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<SEC-DOCUMENT>0000931763-96-000733.txt : 19961009
<SEC-HEADER>0000931763-96-000733.hdr.sgml : 19961009
ACCESSION NUMBER: 0000931763-96-000733
CONFORMED SUBMISSION TYPE: 10-K/A
PUBLIC DOCUMENT COUNT: 2
CONFORMED PERIOD OF REPORT: 19951231
FILED AS OF DATE: 19961008
SROS: NASD
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: VALUJET INC
CENTRAL INDEX KEY: 0000948846
STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512]
IRS NUMBER: 582189551
STATE OF INCORPORATION: NV
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-26914
FILM NUMBER: 96640689
BUSINESS ADDRESS:
STREET 1: 1800 PHOENIX BLVD
STREET 2: STE 126
CITY: ATLANTA
STATE: GA
ZIP: 30349
BUSINESS PHONE: 7709072594
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K/A
<SEQUENCE>1
<DESCRIPTION>FOR FISCAL YEAR ENDED DECEMBER 31, 1995
<TEXT>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
(Mark One)
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required] for the fiscal year ended December 31, 1995 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required] for the transition period from
________________________ to _______________________
Commission file number 0-26914
VALUJET, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEVADA 58-2189551
- --------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1800 Phoenix Boulevard, Atlanta, Georgia 30349
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(770) 907-2580
- --------------------------------------------------
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
None None
- ------------------- ------------------------
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
- --------------------------------------------------------------------------------
(Title of class)
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 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 X No
------- -------
As of March 5, 1996, the aggregate market value of voting stock held by
non-affiliates of the Registrant, based on the closing sales price of such stock
in the NASDAQ Stock Market on March 5, 1996, was approximately $745,000,000. As
of March 5, 1996, the Registrant had 54,625,960 shares of Common Stock
outstanding.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
<PAGE>
The Form 10-K for the year ended December 31, 1995, filed with the
Commission on March 29, 1996, is hereby amended by substituting the enclosed
Exhibit 10.22 for the Exhibit 10.22 to such report previously filed with the
Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Amendment No. 1 to the Annual Report on Form
10-K to be signed on its behalf by the undersigned thereunto duly authorized.
VALUJET, INC.
Date: September 12, 1996 /s/ Robert L. Priddy
--------------------------------------
Robert L. Priddy
Chairman of the Board and Chief
Executive Officer
Date: September 12, 1996 /s/ Michael D. Acks
---------------------------------------
Michael D. Acks
Controller and Chief Accounting Officer
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.22
<SEQUENCE>2
<DESCRIPTION>PURCHASE AGREEMENT
<TEXT>
<PAGE>
EXHIBIT 10.22
Confidential treatment has been granted with respect to certain provisions
of this Exhibit, which provisions have been omitted from this Exhibit 10.22,
marked by asterisks (***) and filed separately with the Commission.
<PAGE>
----------------------------------------
PURCHASE AGREEMENT
BETWEEN
MCDONNELL DOUGLAS CORPORATION
AND
VALUJET AIRLINES, INC.
DAC 95-40-D
----------------------------------------
THIS DOCUMENT CONTAINS TRADE SECRETS AND COMMERCIAL, FINANCIAL AND
PROPRIETARY INFORMATION WHICH IS PRIVILEGED AND CONFIDENTIAL TO THE
MCDONNELL DOUGLAS CORPORATION AND WHICH MAY NOT BE DISCLOSED TO ANY
PERSON, GOVERNMENTAL AGENCY, COMPANY, CORPORATION OR OTHER PARTY EXCEPT AS
SUCH DISCLOSURE IS REQUIRED BY LAW.
<PAGE>
TABLE OF CONTENTS
Date of Contract and Contracting Parties........................ 1-1
Article 1 - DEFINITIONS................................... 1-1
Article 2 - SUBJECT MATTER OF SALE........................ 2-1
Article 3 - PRICE......................................... 3-1
Article 4 - PAYMENT....................................... 4-1
Article 5 - DETAIL SPECIFICATION CHANGES.................. 5-1
Article 6 - DELIVERY...................................... 6-1
Article 7 - EXCUSABLE DELAY............................... 7-1
Article 8 - BUYER FURNISHED OR DESIGNATED EQUIPMENT....... 8-1
Article 9 - TAXES, CUSTOMS, DUTIES AND LICENSES........... 9-1
Article 10 - FEDERAL AVIATION ADMINISTRATION APPROVAL...... 10-1
Article 11 - PATENT, TRADEMARK, TRADE SECRET AND
COPYRIGHT INDEMNITY........................... 11-1
Article 12 - AIRCRAFT SUPPORT SERVICES AND BUYER'S WARRANTY 12-1
Article 13 - ASSIGNMENT AND TRANSFER....................... 13-1
Article 14 - NOTICES AND REQUESTS.......................... 14-1
Article 15 - APPLICABLE LAW, VARIANCES AND WAIVER.......... 15-1
Article 16 - NONDISCLOSURE................................. 16-1
Signature Page.................................................. 17-1
EXHIBIT A - DETAIL SPECIFICATION
EXHIBIT A1 - SPECIFICATION CHANGES NOTICES
EXHIBIT B - CERTIFICATE OF TECHNICAL ACCEPTANCE AND DELIVERY
EXHIBIT C - AIRCRAFT SUPPORT SERVICES
EXHIBIT D - PRICE AND ADJUSTMENTS FOR FLUCTUATIONS IN THE ECONOMY
<PAGE>
PURCHASE AGREEMENT
THIS AGREEMENT, dated December 6, 1995 is made by and between MCDONNELL DOUGLAS
----------------
CORPORATION (Seller), having an office in the City of Long Beach, State of
California, and VALUJET AIRLINES, INC. (Buyer), having its principal place of
business in the City of Atlanta, State of Georgia.
In consideration of the mutual covenants herein, Buyer and Seller agree as
follows:
DEFINITIONS
For all purposes of this Agreement the following terms shall have the following
meanings (such definitions to be equally applicable to both singular and plural
forms of the terms defined):
TERM MEANING
- ---- -------
ADVANCE An amount used solely for the calculation of progress payments and
PAYMENT which is specified in paragraph A. of the article entitled
PRICE PAYMENT.
AGREEMENT This Purchase Agreement including any agreements made a part of the
Purchase Agreement and the Exhibits (each of which is incorporated
in this Purchase Agreement by this reference) and amendments hereto.
AIRCRAFT One or more of the aircraft purchased hereunder, the quantity and
description of which are contained in the article entitled SUBJECT
MATTER OF SALE.
AIRFRAME The price for the airframe set forth in paragraph A. of the
BASE article entitled
PRICE PRICE.
AOG Aircraft On Ground - The highest priority designation to process a
- - -
requirement for a Spare Part or maintenance action. Indicates that
an Aircraft is unable to continue or be returned to revenue service
until the appropriate action is taken.
BASE PRICE The sum of the Airframe Base Price and the Engine Base Price.
BDE Buyer Designated Equipment - Equipment identified in the Detail
- - -
Specification as BFE designated for purchase by Seller.
BFE Buyer Furnished Equipment - Equipment identified in the Detail
- - -
Specification to be furnished by the Buyer to the Seller.
<PAGE>
TERM MEANING
- ---- -------
CERTIFICATE As to any Aircraft, a certificate substantially in the form of
TECHNICAL Exhibit B.
ACCEPTANCE
AND DELIVERY
COVERED Any airframe component or landing gear component specified in
Exhibit C,
COMPONENT Part I, paragraph C.5.
DETAIL The document which defines the configuration of the Aircraft,
SPECIFICATION consisting of the Detail Specification (Exhibit A hereto)
identified in the article entitled SUBJECT MATTER OF SALE, as it
may be amended from time to time by SCNs.
DOCUMENTS Manuals, documents, Programs, data or instructional material
provided pursuant to this Agreement or otherwise, in any form or
medium.
ENGINES The propulsion system which is comprised of engines, nacelles,
including thrust reversers and engine build-up.
ENGINE BASE The price for the Engines as set forth in paragraph A. of the
PRICE article entitled PRICE.
EXCUSABLE Any delay in delivery of Aircraft or of any Product or Document
or delay
DELAY in performance of a Service or any other act by Seller under this
Agreement by reason of any one or more of the causes set forth in
paragraph A. of the article entitled EXCUSABLE DELAY.
FAA The United States Federal Aviation Administration. This term
- - -
includes the Federal Aviation Administrator and any successor
U.S. Federal authority.
FAILURE For purposes of Exhibit C, Part I, paragraph C.1. any breakage of
or defect in a Covered Component.
FAR The United States Federal Aviation Regulations.
- - -
FLIGHT CREW A Flight Crew will consist of one Captain and one First
Officer.
INITIAL Spare parts ordered for the support of the initial twelve months
PROVISIONING of operation after delivery of first Aircraft as specified in
ORDERS Part III of Exhibit C.
<PAGE>
TERM MEANING
- ---- -------
INTEREST The charge for use, including delay in receipt, of money computed
(on a quarterly basis) at prime (the per annum rate announced from
time to time by Chase Manhattan Bank at its principal office in
New York, New York as its prime commercial lending rate) plus one
percent, but in no event greater than the rate permitted under
California law.
INTERFACE Any problem in the operation of the Aircraft or any system or
PROBLEM assembly thereof due to malfunction or failure of any accessory,
equipment, or part, the cause of which after due and reasonable
investigation, is not readily identifiable as to its source.
POLICY The Service Life Policy set forth in Exhibit C, Part I,
paragraph C.
PRICE The Base Price adjusted by the provisions contained in paragraphs
B., C. and D. of the article entitled PRICE.
PRODUCT An Aircraft structure, system, article, product, accessory,
equipment or part whether installed on the Aircraft or purchased
or provided as a spare or replacement part if made to Seller's
proprietary design.
PROGRAM Any computer software or program in any form or media provided by
Seller, including whole or partial copies of machine-readable
instructions, a collection of machine-readable data, such as a
data base, and documentation, descriptions, instructions or
listings related to such instructions or data.
SCN A Specification Change Notice is the document used to change or
- - -
modify the Detail Specification.
SELLER PART An Aircraft article, product, accessory, equipment or part made to
Seller's proprietary design.
SELLER'S A plant or facility designated by Seller.
FACILITY
SELLER'S Manager, Warranty Administration
WARRANTY McDonnell Douglas Corporation
ADMINISTRATOR 3855 Lakewood Boulevard
Long Beach, California 90846-0001
SERVICE Any service related to the subject matter hereof whether provided
under this Agreement or otherwise.
<PAGE>
TERM MEANING
- ---- -------
SPARE PART Seller Part and Vendor Part.
VENDOR A manufacturer or supplier of a Vendor Part, service or document.
VENDOR PART An Aircraft article, product, accessory, equipment or part
not made to Seller's proprietary design. Engines, BFE and BDE are
specifically excluded from this definition of Vendor Parts.
<PAGE>
ARTICLE 2 - SUBJECT MATTER OF SALE
A. Seller shall manufacture, sell and deliver to Buyer, and Buyer shall purchase
from Seller, under the terms and subject to the conditions set forth in this
Agreement, fifty MD-95-30 aircraft conforming to the Detail Specification
which consists of DS9530A dated 05 January 1995 as amended by the SCN's set
forth in Exhibit A1 hereto and as may be further modified in accordance with
the provisions of the article entitled DETAIL SPECIFICATION CHANGES.
B. During the manufacture of the Aircraft by Seller, Buyer shall be required to
provide information concerning the configuration of the Aircraft, including,
but not limited to, interior arrangement, special features, and the selection
of materials and colors. Seller shall provide Buyer reasonable notice
relative to the dates when such information is required and Buyer shall
provide such information by the dates so specified. In the event Buyer fails
to perform in accordance with the dates provided by Seller, Seller shall have
the same rights as those specified in paragraph F. of the article entitled
BUYER FURNISHED OR DESIGNATED EQUIPMENT.
