     DEFINITIONS

 

For all purposes of this Agreement, except as otherwise expressly provided, the following terms will have the following meanings:

 

Affiliate – means (a) with respect to the Buyer, any other person or entity directly or indirectly controlling, controlled by or under common control with the Buyer; and (b) with respect to the Seller, any other person or entity involved in the manufacture, product support, leasing or financing of Airbus Aircraft, where such person or entity is directly or indirectly controlling, controlled by or under common control with the Seller.

 

AirbusWorld - as defined in Clause 14.10.1.

Aircraft - any or all of the twenty-five (25) firm Airbus A330-900neo Aircraft to be sold by the Seller and purchased by the Buyer pursuant to this Agreement, including the Airframe and all components, equipment, furnishings, parts and accessories installed in or on such aircraft and the Propulsion Systems installed thereon upon Delivery.

 

Aircraft Training Services - all flight support services including but not limited to any and all training courses, flight training, flight assistance, line training, line assistance and more generally all flights of any kind performed by the Seller, its agents, employees or subcontractors, and maintenance support, maintenance training (including Practical Training), training support of any kind performed on aircraft and provided to the Buyer pursuant to this Agreement.

 

Airframe - any Aircraft, excluding the Propulsion Systems therefor.

 

ATA Specification - recommended specifications developed by the Air Transport Association of America reflecting consensus in the commercial Aviation industry on accepted means of communicating information, conducting business, performing operations and adhering to accepted practices.

 

Aviation Authority - when used with respect to any jurisdiction, the government entity that, under the laws of such jurisdiction, has control over civil aviation or the registration, airworthiness or operation of civil aircraft in such jurisdiction.

 

A330-200 Standard Specification - means the A330-200 standard specification document Number G.000.02000, issue 6.0 dated 31st July 2014.

 

A330-300 Standard Specification - means the A330-300 standard specification document Number G.000.03000, issue 9.0 dated 31st July 2014.

 

A330 Standard Specification - means individually or collectively the A330-200 Standard Specification or the A330-300 Standard Specification, as applicable.

 

A330-800neo Aircraft or A330-800neo - means an A330-200 type aircraft incorporating the New Engine Option Changes, to be sold by the Seller and purchased by the Buyer pursuant to this Agreement, including the Airframe, the Propulsion Systems, and any part, component, furnishing or equipment installed on the Aircraft on Delivery.

 

A330-900neo Aircraft or A330-900neo - means an A330-300 type aircraft incorporating the New Engine Option Changes, to be sold by the Seller and purchased by the Buyer pursuant to this Agreement, including the Airframe, the

 

Propulsion Systems, and any part, component, furnishing or equipment installed on the Aircraft on Delivery.

 

A330neo Aircraft or A330neo - means individually or collectively the A330-800neo Aircraft or the A330-900neo Aircraft.

 

A330-800neo Standard Specification - as defined in Clause 2.1.2.1.

 

A330-900neo Standard Specification - as defined in Clause 2.1.2.1.

 

A330neo Standard Specification - means individually or collectively the A330-800neo Standard Specification or the A330-900neo Standard Specification, as applicable.

 

Aircraft Base Price – as defined in Clause 3.1.

Aircraft Price Revision Formula - the price revision formula set forth in Exhibit C.

 

Balance of the Final Price - as defined in Clause 5.4.

 

Bill of Sale - as defined in Clause 9.2.2.

 

Business Day - with respect to any action to be taken hereunder, a day other than a Saturday, Sunday or other day designated as a holiday in the jurisdiction in which such action is required to be taken.

 

Buyer Furnished Equipment (BFE) - as defined in Clause 18.1.1.1.

 

BFE Engineering Definition – has the meaning set out in Clause 18.1.2

 

Certificate of Acceptance - as defined in Clause 8.3.

 

Commitment Fee - the commitment fee amounts described in Clause 5.2.

 

Contractual Definition Freeze or CDF – means in relation to any Aircraft, the date by which the contractual definition of an Aircraft must be finalized and all SCNs need to have been executed by the Buyer in order to enable their incorporation into the manufacturing of the Aircraft and Delivery of the Aircraft in the Scheduled Delivery Month.

 

Customization Milestones Chart - as defined in 2.4.1.

 

Declaration of Design and Performance or DDP - the documentation provided by an equipment manufacturer guaranteeing that the corresponding equipment meets the requirements of the Specification, the interface documentation as well as all the relevant certification requirements.

 

Delivery - the transfer of title to the Aircraft from the Seller to the Buyer in accordance with Clause 9.

 

Delivery Date - the date on which Delivery occurs.

 

Delivery Location - the facilities of the Seller at the location of final assembly of the Aircraft.

 

Development Changes - as defined in Clause 2.2.2.

 

EASA - European Aviation Safety Agency or any successor thereto.

 

Excusable Delay - as defined in Clause 10.1.

 

Export Certificate of Airworthiness - an export certificate of airworthiness and/or Statement of Conformity issued by the Aviation Authority of the Delivery Location.

 

FAA - the U.S. Federal Aviation Administration, or any successor thereto.

 

Final Price - as defined in Clause 3.2.

 

Goods and Services  - any goods (excluding Aircraft and SCNs) and services that may be purchased by the Buyer from the Seller or its designee.

 

Inexcusable Delay - as defined in Clause 11.1.

Inhouse Warranty Labor Rate – as defined in Clause 12.1.7.5(b)

 

Initial Operator - the first operator of an Aircraft following Delivery to it hereunder.

 

Manufacture Facilities - means the various manufacture facilities of the Seller, its Affiliates or any subcontractor, where the Airframe or its parts are manufactured or assembled.

 

Manufacturer Specification Change Notice (MSCN) - as defined in Clause 2.2.2.1.

 

Material – has the meaning as defined in Clause 1.2 of Exhibit H.

 

NEO Specification Freeze - has the meaning set out in Clause 2.1.2.1.

 

New Engine Option or NEO - has the meaning set out in Clause 2.1.2.1.

 

New Engine Option Changes - has the meaning set out in Clause 2.1.2.1.

 

Option Catalogues - means the Seller’s catalogues of specification change options.

 

Other Agreement – as defined in Clause 5.12.1

 

Predelivery Payment - any of the payments made or to be made pursuant to Clause 5.3.

 

Predelivery Payment Reference Price - as defined in Clause 5.3.2.

 

Propulsion Systems - as set forth in Clause 2.3.

 

Propulsion Systems Manufacturer - means the manufacturer of the Propulsion Systems as set out in Clause 2.3.

 

Ready for Delivery – with respect to any Aircraft, the time when (i) the Technical Acceptance Process has been completed in accordance with Clause 8 and (ii) all technical conditions required for the issuance of the Export Certificate of Airworthiness and/or Statement of Conformity, as applicable, have been satisfied.

 

Relevant Amounts – as defined in Clause 5.12.1

 

Scheduled Delivery Month - as defined in Clause 9.1.

 

Seller’s Representatives - the representatives of the Seller referred to in Clause 15.

 

Seller’s Representatives Services – the services provided by the Seller to the Buyer and from the Buyer to the Seller pursuant to Clause 15.

 

Seller Service Life Policy - as defined in Clause 12.2.

 

Sharklets - means a new large wingtip device, designed to enhance the eco-efficiency and payload range performance of the A330neo aircraft type, and which are fitted on the A330neo Aircraft and are part of the New Engine Option Changes.

 

Spare Parts – the items of equipment and material that may be provided pursuant to Exhibit H.

Specification – either (a) the Standard Specification if no SCNs are applicable or (b) if SCNs are issued, the Standard Specification as amended by all applicable SCNs.

 

Specification Change Notice (SCN) - as defined in Clause 2.2.1.

 

Standard Specification - means, individually or collectively the A330neo Standard Specification(s).

 

Supplier - any supplier of Supplier Parts.

 

Supplier Part - as defined in 12.3.1.2.

 

Supplier Product Support Agreement - as defined in 12.3.1.3.

 

Taxes – as defined in Clause 5.5.3

 

Technical Acceptance Process – as defined in Clause 8.1.1

 

Technical Data - as defined in Clause 14.1.

 

Termination Event - as defined in Clause 20.1.

 

Total Loss - as defined in Clause 10.4

 

Training Conference - as defined in Clause 16.1.3.

 

Type Certificate - as defined in Clause 7.1

 

Warranted Part - as defined in Clause 12.1.1.

 

The definition of a singular in this Clause 0 will apply to plurals of the same words.

 

Except as provided in Clause 22.6.4, references in this Agreement to an exhibit, schedule, article, section, subsection or clause refer to the appropriate exhibit or schedule to, or article, section, subsection or clause in this Agreement.

 

Each agreement defined in this Clause 0 will include all appendixes, exhibits and schedules thereto. If the prior written consent of any person is required hereunder for an amendment, restatement, supplement or other modification to any such agreement and the consent of each such person is obtained, references in this Agreement to such agreement will be to such agreement as so amended, restated, supplemented or modified.

 

References in this Agreement to any statute will be to such statute as amended or modified and in effect at the time any such reference is operative.

 

The term “including” when used in this Agreement means “including without limitation” except when used in the computation of time periods.

 

Technical and trade terms not otherwise defined herein will have the meanings assigned to them as generally accepted in the aircraft manufacturing industry.

 

1                      SALE AND PURCHASE

 

The Seller will sell and deliver to the Buyer, and the Buyer will purchase and take delivery of the Aircraft from the Seller, subject to the terms and conditions contained in this Agreement.

 

2                      SPECIFICATION

 

2.1                   Aircraft Specification

 

2.1.1                A330neo Aircraft Standard Specification

 

The A330neo Aircraft specification is based on a combination of the standard specification(s) set forth hereunder (each an “A330 Standard Specification”) and the New Engine Option Changes as set out in Clause 2.1.2 below.

 

 

2.1.2                  New Engine Option

 

2.1.2.1            The Seller is currently developing a new engine option (the “New Engine Option” or “NEO”), applicable to the A330-200 and A330-300 aircraft. Hence, the specification of the A330neo Aircraft will be derived from the current respective A330-200 Standard Specification and A330-300 Standard Specification and based on the new sole source Propulsion Systems, as set forth in Clause 2.3 below, and the Sharklets, as well as wing span extension, aerodynamic adaptations of the wing and wing-to-fuselage junction, required airframe structural modifications and aircraft systems and software adaptations required to operate such A330neo Aircraft; in the case of the A330-900neo, the A330neo Aircraft will also include a fuel centre tank (collectively the “New Engine Option Changes”).

 

Consequently, the implementation of these New Engine Option Changes is hereby irrevocably accepted by the Buyer and will be reflected in the first issue of respectively the A330-800neo aircraft and A330-900neo aircraft standard specification(s) (respectively the “A330-800neo Standard Specification” and the “A330-900neo Standard Specification” and together the “A330neo Standard Specifications”) when the design of each of such A330neo aircraft type will have been frozen (the “NEO Specification Freeze”).

 

[*]

 

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

2.1.2.2             A330neo Aircraft Weights

 

The New Engine Option Changes will modify the basic design weights of the respective A330 Standard Specifications, as set forth in paragraph(s) § 03-20.01.00 thereof, as follows:

 

 

[*]

 

The estimated basic Manufacturer’s Weight Empty (“MWE”) of the respective A330 Standard Specifications, as set forth in paragraph(s) § 13-10.01.00 thereof, will be modified by the New Engine Option Changes as follows:

 

 

It is agreed and understood that all of the weights set forth in this Clause 2.1.2.2 are current development targets and may be updated upon NEO Specification Freeze of the respective A330neo aircraft types [*].

 

2.1.2.3             Upon their respective issuance, the A330-800neo Standard Specification and the A330-900neo Standard Specification will each automatically supersede the combination of the respective A330 Standard Specifications and the corresponding New Engine Option Changes. The A330-800neo Aircraft and the A330-900neo Aircraft will be manufactured in accordance with Issue 1 of their respective A330neo Standard Specifications, as modified or varied by the Specification Change Notices listed in Appendix 1 to Exhibit A.

 

 

2.2                   Specification Amendment

 

The parties understand and agree that the A330neo Standard Specification(s) may be amended following signature of this Agreement in accordance with the terms of this Clause 2.

 

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

2.2.1                Specification Change Notice

 

The Specification may be amended by written agreement between the parties in a Specification Change Notice (SCN).  Each SCN will be substantially in the form set out in Exhibit B1 and will set out the SCN’s Aircraft embodiment rank and will also set forth, in detail, the particular change to be made to the Specification and the effect, if any, of such change on design, performance, weight, Delivery Date of the Aircraft affected thereby and on the text of the Specification. An SCN may result in an adjustment of the Aircraft Base Price, which adjustment, if any, will be specified in the SCN.

 

2.2.2                Development Changes

 

The Specification may also be amended to incorporate changes deemed necessary by the Seller to improve the Aircraft, prevent delay or ensure compliance with this Agreement (“Development Changes”), as set forth in this Clause 2.

 

2.2.2.1             Manufacturer Specification Changes Notices

 

2.2.2.1.1          The Specification may be amended by the Seller through a Manufacturer Specification Change Notice (“MSCN”), which will be substantially in the form set out in Exhibit B2 hereto and will set out the MSCN’s Aircraft embodiment rank as well as, in detail, the particular change to be made to the Specification and the effect, if any, of such change on performance, weight, Aircraft Base Price, Delivery Date of the Aircraft affected thereby and interchangeability or replaceability requirements under the Specification.

 

2.2.2.1.2          Except when the MSCN is necessitated by an Aviation Authority directive or by equipment obsolescence, in which case the MSCN will be accomplished without requiring the Buyer’s consent, if the MSCN adversely affects the performance, weight, Aircraft Base Price, Delivery Date of the Aircraft affected thereby or the interchangeability or replaceability requirements under the Specification, the Seller will notify the Buyer of a reasonable period of time during which the Buyer must accept or reject such MSCN. If the Buyer does not notify the Seller of the rejection of the MSCN within such period, the MSCN will be deemed accepted by the Buyer and the corresponding modification will be accomplished.

 

2.2.2.2             In the event of the Seller revising the Specification to incorporate Development Changes which have no adverse effect on any of the elements as set forth in 2.2.2.1 above, such revision will be performed by the Seller without the Buyer’s consent.

