EXHIBIT 10.1
*** Pursuant to 17 CFR 240.24b-2, confidential information has been omitted and
has been filed separately with the Securities and Exchange Commission pursuant
to a Confidential Treatment Application filed with the Securities and Exchange
Commission.
AIRBUS 319-100 PURCHASE AGREEMENT
Dated as of September 19, 1997
between
AVSA, S.A.R.L.,
and
NORTHWEST AIRLINES, INC.
C O N T E N T S
---------------
CLAUSES TITLE PAGE
------- ----- ----
0 PURCHASE AGREEMENT 0
1 DEFINITIONS 1
2 SALE AND PURCHASE 6
3 CHANGES 7
4 PRICE 9
5 PRICE REVISION 13
6 PAYMENT TERMS 14
7 PLANT REPRESENTATIVES - INSPECTION 16
8 NORTHWEST'S ACCEPTANCE 19
9 DELIVERY 23
10 EXCUSABLE DELAY 26
11 INEXCUSABLE DELAY 30
12 WARRANTIES AND SERVICE LIFE POLICY 32
13 PATENT INDEMNITY 56
14 TECHNICAL PUBLICATIONS 60
15 FIELD ASSISTANCE 61
16 TRAINING AND TRAINING AIDS 62
17 VENDORS' PRODUCT SUPPORT 63
18 BUYER FURNISHED EQUIPMENT AND DATA 64
ii
CLAUSES TITLE PAGE
------- ----- ----
19 ASSIGNMENT 67
20 DATA RETRIEVAL 69
21 TERMINATION FOR CERTAIN EVENTS 70
22 MISCELLANEOUS PROVISIONS 72
iii
C O N T E N T S
---------------
EXHIBITS
--------
EXHIBIT A SPECIFICATION
EXHIBIT B CHANGE ORDERS TO STANDARD SPECIFICATION (SCNs)
EXHIBIT C SCN FORM
EXHIBIT D AIRFRAME PRICE REVISION FORMULA
EXHIBIT E POWERPLANTS PRICE REVISION FORMULA
EXHIBIT F CERTIFICATE OF ACCEPTANCE
EXHIBIT G SELLER SERVICE LIFE POLICY AND VENDOR SERVICE
LIFE POLICY
iv
C O N T E N T S
---------------
LETTER AGREEMENTS
-----------------
LETTER AGREEMENT NO. 1 PURCHASE INCENTIVES
LETTER AGREEMENT XX. 0 XXXXXXXXXXX
XXXXXX XXXXXXXXX XX. 0 PREDELIVERY PAYMENTS
LETTER AGREEMENT NO. 4 AIRCRAFT CUSTOMIZATION
LETTER AGREEMENT NO. 5 RELIABILITY MATTERS
LETTER AGREEMENT NO. 6 A319-100 GUARANTEES
LETTER AGREEMENT XX. 0 XXXXX XXXXXXX
XXXXXX XXXXXXXXX XX. 0 X000 AIRCRAFT FINANCING
LETTER AGREEMENT NO. 9 ***
LETTER AGREEMENT NO. 10 SPECIAL APPLICATION
LETTER AGREEMENT NO. 11 MISCELLANEOUS MATTERS
v
P U R C H A S E A G R E E M E N T
This agreement is made this 19th day of September, 1997
between
AVSA, a societe a responsabilite limitee organized and
existing under the laws of the Republic of France, having its
registered office located at
0, xxxx-xxxxx Xxxxxxx Xxxxxxxx
00000 XXXXXXX
XXXXXX
(hereinafter referred to as "AVSA")
and
Northwest Airlines, Inc., a corporation organized and existing
under the laws of the State of Minnesota, United States of
America, having its principal corporate offices located at
0000 Xxxx Xxx Xxxxxxx
Xxxxx, Xxxxxxxxx 00000, XXX
(hereinafter referred to as "Northwest")
WHEREAS,
a) Northwest wishes to purchase, and AVSA is willing to sell, fifty (50)
firm Airbus Industrie A319-100 model aircraft, upon the terms and
conditions herein provided;
b) AVSA is willing to grant Northwest options to purchase fifty (50)
option and fifty (50) roll-over option Airbus A319-100 / A320-200 model
aircraft, upon the terms and conditions herein provided; and
c) AVSA is a sales subsidiary of Airbus Industrie, G.I.E., and will
purchase the Aircraft from Airbus Industrie, G.I.E., for resale to
Northwest.