C. In the event of any conflict or inconsistency between any provisions of this
Agreement (excluding Exhibit A and A1 hereto) and the Detail Specification,
the provisions of this Agreement shall apply.
D. Seller shall make all reasonable efforts towards obtaining the same type
rating with respect to flight crew training between the MD-95-30 aircraft and
DC-9 aircraft.
E. Seller shall make all reasonable efforts towards providing the primary flight
display, navigation display, engine and alert displays in a Liquid Crystal
Display (LCD) format in lieu of those specified in Detail Specification
DS9530A dated 05 January 1995 at no additional charge to Buyer.
<PAGE>
ARTICLE 3 - PRICE
A. The Base Price of the Aircraft is, * * * which is composed of the Airframe
Base Price of * * * , plus the Engine Base Price of * * * .
B. Except for SCNs defined in Article 5, Paragraph B., the Base Price of the
Aircraft shall be increased or decreased by the amounts specified in SCNs
executed in accordance with the article entitled DETAIL SPECIFICATION CHANGES
or as otherwise provided in this Agreement.
C. The Price of the Aircraft shall be the Base Price, first modified or adjusted
in accordance with paragraph B. above, and then adjusted according to the
provisions in Exhibit D.
D. Equipment designated in the Detail Specification as Buyer Furnished Equipment
is hereby designated by Seller as Seller Furnished Equipment (SFE) and is
included in the above Base Price.
<PAGE>
ARTICLE 4 - PAYMENT
A. As the basis for determining the amount of progress payments due each
Aircraft shall have an Advance Payment Price as follows:
<TABLE>
<CAPTION>
YEAR OF ORIGINAL
SCHEDULED DELIVERY ADVANCE PAYMENT PRICE
------------------ -----------------------
<S> <C>
1999
2000
2001 * * *
2002
2003
</TABLE>
B. As an initial progress payment, Buyer shall pay Seller one percent of the
Advance Payment Price of each Aircraft concurrently with the execution of
this Agreement less any payment(s) previously paid for the Aircraft. On the
first business day of each of the following number of full months prior to
the scheduled month of delivery as adjusted from time to time, as set forth
in the article entitled DELIVERY, Buyer shall pay Seller additional progress
payments on each Aircraft. These payments shall equal the following
indicated percentage of the Advance Payment Price of each Aircraft.
<TABLE>
<CAPTION>
MONTHS PRIOR TO
SCHEDULED MONTH OF DELIVERY PERCENTAGE OF
AS ADJUSTED FROM TIME TO TIME ADVANCE PAYMENT PRICE
------------------------------- ---------------------
<S> <C>
* * * * * *
</TABLE>
C. Buyer shall pay Seller the balance of the Price of each Aircraft at the time
of its delivery.
* * *
<PAGE>
* * *
D. Seller will advise Buyer at the time each progress payment is due as to
whether it anticipates that the Aircraft for which the payment is due will
deliver in accordance with the contractual delivery month. In the event
Seller determines that the delivery will be delayed beyond the contractual
delivery month, the progress payments shall be rescheduled in accordance with
Paragraph B. above to correspond with the anticipated month of delivery.
* * *
F. Any sums payable under this Agreement other than the Price of the Aircraft
shall be due and payable within thirty days after receipt of invoice by
Buyer.
G. Seller shall provide Buyer notice in the event Buyer fails to make any of the
payments at the times and in the amounts required under this Agreement.
Buyer shall pay Seller Interest on such payment beginning one business day
after the date notice is provided by Seller until the payment is received by
Seller. This shall be in addition to any other rights or remedies available
to Seller.
H. All Aircraft payments * * *
shall be made in United States of America currency, in immediately available
funds, at a depository in the United States of America to be designated by
Seller. Buyer shall comply with applicable monetary and exchange control
<PAGE>
regulations in order to permit Buyer to make all payments in accordance with
this Agreement. If so requested by Seller, Buyer shall provide Seller
information relative to the day funds are transferred, the amount of funds
transferred, the depository from which the funds are transferred, the
depository to which the funds are deposited, and the means of funds transfer.
I. Buyer shall not by virtue of anything contained in this Agreement (including,
without limitation, any partial payments or progress payments or any
designation or identification by Seller of particular aircraft as Aircraft)
acquire a special property or insurable interest in any Aircraft prior to
delivery of and payment for such Aircraft by Buyer.
<PAGE>
ARTICLE 5 - DETAIL SPECIFICATION CHANGES
A. The Detail Specification may be changed by agreement of the parties through
mutual execution of an SCN.
B. The Detail Specification may be changed by Seller without Buyer's consent to
incorporate development changes. Development changes shall not (i) increase
the Price, (ii) delay delivery, (iii) adversely affect the performance of the
Aircraft as set forth in the Detail Specification, (iv) materially adversely
affect maintainability of the Aircraft, or (v) change the interchangeability
requirements of the Detail Specification. Development changes shall not be
made as to items of BFE or BDE. Seller shall notify Buyer of all development
changes affecting the Detail Specification by furnishing SCNs.
<PAGE>
ARTICLE 6 - DELIVERY
A. INSPECTION AND DEMONSTRATION
----------------------------
1. The manufacture of the Aircraft by Seller and all materials and parts
procured by Seller for this purpose may be inspected by Buyer's
representatives during normal business hours at Seller's Facility. If
access to any part of Seller's Facility where manufacture is in progress
or materials or parts are stored is restricted by governmental
authorities or regulations, Seller shall be allowed a reasonable time to
make the items available for inspection elsewhere. All inspections by
Buyer's representative shall be made in accordance with Seller's
security policies and in such a way that the manufacturing process is
not hindered or delayed. Seller shall furnish, without charge, office
space (including desks, telephones, and facsimile equipment) at Seller's
Facility for a reasonable number of Buyer's representatives. Buyer shall
notify Seller of the number of representatives requiring office space at
least thirty days prior to date of arrival .
2. Performance and functional data based on ground and flight tests on one
or more of the early aircraft of the type purchased by Buyer shall be
the basis for engineering calculations and interpretations to show
compliance with the Detail Specification excepting the Performance
Guarantee set forth in Letter Agreement No. 7 which shall be determined
in accordance with the terms thereof.
3. If flight tests are necessary on Aircraft delivered subsequent to
Buyer's Aircraft No. 1 because of Buyer unique SCNs incorporated in the
Aircraft, Seller may use one or more of the Aircraft for such flight
tests and Buyer will accept delivery of such Aircraft without any
reduction in the Price on account of resulting wear and tear. Buyer
agrees that any delay resulting from such testing shall be considered an
Excusable Delay. In no event shall Seller accrue more than ten hours or
five cycles in performing such flight tests.
4. Seller shall perform its standard production ground functional and
flight test on the Aircraft and the results of such test shall be
provided to Buyer prior to delivery of such Aircraft. Buyer's
representatives do not participate in or observe these flight tests.
5. Buyer's representatives, at any time prior to technical acceptance of an
Aircraft (as described in this article), may request correction of parts
or materials which (i) are not in accordance with the Detail
Specification or Seller's standard engineering and quality manuals or
(ii) have material or workmanship which, if the Aircraft were delivered
and were within the applicable warranty period, would entitle Buyer to
warranty correction under paragraph A. of Part I of Exhibit C. Buyer
shall promptly notify Seller after it discovers any such nonconformance.
Seller shall correct or replace at no-charge to Buyer (unless otherwise
agreed between Buyer and Seller) all
<PAGE>
such parts, materials or workmanship which are promptly brought to its
attention and mutually determined to be nonconforming.
B. TECHNICAL ACCEPTANCE
--------------------
1. The Aircraft shall be tendered to Buyer for technical acceptance after
it has been assembled, completed and tested, but no earlier than seven
business days prior to the first day of the scheduled month of delivery.
Seller shall give Buyer ninety days notice of the date on which Seller
proposes to tender the Aircraft for technical acceptance and delivery.
2. At Buyer's request, an acceptance procedure, including ground functional
and flight test, shall be performed on the Aircraft jointly by Buyer and
Seller and shall be conducted in accordance with Seller's standard
procedures. Up to five representatives of Buyer may participate in this
acceptance procedure and Buyer shall be permitted to flight test the
Aircraft. Seller shall not be required to provide special
instrumentation for this acceptance procedure. Seller shall have
complete control of all flights and shall bear all costs and expenses
incident thereto. Buyer agrees to complete all inspections and testing
authorized or permitted under this paragraph before the end of the
seventh business day after Seller has tendered the Aircraft to Buyer. If
during the five business day technical acceptance period Buyer
determines and Seller agrees, which agreement shall not be unreasonably
withheld, that there is noncompliance with the Detail Specification, the
seven business day period shall be suspended until (i) Seller corrects
the noncompliance or (ii) the condition is resolved to the satisfaction
of Buyer and Seller. During the suspension period Buyer shall continue
its inspection of areas of the Aircraft unaffected by Seller's efforts
to correct the noncompliance. Upon completion of (i) or (ii) above,
Buyer shall have the remainder of the period to complete its acceptance
(subject to further suspensions as a result of non-compliance with the
Detail Specification). Buyer shall technically accept the Aircraft if it
meets the requirements of the Detail Specification.
3. Immediately upon completion of the inspection and testing noted above,
Buyer shall indicate its technical acceptance of an Aircraft by
execution of Section A of a Certificate of Technical Acceptance and
Delivery for the Aircraft. Technical acceptance shall not impair the
warranties set forth in Part I of Exhibit C.
4. In the event Buyer fails to complete its technical acceptance within the
seven business day period, the Aircraft shall be deemed to have been
technically accepted by Buyer at the end of the seven business day
period after tender as if Buyer had expressly indicated its technical
acceptance as noted above.
5. Buyer shall have the right to technically accept an Aircraft not in
compliance with the Detail Specification subject to mutual agreement as
to the resolution of the non-compliance.
<PAGE>
C. DELIVERY
--------
1. On the first business day after technical acceptance pursuant to
paragraph B.3. or B.4. above, but no earlier than the later of the
issuance of an FAA Certificate of Airworthiness for the Aircraft or
the first business day of the scheduled month of delivery, Buyer shall
accept delivery of the Aircraft by endorsement of Section B of a
Certificate of Technical Acceptance and Delivery for such Aircraft.
Delivery shall be made at Long Beach, California, or any other
location mutually agreed by Buyer and Seller. The scheduled months of
delivery of the Aircraft are as follows:
BUYER'S AIRCRAFT SCHEDULED MONTH OF DELIVERY
---------------- ---------------------------
NUMBER
------
1
2
3
4
5
6
7
8
9
10 * * *
11
12
13
14
15
16
17
18
19
20
21
22
<PAGE>
BUYER'S AIRCRAFT SCHEDULED MONTH OF DELIVERY
---------------- ---------------------------
NUMBER
------
23
24
25
26
27
28
29
30
31
32
33 * * *
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
<PAGE>
2. If Buyer fails to accept delivery of an Aircraft as required in paragraph
C.1. above, Buyer shall reimburse Seller for all reasonable losses, costs and
expenses (including, without limitation, taxes, Interest and reasonable
amounts for transportation, storage, insurance, preservation, preparation and
protection) sustained by Seller after such date. Seller's acceptance of such
payments shall not constitute a waiver of its rights to pursue its remedies
for default or to pursue any other rights it may have at law or otherwise.
3. Upon delivery of and payment for an Aircraft, title to the Aircraft shall
pass from Seller to Buyer. Seller shall furnish to Buyer a bill of sale and
other appropriate documents of title as Buyer may reasonably request.
4. Notwithstanding anything herein to the contrary, in no event shall Buyer be
required to take delivery of more than two Aircraft per month except for
Aircraft delayed by Buyer's failure to perform in accordance with the
Agreement.