 

In such cases, the Buyer will have access to the details of such changes through the relevant application in AirbusWorld.

 

2.3                   Propulsion Systems

 

The A330neo Aircraft will be equipped with a set of two (2) Rolls-Royce Trent 7000 engines (the “Propulsion Systems”), with an Airbus Equivalent Thrust (AET) of 72,600lbf.

 

It is agreed and understood that the above thrust rating may be updated at any time until NEO Specification Freeze.

The above-mentioned Propulsion Systems designation is based upon information received from the Propulsion Systems Manufacturer and remains subject to any modification that might be imposed by the Propulsion Systems Manufacturer on the Seller and/or the Buyer.

 

2.4                 Milestones

 

2.4.1              Customization Milestones Chart

 

Within a reasonable period following signature of the Agreement, the Seller will provide the Buyer with a customization milestones chart (the “Customization Milestone Chart”), setting out how far in advance of the Scheduled Delivery Month of the Aircraft:

 

-the Buyer needs to take certain decisions and actions;

-the Buyer needs to provide certain information and documentation; and

-the Buyer shall notify the BFE Suppliers and products selected for BFE; and

-the ITCM for such BFE definition shall be held; and

-the CDF will occur.

 

3                      PRICES

 

3.1                   Aircraft Base Price

 

3.1.1                The Aircraft Base Price is the sum of:

 

(i)   the base price of the A330neo Aircraft corresponding to the respective A330 Standard Specification(s), the New Engine Option Changes and the design weights as set out in Clause 2.1.2.2 (excluding Buyer Furnished Equipment), which is :

 

US $ [*]for the A330-800neo Aircraft

(US dollars [*])

 

US $ [*]for the A330-900neo Aircraft

(US dollars [*])

 

(ii)  the sum of the  base prices of any and all SCNs set forth in Appendix 1 to Exhibit “A”, which is :

 

US $ [*]for the A330-800neo Aircraft

(US dollars [*])

 

US $ [*]for the A330-900neo Aircraft

(US dollars [*])

 

3.1.2               The Aircraft Base Price has been established in accordance with the average economic conditions prevailing in December 2012, January 2013 and February 2013 and corresponding to a theoretical delivery in January 2014 - (the “Base Period”).

 

3.1.3                Notwithstanding the foregoing, the A330neo programme is still in development at the date hereof and it is understood that the thrust rating defined for the A330neo Propulsion Systems in Clause 2.3 may be revised as per such Clause. In such case, the Seller reserves the right to adjust the respective Aircraft Base Prices upon NEO Specification Freeze.

3.2                   Final Price of the Aircraft:

 

The Final Price of each Aircraft will be the sum of:

 

(i)the Aircraft Base Price as adjusted to the applicable Delivery Date of such Aircraft in accordance with Clause 4; plus

 

(ii)the aggregate of all increases or decreases to the Aircraft Base Price as agreed in any Specification Change Notice or part thereof applicable to the Aircraft subsequent to the date of this Agreement as adjusted to the Delivery Date in accordance with Clause 4; plus

 

(iii)any other amount due by the Buyer to the Seller pursuant to this Agreement and/or any other written agreement between the Buyer and the Seller relating to the Aircraft.

 

4                      PRICE REVISION

 

The Aircraft Base Price and the base prices of the SCNs relating to the Aircraft are subject to revision up to and including the Delivery Date in accordance with the Aircraft Price Revision Formula, as set forth in Exhibit “C”.

 

 

5                      PAYMENT TERMS

 

 

5.1                   Seller’s Account

 

The Buyer will pay the Predelivery Payments, the Balance of the Final Price and any other amount due by the Buyer in immediately available funds in United States dollars to:

 

 

or to such other account as may be designated by the Seller in writing.

 

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

5.2                   Commitment Fee

 

The Seller acknowledges that it has received from the Buyer a non-refundable commitment fee of US $ [*] (US dollars [*]) for each Aircraft (the “Commitment Fee”). An amount equal to the Commitment Fee paid with respect to an Aircraft will be credited without interest against the first Predelivery Payment for such Aircraft.

 

5.3                   Predelivery Payments

 

5.3.1                Predelivery Payments are nonrefundable (although amounts equal to Predelivery Payments may be paid to the Buyer pursuant to Clause 11.3) and will be paid by the Buyer to the Seller for the Aircraft.

 

5.3.2                The Predelivery Payment Reference Price for an Aircraft to be delivered in calendar year T is determined in accordance with the following formula:

 

[*]

 

5.3.3    Predelivery Payments will be paid according to the following schedule.

 

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

In the event of the above schedule resulting in any Predelivery Payment falling due prior to the date of signature of the Agreement, such Predelivery Payments will be made upon signature of this Agreement.

 

5.3.4               The Seller will be entitled to hold and use any Predelivery Payment as absolute owner thereof, subject only to the obligation (such obligation itself subject to the provisions of Clause 5.6) to deduct an amount equal to Predelivery Payments from the Final Price of the Aircraft, when calculating the Balance of the Final Price of such Aircraft. The Seller will be under no obligation to segregate any Predelivery Payment, or any amount equal thereto, from the Seller’s funds generally.

 

5.4                   Payment of Balance of the Final Price of the Aircraft

 

Before the Delivery Date or concurrent with the Delivery of each Aircraft, the Buyer will pay to the Seller the Final Price of such Aircraft less the amount of Predelivery Payments received for such Aircraft by the Seller (the “Balance of the Final Price”).

 

The Seller’s receipt of the full amount of all Predelivery Payments and of the Balance of the Final Price of the Aircraft, including any amounts due under Clause 5.8, are a condition precedent to the Seller’s obligation to deliver such Aircraft to the Buyer.

 

5.5                 Taxes

 

5.5.1              The amounts stated in this Agreement to be payable by the Buyer are exclusive of value added tax (“VAT”) chargeable under the laws of the country of the Delivery Location and accordingly the Buyer will pay any VAT chargeable in respect of supplies to the Buyer as contemplated by this Agreement.

 

5.5.2              The Seller will pay all other Taxes, duties or similar charges of any nature whatsoever levied, assessed, charged or collected for or in connection with the manufacture, assembly, sale and delivery of any of the Aircraft, services, instructions and data delivered or furnished under the Agreement provided such charges have been promulgated and are enforceable under the laws of the country of the Delivery Location of the Aircraft.

 

5.5.3              The Buyer will bear the costs of and pay any and all Taxes, duties or similar charges of any nature whatsoever, not assumed by the Seller under Clause 5.5.2, including but not limited to any duties or Taxes due upon or in relation to the importation or registration of the Aircraft in the Buyer’s or the relevant Operator’s country, as applicable, and/or any withholdings or deductions levied or required in the Buyer’s country in respect of the payment to the Seller of any amount due by the Buyer under this Agreement.

 

[*]

 

“Taxes” means any present or future tax, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any governmental authority or any political subdivision or taxing authority thereof or therein.

 

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

5.6                 Application of Payments

 

Notwithstanding any other rights the Seller may have at contract or at law, the Buyer and the Seller hereby agree that should any amount (whether under this Agreement or under any other agreement between the Buyer and its Affiliates on the one hand and the Seller and its Affiliates on the other hand and whether at the stated maturity of such amount, by acceleration or otherwise) become due and payable by the Buyer or its Affiliates, and not be paid in full in immediately available funds on the date due, then the Seller will have the right to debit and apply, in whole or in part, the Predelivery Payments paid to the Seller by the Buyer against such unpaid amount. The Seller will promptly notify the Buyer in writing after such debiting and application, and the Buyer will immediately pay to the Seller the amount required to comply with Clause 5.3.3.

 

5.8                 Overdue Payments

 

5.8.1              If any payment due to the Seller under this Agreement including but not limited to any Predelivery Payment, commitment fee, option fee for the Aircraft as well as any payment due to the Seller for any spare parts, data, documents, training and services, is not received by the Seller on the date or dates due, without prejudice to the Seller’s other rights under this Agreement and at law, the Seller will be entitled to claim from the Buyer, and the Buyer will promptly pay to the Seller upon receipt of such claim, an agreed fixed amount destined to compensate the Seller for the negative consequences, costs, losses and expenses, that the Seller may suffer as a result of such late payment. The amount of such compensation will be calculated using [*] on the amount of such overdue payment, counting from and including the due date of such payment up to  the day prior to the date such payment is received by the Seller. The Seller’s right to receive such interest will be in addition to any other rights of the Seller hereunder or at law.

 

5.8.2              If [*] Predelivery Payment(s) [*] remains unpaid following the date(s) on which such Predelivery Payment(s) is/(are) due [*] (the “Late Predelivery Payment”); the Seller will have, in addition to any remedy under the Agreement, no obligation to deliver any or all of the Aircraft remaining to be delivered under this Agreement within their respective Scheduled Delivery Month(s). Upon receipt of the full amount of all delayed Predelivery Payments, together with any amount due pursuant to Clause 5.8.1, the Seller will inform the Buyer of new Scheduled Delivery Month(s) consistent with the Seller’s other commitments and production capabilities.

 

 

5.9                 Proprietary Interest

 

Notwithstanding any provision of law to the contrary, the Buyer will not, by virtue of anything contained in this Agreement (including, without limitation, any Commitment Fee or Predelivery Payments hereunder, or any designation or identification by the Seller of a particular aircraft as an Aircraft to which any of the provisions of this Agreement refers) acquire any proprietary, insurable or other interest whatsoever in any Aircraft before Delivery of and payment for such Aircraft, as provided in this Agreement.

 

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

5.10               Payment in Full

 

The Buyer’s obligation to make payments to the Seller hereunder will not be affected by and will be determined without regard to any setoff, counterclaim, recoupment, defense or other right that the Buyer may have against the Seller or any other person and all such payments will be made without deduction or withholding of any kind. The Buyer will ensure that the sums received by the Seller under this Agreement will be equal to the full amounts expressed to be due to the Seller hereunder, without deduction or withholding on account of and free from any and all taxes, levies, imposts, duties or charges of whatever nature, except that if the Buyer is compelled by law to make any such deduction or withholding the Buyer will pay such additional amounts to the Seller as may be necessary so that the net amount received by the Seller after such deduction or withholding will equal the amounts that would have been received in the absence of such deduction or withholding.

 

5.11               Other Charges

 

Unless expressly stipulated otherwise, any charges due under this Agreement other than those set out in Clauses 5.2, 5.3 and 5.8 will be paid by the Buyer at the same time as payment of the Balance of the Final Price or, if invoiced after Delivery, within thirty (30) days after the invoice date.

 

 

5.12               Cross-Collateralisation

 

5.12.1            The Buyer hereby agrees that, notwithstanding any provision to the contrary in this Agreement, in the event that the Buyer should fail to make any material payment owing under this Agreement or under any other [*] agreement [*]  between the Buyer and the Seller and/or any of their respective Affiliates (the “Other Agreement”), the Seller may:

 

(i)    withhold payment to the Buyer or its Affiliates of any sums that may be due to or claimed by the Buyer or its Affiliates from the Seller or its Affiliates pursuant to this Agreement or any Other Agreement, including Predelivery Payments, unless or until the default under this Agreement or the Other Agreement is cured or remedied; and

 

(ii)   apply any amount of any Predelivery Payment it then holds under this Agreement in respect of any of the Aircraft as well as any other monies held pursuant to any Other Agreement (collectively the “Relevant Amounts”) in such order as the Seller deems appropriate in satisfaction of any amounts due and unpaid by the Buyer or its Affiliates and to compensate for any losses and/or damages the Seller or its Affiliates may suffer as a result of the Buyer’s or its Affiliates’ failure to make payments in a timely manner under this Agreement or any Other Agreement. The Buyer acknowledges that the application of any of the Relevant Amounts as aforesaid may result in the Buyer or its Affiliates being in default (unless such default is otherwise cured or remedied) in relation to the agreement in respect of which such Relevant Amounts were originally granted or required to be paid, as the case may be.

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

The rights granted to the Seller in the preceding paragraphs (i) and (ii) are without prejudice and are in addition to and will not be deemed a waiver of any other rights and remedies the Seller or its Affiliates may have at law or under this Agreement or any Other Agreement, including the right of set-off.

 

 

5.12.2             In the event that the Seller applies any amount of any Predelivery Payment it then holds under this Agreement in respect of any of the Aircraft in satisfaction of the amount due and unpaid by the Buyer or its Affiliates or to compensate for losses and/or damages to the Seller or its Affiliates as a result of the Buyer’s or its Affiliates’ failure to make payment in a timely manner under the Agreement or any Other Agreement, then the Seller will notify the Buyer to that effect. Within three (3)

 

Business Days of issuance of such notification, the Buyer will pay by wire transfer of funds immediately available to the Seller the amount of the Predelivery Payment that has been applied by the Seller as set forth above.

 

Failure of the Buyer to pay such amount in full, will entitle the Seller to (i) collect interest on such unpaid amount in accordance with Clause 5.8.1 hereof from the fourth (4th) Business Day following the Seller’s written request to the Buyer for such payment and (ii) treat such failure as an additional termination event for which the Seller will be entitled to the remedies available under Clause 20.2 of the Agreement.

 

 

6                    MANUFACTURE PROCEDURE - INSPECTION

 

6.1                 Manufacture Procedures

 

The Airframe will be manufactured in accordance with all of the  requirements of the laws of the jurisdiction of incorporation of the Seller or of its relevant Affiliate as enforced by the Aviation Authority of such jurisdiction.

 

 

6.2                 Inspection

 

6.2.1               Subject to providing the Seller with certificates evidencing compliance with the insurance requirements set forth in Clause 19, the Buyer or its duly authorized representatives (the “Buyer’s Inspector(s)”) will be entitled to inspect the manufacture of the Airframe and all materials and parts obtained by the Seller for the manufacture of the Airframe (each an “Inspection”) on the following terms and conditions;

 

(i)        any Inspection [*] shall be conducted pursuant to the Seller’s system of inspection as developed under the supervision of the relevant Aviation Authority;

 

(ii)        the Buyer’s Inspector(s) will have access to such relevant technical data as is reasonably necessary for the purpose of the Inspection;

 

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

(iii)       any Inspection and any related discussions with the Seller and other relevant personnel by the Buyer’s Inspector(s) will be at reasonable times during business hours and will take place in the presence of the relevant inspection department personnel of the Seller;

 

(iv)       the Inspections will be performed in a manner not to unduly delay or hinder the manufacture or assembly of the Aircraft or the performance of this Agreement by the Seller or any other work in progress at the Manufacture Facilities.