NOW THEREFORE IT IS AGREED AS FOLLOWS:
1 - DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, the following terms
will have the following meanings:
A319 Product Support Agreement - the Airbus A319 Product Support
Agreement dated as of even date herewith among Northwest, ASCO and
AVSA, together with all exhibits, appendixes and letter agreements
thereto. ***
Affiliate - with respect to any person or entity, any other person or
entity directly or indirectly controlling, controlled by or under
common control with such person or entity, not including any of the
Associated Contractors. For purposes of the preceding sentence,
"control" of a corporation shall mean the direct or indirect ownership
of voting securities having the power to direct or cause the direction
of the management and policies of such corporation.
Agreement - this Airbus X000-000 Xxxxxxxx Agreement, including all
exhibits, appendixes and letter agreements attached hereto, as the same
may be amended or modified and in effect from time to time.
Aircraft - any or all of the (i) Firm Aircraft, (ii) Option Aircraft
that have been converted to a firm order, or (iii) Roll-Over Option
Aircraft that have been converted to a firm order, to be purchased by
AVSA and sold to Northwest pursuant to this Agreement, together with
all components, equipment, parts and accessories installed in or on
such aircraft and the Propulsion Systems installed thereon upon
delivery.
Airframe - any Aircraft, excluding the Propulsion Systems therefor.
ASCO - Airbus Service Company, Inc., a corporation organized and
existing under the laws of Delaware, having its registered office
located at 000 Xxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000, or any
successor thereto.
Associated Contractors - collectively, the members and, for certain
purposes, subcontractors of the Manufacturer from time to time, which
members presently are:
(1) AEROSPATIALE, SOCIETE NATIONALE INDUSTRIELLE, whose principal
office is at
00, Xxxxxxxxx xx Xxxxxxxxxxx
00000 Xxxxx
Xxxxxx
(2) BRITISH AEROSPACE (OPERATIONS) LTD, whose principal office is
at
Warwick House
PO Box 87
Farnborough Aerospace Centre
Xxxxxxxxxxx
Xxxxx XX00 0XX
Xxxxxxx
(3) CONSTRUCCIONES AERONAUTICAS, S.A., whose principal office is
at
2
404 Xxxxxxx xx Xxxxxx
00000 Xxxxxx
Xxxxx
(4) DAIMLER-BENZ AEROSPACE AIRBUS, GmbH ("Daimler-Benz"), whose
principal office is at
Kreetslag 10
Xxxxxxxx 00 00 00
00000 Xxxxxxx
Xxxxxxx
ATA Specification 100 - the specification issued by the Air Transport
Association of America relating to manufacturers' technical data.
ATA Specification 101 - the specification issued by the Air Transport
Association of America relating to ground equipment technical data.
ATA Specification 102 - the specification issued by the Air Transport
Association of America relating to software programs.
ATA Specification 200 - the specification issued by the Air Transport
Association of America relating to integrated data processing.
ATA Specification 300 - the specification issued by the Air Transport
Association of America relating to the packaging of spare parts
shipments.
ATA Specification 2000 - the specification issued by the Air Transport
Association of America relating to an industry-wide communication
system linking suppliers and users for the purposes of spares
provisioning, purchasing, order administration, invoicing and
information or data exchange.
ATA Specification 2100 - the specification issued by the Air Transport
Association of America relating to the standards for the presentation
of technical information prepared as digital media (magnetic tape or CD
ROM).