* * *
D. GENERAL
-------
SELLER HEREBY RELEASES AND AGREES TO DEFEND, INDEMNIFY AND HOLD HARMLESS
BUYER, ITS OFFICERS, DIRECTORS, AGENTS AND EMPLOYEES (i) FROM AND AGAINST ALL
LIABILITIES, DAMAGES, LOSSES, COSTS AND EXPENSES FOR ALL INJURIES TO AND
DEATHS OF PERSONS, EXCEPTING INJURIES TO AND DEATH OF BUYER'S EMPLOYEES
PARTICIPATING IN ANY SUCH INSPECTIONS, TESTS OR FLIGHTS OF ANY AIRCRAFT PRIOR
TO ITS DELIVERY, AND (ii) FOR LOSS OF OR DAMAGE TO TANGIBLE PROPERTY OF THIRD
PARTIES NOT EMPLOYED BY BUYER OR CLAIMING THROUGH OR BY REASON OF THE DEATH
OF ANY SUCH EMPLOYEE, WHETHER OR NOT CAUSED BY BUYER'S NEGLIGENCE, ARISING
OUT OF OR IN CONNECTION WITH ANY AIRCRAFT DURING ANY INSPECTION, TEST OR
FLIGHT THEREOF PRIOR TO DELIVERY. BUYER HEREBY RELEASES AND AGREES TO
DEFEND, INDEMNIFY AND HOLD HARMLESS SELLER, ITS OFFICERS, DIRECTORS, AGENTS,
EMPLOYEES AND CONTRACTORS FROM AND AGAINST ALL LIABILITIES, DAMAGES, LOSSES,
COSTS AND EXPENSES RESULTING FROM INJURIES TO OR DEATHS OF BUYER'S SAID
EMPLOYEES PARTICIPATING IN SAID INSPECTIONS, TESTS OR FLIGHTS, WHETHER OR NOT
CAUSED BY SELLER'S NEGLIGENCE. IN THE EVENT ANY CLAIM IS MADE OR SUIT IS
BROUGHT AGAINST EITHER PARTY, THE LIABILITY FOR WHICH HAS BEEN ASSUMED HEREIN
BY THE OTHER PARTY, THE PARTY AGAINST WHOM CLAIM IS MADE SHALL PROMPTLY
NOTIFY THE OTHER PARTY AND THE LATTER SHALL HAVE THE RIGHT TO ASSUME AND
CONDUCT THE DEFENSE THEREOF OR TO EFFECT ANY SETTLEMENT WHICH IT, IN ITS
OPINION, DEEMS PROPER.
<PAGE>
ARTICLE 7 - EXCUSABLE DELAY
A. EXCUSABILITY
------------
1. Seller shall not be held responsible for nor be deemed to be in default
of this Agreement because of delays in delivery of an Aircraft, Product
or Document or delay in the performance of a Service or any other act to
be performed by Seller under this Agreement (in addition to any such
delays otherwise permitted herein) due to causes such as an act of God
or the public enemy; civil war, insurrection or riot; war; natural
disaster, fire, flood, explosion, earthquake or serious accident;
epidemic or quarantine restriction; any act of government, government
priority, allocation regulation or an order affecting material, labor,
equipment, facilities or completed aircraft; strike, labor trouble
causing cessation, slowdown or interruption of work; inability after due
and timely diligence to seasonably procure material, accessories,
equipment or parts or to obtain qualified labor, delay in transportation
or, without limitation by enumeration of the foregoing, any other cause
beyond the control of or not occasioned by the fault or negligence of
Seller.
2. Seller shall promptly notify Buyer of any delay or anticipated delay and
anticipated duration of any such delay in delivery of an Aircraft.
B. LOSS, DESTRUCTION AND DAMAGE
----------------------------
1. If prior to delivery an Aircraft is lost, destroyed or damaged beyond
repair, or damaged to the extent that it can be repaired by replacement
parts to a new condition but cannot be delivered in accordance with the
delivery schedule set forth in this Agreement, the time reasonably
required by Seller to furnish a replacement for such Aircraft or to
accomplish repairs to such Aircraft, is deemed an Excusable Delay.
2. If an Aircraft is lost, destroyed or damaged beyond repair, Seller shall
promptly notify Buyer. As soon as possible Seller shall notify Buyer of
the earliest date that a replacement aircraft can reasonably be
delivered, consistent with Seller's other contractual commitments and
production capabilities. Unless Buyer notifies Seller within one month
after notice of the replacement aircraft delivery date that Buyer
desires a replacement aircraft, this Agreement shall be terminated as to
any such Aircraft and the rights of the parties shall be determined in
accordance with paragraph D. below. If Buyer timely notifies Seller that
it wants a replacement aircraft, the parties shall amend this Agreement
to establish its scheduled month of delivery and shall appropriately
reschedule progress payments. Notwithstanding the foregoing, nothing
herein shall obligate Seller to deliver a replacement aircraft if
manufacture thereof would require the reactivation of the production
line for the model or series of aircraft purchased hereunder. The Base
Price of the replacement aircraft shall be the same as that for the
lost, destroyed or damaged beyond repair Aircraft, except such Base
Price shall be adjusted in accordance with the article hereof entitled
PRICE.
<PAGE>
C. INDEFINITE EXCUSABLE DELAYS
---------------------------
1. If Seller concludes, based on a continual appraisal of the available
facts, that the extent of any delay in delivery of any Aircraft by
reason of an Excusable Delay will exceed twelve months beyond the
scheduled month of delivery, then Seller shall promptly notify Buyer
concerning such delay and submit to Buyer a revised scheduled month
of delivery. Buyer may, by notice to Seller given within one month
from receipt by Buyer of such notice from Seller, elect then to
terminate this Agreement as to such delayed Aircraft and the rights
of the parties shall be determined in accordance with paragraph D.
below.
2. If this Agreement is not terminated as to an Aircraft pursuant to
paragraph C.1. above, and if during the period of delay Seller
concludes, based on its appraisal of the available facts, that the
extent of delay in delivery of any Aircraft by reason of an Excusable
Delay will exceed six months beyond the revised scheduled month of
delivery specified in the notice provided pursuant to paragraph C.1.
above, Seller shall promptly notify Buyer concerning such additional
delay and submit to Buyer a revised scheduled month of delivery.
Buyer may, by notice to Seller given within one month from receipt by
Buyer of such notice from Seller, elect then to terminate this
Agreement as to such delayed Aircraft and the rights of the parties
shall be determined in accordance with paragraph D. below.
3. Notwithstanding the foregoing, nothing herein shall obligate Seller
to deliver an aircraft subject to an indefinite excusable delay if
manufacture thereof would require the reactivation of the production
line for the model or series of aircraft purchased hereunder.
D. In the event of termination under paragraphs B. or C. above, Seller
* * * * * * repay to Buyer, without interest,
the amount of the progress payments which are related to the purchase of
such terminated Aircraft. Such termination shall discharge all obligations
and liabilities of the parties with respect to such Aircraft and all
undelivered Products, Services, Documents or other articles or items
related to that Aircraft. Any Product, Document or other article or item
related to that Aircraft which has been delivered shall be returned to
Seller.
<PAGE>
ARTICLE 8 - BUYER FURNISHED OR DESIGNATED EQUIPMENT
A. BUYER FURNISHED EQUIPMENT
-------------------------
1. Buyer shall furnish the BFE to Seller and Seller shall make appropriate
provisions for the installation of and shall install BFE. Seller shall
provide reasonable notice as to the dates (as they may change from time
to time due to production requirements) Seller needs BFE and its
respective data. Buyer shall meet Seller's required schedule for receipt
of such BFE and its respective data. The BFE data shall include a
written detailed description of the dimensions and weight of such BFE
and information necessary for its proper storage, installation,
servicing, maintenance and operation. The BFE data shall not be
subsequently revised unless agreed to by Seller and, if revised, shall
be subject to reasonable adjustments in Price and delivery as mutually
agreed.
2. Buyer authorizes Seller to contact and work with Buyer's BFE suppliers
for purposes of general engineering coordination, expediting shipments,
adjusting schedules, performing quality control and inspection
functions, and securing required BFE data. Such efforts by Seller are
for the purpose of assisting Buyer and its suppliers in meeting BFE
commitments and shall not relieve Buyer from Buyer's obligations set
forth in this article. Buyer shall make appropriate arrangements with
its suppliers for Seller to contact and work with such suppliers as
described above. At Seller's request, Buyer shall provide technical
advisors to assist Seller in the installation, calibration, repair or
replacement, if defective, of any BFE.
3. Prior to Seller providing any Documents to BFE suppliers, a proprietary
information agreement must be in place between Seller and the BFE
supplier.
B. BUYER DESIGNATED EQUIPMENT
--------------------------
1. Alternatively, upon concurrence by Seller and subject to a handling
charge equal to ten percent of the price of the BFE, Seller shall
purchase on behalf of Buyer items of BFE as BDE. Seller shall, in
accordance with its standard procurement practices, use its diligent
efforts to obtain BDE at the lowest reasonable cost to Buyer.
2. Without waiving Buyer's BFE data obligations defined in paragraph A.
above, Seller shall on behalf of Buyer use its diligent efforts to
obtain from the BDE suppliers, by the date required, BFE data to support
the BDE. At Seller's request, Buyer shall provide technical advisors to
assist Seller in the installation, calibration, repair or replacement,
if defective, of any BDE.
C. Seller shall have no obligation to include in its provisioning data for
Buyer's Aircraft information covering the repair or replacement of BFE or BDE
items unless Buyer provides such data to Seller in accordance with Seller's
requirements. However, if Seller has such information in its existing
provisioning data files and Seller has a right to disclose that information
to Buyer, such information will be included in Buyer's Aircraft provisioning
data at no additional cost to Buyer.
<PAGE>
D. PRICE AND PAYMENT
-----------------
1. Buyer agrees to sell and Seller agrees to purchase each item of BFE
concurrently with its delivery to Seller. A reasonable shipset price for
the BFE shall be established by Buyer. Buyer and Seller agree that the
Price of an Aircraft will be increased by the amount of said shipset
price, without escalation, and such amount shall be included on Seller's
invoice at time of Aircraft delivery. Seller's payment for the purchase
of each shipset of BFE from Buyer shall be made at the time of delivery
of the Aircraft in which the BFE is installed.
2. Buyer and Seller agree that the Price of each Aircraft will be increased
by the price of the BDE installed thereon plus the handling charge and
such amount shall be included, without escalation, on Seller's invoice
at time of Aircraft delivery. If Seller purchases any BDE subject to a
price escalation or price adjustment feature, the Price of each Aircraft
will be changed to reflect such price escalation or price adjustments.
E. Buyer warrants that the BFE or BDE shall comply with all applicable FAR's and
U.S. Food and Drug Administration (FDA) sanitation requirements for
installation and use in the Aircraft at the time of delivery. Buyer shall be
responsible for supplying any data and adjusting, calibrating, retesting or
updating such BFE or BDE and data to the extent necessary to obtain
applicable FAA and FDA approval and shall bear the resulting expenses.
Without waiving Buyer's obligation, Seller shall, as an accommodation to
Buyer, obtain the Certificate of Sanitary Construction on behalf of Buyer.
F. Any delay in an act to be performed by Seller caused by Buyer's failure to
(i) deliver, or have delivered, BFE, (ii) ensure satisfactory operation of
the BFE or BDE, (iii) furnish or obtain applicable BFE data, (iv) perform any
adjusting, calibrating, retesting or updating of BFE or BDE, or (v) furnish
or obtain any FAA or FDA approvals in compliance with the provisions of this
article, shall be deemed an Excusable Delay. Seller shall provide Buyer with
not less than three days written notice of its intention to treat any such
delay as an Excusable Delay. The Price of the Aircraft shall be increased by
the amount of Seller's additional costs attributable to any such Excusable
Delay by Buyer, including without limitation, Interest on the unpaid balance
of such Price, storage, taxes, insurance and the costs of out of sequence
installations. However, in the event of such Excusable Delay and without
waiving any other rights and remedies Seller may have, Seller may (i) elect
to deliver the Aircraft without the installation of the unapproved, delayed
or nonconforming BFE or BDE and Seller shall thereupon be relieved of all
obligations to install such BFE or BDE or (ii) purchase the same or
substantially equivalent equipment from any other source and install and
equitably adjust the Price of the Aircraft and any other affected provisions
of the Agreement to reflect such purchase and associated retesting,
adjustment and calibration.