 

6.2.2              Location of Inspections

 

The Buyer’s Inspector(s) will be entitled to conduct any such Inspection at the relevant Manufacture Facility of the Seller or the Affiliates and where possible at the Manufacture Facilities of the sub-contractors provided that if access to any part of the Manufacture Facilities where the Airframe manufacture is in progress or materials or parts are stored are restricted for security or confidentiality reasons, the Seller will be allowed reasonable time to make the relevant items available elsewhere.

 

6.3                 Seller’s Service for Buyer’s Inspector(s)

 

For the purpose of the Inspections, and starting from a mutually agreed date until the Delivery Date, the Seller will furnish without additional charge suitable space and office equipment in or conveniently located with respect to the Delivery Location for the use of a reasonable number of Buyer’s Inspector(s).

 

7                    CERTIFICATION

 

Except as set forth in this Clause 7, the Seller will not be required to obtain any certificate or approval with respect to the Aircraft.

 

7.1                 Type Certification

 

The Aircraft will have been type certificated  under EASA and FAA procedures for certification in the transport category. The Seller will obtain or cause to be obtained the relevant  type certificate (the “Type Certificate”) to allow the issuance of the Export Certificate of Airworthiness, or as Aircraft are to be registered in a Member State of the European Community, the Statement of Conformity.

 

7.2                 Export Certificate of Airworthiness

 

The Aircraft will be delivered to the Buyer with an Export Certificate of Airworthiness and/or with a Statement of Conformity, as applicable.

 

Subject to the provisions of Clause 7.3, the Aircraft will be delivered to the Buyer with an Export Certificate of Airworthiness and in a condition enabling the Buyer to obtain at the time of Delivery a Standard Airworthiness Certificate issued pursuant to Part 21 and Part 26 of the US Federal Aviation Regulations and a Certificate of Sanitary Construction issued by the U.S. Public Health Service of the Food and Drug Administration. However, the Seller will have no obligation to make and will not be responsible for any costs of alterations or modifications to such Aircraft to enable such Aircraft to meet FAA Part 121 and Part 129 or U.S. Department of Transportation requirements for specific operation on the Buyer’s and/or Initial Operator’s routes, whether before, at or after Delivery of any Aircraft. [*]

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

7.3                 Specification Changes before Aircraft Ready for Delivery

 

7.3.1                If, any time before the date on which the Aircraft is Ready for Delivery, any law, rule or regulation is enacted, promulgated, becomes effective and/or an interpretation of any law, rule or regulation is issued by the EASA that requires any change to the Specification for the purposes of obtaining the Export Certificate of Airworthiness or issuing the Statement of Conformity (a “Change in Law”), the Seller will make the required modification and the parties hereto will sign an SCN or MSCN which specifies the effects, if any, upon the guaranteed performances, weights, interchangeability, time of Delivery, price of the Aircraft and text of the Specification.

 

7.3.2                The Seller will as far as practicable, but at its sole discretion and without prejudice to Clause 7.3.3(ii), take into account the information available to it concerning any proposed law, rule or regulation or interpretation that could become a Change in Law, in order to minimize the costs of changes to the Specification as a result of such proposed law, regulation or interpretation becoming effective before the applicable Aircraft is Ready for Delivery.

 

 

7.3.3              The cost of implementing the required modifications referred to in Clause 7.3.1 will be:

 

[*]

 

7.3.4              Notwithstanding the provisions of Clause 7.3.3, if a Change in Law relates to an item of BFE or to the Propulsion Systems the costs related thereto will be borne in accordance with such arrangements as may be made separately between the Buyer and the manufacturer of the BFE or the Propulsion Systems, as applicable, and the Seller will have no obligation with respect thereto.

 

7.4                 Intentionally left blank

 

7.5                 Validation of Export Airworthiness Certificate or Statement of Conformity

 

7.5.1              The Seller shall provide its best reasonable efforts to obtain the validation of the Type Certificate by the Buyer’s or the Initial Operator’s Aviation Authority.

 

Upon the Buyer’s request, to be provided to the Seller with adequate notice and no later than [*] months prior the Aircraft Delivery, the Seller shall identify the changes that may be required in order for an Aircraft to be eligible for a standard airworthiness certificate to be issued by the airworthiness authority designated by the Buyer for the registration of such Aircraft (the “Designated Airworthiness Authority”).

 

7.5.2                Where the Buyer’s or the Initial Operator’s Designated Airworthiness Authority requires a modification to comply with additional import aviation operational requirements and/or supply of additional data prior to the issuance of the Export Airworthiness Certificate, the Seller shall incorporate such modification at costs to be borne by the Buyer and/or provide any such services/data at no charge to the Buyer. The parties shall sign a Specification Change Notice which specifies the effects, if any, upon the guaranteed performances, weights, interchangeability, time of Delivery and price of the Aircraft.

 

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

8                   TECHNICAL ACCEPTANCE

 

8.1                 Technical Acceptance Process

 

8.1.1                Prior to Delivery, the Aircraft will undergo a technical acceptance process developed by the Seller (the “Technical Acceptance Process”). Completion of the Technical Acceptance Process will demonstrate the satisfactory functioning of the Aircraft and will be deemed to demonstrate compliance with the Specification. Should it be established that the Aircraft does not comply with the Technical Acceptance Process requirements, the Seller will without hindrance from the Buyer be entitled to carry out any necessary changes and, as soon as practicable thereafter, resubmit the Aircraft to such further Technical Acceptance Process as is necessary to demonstrate the elimination of the non-compliance.

 

8.1.2              The Technical Acceptance Process will:

 

(i)commence on a date notified by the Seller to the Buyer by no less than ten (10) days’ notice,

 

(ii)take place at the Delivery Location,

 

(iii)be carried out by the personnel of the Seller, and

 

(iv)include a technical acceptance flight that will not exceed three (3) hours (the “Technical Acceptance Flight”), [*].

 

8.2                 Buyer’s Attendance

 

8.2.1              The Buyer will be entitled to attend the Technical Acceptance Process and notification of the start of such Technical Acceptance Process will be done in accordance with Clause 9.1.2.

 

8.2.2              If the Buyer elects to attend the Technical Acceptance Process, the Buyer:

 

(i)will comply with the reasonable requirements of the Seller, with the intention of completing the Technical Acceptance Process within six (6) Business Days, and

 

(ii)may have a maximum of [*] of its representatives [*] accompany the Seller’s representatives on the Technical Acceptance Flight, during which the Buyer’s representatives will comply with the instructions of the Seller’s representatives.

 

8.2.3                If the Buyer does not attend or fails to cooperate in the Technical Acceptance Process, the Seller will be entitled to complete the Technical Acceptance Process and the Buyer will be deemed to have accepted that the Technical Acceptance Process has been satisfactorily completed, in all respects.

 

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

8.3                 Certificate of Acceptance

 

Upon successful  completion of the Technical Acceptance Process, the Buyer will, on or before the Delivery Date, sign and deliver to the Seller a certificate of acceptance in respect of the Aircraft in the form of Exhibit D (the “Certificate of Acceptance”).

 

 

8.4                 Finality of Acceptance

 

The Buyer’s signature of the Certificate of Acceptance for the Aircraft will constitute waiver by the Buyer of any right it may have, under the Uniform Commercial Code as adopted by the State of New York or otherwise, to revoke acceptance of the Aircraft for any reason, whether known or unknown to the Buyer at the time of acceptance.

 

 

8.5                 Aircraft Utilization

 

The Seller will, without payment or other liability, be entitled to use the Aircraft before Delivery as may be necessary to obtain the certificates required under Clause 7. Such use will not relieve the Buyer of or otherwise in any manner affect its obligation to accept Delivery hereunder.

 

[*]

 

9                    DELIVERY

 

9.1                 Delivery Schedule

 

9.1.1              Subject to Clauses 2, 7, 8, 10 and 18, the Seller will have the Aircraft Ready for Delivery at the Delivery Location as follows:

 

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

 

Each of such months will be, with respect to the corresponding Aircraft, the “Scheduled Delivery Month”.

 

9.1.2              [*]

 

9.1.3              [*]

 

9.2                 Delivery Process

 

9.2.1              The Buyer will send its representatives to the Delivery Location to take Delivery of and collect the Aircraft within seven (7) days after the date on which the Aircraft is Ready for Delivery, and will pay the Balance of the Final Price on or before the Delivery Date.

 

9.2.2              The Seller will deliver and transfer good title to the Aircraft to the Buyer free and clear of all encumbrances (except for any liens or encumbrances created by or on behalf of the Buyer) provided that the Balance of the Final Price of such Aircraft has been paid by the Buyer pursuant to Clause 5.4 and that the Certificate of Acceptance has been signed and delivered to the Seller pursuant to Clause 8.3. The Seller will provide the Buyer with a bill of sale in the form of Exhibit E (the “Bill of Sale”) and/or such other documentation confirming transfer of title and receipt of the Final Price of the Aircraft as may reasonably be requested by the Buyer. Title to and risk of loss of or damage to the Aircraft will pass to the Buyer contemporaneously with the delivery by the Seller to the Buyer of such Bill of Sale.

 

9.2.3              If, by the time specified in Clause 9.2.1, the Buyer fails to (i) deliver the signed Certificate of Acceptance to the Seller, or (ii) pay the Balance of the Final Price of the Aircraft to the Seller and collect the Aircraft, then the Buyer will be deemed to have rejected Delivery wrongfully when the Aircraft was duly tendered to the Buyer hereunder. If such a deemed rejection arises, and in addition to the remedies of Clause 5.8.1, (a) the Seller will retain title to the Aircraft, and (b) the Buyer will indemnify and hold the Seller harmless against any and all costs (including but not limited to any parking, storage, and insurance costs) and consequences resulting from the Buyer’s rejection (including but not limited to risk of loss of or damage to the Aircraft), it being understood that the Seller will be under no duty to the Buyer to store, park, insure or otherwise protect the Aircraft. These rights of the Seller will be in addition to the Seller’s other rights and remedies under this Agreement.

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

9.3                 Flyaway

 

9.3.1              The Buyer and the Seller will cooperate to obtain any licenses that may be required by the Aviation Authority of the Delivery Location for the purpose of exporting the Aircraft.

 

9.3.2              All expenses of, or connected with, flying the Aircraft from the Delivery Location after Delivery will be borne by the Buyer or the Initial Operator as applicable. The Buyer or the Initial Operator as applicable will make direct arrangements with the supplying companies for the fuel and oil required for all post-Delivery flights.

 

10                    EXCUSABLE DELAY AND TOTAL LOSS

 

10.1               The Seller and any Affiliate of the Seller will not be responsible or be deemed to be in default of its obligations under this Agreement on account of delays in delivery or failure to deliver or other delays or failures in the performance of this Agreement, any part hereof, due to causes reasonably beyond the Seller’s control or not occasioned by the Seller’s fault or negligence of which Seller has notified Buyer in accordance with this sub-Clause 10.1 (“Excusable Delay”), including but not being limited to: acts of God or the public enemy, natural disasters, fires, floods, explosions or earthquakes; epidemics or quarantine restrictions; serious accidents; total or constructive total loss; any law, decision, regulation, directive or other act (whether or not having the force of law) of any government or of the Council of the European Community or the Commission of the European Community or of any national, Federal, State, municipal or other governmental department, commission, board, bureau, agency, court or instrumentality, domestic or foreign; governmental priorities or regulations or orders affecting allocation of materials or facilities or a completed Aircraft; war, civil war and warlike operations, terrorism, insurrection or riots; strikes or labor troubles causing cessation, slow down or interruption of work; delay after due and timely diligence in obtaining any airworthiness or type certification; inability after due and timely diligence to procure materials, accessories, equipment or parts; general hindrance in transportation. It is expressly understood and agreed that (i) any delay in delivery or otherwise in the performance of this Agreement by the Seller due in whole or in part to any delay in or failure of the delivery of, or any other event or circumstance relating to, the Propulsion Systems or Buyer Furnished Equipment or (ii) any delay caused by the Buyer’s negligence or the Buyer’s fault will each constitute Excusable Delay for the Seller. The Seller will as soon as practicable after becoming aware of any delay falling within the provisions of this sub-Clause 10.1 (i) exert all reasonable best efforts to minimize the effects of such occurrence, (ii) notify the Buyer of such delay and of the probable extent thereof and (iii) subject to the following provisions, as soon as practicable after the removal of the cause or causes for delay notify Buyer of the actual extent of the delay and resume the performance of those obligations affected under this Agreement. Seller will use due and timely diligence and all reasonable efforts to remove the cause or causes for delay.

 

10.2               In the event that the delivery of an Aircraft will be delayed by reason of an Excusable Delay for a period of more than [*] after the end of the calendar month in which delivery is otherwise required hereunder, [*] will be entitled to terminate this Agreement with respect to such Aircraft upon notice given to [*] within thirty (30) days after the expiration of such [*] period. In the event such delay will continue for an additional [*] period after the expiration of such [*] period, [*] will have the option to terminate this Agreement with respect to such Aircraft upon notice given to [*] within thirty (30) days after the end of such additional [*] period. Such termination will discharge all obligations and liabilities of the parties hereunder with respect to such Aircraft, [*]. Notwithstanding the provisions of Clause 19, the Buyer will not be entitled [*] to terminate this Agreement as to any Aircraft under this Clause 10 by reason of an Excusable Delay if such delay is caused by the negligence or fault of the Buyer or its representatives.