AVSA-Supplied Buyer Furnished Equipment - as referred to in Subclause
18.7 of this Agreement.
Base Price - for any Aircraft, Airframe or Propulsion Systems, as
defined in Subclause 4.1 of this Agreement.
Buyer Furnished Equipment - for any Aircraft, all the items of
equipment that will be furnished by Northwest and installed in the
Aircraft by AVSA, as defined in the Specification.
Development Changes - as defined in Subclause 3.2 of this Agreement.
Excusable Delay - as defined in Subclause 10.1 of this Agreement.
3
FAA - the U.S. Federal Aviation Administration, or any successor agency
thereto.
Failure - as defined in Subclause 12.2.1.2 of this Agreement.
Final Contract Price - as defined in Subclause 4.2 of this Agreement.
Firm Aircraft - any or all of the fifty (50) Airbus Industrie A319-100
model aircraft to be purchased by AVSA and sold to Northwest pursuant
to this Agreement, together with all components, equipment, parts and
accessories installed in or on such aircraft and the Propulsion Systems
installed thereon upon delivery.
In-house Warranty - as defined in Subclause 12.1.7 (i) of this
Agreement.
In-house Warranty Labor Rate - as defined in Subclause 12.1.7(v) of
this Agreement.
Interface Problem - as defined in Subclause 12.4.1 of this Agreement.
Item - as defined in Subclause 12.2.1.1 of this Agreement.
LBA - Luftfahrt-Bundesamt of Germany or any successor agency thereto.
LIBOR - for each stated interest period, the rate determined on the
basis of the offered rates for deposits in US dollars, which appear on
the Reuters Screen LIBO Page as of 11:00 a.m., London time, on the day
that is two (2) days (other than a Saturday, Sunday or a day that is a
legal holiday or a day on which banking institutions are authorized to
close in the City of New York, New York, London, England, or Paris,
France) before the first day of an interest period. If at least two (2)
such offered rates appear on the Reuters Screen LIBO Page, the rate for
that interest period will be the arithmetic mean of such offered rates
(rounded upwards, if necessary, to the nearest one hundred thousandth
of a percentage point). If only one (1) offered rate appears, the rate
for that interest period will be the average (rounded upwards, if
necessary, to the nearest one hundred thousandth of a percentage point)
of the respective rates notified to AVSA by four (4) major banks in the
London interbank market selected by AVSA as the rate at which such bank
is offered deposits in US dollars at or about 11:00 a.m., London time,
on the date that is two (2) days (other than a Saturday, Sunday or a
day that is a legal holiday or a day on which banking institutions are
authorized to close in the City of New York, New York, London, England,
or Paris, France) prior to the first day of such interest period in the
interbank Eurodollar market on such date for that interest period and
in a principal amount equal to an amount of not less than $1,000,000,
provided, however, that if the banks selected as aforesaid are not
quoting as set forth in this sentence, the rate in respect of such
interest period will be determined on the basis of LIBOR in effect for
the previous interest period. "Reuters Screen LIBO Page" means the
display designated as page "LIBO" on the Reuters Monitor Money Rates
Service (or any successor to such page or service).
Manufacturer - Airbus Industrie, a "Groupement d'Interet Economique"
established under "Ordonnance" No. 67-821 dated September 23, 1967, of
the Republic of France.
Material Breach - as defined in Subclause 21.1 of this Agreement.
4
Option Aircraft - any or all of the fifty (50) Airbus Industrie
A319/A320 model aircraft for which AVSA has granted Northwest an option
to purchase pursuant to the terms and conditions contained in Letter
Agreement No. 2 hereto (excluding the RollOver Option Aircraft)
together with all components, equipment, parts and accessories
installed in or on such aircraft and the Propulsion Systems installed
thereon upon delivery.
Predelivery Payment - any payment made against the Final Contract Price
of an Aircraft in accordance with Subclause 6.2 of this Agreement.