<PAGE>
G. SUPPORT
-------
1. To properly maintain Seller's production flow and to preserve Seller's
delivery commitments, Seller reserves the right, if necessary, due to
equipment shortages or failures, to interchange new items of BFE or BDE
acquired from or for Buyer with new items of the same part numbers
acquired from or for other customers of Seller. Such interchange,
however, shall not result in a delay in delivery of Buyer's Aircraft.
Used BFE acquired from Buyer or from other customers of Seller will not
be interchanged.
2. For specific BFE which will, in Seller's opinion, be critical to
Aircraft functional tests and or flights, and whenever other than new
equipment is furnished to fulfill BFE requirements, Buyer shall, upon
Seller's request, place in Seller's possession a reasonable number of
additional units to preclude untimely delays which can be caused by the
failure of the BFE.
3. BFE shall be free and clear of all liens, encumbrances, pledges,
security interests or rights of others and any used BFE shall be in good
operating condition and meet Seller's requirements for installation on
the Aircraft.
4. Upon any Spare or interchanged BFE being incorporated or installed on an
Aircraft, without further act, (i) title to the removed BFE shall vest
in Buyer, free and clear of all rights of Seller (ii) title to the
installed BFE shall vest in Seller, and (iii) the installed BFE shall
become subject to the Agreement and be deemed to be part of that
Aircraft for all purposes to the same extent as the BFE originally
supplied for, incorporated or installed in or on the Aircraft. Prior to
incorporation of the Spare or interchanged BFE into an Aircraft, title
and risk of loss to any Spare or interchanged BFE shall remain in Buyer.
5. Any BFE or BDE delivered to Seller and not installed in an Aircraft
shall be redelivered to Buyer by Seller at Buyer's expense and in
accordance with Buyer's instructions upon or after delivery of the last
Aircraft in as good a condition as when delivered to Seller.
H. If either party shall terminate this Agreement as to an Aircraft pursuant to
the article entitled EXCUSABLE DELAY, Seller shall, within thirty days of the
date of the termination notice, advise Buyer of the items of BFE delivered to
Seller prior to the date of termination notice, that Seller will continue to
purchase and which items of BFE that Seller will return to Buyer. In the
event Seller elects to return BFE, then Seller shall ship the BFE to Buyer at
Seller's cost, within thirty days of such election and upon shipment Buyer
shall concurrently repurchase such BFE from Seller. At the same time Seller
makes its election with regard to BFE delivered to Seller prior to the notice
of termination, Seller shall have the right to purchase other items of BFE
that Buyer has placed on order and which have not been delivered to Seller.
The price paid for BFE shall be the invoice prices paid by Buyer.
<PAGE>
I. Buyer and Seller agree that at the time of Agreement execution, all BFE set
forth in the Detail Specification and Exhibit A-1 has been designated as
Seller-Furnished Equipment (SFE). In the event that Buyer purchases
additional SCNs that include BFE, such BFE may be provided to Seller under
the terms of this article.
<PAGE>
ARTICLE 9 - TAXES, CUSTOMS, DUTIES AND LICENSES
A. In addition to all other amounts payable under this Agreement, Buyer shall
promptly pay to Seller (for purposes of this Article 9, Seller shall include
any wholly-owned subsidiary of Seller) upon demand any and all taxes,
including but not limited to sales, use, value added, or other similar taxes
or fees imposed upon transfers (currently imposed or subsequently enacted)
and related interest and penalties (collectively referred to in this Article
9 as "Taxes"), that are imposed by any taxing jurisdiction in connection with
this Agreement, including but not limited to Taxes occasioned by:
1. the sale, lease, delivery, transfer, storage, use, consumption or
support of any Aircraft, Product, Spare Part, Service or Document;
2. the purchase or retention of BFE or BDE;
3. any act that is expressly requested by Buyer; or
4. any act or failure to act by Buyer or other party acting on behalf of
Buyer in connection with any Aircraft, Product, Spare Part, Service or
Document.
B. Notwithstanding anything herein to the contrary, Buyer shall not be required
to pay to Seller:
1. Any United States (federal, state or local):
a. Taxes measured by Seller's net income, capital or both;
b. payroll or employment Taxes imposed on Seller;
c. Taxes imposed on Seller prior to delivery to Buyer (except to the
extent that the imposition of such Taxes results from Buyer's
failure to take in a timely manner any action required of Buyer
under the provisions of this Agreement, and except Taxes imposed on
BFE or BDE); or
d. any interest or penalties relating to Taxes attributable to (i) any
delay by Seller in performing any act or (ii) any failure by Seller
to act, provided that such failure or delay by Seller is not caused
by Seller's reliance on information provided by Buyer.
2. Any Taxes imposed by a jurisdiction outside the United States in
connection with this Agreement.
C. Seller shall promptly notify Buyer if a claim is made by any jurisdiction
against Seller for any Taxes described in Paragraph A. of this Article. If
reasonably requested by Buyer in writing, Seller, at Buyer's expense, shall
contest the validity, applicability or amount of such Taxes by actions to
which Seller and Buyer jointly agree. If Buyer fails to make such written
request to Seller, Seller shall promptly pay all Taxes then due and owing and
<PAGE>
Buyer shall promptly reimburse Seller for such Taxes. Notwithstanding the
foregoing, Buyer may contest the validity, applicability or amount of such
Taxes without Seller's participation provided that Buyer delivers to Seller a
tax indemnification agreement reasonably acceptable to Seller.
D. In addition to all other amounts payable under this Agreement, Buyer shall
pay Seller upon demand any customs, duties and related brokerage, freight and
other charges (including related interest and penalties) which are imposed
upon Seller in connection with the importation to the United States of:
1. any BFE or BDE, and
2. any item of foreign manufacture to be installed in or applicable to an
Aircraft, Product, Spare Part, Service or Document as a result of a
change installed on or incorporated at the request of the Buyer.
<PAGE>
ARTICLE 10 - FEDERAL AVIATION ADMINISTRATION APPROVAL
A. Each Aircraft shall at the time of delivery meet the FAA requirements for
airworthiness certification and be so certified under all the conditions set
forth in the Detail Specification. It is further understood and agreed that,
except as required by the Detail Specification, each Aircraft need not meet
FAA requirements for specific operation on Buyer's routes.
B. Subject to the provisions of the article hereof entitled BUYER FURNISHED OR
DESIGNATED EQUIPMENT if any change, modification or addition to any Aircraft
is required prior to delivery pursuant to any United States law or
governmental regulation or interpretation thereof by a United States
governmental agency in order to continue the effectiveness of the Type
Certificate or meet the FAA requirements for airworthiness certification of
the Aircraft as above provided, such change, addition or modification shall
be made in the undelivered Aircraft affected. Seller shall bear the cost of
complying with FAA airworthiness certification requirements which are
required to be incorporated in the Aircraft prior to its delivery. Any delay
in delivery of an Aircraft by reason of such change, addition or modification
shall be deemed an Excusable Delay and the scheduled month of delivery of
such Aircraft shall be adjusted to the extent of such delay. Seller shall
provide Buyer with not less than three days written notice of its intention
to treat any such delay as an Excusable Delay. Any such change, addition or
modification effective after Aircraft delivery shall be the sole
responsibility of Buyer.
<PAGE>
ARTICLE 11 - PATENT, TRADEMARK, TRADE SECRET AND COPYRIGHT INDEMNITY
A. DUTY TO DEFEND
--------------
1. Seller will hold Buyer harmless and indemnify Buyer from any claim, suit
or action which may be made or brought against Buyer, its directors,
officers, agents, successors or assigns for alleged infringement or
misappropriation of any United States patent, trademark, copyright or
trade secret, or any foreign patent, arising out of the purchase,
possession, use or lease, of a Product or Vendor Part (a Claim),
provided that:
a. Buyer gives Seller prompt notice (within ten days after service of
any such suit or action or 30 days after receipt of any such claim)
of any Claim and promptly furnishes to Seller copies of all papers
served upon or received by Buyer relating to such Claim; and,
b. Buyer cooperates fully with Seller in the defense, including giving
to Seller all data, documents and information within Buyer's
possession or knowledge that is material to the defense; and
B. INDEMNIFICATION
---------------
Seller will pay all damages and costs awarded by a court as a result of a
Claim, together with all interest accruing after entry of judgment or after
the making of any settlement. Except for any damages, costs, expenses and
loss of profit resulting from loss of use, Seller will reimburse Buyer for
all reasonable expenses incurred by Buyer with respect to a Claim provided
that Buyer has complied with the conditions of this Article with respect to
notice and cooperation, or, if Buyer has failed to comply with such
provisions, if such failure to comply has not materially and adversely
affected Seller's ability to defend against such Claim. Seller or Vendor
shall have the obligation to assume, conduct and control the defense of such
suit.
C. LOSS OF USE
-----------
If a Product or Vendor Part is found pursuant to paragraph 11.A.1. above, to
infringe any patent, trademark or copyright or to misappropriate any trade
secret and Buyer is enjoined from using it, Seller will, at its option and at
its expense, either:
1. procure for Buyer the right to use it free of any liability for
infringement; or
2. replace it with a non-infringing substitute which otherwise complies
with this Agreement and the applicable order.
<PAGE>
D. The provisions of this Article (i) applies solely to Seller Parts and
Vendor Parts, (ii) regarding trademarks, copyrights and trade secrets
apply to and are solely for the benefit of the first purchaser of the
Aircraft (and to the first operator in the event the Aircraft are leased
to the first operator or the Aircraft are sold and leased back to Buyer as
the first operator), and (iii) are Buyer's sole and exclusive remedy with
respect to a Claim.
<PAGE>
ARTICLE 12 - AIRCRAFT SUPPORT SERVICES AND BUYER'S WARRANTY
A. WARRANTY AND SERVICE LIFE POLICY
--------------------------------
Seller's Warranty and Service Life Policy are set forth in Exhibit C, Part I.
B. TRAINING AND TECHNICAL SERVICES
-------------------------------
Seller shall provide training and technical services, including instructional
materials, in accordance with Exhibit C, Part II.
C. SPARE PARTS
-----------
Seller agrees to sell and Buyer agrees to purchase Products in accordance
with Exhibit C, Part III.
D. DOCUMENTS
---------
Seller shall provide Buyer with Documents in accordance with Exhibit C, Part
IV.
<PAGE>
ARTICLE 13 - ASSIGNMENT AND TRANSFER
A. This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of both parties. It shall not be assigned in whole or
in part by either party without the prior written consent of the other party.
Subject to the provisions of Letter Agreement No. 14, this Agreement may be
assigned without prejudice to the rights of the other party hereto against
the assignor, insofar as it relates to any undelivered Aircraft, without such
consent, by either party through merger, consolidation or reorganization;
provided, however, that the assignee shall, at the time of assignment without
such consent, be solvent and have a net worth and a ratio of net worth to
total debt and liabilities which are not less than that of the assignor.
B. The parties agree that either party may at any time assign its right to
receive money and, without the other parties' further consent, assign this
Agreement, (i) in connection with a reorganization, merger or consolidation
effected to implement a recapitalization or reorganization (or a similar
transaction) that does not result in a material change to the beneficial
ownership of such party's voting securities; or (ii) to such party's parent
or a wholly-owned subsidiary of such party or such party's parent. Such
assignment, however, will be without release or impairment of either parties'
rights. The assignment shall contain the assignor's commitment to perform
and be responsible for any and all of its obligations under this Agreement as
if the assignment had not been made.