10.3               If the Seller concludes, based on its appraisal of the facts, that, due to Excusable Delay, delivery of an Aircraft will be delayed for a period of more than [*] after the end of the calendar month in which delivery is otherwise required (unless the Seller concludes that, by reason of any Excusable Delay, delivery of such Aircraft will not occur), and as a result thereof in good faith and in accordance with its normal scheduling procedures internally reschedules delivery of such Aircraft to a date reflecting such delays, the Seller will notify the Buyer in writing of such delay and rescheduling or, as the case may be, of such non-delivery, (i) in the event of such delay or non-delivery, Buyer may terminate this Agreement or (ii) in the event of such non-delivery Seller may terminate this Agreement as to such Aircraft in each case by giving written notice to the other party within thirty (30) days after receipt by the Buyer of such notice of anticipated delay. Such termination will discharge all obligations and liabilities of the Buyer and Seller hereunder to the extent related to such Aircraft, [*]. Notwithstanding the provisions of Clause 19, the Buyer will not be entitled to [*] terminate this Agreement as to any Aircraft under this Clause 10 by reason of an Excusable Delay if such delay is caused by the negligence or fault of the Buyer or its representative.

 

10.4               If, following notice of an anticipated delay under sub-Clause 10.3, this Agreement, with respect to the affected Aircraft, is not terminated in accordance with the provisions of such sub-Clause, then the time of delivery otherwise required hereunder will be extended by a period equal to the delay specified in such notice.

 

10.5               If an event occurs prior to delivery of an Aircraft which could result in such Aircraft being lost, destroyed or damaged beyond economic repair (“Total Loss”), the Seller will immediately notify Buyer of the occurrence of such event with the understanding that the Seller is still making its determination of what consequences such event has on the Aircraft. Should the Aircraft be subject to a Total Loss prior to delivery further to such event, a further notice will specify the earliest date reasonably possible, consistent with the Seller’s other contractual commitments and production capabilities, by which the Seller would be able to deliver a replacement for such Aircraft. This Agreement will terminate as to such Aircraft unless the Buyer gives the Seller written notice, within forty-five (45) days after receipt by the Buyer of the notice from the Seller of such Total Loss, that the Buyer desires the Seller to manufacture and deliver to the Buyer a replacement for such Aircraft. If the Buyer gives such notice to the Seller, the Seller will manufacture and deliver to the Buyer, at the earliest date reasonably possible consistent with the Seller’s other contractual commitments and production capabilities, an aircraft to replace the Aircraft subject to Total Loss, and the parties will execute an amendment to the Agreement to which such Aircraft subject to Total Loss related to evidence the delivery date for such replacement aircraft; provided, however, that nothing herein will obligate the Seller to manufacture and deliver such replacement aircraft if such manufacture would require the reactivation of its production line for the model of aircraft purchased hereunder. The terms and conditions of this Agreement applicable to the Aircraft subject to Total Loss will apply to the replacement aircraft. In the event of termination of this Agreement as to an Aircraft subject to Total Loss, the obligations and liabilities of the parties hereunder to the extent related to such Aircraft will be discharged. [*]

 

10.6               The termination provisions set forth in this Clause 10 are in substitution for any other rights of termination set forth in the Uniform Commercial Code or any other applicable law, statute or regulation or otherwise by virtue of an Excusable Delay or the loss, destruction or damage beyond economic repair of an Aircraft.

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

10.7               Termination Rights Exclusive

 

If this Agreement is terminated as provided for under the terms of Clauses 10.3 or 10.4, such termination will discharge all obligations and liabilities of the parties hereunder with respect to such affected Aircraft and undelivered material, services, data or other items applicable thereto and to be furnished under the Agreement.

 

10.8               Remedies

 

THIS CLAUSE 10 SETS FORTH THE SOLE AND EXCLUSIVE REMEDY OF THE BUYER FOR DELAYS IN DELIVERY OR FAILURE TO DELIVER, OTHER THAN SUCH DELAYS AS ARE COVERED BY CLAUSE 11, AND THE BUYER HEREBY WAIVES ALL RIGHTS TO WHICH IT WOULD OTHERWISE BE ENTITLED IN RESPECT THEREOF, INCLUDING, WITHOUT LIMITATION, ANY RIGHTS TO INCIDENTAL AND CONSEQUENTIAL DAMAGES OR SPECIFIC PERFORMANCE. THE BUYER WILL NOT BE ENTITLED TO CLAIM THE REMEDIES AND RECEIVE THE BENEFITS PROVIDED IN THIS CLAUSE 10 WHERE THE DELAY REFERRED TO IN THIS CLAUSE 10 IS CAUSED BY THE NEGLIGENCE OR FAULT OF THE BUYER OR ITS REPRESENTATIVES.

 

11 -                   INEXCUSABLE DELAY

 

11.1               Should an Aircraft not be ready for delivery to the Buyer within [*] after the date specified in Clause 9 hereof (as such date may be changed pursuant to this Agreement), except as a result of such delays or failures to deliver as are covered by Clause 10, the provisions of this Clause 11 will be applicable [*].

 

11.2               Except as provided for in any other part of the Agreement, the total liability of the Seller under this Clause 11 with respect to any Aircraft will in no event exceed the amount of [*] US Dollars (USD [*]) plus any amounts referred to in sub-Clauses 11.3 or 11.4 if applicable.

 

11.3               Buyer’s termination right

 

11.3.1             If the Seller has notified the Buyer in writing of an Inexcusable Delay at least [*] before the first day of the Scheduled Delivery Month of the applicable Aircraft, then in the event that an Aircraft is not ready for delivery to the Buyer for a period in excess of [*] after the date specified in Clause 9.1.1 hereof (as such date may be changed pursuant to this Agreement), the Buyer will have the further right, exercisable by written notice to the Seller given not less than one (1) month nor more than two (2) months after the expiration of such [*] period, to terminate this Agreement in respect only of the affected Aircraft; whereupon the Seller will pay the Buyer, within one (1) month after receipt of such notice, an amount equal to all Predelivery Payments made by the Buyer to the Seller in relation to such Aircraft [*].

 

11.3.2             If the Seller has not notified the Buyer in writing of an Inexcusable Delay at least [*] before the first day of the Scheduled Delivery Month of the applicable Aircraft, then in the event that an Aircraft is not ready for delivery to the Buyer for a period in excess of [*] after the date specified in Clause 9.1.1 hereof (as such date may be changed pursuant to this Agreement), the Buyer will have the further right, exercisable by written notice to the Seller given not less than one (1) month nor more than two (2) months after the expiration of such [*] period, to terminate this Agreement in respect only of the affected Aircraft; whereupon the Seller will pay the Buyer, within one (1) month after receipt of such notice, an amount equal to all Predelivery Payments made by the Buyer to the Seller in relation to such Aircraft [*].

 

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

11.4               In the event that an Aircraft is not ready for delivery to the Buyer for a period in excess of [*] after the date specified in clause 9.1.1 hereof (as such date may be changed pursuant to this Agreement), either party will have the right, exercisable by written notice to the other party given not less than one (1) month nor more than two (2) months after expiration of such [*] period, to terminate this Agreement in respect only of the affected Aircraft whereupon the Seller will pay the Buyer, within one (1) month after such notice, an amount equal to all Predelivery Payments made by the Buyer to the Seller in relation to such Aircraft, [*].

 

11.5               Notwithstanding anything to the contrary contained herein, the Buyer will have the right to direct the Seller to apply any and all sums previously paid by the Buyer to the Seller with respect to an Aircraft subject to the provisions of this Clause 11 first to the payment of any other amounts owing from the Buyer to the Seller or any affiliate thereof under any agreement between them.

 

11.6               Remedies

 

THIS CLAUSE 11, AS AMENDED BY THE PARTIES IN WRITING, SETS FORTH THE SOLE AND EXCLUSIVE REMEDY OF THE BUYER FOR DELAYS IN DELIVERY OR FAILURE TO DELIVER, OTHER THAN SUCH DELAYS AS ARE COVERED BY CLAUSE 10, AND THE BUYER HEREBY WAIVES ALL RIGHTS TO WHICH IT WOULD OTHERWISE BE ENTITLED IN RESPECT THEREOF, INCLUDING WITHOUT LIMITATION ANY RIGHTS TO INCIDENTAL AND CONSEQUENTAIL DAMAGES OR SPECIFIC PERFORMANCE.

 

12                  WARRANTIES AND SERVICE LIFE POLICY

 

This Clause covers the terms and conditions of the warranty and service life policy.

 

12.1               Standard Warranty

 

12.1.1            Nature of Warranty

 

For the purpose of this Agreement the term “Warranted Part” will mean any Seller proprietary component, equipment, accessory or part or software, which is installed on an Aircraft at Delivery thereof and

 

(a)   which is manufactured to the detailed design of the Seller or a subcontractor of the Seller and

 

(b)   which bears a part number of the Seller at the time of such Delivery.

 

Subject to the conditions and limitations as hereinafter provided for and except as provided for in Clause 12.1.2, the Seller warrants to the Buyer that each Aircraft and each Warranted Part will at Delivery to the Buyer be free from defects:

 

(i)    in material;

 

(ii)   in workmanship, including without limitation processes of manufacture;

 

(iii)  in design (including without limitation the selection of materials) having regard to the state of the art at the date of such design; and

 

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

(iv)  arising from failure to conform to the Specification, except to those portions of the Specification relating to performance or where it is expressly stated that such portions  are estimates or approximations or design aims.

 

12.1.2            Exclusions

 

The warranties set forth in Clause 12.1.1 will not apply to Buyer Furnished Equipment, nor to the Propulsion Systems, nor to any component, equipment, accessory or part installed on the Aircraft at Delivery that is not a Warranted Part except that:

 

(i)    any defect in the Seller’s workmanship in respect of the installation of such items in the Aircraft, including any failure by the Seller to conform to the installation instructions of the manufacturers of such items, that invalidates any applicable warranty from such manufacturers, will constitute a defect in workmanship for the purpose of this Clause 12.1 and be covered by the warranty set forth in Clause 12.1.1 (ii); and

 

(ii)   any defect inherent in the Seller’s design of the installation, in consideration of the state of the art at the date of such design, which impairs the use of such items, will constitute a defect in design for the purpose of this Clause 12.1 and be covered by the warranty set forth in Clause 12.1.1 (iii).

 

12.1.3             Warranty Period

 

The warranties set forth in Clauses 12.1.1 and 12.1.2 will be limited to those defects that become apparent within [*] months after Delivery of the affected Aircraft (the “Warranty Period”).

 

12.1.4             Limitations of Warranty

 

12.1.4.1          The Buyer’s remedy and the Seller’s obligation and liability under Clauses 12.1.1 and 12.1.2 are limited to, at the Seller’s expense and option, the repair, replacement or correction of any Warranted Part which is defective (or to the supply of modification kits rectifying the defect), together with a credit to the Buyer’s account with the Seller of an amount equal to the mutually agreed direct labor costs expended in performing the removal and the reinstallation thereof on the Aircraft at the labor rate defined in Clause 12.1.7.5.

 

The Seller may alternatively furnish to the Buyer’s account with the Seller a credit for the future purchase of goods and services (not including Aircraft or aircraft) equal to the price at which the Buyer is entitled to purchase a replacement for the defective Warranted Part.

 

12.1.4.2          In the event of a defect covered by Clauses 12.1.1 (iii), 12.1.1 (iv) and 12.1.2 (ii) becoming apparent within the Warranty Period, the Seller will also, if so requested by the Buyer in writing, correct such defect in any Aircraft which has not yet been delivered to the Buyer, provided, however,

 

(i)    that the Seller will not be responsible, nor be deemed to be in default on account of any delay in Delivery of any Aircraft or otherwise in respect of the performance of this Agreement, due to the Seller’s undertaking to make such correction and provided further

 

 

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

(ii)   that, rather than accept a delay in the Delivery of any such Aircraft, the Buyer and the Seller may agree to deliver such Aircraft with subsequent correction of the defect by the Buyer at the Seller’s expense, or the Buyer may elect to accept Delivery and thereafter file a Warranty Claim as though the defect had become apparent immediately after Delivery of such Aircraft.

 

12.1.4.3          Cost of inspection

 

In addition to the remedies set forth in Clauses 12.1.4.1 and 12.1.4.2, the Seller will reimburse the direct labor costs incurred by the Buyer in performing inspections of the Aircraft to determine whether or not a defect exists in any Warranted Part within the Warranty Period subject to the following conditions:

 

(i)    such inspections are recommended by a Seller Service Bulletin to be performed within the Warranty Period;

 

(ii)   the reimbursement will not apply for any inspections performed as an alternative to accomplishing corrective action as recommended by the Seller when such corrective action has been made available to the Buyer and such corrective action could have reasonably been accomplished by the Buyer at the time such inspections are performed or earlier;

 

(iii)  the labor rate for the reimbursement will be the Inhouse Warranty Labor Rate; and

 

(iv)  the manhours used to determine such reimbursement will not exceed the Seller’s estimate of the manhours required for such inspections.

 

12.1.5             Warranty Claim Requirements

 

The Buyer’s remedy and the Seller’s obligation and liability under this Clause 12.1 with respect to any warranty claim submitted by the Buyer (each a “Warranty Claim”) are subject to the following conditions:

 

(i)    the defect having become apparent within the Warranty Period;

 

(ii)   the Buyer having filed a warranty claim within [*];

 

(iii)  the Buyer having submitted to the Seller evidence reasonably satisfactory to the Seller that the claimed defect is due to a matter covered under the provisions of this Clause 12.1 and that such defect has not resulted from any act or omission of the Buyer, including but not limited to, any failure to operate and maintain the affected Aircraft or part thereof in accordance with the standards set forth in Clause 12.1.10 or from any act or omission of any third party;

 

(iv)  the Seller having received a Warranty Claim complying with the provisions of Clause 12.1.6 below.

 

 

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

12.1.6             Warranty Administration

 

The warranties set forth in Clause 12.1 will be administered as hereinafter provided for:

 

12.1.6.1          Claim Determination

 

Determination as to whether any claimed defect in any Warranted Part is a valid Warranty Claim will be made by the Seller and will be based upon the claim details, reports from the Seller’s Representatives, historical data logs, inspections, tests, findings during repair, defect analysis and other relevant documents and information.

 

12.1.6.2         Transportation Costs

 

The cost of transporting a Warranted Part claimed to be defective to the facilities designated by the Seller and for the return therefrom of a repaired or replaced Warranted Part will be borne by the Seller.

 

12.1.6.3          Return of an Aircraft

 

If the Buyer and the Seller mutually agree, prior to such return, that it is necessary to return an Aircraft to the Seller for consideration of a Warranty Claim, the Seller will bear the direct costs of fuel and landing fees to and from the Seller’s facilities for such return of the Aircraft. The Buyer will make reasonable efforts to minimize the duration of the corresponding flights.