Prime Rate - the rate of interest per annum publicly announced from
time to time by Citibank, N.A. in New York, New York, as its prime or
base or equivalent lending rate.
Product Support Agreements - as referred to in Subclause 17.1.1 of this
Agreement.
Propulsion Systems - the two (2) CFM56-5A4 powerplants to be installed
on an Aircraft at delivery, each composed of the powerplant (as such
term is defined in Chapters 70-80 of ATA Specification 100 (Revision
22), but limited to the equipment, components, parts and accessories
included in the powerplant, as so defined), that have been sold to the
Manufacturer by CFMI International, and a nacelle and thrust reverser
for each such powerplant.
RFC - as defined in Subclause 3.3.1 of this Agreement.
Roll-Over Option Aircraft - any or all of the fifty (50) Airbus
Industrie A319/A320 model aircraft which Northwest may obtain an option
to purchase pursuant to the terms and conditions contained in Subclause
2.6 of Letter Agreement No. 2 hereto, together with all components,
equipment, parts and accessories installed in or on such aircraft and
the Propulsion Systems installed thereon upon delivery.
SCN - as defined in Subclause 3.1 of this Agreement.
Seller Furnished Equipment - for any Aircraft, all of the items of
equipment that will be furnished by AVSA and installed in the Aircraft
by AVSA, as defined in the Specification.
Service Life Policy - as referred to in Subclause 12.2 of this
Agreement.
Specification - as defined in Subclause 2.2 of this Agreement.
Standard Specification - as defined in Subclause 2.2 of this Agreement.
Vendor - each manufacturer (other than the manufacturer of the
Propulsion Systems) and any successor thereof, of a component,
equipment, accessory or part installed in an Aircraft at its delivery
to Northwest under this Agreement, or any replacement therefor, other
than a Warranted Part, and listed in the Supplier Product Support
Agreements manual referred to in Subclause 12.3.1 of this Agreement.
5
Vendor Component - as defined in Subclause 12.4.3 of this Agreement.
Vendor Parts - as defined in Subclause 12.3.1 of this Agreement.
Warranted Part - as defined in Subclause 12.1.1 of this Agreement.
Warranty Claim - as defined in Subclause 12.1.6(v) of this Agreement.
Working Day - with respect to any action to be taken hereunder, a day
other than a Saturday, Sunday or other day designated as a holiday in
the jurisdiction in which such action is required to be taken.
The terms "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement, and not a particular Clause thereof.
Technical and trade items not otherwise defined herein will have the
meanings assigned to them as generally accepted in the aircraft
manufacturing industry.
6
2- SALE AND PURCHASE
2.1 General
AVSA will cause to be manufactured and will sell and deliver, and
Northwest will buy and take delivery of, the Aircraft subject to the
terms and conditions contained in this Agreement.
2.2 Specification Documents
The Aircraft will be manufactured in accordance with the A319-100
Standard Specification, Document No. J.000.01000, Issue 3, dated March
29, 1995, including Temporary Revision 1, dated August 25, 1995. Such
Standard Specification, a copy of which is annexed hereto as Exhibit A
to this Agreement, as amended by the change orders set forth in Exhibit
B hereto, is hereinafter referred to as the "Specification." The
Specification may be further modified from time to time pursuant to the
provisions of Clause 3 below.
2.3 Certification
Prior to the delivery of the first Aircraft, AVSA will obtain or cause
to be obtained a US FAA Type Certificate (transport category) for the
Aircraft pursuant to Part 21 and in compliance with the applicable
provisions of Part 25 of the US Federal Aviation Regulations.