C. Buyer represents that it is purchasing the Aircraft for use and not for
resale. However, if Buyer resells, leases or otherwise transfers the
Aircraft after delivery, it shall obtain from such purchaser, lessee or
transferee an agreement to be bound by and comply with all relevant
provisions of this Agreement (including, without limitation, the provisions
contained in Exhibit C and this article) and upon obtaining such agreement, a
copy of which shall promptly be delivered by Buyer to Seller, Buyer shall
have the right to assign to said purchaser, lessee or transferee all the
rights conferred upon Buyer under this Agreement (including Exhibit C) with
respect to the Aircraft resold, leased or otherwise transferred.
D. At Buyer's request and expense, Seller shall take any action reasonably
required for the purpose of causing any Aircraft to be subjected, at or after
delivery, to an equipment trust, chattel mortgage, conditional sale, lien,
assignment, lease, or other arrangement for the financing by Buyer of the
purchase of such Aircraft. No such action, however, shall subject Seller to
any liability to which it would not otherwise be subject or modify in any
respect Seller's contract rights or require Seller to divest itself of title
to or possession of such Aircraft until delivery of and payment for such
Aircraft has been made as provided in this Agreement.
<PAGE>
ARTICLE 14 - NOTICES AND REQUESTS
A. Except as otherwise expressly provided in this Agreement, all notices and
requests required or authorized shall be given in writing. Notices and
requests shall be submitted to the addressee noted below by personal
delivery, electronic transmission with confirmation of receipt or any other
customary means of communication. The date upon which any such notice or
request is received by the addressee shall be deemed to be the effective date
of such notice or request. Seller shall be addressed at 3855 Lakewood
Boulevard, Long Beach, California 90846-0001, Attention: Contracts
Department and Buyer shall be addressed at 1800 Phoenix Boulevard, Suite 126,
Atlanta, Georgia 30349, Attention: Senior Vice President and Chief Financial
Officer, or to such other person or such other address as the party to
receive the notice or request shall designate.
<PAGE>
ARTICLE 15 - APPLICABLE LAW, VARIANCES AND WAIVER
A. This Agreement constitutes the final agreement between the parties and
supersedes all previous negotiations, representations and agreements between
the parties with respect to the subject matter hereof. It is the intent of
the parties to establish this document as the complete and exclusive
statement of the terms of the agreement. This Agreement may be amended only
as provided in the article entitled DETAIL SPECIFICATION CHANGES or by an
instrument in writing of even or subsequent date, executed by duly authorized
representatives of the parties. Any other purported amendment or
modification will be null and void.
B. This Agreement shall be construed and performance thereof shall be determined
according to the laws of the State of California, United States of America,
excluding its laws regarding conflict or choice of law. The applicable
California statute of limitation shall govern this Agreement regardless of
the forum. The parties agree to exclude the application of the United
Nations Convention on Contracts for the International Sale of Goods (1980).
C. The failure of either party to enforce at any time any of the provisions of
this Agreement or to require at any time performance by the other party of
any of the provisions of this Agreement shall in no way be construed to be a
present or future waiver of such provisions. The express waiver (whether one
or more times) by either party of any provision, condition or requirement of
this Agreement shall not constitute a waiver of any future obligation to
comply with such provision, condition or requirement.
<PAGE>
ARTICLE 16 - NONDISCLOSURE
A. This Agreement contains, and other information provided in connection with
the transactions contemplated hereby may contain, information which is
confidential and proprietary to Seller and relates to Seller's research,
development, trade secrets, products, pricing and business affairs
(collectively, Confidential Information). Buyer shall protect the
Confidential Information with the same degree of care it exercises to protect
the confidentiality of its own confidential and proprietary information and
to prevent unauthorized disclosure, use or publication thereof; provided,
however, that (i) Buyer may disclose Confidential Information to its lenders
and where required by applicable law, the order of any court or governmental
agency, or the rules of any applicable securities exchange and (ii) Buyer's
obligation to protect such information shall be conditioned on Seller clearly
and conspicuously marking such information as confidential or proprietary.
Where disclosure of Confidential Information is required pursuant to the
rules of any applicable securities exchange or pursuant to the direction of
any governmental authority, Buyer agrees to notify Seller in writing of any
such disclosure Buyer intends to make as far in advance of the date Buyer
makes or is required to make the disclosure as is practicable and Buyer shall
use its reasonable efforts to obtain assurances that confidential treatment
will be accorded to the information required to be disclosed. Except as
permitted herein, Buyer shall not disclose the terms of this Agreement to any
other party. The obligation to treat information as Confidential Information
shall not apply to any information which is publicly available, independently
developed by Buyer, or obtained rightfully from third parties without a duty
to keep confidential.
B. Buyer shall not discuss Confidential Information with, or reveal Confidential
Information to, anyone other than (i) its employees who require knowledge of
such terms and conditions in the ordinary course and scope of their
employment; and (ii) agents, consultants and advisors (including legal
counsel, accountants and management consultants) whose assigned duties
reasonably require that such disclosure be made. In the event any disclosure
is made to the parties identified in the preceding clause (ii), Buyer further
agrees to inform the recipients of the confidential nature of the information
and of their obligation to treat such information confidentially pursuant to
this Agreement. If disclosure is made to parties identified in the preceding
clause (ii) in the form of copies of all or part of this Agreement, Buyer
agrees to attach to the first page of such disclosed materials the following
legend:
THIS DOCUMENT CONTAINS TRADE SECRETS AND COMMERCIAL, FINANCIAL AND
PROPRIETARY INFORMATION WHICH IS PRIVILEGED AND CONFIDENTIAL TO THE
MCDONNELL DOUGLAS CORPORATION AND WHICH MAY NOT BE DISCLOSED TO ANY
PERSON, GOVERNMENTAL AGENCY, COMPANY, CORPORATION OR OTHER PARTY EXCEPT AS
SUCH DISCLOSURE IS REQUIRED BY LAW.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written by their officers or agents thereunto duly
authorized.
VALUJET AIRLINES, INC.
Signature /s/ Stephen C. Nevin
-----------------------------------
Printed Name Stephen C. Nevin
-------------------------------
Title SVP Financial & CFO
--------------------------------------
Witness:
Signature /s/ James M. Issacson
-----------------------------------
Printed Name James M. Isaacson
-------------------------------
Title Director - Corporate Finance
---------------------------------------
MCDONNELL DOUGLAS CORPORATION
Signature /s/ T. C. Moore
------------------------------------
Printed Name T. C. Moore
--------------------------------
Title V.P. Contracts
---------------------------------------
Witness:
Signature /s/ Thomas C. Tucker
------------------------------------
Printed Name Thomas C. Tucker
--------------------------------
Title Area Director, Commercial Marketing
---------------------------------------
<PAGE>
EXHIBIT A - DETAIL SPECIFICATION
(Note: The Detail Specification has been provided separately.)
<PAGE>
EXHIBIT A1 - SPECIFICATION CHANGE NOTICES
<PAGE>
SCNS OVER AND ABOVE DS9530A
<TABLE>
<CAPTION>
SCN NO.
DATE SUBJECT
-------- -------
<C> <S>
G0100C007 SELECTABLE PROGRAM OPTIONS (MD-95-30)
05/16/95
G0200D003 INCORPORATION OF FINISH SPECIFICATION F-109-211 FOR VALUJET
10/25/95
G0214S001 REVISION TO THE TAKEOFF AND LANDING ALTITUDE LIMITS
04/06/95
G0320C003 INCREASED MAXIMUM TAKEOFF GROSS WEIGHT FROM 114,000 TO
08/18/94 121,000 LB AND THE MAXIMUM TAXI WEIGHT FROM 115,000 TO 122,000 LB
G0320C005 INCREASED MAXIMUM LANDING WEIGHT FROM 102,000 LBS TO 104,000
04/26/95 LBS AND MAXIMUM ZERO FUEL WEIGHT FROM 96,000 LBS TO 98,000 LBS
G2500E010A INSTALLATION OF A 129 PASSENGER SINGLE CLASS INTERIOR
10/20/95 ARRANGEMENT
G2541C001 INSTALLATION OF LIQUID SOAP DISPENSERS IN LAVATORIES IN LIEU OF
04/26/95 BAR SOAP DISPENSERS
G2560E001 INSTALLATION OF EMERGENCY EQUIPMENT
10/24/95
G2751S001 REVISION TO THE WING FLAP CONTROL SYSTEM TO PROVIDE DIAL-A-FLAP
06/08/95 POSITION SELECTION
G2842S003 INSTALLATION OF DRIPLESS DIP STICKS GRADUATED IN POUNDS IN LIEU
04/24/95 OF INCHES (6.7 Lb/Gal)
G3446C001B INSTALLATION OF TRAFFIC ALERT AND COLLISION AVOIDANCE SYSTEM
05/02/95 COMPUTER AND ANTENNAS UTILIZING EXISTING PARTIAL PROVISIONS
G5115E002A ADDITION OF POLYURETHANE FINISH TO LOWER FUSELAGE (COLOR TO BE
07/11/95 DETERMINED)
G5212S001A INSTALLATION OF A FULL SIZE AFT PRESSURE BULKHEAD EXIT DOOR
11/08/95
G5261E001 DELETION OF FORWARD ENTRANCE STAIRWAY WITH RETENTION OF
09/08/95 COMPLETE PROVISIONS
</TABLE>
<PAGE>
<TABLE>
<C> <S>
G5300S001 REVISION TO THE AIRCRAFT STRUCTURE TO LENGTHEN THE FUSELAGE 38
05/31/95 INCHES
G5300S002 REVISION TO THE AIRCRAFT STRUCTURE TO LENGTHEN THE FUSELAGE 19
10/09/95 INCHES
G7200S006A BR715 REVISION TO ENGINE DESIGNATION AND ASSUMED WEIGHT
10/16/95
G7200E009 INSTALLATION OF BR715 ENGINES IN LIEU OF THOSE SPECIFIED (PROVIDES
09/05/95 INCREASED THRUST TO 21,000 LBF)
G9900E005 EQUIPMENT CATEGORY CHANGE FROM BUYER FURNISHED TO SELLER
10/24/95 FURNISHED
</TABLE>
<PAGE>
EXHIBIT B - CERTIFICATE OF
TECHNICAL ACCEPTANCE AND DELIVERY
<PAGE>
CERTIFICATE OF TECHNICAL ACCEPTANCE AND DELIVERY
Buyer: VALUJET AIRLINES, INC.
Seller: MCDONNELL DOUGLAS CORPORATION
Purchase Agreement Number: DAC 95-40-D dated _______
AIRCRAFT IDENTIFICATION
- -----------------------
Model
-----------------------------------
Buyer's Aircraft Number
-----------------------------------
Nationality and Registration
-----------------------------------
Factory Serial Number
-----------------------------------
Fuselage Number
SECTION A - TECHNICAL ACCEPTANCE
--------------------------------
ValuJet Airlines, Inc. hereby technically accepts the Aircraft and agrees that
the Aircraft has been manufactured in accordance with and conforms to the
requirements of Purchase Agreement DAC 95-40-D, as amended.
VALUJET AIRLINES, INC.
Signature
----------------------
Printed Name
----------------------
Title
----------------------
Date
----------------------
<PAGE>
CERTIFICATE OF TECHNICAL ACCEPTANCE AND DELIVERY
Buyer: VALUJET AIRLINES, INC.