 

12.1.6.4         On Aircraft Work by the Seller

 

If the Seller determines that a defect subject to this Clause 12.1 justifies the dispatch by the Seller of a working team to repair or correct such defect through the embodiment of one or several Seller’s Service Bulletins at the Buyer’s facilities, or if the Seller accepts the return of an Aircraft to perform or have performed such repair or correction, then the labor costs for such on-Aircraft work will be borne by the Seller.

 

The condition which has to be fulfilled for on-Aircraft work by the Seller is that, in the opinion of the Seller, the work necessitates the technical expertise of the Seller as manufacturer of the Aircraft.

 

If said condition is fulfilled and if the Seller is requested to perform the work, the Seller and the Buyer will agree on a schedule and place for the work to be performed.

 

12.1.6.5          Warranty Claim Substantiation

 

Each Warranty Claim filed by the Buyer under this Clause 12.1 will contain at least the following data:

 

(a)   description of defect and action taken, if any,

(b)   date of incident and/or removal date,

(c)   description of Warranted Part claimed to be defective,

(d)   part number,

(e)   serial number (if applicable),

(f)    position on Aircraft,

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

(g)   total flying hours or calendar time, as applicable, at the date of defect appearance,

(h)   time since last shop visit at the date of defect appearance,

(i)    Manufacturer Serial Number of the Aircraft and/or its registration,

(j)    Aircraft total flying hours and/or number of landings at the date of defect appearance,

(k)   Warranty Claim number,

(l)    date of Warranty Claim,

(m)  Delivery Date of Aircraft or Warranted Part to the Buyer,

 

Warranty Claims are to be addressed as follows:

 

AIRBUS

CUSTOMER SERVICES DIRECTORATE

WARRANTY ADMINISTRATION

Rond Point Maurice Bellonte

B.P. 33

F 31707 BLAGNAC CEDEX

FRANCE

 

12.1.6.6          Replacements

 

Title to and risk of loss of any Aircraft, component, accessory, equipment or part returned by the Buyer to the Seller will at all times remain with the Buyer, except that:

 

((i)   when the Seller has possession of a returned Aircraft, component, accessory, equipment or part to which the Buyer has title, the Seller will have such responsibility therefor as is chargeable by law to a bailee for hire, but the Seller will not be liable for loss of use, and;

 

(ii)   title to and risk of loss of a returned component, accessory, equipment or part will pass to the Seller upon shipment by the Seller to the Buyer of any item furnished by the Seller to the Buyer as a replacement therefor.

 

Upon the Seller’s shipment to the Buyer of any replacement component, accessory, equipment or part provided by the Seller pursuant to this Clause 12.1, title to and risk of loss of such replacement component, accessory, equipment or part will pass to the Buyer.

 

Replaced components, equipment, accessories or parts will become the Seller’s property.

 

12.1.6.7          Rejection

 

The Seller will provide reasonable written substantiation in case of rejection of a Warranty Claim. In such event the Buyer will refund to the Seller reasonable inspection and test charges incurred in connection therewith.

 

12.1.6.8          Inspection

 

The Seller, at its own cost and expense, will have the right to inspect the affected Aircraft, documents and other records relating thereto in the event of any Warranty Claim under this Clause 12.1. [*]

 

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

12.1.7            Inhouse Warranty

 

12.1.7.1         Seller’s Authorization

 

The Seller hereby authorizes the Buyer to repair Warranted Parts (“Inhouse Warranty”) subject to the terms of this Clause 12.1.7.

 

12.1.7.2          Conditions for Seller’s Authorization

 

The Buyer will be entitled to repair such Warranted Parts:

 

-  provided the Buyer notifies the Seller Representative of its intention to perform Inhouse Warranty repairs before any such repairs are started where the estimated cost of such repair is in excess of US Dollars [*](US$ [*]). The Buyer’s notification will include sufficient detail regarding the defect, estimated labor hours and material to allow the Seller to ascertain the reasonableness of the estimate. The Seller agrees to use all reasonable efforts to ensure a prompt response and will not unreasonably withhold authorization;

 

-  provided adequate facilities and qualified personnel are available to the Buyer;

 

-  provided repairs are performed in accordance with the Seller’s Technical Data or written instructions; and

 

-  only to the extent specified by the Seller, or, in the absence of such specification, to the extent reasonably necessary to correct the defect, in accordance with the standards set forth in Clause 12.1.10.

 

12.1.7.3          Seller’s Rights

 

The Seller will have the right to require the return of any Warranted Part, or any part removed therefrom, which is claimed to be defective if, in the judgment of the Seller, the nature of the claimed defect requires technical investigation. Such return will be subject to the provisions of Clause 12.1.6.2. Furthermore, the Seller will have the right to have a Seller Representative present during the disassembly, inspection and testing of any Warranted Part claimed to be defective, subject to such presence being practical and not unduly delaying the repair.

 

12.1.7.4          Inhouse Warranty Claim Substantiation

 

Claims for Inhouse Warranty credit will be filed within the time period set forth in 12.1.5 (ii) and will contain the same information as that required for Warranty Claims under Clause 12.1.6.5 and in addition will include:

 

(a)    a report of technical findings with respect to the defect,

 

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

(b)    for parts required to remedy the defect:

- part numbers,

- serial numbers (if applicable),

- parts description,

- quantity of parts,

- unit price of parts,

- related Seller’s or third party’s invoices (if applicable),

- total price of parts,

 

(c)    detailed number of labor hours [*],

 

(d)    Inhouse Warranty Labor Rate [*],

 

(e)    total claim value.

 

12.1.7.5          Credit

 

The Buyer’s sole remedy and the Seller’s sole obligation and liability with respect to Inhouse Warranty Claims will be the credit to the Buyer’s account of an amount equal to the mutually agreed direct labor costs expended in performing the repair of a Warranted Part and to the direct costs of materials incorporated in said repair, determined as set forth below:

 

(a)   to determine direct labor costs, only manhours spent on removal from the Aircraft, disassembly, inspection, repair, reassembly, final inspection and test of the Warranted Part and reinstallation thereof on the Aircraft will be counted. Any manhours required for maintenance work concurrently being carried out on the Aircraft or the Warranted Part will not be included.

 

(b)   The manhours counted as set forth above will be multiplied by an agreed labor rate (“Inhouse Warranty Labour Rate”) of either:

 

(i)         the Inhouse Warranty Labour Rate applicable pursuant to any existing agreement between the Seller and the Operator of the Aircraft in the event such Operator operates Airbus aircraft, or

 

(ii)        a labor rate to be agreed between the Buyer and the Seller and corresponding to the Inhouse Warranty Labour Rate generally applicable to operators of Airbus aircraft in the region, in the event that the Operator of the Buyer’s Aircraft is not already an Airbus aircraft operator.

 

(c)   Direct material costs are determined by the prices at which the Buyer acquired such material, excluding any parts and materials used for overhaul and as may be furnished by the Seller at no charge.

 

12.1.7.6          Limitation

 

The Buyer will in no event be credited for repair costs (including labor and material) for any Warranted Part in excess of sixty-five per cent (65%) of the Seller’s current catalogue price for a replacement of such defective Warranted Part.

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

12.1.7.7          Scrapped Material

 

The Buyer will retain any defective Warranted Part beyond economic repair and any defective part removed from a Warranted Part during repair for a period of either [*] after the date of completion of the repair or [*] after submission of a claim for Inhouse Warranty credit relating thereto, whichever is longer. Such parts will be returned to the Seller within [*] of receipt of the Seller’s request to that effect.

 

Notwithstanding the foregoing, the Buyer may scrap any such defective parts, which are beyond economic repair and not required for technical evaluation locally, with the agreement of the Seller Representative(s).

 

Scrapped Warranted Parts will be evidenced by a record of scrapped material certified by an authorized representative of the Buyer and will be kept in the Buyer’s file for at least the duration of the applicable Warranty Period.

 

12.1.8            Standard Warranty in case of Pooling or Leasing Arrangements

 

Without prejudice to Clause 21.1, the warranties provided for in this Clause 12.1 for any Warranted Part will accrue to the benefit of any airline in revenue service, other than the Operator, if the Warranted Part enters into the possession of any such airline as a result of a pooling or leasing arrangement between such airline and the Operator, in accordance with the terms and subject to the limitations and exclusions of the foregoing warranties and to the extent permitted by any applicable law or regulations.

 

12.1.9            Warranty for Corrected, Replaced or Repaired Warranted Parts

 

Whenever any Warranted Part, which contains a defect for which the Seller is liable under Clause 12.1, has been corrected, replaced or repaired pursuant to the terms of this Clause 12.1, the period of the Seller’s warranty with respect to such corrected, repaired or replacement Warranted Part, whichever the case may be, will be the remaining portion of the original warranty or [*] months, whichever is longer.

 

If a defect is attributable to a defective repair or replacement by the Buyer, a Warranty Claim with respect to such defect will be rejected, notwithstanding any subsequent correction or repair, and will immediately terminate the remaining warranties under this Clause 12.1 in respect of the affected Warranted Part.

 

12.1.10           Accepted Industry Standard Practices Normal Wear and Tear

 

The Buyer’s rights under this Clause 12.1 are subject to the Aircraft and each component, equipment, accessory and part thereof being maintained, overhauled, repaired and operated in accordance with accepted industry standard practices, all Technical Data and any other instructions issued by the Seller, the Suppliers and the Propulsion Systems Manufacturer and all applicable rules, regulations and directives of the relevant Aviation Authorities.

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

The Seller’s liability under this Clause 12.1 will not extend to normal wear and tear nor to:

 

(i)      any Aircraft or component, equipment, accessory or part thereof, which has been repaired, altered or modified after Delivery, except by the Seller or in a manner approved by the Seller;

 

(ii)      any Aircraft or component, equipment, accessory or part thereof, which has been operated in a damaged state;

 

(iii)     any component, equipment, accessory and part from which the trademark, name, part or serial number or other identification marks have been removed.

 

12.1.11           DISCLAIMER OF SELLER LIABILITY

 

THE SELLER WILL NOT BE LIABLE FOR, AND THE BUYER WILL INDEMNIFY THE SELLER AGAINST, THE CLAIMS OF ANY THIRD PARTIES FOR LOSSES DUE TO ANY DEFECT, NONCONFORMANCE OR PROBLEM OF ANY KIND, ARISING OUT OF OR IN CONNECTION WITH ANY REPAIR OF WARRANTED PARTS UNDERTAKEN BY THE BUYER UNDER THIS CLAUSE 12.1 OR ANY OTHER ACTIONS UNDERTAKEN BY THE BUYER UNDER THIS CLAUSE 12, WHETHER SUCH CLAIM IS ASSERTED IN CONTRACT OR IN TORT, OR IS PREMISED ON ALLEGED, ACTUAL, IMPUTED, ORDINARY OR INTENTIONAL ACTS OR OMISSIONS OF THE BUYER OR THE SELLER.

 

12.2               Seller Service Life Policy

 

12.2.1            In addition to the warranties set forth in Clause 12.1, the Seller further agrees that should a Failure occur in any Item (as these terms are defined hereinbelow) then, subject to the general conditions and limitations set forth in Clause 12.2.4, the provisions of this Clause 12.2 will apply.

 

For the purposes of this Clause 12.2:

 

(i)     “Item” means any item listed in Exhibit “F”;

 

(ii)    “Failure” means any breakage of, or defect in, an Item that materially impairs the utility or safety of the Item, provided that (a) any such breakage of, or defect in, such Item did not result from any breakage or defect in any other Aircraft part or component or from any other extrinsic force and (b) has occurred or can reasonably be expected to occur on a repetitive or fleetwide basis.

 

12.2.2            Periods and Seller’s Undertakings

 

Subject to the general conditions and limitations set forth in Clause 12.2.4, the Seller agrees that if a Failure occurs in an Item before the Aircraft in which such Item was originally installed has completed [*] flying hours or [*] flight cycles or within [*] years after the Delivery of said Aircraft, whichever will first occur, the Seller will, at its discretion and as promptly as practicable and with the Seller’s financial participation as hereinafter provided, either :

 

- design and furnish to the Buyer a correction for such Item with a Failure and provide any parts required for such correction (including Seller designed standard parts but excluding industry standard parts), or

 

- replace such Item.

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

12.2.3            Seller’s Participation in the Costs

 

Subject to the general conditions and limitations set forth in Clause 12.2.4, any part or Item that the Seller is required to furnish to the Buyer under this Service Life Policy in connection with the correction or replacement of an Item will be furnished to the Buyer at the Seller’s then current sales price therefore, less the Seller’s financial participation determined in accordance with the following formula:

 

P = [*]

 

where:

 

P:financial participation of the Seller,

 

C:Seller’s then current sales prices for the required Item or

Seller designed parts,

 

T:total time in months since Delivery of the Aircraft in which the Item subject to a Failure was originally installed,

and,

 

N:[*] months,

 

 

THE BUYER’S SOLE REMEDY AND RELIEF FOR THE NON-PERFORMANCE OF ANY OBLIGATION OR LIABILITY OF THE SELLER ARISING UNDER OR BY VIRTUE OF THIS CLAUSE 12.2 WILL BE A CREDIT FOR GOODS AND SERVICES (NOT INCLUDING AIRCRAFT OR AIRCRAFT), LIMITED TO THE AMOUNT THE BUYER REASONABLY EXPENDS IN PROCURING A CORRECTION OR REPLACEMENT FOR ANY ITEM THAT IS THE SUBJECT OF A FAILURE COVERED BY THIS CLAUSE 12.2 AND TO WHICH SUCH NON-PERFORMANCE IS RELATED LESS THE AMOUNT THAT THE BUYER OTHERWISE WOULD HAVE BEEN REQUIRED TO PAY UNDER THIS CLAUSE 12.2.3 IN RESPECT OF SUCH CORRECTED OR REPLACEMENT ITEM.

 

12.2.4             General Conditions and Limitations

 

12.2.4.1          The undertakings set forth in this Clause 12.2 will be valid after the period of the Seller’s warranty applicable to an Item under Clause 12.1.