Each Aircraft will be delivered to Northwest with the Certificate of
Airworthiness for Export issued by the LBA and in a condition enabling
Northwest (or a person eligible to obtain such certificate under then
applicable law) to obtain at the time of delivery a Standard
Airworthiness Certificate issued pursuant to Part 21 of the US Federal
Aviation Regulations permitting Northwest to operate the Aircraft under
Part 121 of the US Federal Aviation Regulations. AVSA will have no
obligation, whether before, at or after delivery of any Aircraft, to
make any alterations to such Aircraft to enable such Aircraft to meet
FAA requirements for non-standard operation on Northwest's routes.
Except as set forth in this Subclause 2.3, AVSA will not be required to
obtain any other certificate or approval with respect to the Aircraft.
2.4 AVSA will deliver each Aircraft with provisions suitable for that
equipment required to be incorporated on such Aircraft to meet those
additional requirements of the US Federal Aviation Regulations which
(i) are generally applicable with respect to transport category
aircraft to be used in United States certificated air carriage and (ii)
are required to be complied with on or before the date of delivery of
such Aircraft, provided that any required amendment to the
Specification resulting from such additional requirements will be set
forth in an SCN which will be effected as provided in Clause 3 hereof.
Northwest will cooperate with AVSA in complying with the foregoing
requirements.
7
3 - CHANGES
3.1 Specification Change Notices
The Specification may be amended from time to time by a Specification
Change Notice (each such Specification Change Notice being herein
called an "SCN" and being in the form of Exhibit C hereto). Each SCN
will set forth in detail the particular changes to be made in the
Specification, any materials to be deleted from the Aircraft by AVSA in
connection with such SCN, and the effect, if any, of such changes on
design, performance, weight, balance, time of delivery, Buyer Furnished
Equipment and price of each Aircraft affected thereby and
interchangeability or replaceability of parts. SCNs will not be binding
on either party until signed by persons duly authorized in writing by
Northwest and AVSA, but upon being so signed will constitute amendments
to this Agreement.
3.2 Development Changes
The Specification may also be revised by AVSA without an SCN or
Northwest's consent to incorporate Manufacturer-decided changes that
are deemed necessary or useful to correct defects, improve the Aircraft
or its process of manufacture, prevent delay, or ensure compliance with
this Agreement and that do not increase the price or adversely affect
the delivery, overall dimensions, guaranteed weight, maintenance
requirements or performance of the Aircraft or adversely change the
interchangeability or replaceability requirements of the Specification
(hereinafter called "Development Changes"). AVSA will notify Northwest
of all Development Changes prior to incorporation therein.
3.3 Requests and Approvals
3.3.1 In the event that Northwest requests a change to the Specification,
AVSA will issue a Request for Change (RFC) and carry out a feasibility
study of such change. If AVSA determines that such RFC is feasible to
incorporate, AVSA will produce an SCN and submit such SCN to Northwest
for Northwest's approval. If such SCN is rejected by Northwest, such
RFC and proposed SCN will be canceled without charge to Northwest.
3.3.2 In the event that Northwest requests AVSA in writing to incorporate a
proposed change (excluding Development Changes) in an Aircraft and AVSA
agrees to such request but the change is not subsequently made the
subject of an SCN for any reason (other than AVSA's unreasonable
refusal to sign the SCN or otherwise acting in bad faith), Northwest
will pay AVSA the full cost of design and other work resulting from
such request and incurred by AVSA, provided that in the event AVSA's
reasonable estimate of the cost of developing such proposed change is
higher than US$ ***, AVSA shall have notified Northwest in writing
within *** Working Days after AVSA's receipt of Northwest's request of
such cost estimate and secured Northwest's agreement prior to incurring
any such costs.
In the event that Northwest requests AVSA in writing to proceed with a
proposed change before any requisite approval of the LBA and FAA has
been obtained and such LBA or
8
FAA approval is not subsequently obtained, any SCN executed in
connection with such proposed change will be ***.