Seller: MCDONNELL DOUGLAS CORPORATION
Purchase Agreement Number: DAC 95-40-D dated ____________
AIRCRAFT IDENTIFICATION
- -----------------------
Model
-----------------------------------
Buyer's Aircraft Number
-----------------------------------
Nationality and Registration
-----------------------------------
Number
-----------------------------------
Factory Serial Number
-----------------------------------
Fuselage Number
-----------------------------------
SECTION B - DELIVERY
--------------------
ValuJet Airlines, Inc. hereby accepts delivery of the Aircraft at the time and
place noted below and hereby waives all remedies, excepting those remedies
provided for in * * * Exhibit C, Part I to Purchase Agreement DAC 95-40-D, as to
the condition of the Aircraft, including the remedy of revocation of acceptance,
which might otherwise arise by operation of law. ValuJet Airlines, Inc.
certifies the Aircraft will be used by ValuJet Airlines, Inc. as a certified or
licensed carrier of persons or property in interstate or foreign commerce.
VALUJET AIRLINES, INC.
Signature
----------------------
Printed Name
----------------------
Title
----------------------
Date
----------------------
Time
----------------------
Place
----------------------
<PAGE>
EXHIBIT C - AIRCRAFT SUPPORT SERVICES
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
TABLE OF CONTENTS
PART I - WARRANTY AND SERVICE LIFE POLICY ............................................. I-1
A. Seller's Warranty.................................................................. I-1
B. Warranties From Other Manufacturers................................................ I-3
C. Service Life Policy................................................................ I-4
D. Normal Usage....................................................................... I-7
E. Duplicate Protection Plan Remedies................................................. I-7
F. General............................................................................ I-8
PART II - TRAINING AND SERVICES........................................................ II-1
A. Flight Training Program............................................................ II-1
B. Maintenance and Technical Training Program......................................... II-3
C. Field Service...................................................................... II-7
D. Factory Service.................................................................... II-7
E. Maintenance Planning Assistance.................................................... II-7
F. Additional Services................................................................ II-8
G. Transportation and Per Diem Reimbursemen........................................... II-8
H. General............................................................................ II-8
PART III - SPARE PARTS................................................................. III-1
A. Applicability...................................................................... III-1
B. Term............................................................................... III-1
C. Buyer's Orders..................................................................... III-1
D. Communications..................................................................... III-1
E. Status Information................................................................. III-1
F. Prices............................................................................. III-1
G. Shipment........................................................................... III-2
H. Payment............................................................................ III-2
I. Purchase of Seller's Parts......................................................... III-3
J. Vendor Parts....................................................................... III-4
K. Provisioning....................................................................... III-4
L. General............................................................................ III-5
PART IV - AIRCRAFT MANUALS AND DOCUMENTS............................................... IV-1
A. Documents Provided................................................................. IV-1
B. ATA Specifications................................................................. IV-1
C. Shipment........................................................................... IV-1
D. Revision Service................................................................... IV-1
E. List of Documents.................................................................. IV-1
F. Additional Copies.................................................................. IV-11
G. Limitation On Use of Documents..................................................... IV-11
H. Warranty........................................................................... IV-12
</TABLE>
<PAGE>
PART I - WARRANTY AND SERVICE LIFE POLICY
This Part I contains the terms and conditions applicable to the warranty and
service life policy.
A. SELLER'S WARRANTY
-----------------
1. Coverage. Seller warrants that Products, at the time of delivery by
--------
Seller, shall be free from:
a. defects in material and workmanship;
b. defects caused by Seller's installation of any article not
manufactured by Seller in a manner not in accordance with the
reasonable instructions of the manufacturer;
c. defects arising from failure to conform to the Detail
Specification, except as to portions thereof stated to be estimates
or approximations or stated to be design objectives; and
d. defects inherent in the design, in view of the state of the art as
of the date of such design, including defects arising from Seller's
selection of materials or process of manufacture.
2. Term. This warranty applies only to defects described in paragraph 1.
----
above which become apparent to Buyer within * * * after installation or
use of each Product.
3. Repair or Replacement. Seller's liability under this warranty for
---------------------
defects described in paragraphs 1.a., 1.b. and 1.c. above is limited,
at Seller's election, to the repair or replacement (with a similar item
free from the defect in question) of any defective Product.
4. Correction of Design Defects. Seller's liability under this warranty
----------------------------
for defects described in paragraph 1.d. above is limited to correction
at Seller's expense of all such defects.
5. Timely Corrections. Seller, or Buyer with the approval of Seller, shall
------------------
make the repairs, replacements or corrections with reasonable care and
dispatch in order that the Product involved is not out of service
longer than necessary.
6. Seller's Approval. Within two weeks following receipt of Buyer's notice
-----------------
of a defect accompanied by Buyer's request to Seller's Field Service
Representative at Buyer's main base for permission to make a repair or
correction, Seller shall notify Buyer of its approval or disapproval of
the request. If Seller fails to give timely notice, the request shall
be deemed approved. Approval under this paragraph shall not constitute
a determination as to the existence of a defect, as described in
paragraph 1. above.
<PAGE>
7. Labor Coverage. For defects described in paragraph 1. above, removal
--------------
and repair of the defective Product and its reinstallation shall be at
Seller's expense. When temporary or interim repairs, replacements and
corrections are accomplished by Buyer and not proposed, requested, or
approved by Seller, Seller's liability to Buyer for removal and repair
shall not exceed the cost of furnishing a permanent repair, replacement
or correction.
8. Labor Reimbursement. For defects described in paragraph 1. above,
-------------------
Seller shall establish a reasonable estimate for the labor hours
required for removal and reinstallation and, if performed by Buyer,
repair or correction of the defective Product and will reimburse Buyer
for the estimated hours or for Buyer's actual labor hours, whichever is
less. Buyer's warranty labor rate shall be based upon Buyer's direct
labor rate per man-hour plus a burden rate of fifty percent, subject to
annual review and adjustment as mutually agreed. The amount of Buyer's
warranty labor rate shall not exceed the Douglas Aircraft Company's
manufacturing direct labor rate plus a burden rate of one hundred
percent.
9. Claims Information. All warranty claims must be submitted in writing to
------------------
Seller's Warranty Administrator at Long Beach, California and shall
include the following:
a. the identity of the Product involved, including Seller's part
number, nomenclature and the quantity claimed to be defective;
b. the identity of the Aircraft from which each Product was removed;
c. the date the claimed defect became apparent to Buyer;
d. the total flight hours accrued on each Product at the time the
claimed defect became apparent to Buyer;
e. description of the claimed defect and circumstances;
f. the date any repair or modification was completed;
g. an itemized account of any direct labor hours expended in
performing the repair or modification;
h. an itemized account of any direct materials incorporated in any
repair or modification; and
<PAGE>
i. with respect to any spare parts purchased from Seller,
identification by Buyer's purchase order number and date.
10. Audit, Notification and Transportation. All warranty claims shall be
--------------------------------------
subject to audit by Seller. Seller shall notify Buyer of Seller's
disposition of each claim. For defects described in paragraph 1. above,
Seller shall pay all costs of transportation of the defective Product
returned, to and from Atlanta, Georgia.
11. Limitations. Seller shall have no obligation or liability under this
-----------
warranty if:
a. the Aircraft was operated with any product not specifically
approved by Seller unless such product was not a cause of the
defect;
b. the Aircraft was not operated or maintained in accordance with the
AIRCRAFT MANUALS AND DOCUMENTS furnished Buyer pursuant to Part IV
hereof unless such operation or maintenance was not a cause of the
defect;
c. the Aircraft was not operated under normal airline use unless such
operation was not a cause of the defect;
d. Buyer does not (i) report the defect in writing to Seller's
Warranty Administrator within one year following such defect
becoming apparent and (ii) return the defective Product to Seller's
Facility, unless otherwise approved by Seller, within two months
following such defect becoming apparent;
e. Buyer does not submit reasonable proof to Seller within one year
after the defect becomes apparent that the defect is due to a
matter covered within this warranty. Seller shall use reasonable
efforts to approve or disapprove in writing Buyer's warranty claim
within two months of receipt; or
f. Buyer does not submit its claim for reimbursement within one year
of the defect becoming apparent to Buyer or within a reasonable
time period as mutually agreed between Buyer and Seller's Warranty
Administrator.
12. Document Warranty. Seller warrants that at the time of delivery by
-----------------
Seller all Documents shall be free from errors. Seller's liability
under this warranty is limited to replacement during the first twenty-
four months after delivery of the Document or first use if not used in
the first twenty-four months with a similar Document or page thereof
free from the error in question.
B. Warranties From Other Manufacturers
-----------------------------------
1. Warranties From Other Manufacturers. Seller has made or shall make
-----------------------------------
reasonable efforts to obtain favorable warranties from vendors, with
respect to Vendor Parts. In
<PAGE>
addition, Seller shall make reasonable efforts to extend vendor
warranties to sixty months. Seller has made or shall make reasonable
efforts to obtain for Buyer the same warranties or more favorable
warranties to encompass Buyer's direct purchase of spare parts.
2. Vendor Backstop. For those Vendor Parts installed on the Aircraft or
---------------
purchased through Seller, excluding the Engine or the Engine
manufacturer's parts, in the event of a default by a Vendor in the
performance of any obligation under any applicable warranty obtained by
Seller from such Vendor pursuant to paragraph 1. above, or in the event
of a disclaimer of responsibility by such Vendor for any defect
constituting a breach of such warranty and upon seasonable notice
thereof to Seller, the warranties and all other terms and conditions of
paragraph A. of Part I shall become applicable as if the Vendor Parts
had been manufactured by Seller except that the warranty period shall
be the warranty period as set forth herein or the Vendor's warranty,
whichever is shorter and all transportation costs associated with the
Vendor Parts shall be borne by Seller. In the event a Vendor does not
provide a warranty, Seller's Warranty shall apply to such parts.
3. Seller's Interface Commitment. At Buyer's request to Seller's Warranty
-----------------------------
Administrator, Seller shall, without charge, conduct an investigation
and analysis of any Interface Problem to determine, if possible, the
cause of the Interface Problem and to recommend feasible corrective
action. Buyer shall furnish to Seller all data and information in
Buyer's possession relevant to the Interface Problem and shall
cooperate with Seller in the conduct of its investigation and such
tests as may be required. Seller, at the conclusion of its
investigation, shall advise Buyer in writing of Seller's opinion as to
the cause of the Interface Problem and Seller's recommended corrective
action. Buyer shall have the right to file a warranty claim upon
determination of the cause of the Interface Problem to the extent that
warranty coverage is applicable hereunder.
C. Service Life Policy
-------------------
The Policy shall apply if fleetwide or repetitive Failures occur in any
Covered Component.
1. Term. Should a Failure occur in any Covered Component within * * *
----
after delivery, Seller shall, at the price provided below and as
promptly as practicable, either (i) design and furnish a correction for
such failed Covered Component and provide any parts required for such
correction (exclusive of standard parts) or (ii) furnish a replacement
Covered Component.
<PAGE>
2. Price. Any part or Covered Component which Seller is required to
-----
furnish under this Policy shall be priced in accordance with the
following formula:
P = CT
--
N
where:
P = Price to Buyer;
C = Seller's then current Seller Part sales price;
T = the total time to the nearest month during which the
Covered Component has been used; and
N = * * * months.
In the event that C is * * * or less, Seller shall provide
the part or Covered Component to Buyer at no-charge.