 

12.2.4.2          The Buyer’s remedies and the Seller’s obligations and liabilities under this Service Life Policy are subject to the prior compliance by the Buyer with the following conditions:

 

(i)    the Buyer will maintain log books and other historical records with respect to each Item, adequate to enable the Seller to determine whether the alleged Failure is covered by this Service Life Policy and, if so, to define the portion of the costs to be borne by the Seller in accordance with Clause 12.2.3;

 

(ii)   the Buyer will keep the Seller informed of any significant incidents relating to an Aircraft, howsoever occurring or recorded;

 

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

(iii)   the Buyer will comply with the conditions of Clause 12.1.10;

 

(iv)  the Buyer will implement specific structural inspection programs for monitoring purposes as may be established from time to time by the Seller. Such programs will be as compatible as possible with the Buyer’s operational requirements and will be carried out at the Buyer’s expense. Reports relating thereto will be regularly furnished to the Seller;

 

(v)   the Buyer will report any breakage or defect in a Item in writing to the Seller within sixty (60) days after such breakage or defect becomes apparent, whether or not said breakage or defect can reasonably be expected to occur in any other aircraft, and the Buyer will have provided to the Seller sufficient detail on the breakage or defect to enable the Seller to determine whether said breakage or defect is subject to this Service Life Policy.

 

12.2.4.3          Except as otherwise provided for in this Clause 12.2, any claim under this Service Life Policy will be administered as provided for in, and will be subject to the terms and conditions of, Clause 12.1.6.

 

12.2.4.4          In the event of the Seller having issued a modification applicable to an Aircraft, the purpose of which is to avoid a Failure, the Seller may elect to supply the necessary modification kit free of charge or under a pro rata formula established by the Seller. If such a kit is so offered to the Buyer, then, to the extent of such Failure and any Failures that could ensue therefrom, the validity of the Seller’s commitment under this Clause 12.2 will be subject to the Buyer incorporating such modification in the relevant Aircraft, as promulgated by the Seller and in accordance with the Seller’s instructions, within a reasonable time.

 

12.2.4.5          THIS SERVICE LIFE POLICY IS NEITHER A WARRANTY, PERFORMANCE GUARANTEE, NOR AN AGREEMENT TO MODIFY ANY AIRCRAFT OR AIRFRAME COMPONENTS TO CONFORM TO NEW DEVELOPMENTS OCCURRING IN THE STATE OF AIRFRAME DESIGN AND MANUFACTURING ART. THE SELLER’S OBLIGATION UNDER THIS CLAUSE 12.2 IS TO FURNISH ONLY THOSE CORRECTIONS TO THE ITEMS OR PROVIDE REPLACEMENTS THEREFOR AS PROVIDED FOR IN THIS CLAUSE 12.2. WITHOUT LIMITING THE EXCLUSIVITY OF WARRANTIES AND GENERAL LIMITATIONS OF LIABILITY PROVISIONS SET FORTH IN CLAUSE 12.5, THE BUYER HEREBY WAIVES, RELEASES AND RENOUNCES ALL CLAIMS TO ANY FURTHER DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF PROFITS AND ALL OTHER RIGHTS, CLAIMS AND REMEDIES, ARISING UNDER OR BY VIRTUE OF THIS SERVICE LIFE POLICY.

 

12.3               Supplier Warranties and Service Life Policies

 

At least [*] months prior to or at Delivery of the first Aircraft, the Seller will provide the Buyer, in accordance with the provisions of Clause 17, with the warranties and, where applicable, service life policies that the Seller has obtained for Supplier Parts pursuant to the Supplier Product Support Agreements.

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

12.3.1             Definitions

 

12.3.1.1         “Supplier” means any supplier of Supplier Parts.

 

12.3.1.2         “Supplier Part” means any component, equipment, accessory or part installed in an Aircraft at the time of Delivery thereof and for which there exists a Supplier Product Support Agreement. For the sake of clarity, Propulsion Systems and Buyer Furnished Equipment and other equipment selected by the Buyer to be supplied by suppliers with whom the Seller has no existing enforceable warranty agreements are not Supplier Parts.

 

12.3.1.3        “Supplier Product Support Agreements” means agreements between the Seller and Suppliers, as described in Clause 17.1.2, containing enforceable and transferable warranties and, in the case of landing gear suppliers, service life policies for selected structural landing gear elements.

 

12.3.2            Supplier’s Default

 

12.3.1.2.1       If any Supplier, under any standard warranty contained in a Supplier Product Support Agreement, defaults in the performance of any material obligation with respect thereto and the Buyer submits to the Seller timely and reasonable evidence that such default has occurred, then Clause 12.1 will apply to the extent the same would have been applicable had such Supplier Part been a Warranted Part, except that the Supplier’s warranty period as indicated in the Supplier Product Support Agreement will apply.

 

12.3.1.2.2       If any Supplier, under any Supplier service life policy referred to in Clause 12.3.1, defaults in the performance of any material obligation with respect thereto and the Buyer submits to the Seller reasonable and timely evidence that such default has occurred, then Clause 12.2 will apply to the extent the same would have been applicable had such Supplier item been listed in Exhibit F, Seller Service Life Policy, except that the Supplier’s service life policy period as indicated in the Supplier Product Support Agreement will apply.

 

12.3.2.3          At the Seller’s request, the Buyer will assign to the Seller, and the Seller will be subrogated to, all of the Buyer’s rights against the relevant Supplier with respect to and arising by reason of such default and will provide reasonable assistance to enable the Seller to enforce the rights so assigned.

 

12.4               Interface Commitment

 

12.4.1            Interface Problem

 

If the Buyer experiences any technical problem in the operation of an Aircraft or its systems due to a malfunction, the cause of which, after due and reasonable investigation, is not readily identifiable by the Buyer but which the Buyer reasonably believes to be attributable to the design characteristics of one or more components of the Aircraft (“Interface Problem”), the Seller will, if so requested by the Buyer, and without additional charge to the Buyer except for transportation of the Seller’s or its designee’s personnel to the Buyer’s facilities, promptly conduct or have conducted an investigation and analysis of such problem to determine, if possible, the cause or causes of the problem and to recommend such corrective action as may be feasible. The Buyer will furnish to the Seller all data and information in the Buyer’s possession relevant to the Interface Problem and will cooperate with the Seller in the conduct of the Seller’s investigations and such tests as may be required.

 

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

At the conclusion of such investigation, the Seller will promptly advise the Buyer in writing of the Seller’s opinion as to the cause or causes of the Interface Problem and the Seller’s recommendations as to corrective action.

 

12.4.2            Seller’s Responsibility

 

If the Seller determines that the Interface Problem is primarily attributable to the design of a Warranted Part, the Seller will, if so requested by the Buyer and pursuant to the terms and conditions of Clause 12.1, correct the design of such Warranted Part to the extent of the Seller’s obligation as defined in Clause 12.1.

 

12.4.3             Supplier’s Responsibility

 

If the Seller determines that the Interface Problem is primarily attributable to the design of any Supplier Part, the Seller will, if so requested by the Buyer, reasonably assist the Buyer in processing any warranty claim the Buyer may have against the Supplier.

 

12.4.4            Joint Responsibility

 

If the Seller determines that the Interface Problem is attributable partially to the design of a Warranted Part and partially to the design of any Supplier Part, the Seller will, if so requested by the Buyer, seek a solution to the Interface Problem through cooperative efforts of the Seller and any Supplier involved.

 

The Seller will promptly advise the Buyer of such corrective action as may be proposed by the Seller and any such Supplier. Such proposal will be consistent with any then existing obligations of the Seller hereunder and of any such Supplier towards the Buyer. Such corrective action will constitute full satisfaction of any claim the Buyer may have against either the Seller or any such Supplier with respect to such Interface Problem.

 

12.4.5            General

 

12.4.5.1          All requests under this Clause 12.4 will be directed to both the Seller and the affected Supplier.

 

12.4.5.2          Except as specifically set forth in this Clause 12.4, this Clause will not be deemed to impose on the Seller any obligations not expressly set forth elsewhere in this Agreement.

 

12.4.5.3          All reports, recommendations, data and other documents furnished by the Seller to the Buyer pursuant to this Clause 12.4 will be deemed to be delivered under this Agreement and will be subject to the terms, covenants and conditions set forth in this Clause 12.

 

12.5               Exclusivity of Warranties

 

THIS CLAUSE 12 SETS FORTH THE EXCLUSIVE WARRANTIES, EXCLUSIVE LIABILITIES AND EXCLUSIVE OBLIGATIONS OF THE SELLER, AND THE EXCLUSIVE REMEDIES AVAILABLE TO THE BUYER, WHETHER UNDER THIS AGREEMENT OR OTHERWISE, ARISING FROM ANY DEFECT OR NONCONFORMITY OR PROBLEM OF ANY KIND IN ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY, PART, SOFTWARE, DATA OR SERVICE DELIVERED BY THE SELLER UNDER THIS AGREEMENT.

THE BUYER RECOGNIZES THAT THE RIGHTS, WARRANTIES AND REMEDIES IN THIS CLAUSE 12 ARE ADEQUATE AND SUFFICIENT TO PROTECT THE BUYER FROM ANY DEFECT OR NONCONFORMITY OR PROBLEM OF ANY KIND IN THE GOODS AND SERVICES SUPPLIED UNDER THIS AGREEMENT. THE BUYER HEREBY WAIVES, RELEASES AND RENOUNCES ALL OTHER WARRANTIES, OBLIGATIONS, GUARANTEES AND LIABILITIES OF THE SELLER AND ALL OTHER RIGHTS, CLAIMS AND REMEDIES OF THE BUYER AGAINST THE SELLER, WHETHER EXPRESS OR IMPLIED BY CONTRACT, TORT, OR STATUTORY LAW OR OTHERWISE, WITH RESPECT TO ANY NONCONFORMITY OR DEFECT OR PROBLEM OF ANY KIND IN ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY, PART, SOFTWARE, DATA OR SERVICE DELIVERED BY THE SELLER UNDER THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO:

 

(1)       ANY IMPLIED WARRANTY OF MERCHANTABILITY AND/OR FITNESS FOR ANY GENERAL OR PARTICULAR PURPOSE;

 

(2)        ANY IMPLIED OR EXPRESS WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE;

 

(3)       ANY RIGHT, CLAIM OR REMEDY FOR BREACH OF CONTRACT;

 

(4)       ANY RIGHT, CLAIM OR REMEDY FOR TORT, UNDER ANY THEORY OF LIABILITY, HOWEVER ALLEGED, INCLUDING, BUT NOT LIMITED TO, ACTIONS AND/OR CLAIMS FOR NEGLIGENCE, GROSS NEGLIGENCE, INTENTIONAL ACTS, WILLFUL DISREGARD, IMPLIED WARRANTY, PRODUCT LIABILITY, STRICT LIABILITY OR FAILURE TO WARN;

 

(5)       ANY RIGHT, CLAIM OR REMEDY ARISING UNDER THE UNIFORM COMMERCIAL CODE OR ANY OTHER STATE OR FEDERAL STATUTE;

 

(6)       ANY RIGHT, CLAIM OR REMEDY ARISING UNDER ANY REGULATIONS OR STANDARDS IMPOSED BY ANY INTERNATIONAL, NATIONAL, STATE OR LOCAL STATUTE OR AGENCY;

 

(7)       ANY RIGHT, CLAIM OR REMEDY TO RECOVER OR BE COMPENSATED FOR:

 

(a)LOSS OF USE OR REPLACEMENT OF ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY OR PART PROVIDED UNDER THIS AGREEMENT;

 

(b)LOSS OF, OR DAMAGE OF ANY KIND TO, ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY OR PART PROVIDED UNDER THIS AGREEMENT;

 

(c)LOSS OF PROFITS AND/OR REVENUES;

 

(d)ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGE.

 

THE WARRANTIES AND SERVICE LIFE POLICY PROVIDED BY THIS AGREEMENT WILL NOT BE EXTENDED, ALTERED OR VARIED EXCEPT BY A WRITTEN INSTRUMENT SIGNED BY THE SELLER AND THE BUYER. IN THE EVENT THAT ANY PROVISION OF THIS CLAUSE 12 SHOULD FOR ANY REASON BE HELD UNLAWFUL, OR OTHERWISE UNENFORCEABLE, THE REMAINDER OF THIS CLAUSE 12 WILL REMAIN IN FULL FORCE AND EFFECT.

FOR THE PURPOSES OF THIS CLAUSE 12.5, THE “SELLER” WILL BE UNDERSTOOD TO INCLUDE THE SELLER, ANY OF ITS SUPPLIERS,

 

SUBCONTRACTORS, AFFILIATES AND ANY OF THEIR RESPECTIVE INSURERS.

 

12.6               Duplicate Remedies

 

The remedies provided to the Buyer under Clause 12.1 and Clause 12.2 as to any defect in respect of the Aircraft or any part thereof are mutually exclusive and not cumulative. The Buyer will be entitled to the remedy that provides the maximum benefit to it, as the Buyer may elect, pursuant to the terms and conditions of this Clause 12 for any particular defect for which remedies are provided under this Clause 12; provided, however, that the Buyer will not be entitled to elect a remedy under both Clause 12.1 and Clause 12.2 for the same defect. The Buyer’s rights and remedies herein for the nonperformance of any obligations or liabilities of the Seller arising under these warranties will be in monetary damages limited to the amount the Buyer expends in procuring a correction or replacement for any covered part subject to a defect or nonperformance covered by this Clause 12, and the Buyer will not have any right to require specific performance by the Seller.

 

 

12.7               Negotiated Agreement

 

The Buyer specifically recognizes that:

 

(i)the Specification has been agreed upon after careful consideration by the Buyer using its judgment as a professional operator of aircraft used in public transportation and as such is a professional within the same industry as the Seller;

 

(ii)this Agreement, and in particular this Clause 12, has been the subject of discussion and negotiation and is fully understood by the Buyer; and

 

(iii)the price of the Aircraft and the other mutual agreements of the Buyer set forth in this Agreement were arrived at in consideration of, inter alia, the provisions of this Clause 12, specifically including the waiver, release and renunciation by the Buyer set forth in Clause 12.5.