3.4 Specification Changes Before Delivery
If, pursuant to the promulgation of any applicable law or regulation,
any change in the Specification has to be made before delivery of any
Aircraft to enable Northwest to obtain a Standard Airworthiness
Certificate for such Aircraft referred to in Subclause 2.3, AVSA will
make or cause to be made the required change or modification to the
Aircraft. For each such change, the parties will sign an SCN specifying
the effect, if any, of such change on design, performance, weight,
balance, time of delivery, and Buyer Furnished Equipment of each
Aircraft affected thereby and interchangeability or replaceability of
parts. If AVSA anticipates that the scheduled delivery of any Aircraft
will be postponed by reason of such change, the delivery date of such
Aircraft as provided in Subclause 9.1 will be extended to the extent of
such postponement.
The effect on price of such a change will be borne ***.
3.5 Specification Changes After Delivery
Subclause 3.4 will not require AVSA to make any changes or
modifications to or to make any payments or take any other action with
respect to any Aircraft delivered to Northwest prior to the time any
law or regulation referred to in Subclause 3.4 becomes effective. Any
such changes or modifications made to an Aircraft after its delivery to
Northwest will be at Northwest's expense.
9
4 - PRICE
4.1 Base Price of the Aircraft
The Base Price of each Aircraft is the sum of:
(i) the Base Price of the Airframe, and
(ii) the Base Price of the Propulsion Systems.
4.1.1 Base Price of the Airframe
4.1.1.1 The Base Price of the Airframe will be the sum of the Base Prices set
forth below in (i), (ii) and (iii):
(i) the Base Price of the Standard A319 Airframe, as defined in
the Standard Specification set forth in Exhibit A hereto
(excluding Buyer Furnished Equipment, Propulsion Systems and
SCNs), at delivery conditions prevailing in January 1998,
which is:
US$ ***
(US dollars -- ***) and
(ii) the Base Price of any and all SCNs mutually agreed upon prior
to the signature of this Agreement and set forth in Exhibit B,
at delivery conditions prevailing in January 1998, which is:
US$ ***
(US dollars -- ***), and
(iii) the Base Price of seats and galleys, at delivery conditions
prevailing in January 1998 in the amount of:
US$ ***
(US dollars -- ***)
***
4.1.1.2 The Base Price of the Airframe of each Aircraft will be revised to the
actual delivery date of such Aircraft in accordance with the Airframe
Price Revision Formula set forth
10
in Subclause 5.1 hereto.
4.1.2 Base Price of the Propulsion Systems
4.1.2.1 The Base Price of the Propulsion Systems is the sum of (i) and (ii)
below:
(i) Base Price of the Powerplants
The Base Price of a set of Powerplants and additional standard
equipment at delivery conditions prevailing in January 1998
(cpi 147.77), which is:
US$ ***
(US dollars -- ***).
Said Base Price has been calculated with reference to the
Reference Price indicated by CFM International of US$ *** (US
dollars -- ***) in accordance with economic conditions
prevailing in September 1990 (cpi 126.54).
Said Reference Price is subject to adjustment to the date of
delivery of the Aircraft in accordance with the CFMI Price
Revision Formula set forth in Subclause 5.2 hereto.
(ii) Base Price of Nacelles and Thrust Reversers
The Base Price of a set of two (2) nacelles and two (2) thrust
reversers for the Powerplants at delivery conditions
prevailing in January 1998, which is:
US$ ***
(US dollars --***).
Said Base Price is subject to adjustment to the date of
delivery of the Aircraft in accordance with the Airframe Price
Revision Formula set forth in Subclause 5.1 hereto.