3. Conditions and Limitations. The following general conditions and
--------------------------
limitations shall apply to the Policy:
a. The transportation cost for the return, if practicable and
requested by Seller, of any failed Covered Component necessary for
redesigning studies shall be borne by Seller to and from Atlanta,
Georgia.
b. Any required disassembly and reassembly of the Aircraft or landing
gear, removal of the failed Covered Component and reassembly and
installation of the corrected or replacement Covered Component,
shall be at Buyer's expense.
c. Seller's obligations under the Policy are conditioned upon the
submission of reasonable proof to Seller that the Failure is
covered by the Policy.
d. Buyer must report a Failure in writing to Seller's Warranty
Administrator within two months after any Failure becomes evident,
whether or not said Failure can reasonably be expected to occur in
any other aircraft. Omission to give this required notice shall
excuse Seller from all obligations with respect to the Failure
which was not reported in accordance with the two month period.
e. The provisions of paragraph 11. (except for paragraphs 11.d., 11.e.
and 11.f. thereof) of paragraph A. of Part I entitled Seller's
Warranty, are incorporated by this reference and shall condition
Seller's obligations under the Policy with respect to any Covered
Component.
f. Seller's obligations under the Policy shall not apply to any
Aircraft which has not been correctly modified in accordance with
Seller's service bulletin specifications
<PAGE>
or instructions furnished by Seller to Buyer prior to receipt by
Seller from Buyer of any notice of an occurrence which constitutes,
or which at a later date is shown to constitute, a Failure in a
Covered Component unless such Failure was not caused by Buyer's
failure to so modify the Aircraft. This provision does not apply
(i) in cases where Buyer has demonstrated that such service
bulletins are not cost effective to Buyer and (ii) where a
reasonable period of time is not given Buyer to incorporate the
service bulletin.
g. The Policy shall not apply for a Failure that may not reasonably be
expected to occur on a fleetwide or repetitive basis.
4. Coverage. This Policy is neither a warranty, performance guarantee nor
--------
an agreement to modify the Aircraft or Covered Component to conform to
new developments in airframe and landing gear design and manufacturing
art. Seller's obligation is to make only those corrections to the
Covered Components or furnish replacements as provided in the Policy.
5. Covered Components. The following specific airframe components and
------------------
landing gear components are subject to the provisions of the Policy:
a. Airframe Components
(1) Pylons
(a) Front engine mount yoke
(b) Spars and spar caps
(c) Front engine mount yoke to pylon attach fitting
(d) Aft engine mount to pylon attach fitting
(e) Upper and lower plating and stiffeners between spars
(f) Pylon to fuselage attach angles and fittings
(2) Wings
(a) Front and rear spars
(b) Upper and lower stringers and plating between spars
(c) Landing gear bulkhead and forging
(d) Bulkhead at side of fuselage, including trapezoidal panel
(e) Flap ribs in the wing
(f) Wing to fuselage attach tee
(g) Wing flap attach fittings
<PAGE>
(3) Fuselage
Frames, plating, stringers and pressure bulkheads, but
excluding all non-load carrying access doors.
(4) Empennage
(a) Vertical spars and plating between spars
(b) Aft fuselage vertical stabilizer carry-through structure
(c) Horizontal stabilizer spars, integral plating between
spars, and pivot fittings
b. Landing Gear Components
(1) Main Gear
(a) Outer cylinder
(b) Piston/axle
(c) Side brace
(d) Fixed side brace
(e) Orifice support tube
(2) Nose Gear
(a) Housing
(b) Piston
(c) Axle
(d) Orifice support tube
(e) Cylinder
NOTE: The Policy does not cover any bearings, bolts, bushings, gaskets,
O-rings, or seals used in the Covered Components.
D. Normal Usage
------------
Normal wear and tear and the need for regular overhaul shall not constitute
a defect or failure pursuant to Part I hereof.
E. Duplicate Protection Plan Remedies
----------------------------------
Buyer shall have the right to submit warranty claims under Seller's Warranty
or Service Life Policy at Buyer's discretion as applicable. It is agreed
that Seller shall not be obligated to provide to Buyer any remedy which is a
duplicate of any other remedy which has been provided to Buyer under Part I
hereof.
<PAGE>
F. General
-------
1. THE WARRANTY AND SERVICE LIFE POLICY PROVIDED IN THIS
EXHIBIT C, PART I AND THE OBLIGATIONS AND LIABILITIES OF SELLER
UNDER SAID WARRANTY AND SERVICE LIFE POLICY ARE EXCLUSIVE
AND IN LIEU OF, AND BUYER HEREBY WAIVES ALL OTHER REMEDIES,
WARRANTIES, GUARANTEES OR LIABILITIES, EXPRESS OR IMPLIED, WITH
RESPECT TO EACH AIRCRAFT, ARTICLE, PRODUCT, ACCESSORY,
EQUIPMENT, SPARE PART, SERVICE, MANUAL, DOCUMENT AND DATA
DELIVERED UNDER THIS AGREEMENT AND RELATED DOCUMENTS,
ARISING BY LAW OR OTHERWISE (INCLUDING, WITHOUT LIMITATION,
ANY OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE OR TORT OR
WITH RESPECT TO FITNESS, MERCHANTABILITY, LOSS OF USE, REVENUE
OR PROFIT OR CONSEQUENTIAL DAMAGES).
2. BUYER AND SELLER STATE AND AGREE THAT THIS PART I OF EXHIBIT C,
INCLUDING BUT NOT LIMITED TO PARAGRAPH 1. ABOVE, HAS BEEN THE
SUBJECT OF DISCUSSION AND NEGOTIATION AND IS FULLY UNDERSTOOD
BY THE PARTIES AND THAT THE PRICE OF THE AIRCRAFT AND THE
OTHER MUTUAL AGREEMENTS OF THE PARTIES SET FORTH IN THIS
AGREEMENT WERE ARRIVED AT IN CONSIDERATION OF THE PROVISIONS
CONTAINED IN THIS PARAGRAPH, PARAGRAPH 1. ABOVE AND THE OTHER
PROVISIONS OF THIS PART I OF EXHIBIT C.
3. NOTWITHSTANDING THE PROVISIONS OF PARAGRAPH 1. ABOVE, SELLER
HAS PROVIDED GUARANTEES IN LETTER AGREEMENT NUMBERS 7, 9 AND
10. WITH RESPECT TO THE GUARANTEES OR AGREEMENTS BY SELLER
SET FORTH IN LETTER AGREEMENT NUMBERS 7, 9 AND 10, BUYER'S SOLE
AND EXCLUSIVE REMEDY FOR BREACH OF SAID GUARANTEES OR
AGREEMENTS SHALL BE AS SET FORTH IN SAID LETTER AGREEMENTS.
<PAGE>
Part II - TRAINING AND SERVICES
This Part II contains the terms and conditions applicable to the training of
Buyer's flight and maintenance personnel. The training program shall consist of
services and support, presented in the English language, designed to
familiarize, train and assist Buyer's personnel with the introduction of the
Aircraft. Unless otherwise stated, the program shall be provided at no charge to
Buyer and conducted at Seller's Facility. Any other location or additional
training based on Buyer's special requirements will be subject to mutually
agreeable terms and conditions including price, schedule, location and scope of
training required.
At Buyer's request, Seller shall provide the training set forth in this Exhibit
C, Part II to a third party in lieu of providing such training to Buyer. Prior
to commencement of such training, an agreement must be in place between Seller
and such third parties covering proprietary information, liability and access to
Seller's training facility.
A. Flight Training Program
-----------------------
1. General. Seller reserves the right to rotate instructors every four
-------
weeks when training is conducted away from Seller's Facility.
Instructor services, when utilized away from Seller's Facility, are
counted in full days on a portal to portal basis. Buyer's personnel
shall be qualified and have experience in Commercial Transport Class
(Group II) Turbo Jet Aircraft as defined in FAR Part 121.400.
2. Training Conference. Buyer and Seller shall schedule a flight training
-------------------
conference at Seller's Facility no less than twelve months prior to
delivery of the first Aircraft. This conference will establish a
training plan and schedule including the elements in this paragraph A.
and will establish any additional training or special requirements
beyond the scope of this paragraph A. The terms and conditions
applicable to such additional training or special requirements will be
the subject of a separate agreement.
3. Classroom Training. Seller shall conduct the following classroom
------------------
instruction:
a. Flight Crew Ground Training Course - Provide customized FAA
approved operational courses, up to fifteen days in duration, for
six of Buyer's Flight Crews. This course shall consist of classroom
instruction supplemented by the use of ground training devices. The
course objective is to train Buyer's personnel to be proficient to
operate the Aircraft systems and to advance to the flight training
phase of paragraph A.4. This course will normally be conducted
during the four month period prior to delivery of the first
Aircraft. Seller shall furnish to each of Buyer's personnel
participating in this course one copy of the Flight Crew Operating
Manual (without revision service).
<PAGE>
b. Flight Crew Ground Training Instructor Course - This course of up
to nineteen business days duration, for up to four of Buyer's
ground training personnel, consists of the Flight Crew Ground
Training Course plus additional in-depth Aircraft Systems
information.
c. Flight Attendant Course - A familiarization course of up to three
days duration shall be conducted for up to twenty of Buyer's flight
attendant personnel. This course shall present general information
on the Aircraft and detailed information on the operation of the
cabin equipment and emergency equipment. Seller shall furnish for
each participant in this course one copy of the Flight Attendant
Manual (without revision service). Five instructor days plus travel
time shall be available to assist Buyer's personnel at Buyer's
facility to conduct hands-on training on the first delivered
Aircraft.
d. Flight Dispatcher Course - A course of up to five days duration
shall be conducted for up to ten of Buyer's flight dispatcher
personnel. The course consists of classroom instruction covering
general aircraft familiarization plus detailed coverage of aircraft
performance, flight planning, weight and balance calculation and
the Master Minimum Equipment List. Seller shall furnish for each
participant in this course one copy of the Flight Crew Operating
Manual (without revision service).
e. Course Material - If utilized in the course, Seller shall furnish
one set of the following materials (without revision service) used
to conduct the Flight Crew Ground Training Course, Flight Attendant
Course and Flight Dispatcher Course as applicable:
(1) 35mm slides
(2) Instructional narrative or instruction guides
(3) Overhead projection transparencies
(4) Video tapes
(5) Audio cassette tapes
(6) Computer based courseware in the Seller's format
(7) Cockpit panel prints (two sets unmounted)
f. Customization of Courses - The Flight Crew Ground Training Course,
Flight Crew Ground Training Instructor Course, Flight Attendant
Course and the Flight Dispatcher Course will be designed to
reasonably reflect the configuration of the Aircraft and Seller's
standard operating procedures.
4. Flight Crew Flight Training. Seller will train Buyer's Flight Crews
---------------------------
with a flight training syllabus which meets the performance standards
of the FAA pilot type rating. Any additional training beyond the level
established by the syllabus to achieve the desired proficiency will be
subject to mutually agreeable terms and conditions. Seller
<PAGE>
shall provide qualified instructors to conduct the flight training
program for a total of one hundred thirty calendar days. These days may
be utilized in a combination of the following types of flight training
support:
a. Flight Crew Simulator Training - Seller shall use reasonable
efforts to schedule time in a FAA approved flight simulator for the
training outlined in Seller's flight training syllabus. Costs of
simulator rental shall be borne by Buyer.
b. Aircraft Ferry - Upon request, Seller shall provide qualified
flight personnel to assist Buyer in ferrying Aircraft to Buyer's
main base.
c. Flight Crew Aircraft Training - If required, Seller shall conduct a
program of aircraft flight training utilizing Buyer's Aircraft at a
mutually agreed location commencing with the delivery of the first
Aircraft. Seller's responsibility is limited to instructor service
only.
d. Line Training - Upon request, Seller shall provide flight personnel
to assist the Buyer in achieving initial operating experience.
Processing of any special licenses permits or other documentation
required for the Seller's flight personnel to provide this service
shall be the responsibility of the Buyer.
5. Time Limit. Seller's obligation to provide flight training shall cease
----------
twelve months following delivery of the first Aircraft.
6. Revisits. Subject to separate contractual negotiation, operational
--------
assistance will be provided on a periodic basis in the form of revisits
by Seller's flight operations personnel.
7. Recurrent Flight Crew Training. Subject to separate contractual
------------------------------
negotiation, Seller will provide a FAA approved program of flight crew
recurrent training customized in content and frequency to meet the
recurrent training requirements of Buyer's flight crews.
B. Maintenance and Technical Training Program
------------------------------------------
1. General. The maintenance training program shall consist of factory and
-------
field training, including training aids and materials.