 

12.8               Disclosure to Third Party Entity

 

In the event of the Buyer intending to designate a third party entity (a “Third Party Entity”) to administrate this Clause 12, the Buyer will notify the Seller of such intention prior to any disclosure of this Clause to the selected Third Party Entity and will cause such Third Party Entity to enter into a confidentiality agreement and or any other relevant documentation with the Seller solely for the purpose of administrating this Clause 12.

 

12.9               Transferability

 

Without prejudice to Clause 21.1, the Buyer’s rights under this Clause 12 may not be assigned, sold, transferred, novated or otherwise alienated by operation of law or otherwise, without the Seller’s prior written consent, which will not be unreasonably withheld or delayed.

 

Any transfer in violation of this Clause 12.9 will, as to the particular Aircraft involved, void the rights and warranties of the Buyer under this Clause 12.

13                  PATENT AND COPYRIGHT INDEMNITY

 

13.1               Indemnity

 

13.1.1            Subject to the provisions of Clause 13.2.3, the Seller will indemnify the Buyer from and against any damages, costs and/or expenses including legal costs (excluding damages, costs, expenses, loss of profits and other liabilities in respect of or resulting from loss of use of the Aircraft) resulting from any infringement or claim of infringement by the Airframe (or any part or software installed therein at Delivery) of:

 

(i)    any British, French, German, Spanish or U.S. patent;

 

and

 

(ii)   any patent issued under the laws of any other country in which the Buyer may lawfully operate the Aircraft, provided that :

 

(1)     from the time of design of such Airframe, accessory, equipment and/or part or software and until infringement claims are resolved, such country and the flag country of the Aircraft are each a party to the Chicago Convention on International Civil Aviation of December 7, 1944, and are each fully entitled to all benefits of Article 27 thereof,

 

or in the alternative,

 

(2)    from such time of design and until infringement claims are resolved, such country and the flag country of the Aircraft are each a party to the International Convention for the Protection of Industrial Property of March 20, 1883 (“Paris Convention”);

 

and

 

(iii)    in respect of computer software installed on the Aircraft, any copyright, provided that the Seller’s obligation to indemnify will be limited to infringements in countries which, at the time of infringement, are members of The Berne Union and recognize computer software as a “work” under the Berne Convention.

 

13.1.2             Clause 13.1.1 will not apply to

 

(i)      Buyer Furnished Equipment or Propulsion Systems; or

 

(ii)     software not created by, or specifically for, the Seller.

 

13.1.3            In the event that the Buyer, due to circumstances contemplated in Clause 13.1.1, is prevented from using the Aircraft (whether by a valid judgment of a court of competent jurisdiction or by a settlement arrived at between claimant, Seller and Buyer), the Seller will at its discretion and expense either:

 

(i)      procure for the Buyer the right to use the Aircraft’s part or software free of charge to the Buyer; or

 

(ii)     replace the infringing part of the Aircraft as soon as possible with a non-infringing substitute complying in all other respects with the requirements of this Agreement.

13.2               Administration of Patent and Copyright Indemnity Claims

 

13.2.1            If the Buyer receives a written claim or a suit is threatened or commenced against the Buyer for infringement of a patent or copyright referred to in Clause 13.1, the Buyer will:

 

(i)      forthwith notify the Seller giving particulars thereof;

 

(ii)     furnish to the Seller all data, papers and records within the Buyer’s control or possession relating to such patent or claim;

 

(iii)    refrain from admitting any liability or making any payment or assuming any expenses, damages, costs or royalties or otherwise acting in a manner prejudicial to the defense or denial of such suit or claim provided always that nothing in this sub-Clause (iii) will prevent the Buyer from paying such sums as may be required in order to obtain the release of the Aircraft, provided such payment is accompanied by a denial of liability and is made without prejudice;

 

(iv)    fully co-operate with, and render all such assistance to, the Seller as may be pertinent to the defense or denial of the suit or claim;

 

(v)     act in such a way as to mitigate damages, costs and expenses and/or reduce the amount of royalties which may be payable.

 

13.2.2            The Seller will be entitled either in its own name or on behalf of the Buyer to conduct negotiations with the party or parties alleging infringement and may assume and conduct the defense or settlement of any suit or claim in the manner which, in the Seller’s opinion, it deems proper.

 

13.2.3            The Seller’s liability hereunder will be conditional upon the strict and timely compliance by the Buyer with the terms of this Clause and is in lieu of any other liability to the Buyer express or implied which the Seller might incur at law as a result of any infringement or claim of infringement of any patent or copyright.

 

THE INDEMNITY PROVIDED IN THIS CLAUSE 13 AND THE OBLIGATIONS AND LIABILITIES OF THE SELLER UNDER THIS CLAUSE 13 ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND THE BUYER HEREBY WAIVES, RELEASES AND RENOUNCES ALL OTHER INDEMNITIES, WARRANTIES, OBLIGATIONS, GUARANTEES AND LIABILITIES ON THE PART OF THE SELLER AND RIGHTS, CLAIMS AND REMEDIES OF THE BUYER AGAINST THE SELLER, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE (INCLUDING WITHOUT LIMITATION ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY ARISING FROM OR WITH RESPECT TO LOSS OF USE OR REVENUE OR CONSEQUENTIAL DAMAGES), WITH RESPECT TO ANY ACTUAL OR ALLEGED PATENT INFRINGEMENT OR THE LIKE BY ANY AIRFRAME, PART OR SOFTWARE INSTALLED THEREIN AT DELIVERY, OR THE USE OR SALE THEREOF, PROVIDED THAT, IN THE EVENT THAT ANY OF THE AFORESAID PROVISIONS SHOULD FOR ANY REASON BE HELD UNLAWFUL OR OTHERWISE INEFFECTIVE, THE REMAINDER OF THIS CLAUSE WILL REMAIN IN FULL FORCE AND EFFECT. THIS INDEMNITY AGAINST PATENT AND COPYRIGHT INFRINGEMENTS WILL NOT BE EXTENDED, ALTERED OR VARIED EXCEPT BY A WRITTEN INSTRUMENT SIGNED BY THE SELLER AND THE BUYER.

 

14                  TECHNICAL DATA AND SOFTWARE SERVICES

 

14.1               Scope

 

This Clause 14 covers the terms and conditions for the supply of technical data (“hereinafter “Technical Data”) and software services described hereunder (hereinafter “Software Services”) to support the Aircraft operation.

14.1.1            The Technical Data will be supplied in the English language using the aeronautical terminology in common use.

 

14.1.2            Range, type, format and delivery schedule of the Technical Data to be provided under this Agreement are outlined in Exhibit G hereto.

 

14.2               Aircraft Identification for Technical Data

 

14.2.1            For those Technical Data that are customized to the Aircraft, the Buyer agrees to the allocation of fleet serial numbers (“Fleet Serial Numbers”) in the form of block of numbers selected in the range from 001 to 999.

 

14.2.2            The sequence will not be interrupted unless two (2) different Propulsion Systems or two (2) different models of Aircraft are selected.

 

14.2.3            The Buyer will indicate to the Seller the Fleet Serial Number allocated to each Aircraft corresponding to the delivery schedule set forth in Clause 9.1 no later than twelve (12) months before the Scheduled Delivery Month of the first Aircraft. Neither the designation of such Fleet Serial Numbers nor the subsequent allocation of the Fleet Serial Numbers to Manufacturer Serial Numbers for the purpose of producing certain customized Technical Data will constitute any property, insurable or other interest of the Buyer in any Aircraft prior to the Delivery of such Aircraft as provided for in this Agreement.

 

The customized Technical Data that are affected thereby are the following:

 

- Aircraft Maintenance Manual,

- Illustrated Parts Catalogue,

- Trouble Shooting Manual,

- Aircraft Wiring Manual,

- Aircraft Schematics Manual,

- Aircraft Wiring Lists.

 

14.3               Integration of Equipment Data

 

14.3.1            Supplier Equipment

 

Information, including revisions, relating to Supplier equipment that is installed on the Aircraft at Delivery, or through Airbus Service Bulletins thereafter, will be introduced into the customized Technical Data to the extent necessary for understanding of the affected systems, at no additional charge to the Buyer.

 

14.3.2            Buyer Furnished Equipment

 

14.3.2.1         The Seller will introduce Buyer Furnished Equipment data for Buyer Furnished Equipment that is installed on the Aircraft by the Seller (hereinafter “BFE Data”) into the customized Technical Data, at no additional charge to the Buyer for the initial issue of the Technical Data provided at or before Delivery of the first Aircraft, provided such BFE Data is provided in accordance with the conditions set forth in Clauses 14.3.2.2 through 14.3.2.6.

 

14.3.2.2          The Buyer will supply, or will cause the BFE Supplier(s) to supply on its behalf, BFE Data to the Seller at least six (6) months prior to the Scheduled Delivery Month of the first Aircraft.

14.3.2.3         The BFE Data will be supplied in English and will be established in compliance with the then applicable revision of ATA iSpecification 2200 (iSpec 2200), Information Standards for Aviation Maintenance.

 

14.3.2.4         The BFE Data will be delivered in digital format and/or in Portable Document Format (PDF), as agreed between the Buyer and the Seller.

 

14.3.2.5         All costs related to the delivery to the Seller of the applicable BFE Data will be borne by the Buyer.

 

14.4               Supply

 

14.4.1            Technical Data will be supplied on-line and/or off-line, as set forth in Exhibit G hereto.

 

14.4.2            The Buyer will not receive any credit or compensation for any unused or only partially used Technical Data supplied pursuant to this Clause 14.

 

14.4.3            Delivery

 

14.4.3.1         For Technical Data provided off-line, such Technical Data and corresponding revisions will be sent to up to two (2) addresses as indicated by the Buyer.

 

14.4.3.2         Technical Data provided off-line will be delivered by the Seller at the Buyer’s named place of destination under DAP conditions. The term Delivered At Place (DAP) is defined in the Incoterms 2010 publication issued by the International Chamber of Commerce.

 

14.4.3.3         The Technical Data will be delivered according to a mutually agreed schedule to correspond with the Deliveries of Aircraft. The Buyer will provide no less than sixty (60) days’ notice when requesting a change to such delivery schedule.

 

14.4.4            It will be the responsibility of the Buyer to coordinate and satisfy local Aviation Authorities’ requirements with respect to Technical Data. Reasonable quantities of such Technical Data will be supplied by the Seller at no charge to the Buyer at the Buyer’s named place of destination.

 

Notwithstanding the foregoing, and in agreement with the relevant Aviation Authorities, preference will be given to the on-line access to such Buyer’s Technical Data through the Airbus customer portal “AirbusWorld”.

 

14.5               Revision Service

 

For each firmly ordered Aircraft covered under this Agreement, revision service for the Technical Data will be provided on a free of charge basis for a period of three years after Delivery of such Aircraft (each a “Revision Service Period”).

 

Thereafter revision service will be provided in accordance with the terms and conditions set forth in the Seller’s then current Customer Services Catalog.

 

14.6               Service Bulletins (SB) Incorporation

 

During any Revision Service Period and upon the Buyer’s request, after issuance of the applicable Service Bulletin, Seller Service Bulletin information will be incorporated into the Technical Data, provided that the Buyer notifies the Seller through the relevant AirbusWorld on-line Service Bulletin Reporting application that it intends to accomplish such Service Bulletin, after which post Service Bulletin status will be shown.

14.7               Technical Data Familiarization

 

Upon request by the Buyer, the Seller will provide up to one (1) week of Technical Data familiarization training at the Seller’s or the Buyer’s facilities. The basic familiarization course is tailored for maintenance and engineering personnel.

 

 

14.8               Customer Originated Changes (COC)

 

If the Buyer wishes to introduce Buyer originated data, including BFE Data after the initial issue of the Technical Data, (hereinafter “COC Data”) into any of the customized Technical Data that are identified as eligible for such incorporation in the Seller’s then current Customer Services Catalog, the Buyer will notify the Seller of such intention.

 

The incorporation of any COC Data will be performed under the methods and tools for achieving such introduction and the conditions specified in the Seller’s then current Customer Services Catalog.

 

 

14.9               AirN@v Family products

 

14.9.1            The Technical Data listed herebelow are provided on DVD and include integrated software (hereinafter together referred to as “AirN@v Family”).

 

14.9.2            The AirN@v Family covers several Technical Data domains, reflected by the following AirN@v Family products:

 

- AirN@v / Maintenance,

- AirN@v / Planning,

- AirN@v / Repair,

- AirN@v / Workshop,

- AirN@v / Associated Data,

- AirN@v / Engineering.

 

14.9.3            The licensing conditions for the use of AirN@v Family integrated software will be as set forth in Part 1 of Exhibit I to the Agreement, “End-User License Agreement for Airbus Software”.

 

14.9.4            The revision service and the license to use AirN@v Family products will be granted free of charge for the duration of the corresponding Revision Service Period. At the end of such Revision Service Period, the yearly revision service for AirN@v Family products and the associated license fee will be provided to the Buyer under the commercial conditions set forth in the Seller’s then current Customer Services Catalog.

 

 

14.10             On-Line Technical Data

 

14.10.1          The Technical Data provided on-line will be made available to the Buyer through the Airbus customer portal AirbusWorld (“AirbusWorld”).

 

14.10.2          Access to AirbusWorld will be subject to the “General Terms and Conditions of Access to and Use of AirbusWorld” (hereinafter the “GTC”), as set forth in Part 2 of Exhibit I to this Agreement.

14.10.3          The list of the Technical Data provided on-line may be extended from time to time.

 

For any Technical Data which is or becomes available on-line, the Seller reserves the right to eliminate other formats for the concerned Technical Data.

 

14.10.4           Access to AirbusWorld will be granted free of charge for an unlimited number of the Buyer’s users (including two (2) Buyer’s Administrators (as defined in the GTC) for the Technical Data related to the Aircraft which will be delivered under this Agreement.

 

14.10.5           For the sake of clarification, it is hereby specified that Technical Data accessed through AirbusWorld will remain subject to the conditions of this Clause 14.

 

In addition, should AirbusWorld provide access to Technical Data in software format, the use of such software will be subject to the conditions of Part 1 of Exhibit I to the Agreement.