4.2 Final Contract Price
The Final Contract Price of an Aircraft will be the sum of:
(i) the Base Price of the Airframe constituting a part of such
Aircraft, as adjusted to the date of delivery of such Aircraft
in accordance with Subclause 5.1 of this Agreement;
11
(ii) the price (as of delivery conditions prevailing in January
1998), of any SCNs constituting a part of such Aircraft that
are entered into pursuant to Clause 3 (excluding Subclause
3.4) after the date of execution of this Agreement, as
adjusted to the date of delivery of such Aircraft in
accordance with Subclause 5.1 of this Agreement;
(iii) the Reference Price of the installed Propulsion Systems
constituting a part of such Aircraft, as adjusted to the date
of delivery of such Aircraft in accordance with Subclause 5.2
of this Agreement;
(iv) the Base Price of the nacelles and thrust reversers
constituting a part of such Aircraft, as adjusted to the date
of delivery of such Aircraft in accordance with Subclause 5.1
of this Agreement; and
(v) any other amount resulting from any other provisions of this
Agreement and/or any other written agreement between Northwest
and AVSA relating to the Aircraft and specifically making
reference to the Final Contract Price of an Aircraft.
4.3 Taxes, Duties and Imposts
4.3.1 AVSA will bear and pay the amount of any and all taxes, duties, imposts
or similar charges of any nature whatsoever *** that are (i) imposed
upon Northwest, (ii) imposed upon AVSA with an obligation on Northwest
to withhold or collect the amount thereof from AVSA or (iii) imposed
upon Northwest with an obligation on AVSA to withhold or collect such
amount from Northwest, and that are levied, assessed, charged or
collected for or in connection with the fabrication, manufacture,
modification, assembly, sale, delivery, use of or payment under this
Agreement for any Aircraft, component, accessory, equipment or part
delivered or furnished hereunder, provided such taxes, duties, imposts
or similar charges have been levied, assessed, charged or collected
under laws promulgated and enforceable in Germany ***.
4.3.2 Northwest will bear and pay the amount of any and all taxes, duties,
imposts or similar charges of any nature whatsoever that are (i)
imposed upon AVSA, (ii) imposed upon Northwest with an obligation on
AVSA to collect the amount thereof for Northwest or (iii) imposed upon
AVSA with an obligation for Northwest to withhold such amount from
AVSA, and that are levied, assessed, charged or collected for or in
connection with the fabrication, manufacture, modification, assembly,
sale, delivery or use of or payment under this Agreement for any
Aircraft, component, accessory, equipment or part delivered or
furnished hereunder, provided such taxes, duties, imposts or similar
charges have been levied, assessed, charged or collected under laws
promulgated and enforceable in countries other than Germany ***. If
Northwest is compelled by law to pay such taxes,
12
duties, imposts or similar charges as a deduction or withholding , then
Northwest will ensure that the sums received by AVSA under this
Agreement will be equal to the full amounts expressed to be due AVSA
hereunder, without deduction or withholding on account of and free from
any and all taxes, levies, imposts, duties or charges of whatever
nature, and Northwest will pay such additional amounts as may be
necessary so that the net amount received by AVSA after such deduction
or withholding will equal the amounts that would have been received in
the absence of such deduction or withholding.
4.3.3 AVSA will in its own name do all things necessary with respect to the
export of the Aircraft from Germany and will pay any customs duties,
taxes and fees required to be paid with respect to such export of the
Aircraft which are imposed under laws promulgated and enforceable in
Germany ***.
4.3.4 It is expressly understood and agreed that AVSA's undertaking in
Subclause 4.3.1 will not apply to taxes, duties, imposts or similar
charges of any nature whatsoever, relating to the use of or payment for
any Aircraft (excluding income, franchise, and doing business taxes
imposed on AVSA), component, accessory, equipment or part delivered or
furnished under this Agreement in the United States of America.
4.3.5 It is expressly understood and agreed that Northwest's undertaking in
Subclause 4.3.2 will not apply to taxes imposed on AVSA that are based
on or measured by gross or net income or receipts or that are based on
or measured by AVSA's doing business, capital or net worth, or other
taxes, however denominated, in the nature of such taxes.
13
5 - PRICE REVISION
5.1 Airframe Price Revision Formula
The Base Price of each Airframe and the Base Price of a set of two (2)
nacelles and two (2) thrust reversers for each Aircraft will be revised
to the actual delivery date of such Aircraft in accordance with the
revision formula set forth in the Airframe Price Revision Formula
attached hereto in Exhibit D.