2. Training Conference. Buyer and Seller shall schedule a maintenance
-------------------
training conference at Seller's Facility, on a mutually agreed to date,
approximately twelve months prior to first Aircraft delivery. This
conference will establish a maintenance training plan including the
scheduling and content of all elements in this paragraph B. The scope
and depth of the individual courses defined in the plan will be based
on Seller's standard course syllabi.
<PAGE>
3. Seller's Instructor Time. Seller shall provide instructor time, for a
------------------------
combination of factory and field training up to thirty-four man-weeks.
4. Factory Training. The following factory training will be furnished at
----------------
Seller's Facility:
a. Executive General Familiarization Course - This course is in
general accordance with ATA Specification 104, Level I and is
designed for Buyer's management, or other support personnel, who
are generally familiar with modern jet aircraft. A brief overview
of the airframe, powerplant, electrical and avionic related systems
shall be presented.
b. General Familiarization Course - This course is in general
accordance with ATA Specification 104, Level I and is designed for
Buyer's management, or other support personnel, familiar with
modern jet aircraft. It includes a brief overview of the airframe,
powerplant, electrical and avionic related systems. Additionally,
it may provide limited information of technical data,
specifications, special tools, test equipment, maintenance
practices, safety precautions and procedures peculiar or unique to
the Aircraft.
c. Ramp and Transit Maintenance Course - This course is in general
accordance with ATA Specification 104, Level II and is designed as
basic systems training for Buyer's management, planning, technical
publications and maintenance personnel who are licensed, certified
or otherwise approved, with experience in through-flight activities
and servicing practices. In addition to the information contained
in the General Familiarization Course, task oriented information
will be provided concerning identification and location of systems
and components, system operation, control and indication, minor
troubleshooting, normal ground handling and systems servicing.
d. Airframe and Powerplant Line and Base Maintenance Course - This
course is in general accordance with ATA Specification 104, Level
III and is designed as advanced systems training for Buyer's line
and hangar maintenance personnel, instructors, technical
specialists, quality assurance inspectors and engineers. The course
material is principally mechanical, with electrical information
presented for overall system comprehension. Personnel attending
this course must have the knowledge and experience required to hold
current licenses under International Civil Aviation Organization
(ICAO) standards. Additional task oriented emphasis is placed on
detailed system description and operation, in-depth
troubleshooting, component identification and location, removal and
installation techniques, limited adjustment and rigging and test
procedures.
e. Electrical and Avionics Line and Base Maintenance Course - This
course is designed as advanced systems training for line and hangar
maintenance personnel,
<PAGE>
instructors, technical specialists, quality assurance inspectors
and engineers. The course material is principally electrical and
avionics, with mechanical information presented for overall system
comprehension, and is in general accordance with ATA Specification
104, Level III. Personnel attending this course must have the
knowledge and experience required to hold current licenses under
International Civil Aviation Organization (ICAO) standards.
Additional task oriented emphasis is placed on detailed system
description and operation, in-depth troubleshooting, component
identification and location, removal and installation techniques,
limited adjustment and rigging and test procedures.
f. Specialized Courses - Specialized courses are designed as task
oriented specialized training for Buyer's base and heavy
maintenance personnel, instructors, technical specialists, quality
assurance inspectors and engineers, and is in general accordance
with ATA Specification 104, Level IV. Buyer's personnel attending
these courses, as defined by subject matter, must have considerable
field experience. Courses will review pertinent material and
present detailed specific instruction on troubleshooting, repair,
adjustment, rigging and test procedures. Emphasis is placed on use
of maintenance and repair manuals, wiring diagrams, schematics,
engineering data and process and material standards, where
applicable. Prerequisites for students attending specialized course
will be coordinated by the Buyer and Seller's maintenance training
personnel.
5. Field Training. Seller shall provide the services of a field instructor
team, consisting of no more than four instructors, at Buyer's
designated base(s) of operation. The field instructors will provide
assistance as mutually agreed upon to Buyer's maintenance and training
personnel, including classroom and on-the-job training, consultation
and monitoring assistance. Seller reserves the right to rotate
instructors as required. The field training shall not exceed a total of
nineteen instructor weeks. The field training weeks available to Buyer
shall be a portion of, and not in addition to, Seller's instructor time
set forth above. Field training is in general accordance with ATA
Specification 104, Levels I through IV.
6. Vendor Training. Seller will use reasonable efforts, to obtain an
agreement with its Vendors to make maintenance training available as
required, in general accordance with ATA Specification 104, Level V.
7. Training Aids and Materials. If utilized in the course, Seller shall
furnish copies of the following training aids and materials used to
conduct Seller's standard training courses which are in general
accordance with ATA Specification 104, Levels I through III, to assist
Buyer in establishing a maintenance training program at Buyer's
training facility. Revision service shall be provided for only those
materials described in
<PAGE>
paragraphs 7.a.(1), 7.a.(2) and 7.b. below. Revision service shall be
provided for one year after delivery of the first Aircraft.
a. Audio Visual Aids
(1) Overhead Projection Transparencies - Four each of all
appropriate 8" x 11" transparencies (in teaching sequence)
used in Seller's baseline training courses will be provided.
(2) 35mm Slides - Four each of the appropriate slides (in teaching
sequence) as used in Seller's baseline training program shall
be furnished.
(3) Video Tapes - Four copies each of all applicable color sound
video tapes specially designed, developed and utilized in
support of the baseline training courses will be provided.
(4) Wall Charts - Twenty-four sets of color flight deck wall
charts used in the factory training program will be provided.
These charts will depict cockpit and instrument panel
configuration and arrangement.
b. Student Manuals - Buyer's personnel attending factory training
courses shall receive corresponding paper copies of appropriate
media with respective narrative.
c. Component and Equipment Location List - Buyer's personnel attending
Seller's standard courses shall receive one copy of the Component
and Equipment Location List.
d. Study Guides - Up to twenty-five copies of the system description
and operation section of the Maintenance Manual, or equivalent
information, for Buyer's Aircraft will be provided.
e. Course Completion Records - Each student attending a Level II or
higher course shall be measured to demonstrate competence and if
qualified shall be provided a course completion certificate. Seller
shall furnish Buyer with appropriate student records.
f. Computer Based Training - Seller will provide, as available,
baseline Computer Based Maintenance Training (CBMT) courseware for
the Aircraft. In no case will the CBMT be more than fifty percent
of the total Maintenance Training Program.
8. Time Limit. Seller shall not be obligated to provide maintenance
----------
training after fifteen months following delivery of the first Aircraft.
<PAGE>
C. Field Service
-------------
1. Seller shall assign one service representative to Buyer's main base of
operation or other location as mutually agreed. Such assignment shall
commence approximately one month prior to the scheduled delivery of the
first Aircraft and shall continue for one year after delivery of the
last Aircraft.
2. Buyer shall furnish, at no charge to Seller, office facilities, and
office equipment conveniently located to Buyer's maintenance facilities
for accommodation of such field service representative.
3. The Field Service Representative shall provide Buyer access to MD-95-30
engineering drawings as required.
D. Factory Service
---------------
Seller agrees to maintain the capability to respond to Buyer's technical
inquiries, to conduct investigations concerning repetitive maintenance
problems and the issuance of findings and recommended action. This service
shall be provided for as long as ten of the aircraft of the type purchased
hereunder remain in regularly scheduled commercial air transport service.
Any investigations which Seller deems to be extensive and requires more than
routine effort by Seller's personnel shall be the subject of separate
contractual negotiations. Seller shall also provide any necessary FAA
Designated Engineering Representative (DER) approval of repairs necessary to
continue MD-95-30 in service under normal operational conditions.
E. Maintenance Planning Assistance
-------------------------------
The following support shall be provided for as long as Buyer maintains ten
Aircraft in regularly scheduled service.
1. Maintenance Requirements. Seller shall provide technical assistance for
------------------------
Buyer's use in planning Aircraft maintenance requirements.
2. Maintenance Engineering Data. Seller shall provide maintenance
----------------------------
engineering data as set forth in Part IV of this Exhibit C.
3. Ground Support Equipment Planning. Seller shall recommend ground
---------------------------------
support equipment necessary for operation of the Aircraft and shall
provide a summary of ground support equipment suitable for use in
maintenance and servicing.
4. Maintenance Engineering Operations Review. Seller shall, at Buyer's
-----------------------------------------
request, conduct a maintenance engineering operations review at Buyer's
facility which consists of assistance to analyze Buyer's then current
maintenance and engineering operational requirements, reliability and
maintenance specifications, maintenance cost and reliability
<PAGE>
accounting practices. The object of such review is to improve the
interactions of operations, engineering, maintenance and logistics for
improved operational effectiveness. Seller will provide the findings
and recommendations in a report to Buyer. This service will be
available until three years after delivery of the last Aircraft.
5. Maintenance Reliability Program Progression. Buyer agrees to provide
-------------------------------------------
Seller in-service maintenance data for the Aircraft. Seller shall
analyze the data together with airline industry experience in order to
provide updates to Seller's Recommended On-Aircraft Maintenance
Planning Report. Buyer and Seller shall agree on standards and
frequency for communication of such data.
6. Aircraft Maintenance Task Oriented Support System. Seller shall provide
-------------------------------------------------
an Aircraft Maintenance Task Oriented Support System (AMTOSS) which
provides a numerical identity for those maintenance procedures normally
conducted in an airline maintenance program. In addition, Seller shall
provide a Production Management Data Base (PMDB) in general accordance
with ATA Specification 100.
F. Additional Services
-------------------
Seller shall provide additional services which may include training, special
investigations and maintenance and repair of the Aircraft, subject to
mutually agreeable terms and conditions.
G. Transportation
--------------
With respect to all services and support provided by Seller away from
Seller's Facility specified in this Part II., Seller shall provide only that
portion of transportation for its personnel from and to its main facility
which occurs within the continental United States.
H. General
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1. Buyer agrees the quality and reliability of Seller's services provided
under this Part II will be based upon the quality and reliability of
the relevant data and information received from Buyer.
2A. BUYER HEREBY RELEASES AND AGREES TO DEFEND, INDEMNIFY
AND HOLD HARMLESS SELLER, ITS SUBSIDIARIES AND VENDORS,
AND THE EMPLOYEES, DIRECTORS, OFFICERS, AGENTS AND
SUBCONTRACTORS OF EACH OF THEM, FROM AND AGAINST ALL
LIABILITIES, CLAIMS, DAMAGES, LOSSES, COSTS AND EXPENSES
FOR ALL INJURIES TO OR DEATH OF ANY AND ALL PERSONS
(INCLUDING BUYER'S OFFICERS, AGENTS AND EMPLOYEES
UTILIZING SUCH SERVICES AND SUPPORT BUT EXCLUDING
<PAGE>
EMPLOYEES OF SELLER) AND FOR LOSS OF OR DAMAGE TO
PROPERTY, AND LOSS OF USE THEREOF, ARISING DIRECTLY OR
INDIRECTLY OUT OF OR IN CONNECTION WITH ALL TRAINING,
SERVICES AND SUPPORT (EXCLUDING TRAINING SERVICES)
PROVIDED UNDER OR IN CONNECTION WITH THIS PART II AND
LETTER AGREEMENT NO. 6 TO THE AGREEMENT, WHETHER OR
NOT CAUSED BY THE NEGLIGENCE OF SELLER, ITS SUBSIDIARIES
OR VENDORS, OR THE EMPLOYEES, DIRECTORS, OFFICERS,
AGENTS OR SUBCONTRACTORS OF ANY OF THEM. IN PROVIDING
SUCH SERVICES AND SUPPORT, SELLER, ITS SUBSIDIARIES AND
VENDORS AND THEIR REPRESENTATIVES ARE DEEMED TO BE
ACTING IN AN ADVISORY CAPACITY ONLY AND AT NO TIME
SHALL THEY BE DEEMED TO ACT AS EMPLOYEES OR AGENTS OF
BUYER EITHER DIRECTLY OR INDIRECTLY.
* * *
<PAGE>
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