 

 

14.11             Waiver, Release and Renunciation

 

The Seller warrants that the Technical Data are prepared in accordance with the state of art at the date of their development. Should any Technical Data prepared by the Seller contain a non-conformity or defect, the sole and exclusive liability of the Seller will be to take all reasonable and proper steps to correct such Technical Data. Irrespective of any other provisions herein, no warranties of any kind will be given for the Customer Originated Changes, as set forth in Clause 14.8.

 

THE WARRANTIES, OBLIGATIONS AND LIABILITIES OF THE SELLER (AS DEFINED BELOW FOR THE PURPOSES OF THIS CLAUSE) AND REMEDIES OF THE BUYER SET FORTH IN THIS CLAUSE 14 ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND THE BUYER HEREBY WAIVES, RELEASES AND RENOUNCES ALL OTHER WARRANTIES, OBLIGATIONS AND LIABILITIES OF THE SELLER AND RIGHTS, CLAIMS AND REMEDIES OF THE BUYER AGAINST THE SELLER, EXPRESS OR IMPLIED, ARISING BY LAW, CONTRACT OR OTHERWISE, WITH RESPECT TO ANY NON-CONFORMITY OR DEFECT OF ANY KIND, IN ANY TECHNICAL DATA OR SERVICES DELIVERED UNDER THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO:

 

A.         ANY WARRANTY AGAINST HIDDEN DEFECTS;

 

B.         ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS;

 

C.         ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OR TRADE;

 

D.         ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY, WHETHER IN CONTRACT OR IN TORT, WHETHER OR NOT ARISING FROM THE SELLER’S NEGLIGENCE, ACTUAL OR IMPUTED; AND

 

E.         ANY OBLIGATION, LIABILITY, RIGHT, CLAIM, OR REMEDY FOR LOSS OF OR DAMAGE TO ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY, PART, SOFTWARE, DATA OR SERVICES DELIVERED UNDER THIS AGREEMENT, FOR LOSS OF USE, REVENUE OR PROFIT, OR FOR ANY OTHER DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES;

PROVIDED THAT, IN THE EVENT THAT ANY OF THE AFORESAID PROVISIONS SHOULD FOR ANY REASON BE HELD UNLAWFUL OR OTHERWISE INEFFECTIVE, THE REMAINDER OF THIS AGREEMENT WILL REMAIN IN FULL FORCE AND EFFECT.

 

FOR THE PURPOSES OF THIS CLAUSE 14, THE “SELLER” WILL BE UNDERSTOOD TO INCLUDE THE SELLER, ANY OF ITS SUPPLIERS AND SUBCONTRACTORS, ITS AFFILIATES AND ANY OF THEIR RESPECTIVE INSURERS.

 

14.12              Proprietary Rights

 

14.12.1           All proprietary rights relating to Technical Data, including but not limited to patent, design and copyrights, will remain with the Seller and/or its Affiliates, as the case may be.

 

These proprietary rights will also apply to any translation into a language or languages or media that may have been performed or caused to be performed by the Buyer.

 

14.12.2           Whenever this Agreement and/or any Technical Data provides for manufacturing by the Buyer, the consent given by the Seller will not be construed as any express or implicit endorsement or approval whatsoever of the Buyer or of the manufactured products. The supply of the Technical Data will not be construed as any further right for the Buyer to design or manufacture any aircraft or part thereof or any spare part.

 

14.13              Performance Engineer’s Program

 

14.13.1           In addition to the Technical Data provided under Clause 14, the Seller will provide to the Buyer Software Services, which will consist of the Performance Engineer’s Programs (“PEP”) for the Aircraft type covered under this Agreement. Such PEP is composed of software components and databases, and its use is subject to the license conditions set forth in Part 1 of Exhibit I to the Agreement “End-User License Agreement for Airbus Software”.

 

14.13.2           Use of the PEP will be limited to one (1) copy to be used on the Buyer’s computers for the purpose of computing performance engineering data. The PEP is intended for use on ground only and will not be placed or installed on board the Aircraft.

 

14.13.3          The license to use the PEP and the revision service will be provided on a free of charge basis for the duration of the corresponding Revision Service Period as set forth in Clause 14.5.

 

14.13.4           At the end of such PEP Revision Service Period, the PEP will be provided to the Buyer at the standard commercial conditions set forth in the Seller’s then current Customer Services Catalog.

 

14.14             Future Developments

 

The Seller continuously monitors technological developments and applies them to Technical Data, document and information systems’ functionalities, production and methods of transmission.

 

The Seller will implement and the Buyer will accept such new developments, it being understood that the Buyer will be informed in due time by the Seller of such new developments and their application and of the date by which the same will be implemented by the Seller.

14.15             Confidentiality

 

14.15.1          This Clause, the Technical Data, the Software Services and their content are designated as confidential. All such Technical Data and Software Services are provided to the Buyer for the sole use of the Buyer who undertakes not to disclose the contents thereof to any third party without the prior written consent of the Seller, except as permitted therein or pursuant to any government or legal requirement imposed upon the Buyer.

 

14.15.2           If the Seller authorizes the disclosure of this Clause or of any Technical Data or Software Services to third parties either under this Agreement or by an express prior written authorization and specifically, where the Buyer intends to designate a maintenance and repair organization or a third party to perform the maintenance of the Aircraft or to perform data processing on its behalf (each a “Third Party”), the Buyer will notify the Seller of such intention prior to any disclosure of this Clause and/or the Technical Data and/or the Software Services to such Third Party.

 

The Buyer hereby undertakes to cause such Third Party to agree to be bound by the conditions and restrictions set forth in this Clause 14 with respect to the disclosed Clause, Technical Data or Software Services and will in particular cause such Third Party to enter into a confidentiality agreement with the Seller and appropriate licensing conditions, and to commit to use the Technical Data solely for the purpose of maintaining the Buyer’s Aircraft and the Software Services exclusively for processing the Buyer’s data.

 

14.16             Transferability

 

Without prejudice to Clause 21.1, the Buyer’s rights under this Clause 14 may not be assigned, sold, transferred, novated or otherwise alienated by operation of law or otherwise, without the Seller’s prior written consent.

 

Any transfer in violation of this Clause 14.16 will, as to the particular Aircraft involved, void the rights and warranties of the Buyer under this Clause 14 and any and all other warranties that might arise under or be implied in law.

 

15                  SELLER REPRESENTATIVE SERVICES

 

The Seller will provide at no charge to the Buyer the services described in this Clause 15, at the Buyer’s main base or at other locations to be mutually agreed.

 

15.1               Customer Support Representative(s)

 

15.1.1            The Seller will provide free of charge to the Buyer the services of Seller customer support representative(s), as defined in Appendix A to this Clause 15 (each a “Seller Representative”), at the Buyer’s main base or such other locations as the parties may agree.

 

15.1.2            In providing the services as described hereabove, any Seller Representatives, or any Seller employee(s) providing services to the Buyer hereunder, are deemed to be acting in an advisory capacity only and at no time will they be deemed to be acting as Buyer’s employees, contractors or agents, either directly or indirectly.

 

15.1.3            The Seller will provide to the Buyer an annual written accounting of the consumed man-months and any remaining man-month balance from the allowance defined in Appendix A to this Clause 15. Such accounting will be deemed final and accepted by the Buyer unless the Seller receives written objection from the Buyer within thirty (30) calendar days of receipt of such accounting.

15.1.4            In the event of a need for Aircraft On Ground (“AOG”) technical assistance after the end of the assignment referred to in Appendix A to this Clause 15, the Buyer will have non-exclusive access to:

 

(a)    AIRTAC (Airbus Technical AOG Center);

 

(b)    The Seller Representative network closest to the Buyer’s main base. A list of contacts of the Seller Representatives closest to the Buyer’s main base will be provided to the Buyer.

 

As a matter of reciprocity, the Buyer agrees that Seller Representative(s) may provide similar services to other airlines during any assignment with the Buyer.

 

15.1.5            Should the Buyer request Seller Representative services exceeding the allocation specified in Appendix A to this Clause 15, the Seller may provide such additional services subject to terms and conditions to be mutually agreed.

 

15.1.6            The Seller will cause similar services to be provided by representatives of the Propulsion Systems Manufacturer and Suppliers, when necessary and applicable.

 

15.2               Buyer’s Support

 

15.2.1            From the date of arrival of the first Seller Representative and for the duration of the assignment, the Buyer will provide free of charge a suitable, lockable office, conveniently located with respect to the Buyer’s maintenance facilities, with complete office furniture and equipment including telephone, internet, email and facsimile connections for the sole use of the Seller Representative(s). All related communication costs will be borne by the Seller upon receipt by the Seller of all relevant justifications; however the Buyer will not impose on the Seller any charges other than the direct cost of such communications.

 

15.2.2            The Buyer will reimburse the Seller for the costs of the initial and termination assignment travel of the Seller Representatives, which will consist of one (1) confirmed ticket, Business Class, to and from their place of assignment and Toulouse, France.

 

15.2.3            The Buyer will also reimburse the Seller the costs for air transportation for the annual vacation of the Seller Representatives to and from their place of assignment and Toulouse, France.

 

15.2.4            Should the Buyer request any Seller Representative referred to in Clause 15.1 above to travel on business to a city other than his usual place of assignment, the Buyer will be responsible for all related transportation costs and expenses.

 

15.2.5            Absence of an assigned Seller Representative during normal statutory vacation periods will be covered by other seller representatives on the same conditions as those described in Clause 15.1.4, and such services will be counted against the total allocation provided in Appendix A hereto.

 

15.2.6            The Buyer will assist the Seller in obtaining from the civil authorities of the Buyer’s country those documents that are necessary to permit the Seller Representative to live and work in the Buyer’s country. Failure of the Seller to obtain the necessary documents will relieve the Seller of any obligation to the Buyer under the provisions of Clause 15.1. For the sake of clarity in such a case, the allocation - as defined in Appendix A to this Clause 15 – will not be cancelled nor reduced by the inability of the Seller to obtain the necessary documents and such unused allocation will remain to the account of the Buyer

15.2.7            The Buyer will reimburse to the Seller charges, taxes, duties, imposts or levies of any kind whatsoever, imposed by the authorities of the Buyer’s country upon:

 

-the entry into or exit from the Buyer’s country of the Seller Representatives and their families,

 

-the entry into or the exit from the Buyer’s country of the Seller Representatives and their families’ personal property,

 

-the entry into or the exit from the Buyer’s country of the Seller’s property, for the purpose of providing the Seller Representatives services.

 

15.3               Withdrawal of the Seller Representative

 

The Seller will have the right to withdraw its assigned Seller Representatives as it sees fit if conditions arise, which are in the Seller’s opinion dangerous to their safety or health or prevent them from fulfilling their contractual tasks.

 

15.4               Indemnities

 

INDEMNIFICATION PROVISIONS APPLICABLE TO THIS CLAUSE 15 ARE SET FORTH IN CLAUSE 19.

 

 

 

 

 

SELLER REPRESENTATIVE ALLOCATION

 

The Seller Representative allocation provided to the Buyer pursuant to Clause 15.1 is defined hereunder.

 

1The Seller will provide to the Buyer Seller Representative services at the Buyer’s main base or at other locations to be mutually agreed for a total of [*] man-months per Aircraft.

 

2For the sake of clarification, such Seller Representatives’ services will include [*].

 

3The number of the Seller Representatives assigned to the Buyer at any one time will be mutually agreed, [*].

 

* Confidential material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

 

16                 TRAINING SUPPORT AND SERVICES

 

16.1               General

 

16.1.1            This Clause 16 sets forth the terms and conditions for the supply of training support and services for the Buyer’s personnel to support the Aircraft operation.

 

16.1.2            The range, quantity and validity of training to be provided free of charge under this Agreement are covered in Appendix A to this Clause 16.

16.1.3            Scheduling of training courses covered in Appendix A will be mutually agreed during a training conference (the “Training Conference”) that will be held no later than nine (9) months prior to Delivery of the first Aircraft.

 

 

16.2               Training Location

 

16.2.1            The Seller will provide training at its training center in Blagnac, France, and/or in Hamburg, Germany, or will designate an affiliated training center in Miami, U.S.A., or Beijing, China (individually a “Seller’s Training Center” and collectively the “Seller’s Training Centers”).

 

16.2.2            If the unavailability of facilities or scheduling difficulties make training by the Seller at any Seller’s Training Center impractical, the Seller will ensure that the Buyer is provided with such training at another location designated by the Seller.

 

16.2.3.1         Upon the Buyer’s request, the Seller may also provide certain training at a location other than the Seller’s Training Centers, including one of the Buyer’s bases, if and when practicable for the Seller, under terms and conditions to be mutually agreed upon. In such event, all additional charges listed in Clauses 16.5.2 and 16.5.3 will be borne by the Buyer.

 

16.2.3.2         If the Buyer requests training at a location as indicated in Clause 16.2.3.1 and requires such training to be an Airbus approved course, the Buyer undertakes that the training facilities will be approved prior to the performance of such training. The Buyer will, as necessary and with adequate time prior to the performance of such training, provide access to the training facilities set forth in Clause 16.2.3.1 to the Seller’s and the competent Aviation Authority’s representatives for approval of such facilities.

 

16.3               Training Courses

 

16.3.1            Training courses will be as described in the Seller’s customer services catalog (the “Seller’s Customer Services Catalog”). The Seller’s Customer Services Catalog also sets forth the minimum and maximum number of trainees per course.

 

All training requests or training course changes not made during the Training Conference will be submitted by the Buyer with a minimum of three (3) months prior notice.

 

16.3.2            The following terms and conditions will apply to training performed by the Seller:

 

(i)Training courses will be the Seller’s standard courses as described in the Seller’s Customer Services Catalog valid at the time of execution of the course. The Seller will be responsible for all training course syllabi, training aids and training equipment necessary for the organization of the training courses.  For the avoidance of doubt, such training equipment does not include provision of aircraft for the purpose of performing training.

 

(ii)The training equipment and the training curricula used for the training of flight, cabin and maintenance personnel will not be fully customized but will be configured in order to obtain the relevant Aviation Authority’s approval and to support the Seller’s training programs.

 

(iii)Training data and documentation for trainees receiving the training at the Seller’s Training Centers will be provided free of charge. Training data and documentation will be marked “FOR TRAINING ONLY” and as such are supplied for the sole and express purpose of training; training data and documentation will not be revised.