5.2 Powerplants Price Revision Formula
The Reference Price of the Powerplants Systems will be revised to the
actual delivery date of the Aircraft on which such Propulsion Systems
are installed in accordance with the revision formula set forth in
Exhibit E hereto.
14
6 - PAYMENT TERMS
6.1 Northwest will pay all sums due hereunder in immediately available
funds in United States dollars by credit to Credit Lyonnais, New York
Branch, for transfer by Credit Lyonnais to AVSA's account with Credit
Lyonnais at 0, Xxxxxxxxx Xxxxxxx Xxxxxxxxxx, 00000 Xxxxxxxx, Xxxxxx, or
to such other account at any New York Clearing House Member Bank as
AVSA will designate by notice to Northwest.
6.2 Predelivery Payments
Predelivery Payments will be paid by Northwest to AVSA for each
Aircraft in accordance with the provisions of Letter Agreement No. 3 to
this Agreement.
6.3 Payment of Final Contract Price
Concurrently with the delivery of each Aircraft, Northwest will pay to
AVSA the Final Contract Price therefor, less the total amount of the
Predelivery Payments theretofore received by AVSA for such Aircraft
under Subclause 6.2 above. AVSA's receipt of the full amount of such
payments will be a condition precedent to AVSA's obligation to deliver
such Aircraft.
6.4 Payment of Other Amounts
6.4.1 Unless otherwise expressly provided for herein, any payments due
hereunder or in respect of an Aircraft in addition to those referred to
in Subclauses 6.2 and 6.3 above will be paid by Northwest concurrently
with the delivery of the corresponding Aircraft or, if invoiced after
delivery of such Aircraft, within *** after the invoice date. AVSA and
Northwest agree that with respect to payments to be made under this
Subclause 6.4.1, and for the purposes of Clause 21, Northwest will not
be deemed to be in default unless such payment is not made within ***
after invoice date.
6.4.2 Notwithstanding any other rights AVSA may have at contract or at law,
Northwest and AVSA hereby agree that should any amount under this
Agreement become due and payable by Northwest, and not be paid in full
in immediately available funds on the date due (unless contested by
Northwest in good faith), then AVSA will have the right to debit and
apply, in whole or in part, the unused amount of any credit made
available by AVSA to Northwest against such unpaid amount. AVSA will
promptly notify Northwest in writing after such debiting and
application.
15
6.5 Overdue Payments
If any payment due AVSA is not received by AVSA on the date or dates as
agreed upon between Northwest and AVSA, AVSA will have the right to
claim from Northwest, and Northwest will promptly pay to AVSA, upon
receipt of such claim, interest (on the basis of a 365 day year) at a
rate per annum equal to *** on the amount of such overdue payment, to
be calculated from and including the due date of such payment to (but
excluding) the date such payment is received by AVSA. AVSA's right to
receive such interest will be in addition to any other rights of AVSA
hereunder or at law.
6.6 Refund of Predelivery Payments
Northwest will have no right to any refund of any deposit or
Predelivery Payment received by AVSA, except as provided under Clauses
10, 11, and ***
6.7 Proprietary Interest
Northwest will not, by virtue of anything contained in this Agreement
(including, without limitation, any Predelivery Payments hereunder, or
any designation or identification by AVSA of a particular Aircraft as
an Aircraft to which any of the provisions of this Agreement refer),
and notwithstanding any provision of law to the contrary, acquire any
proprietary, insurable or other interest whatsoever in any Aircraft
prior to delivery of and payment in full for such Aircraft as provided
in this Agreement.
6.8 Tender of Delivery
In addition to any other rights and remedies available to AVSA, AVSA
will not be obligated to tender delivery of any Aircraft to Northwest
and will have no further liability to Northwest with respect thereto,
if Northwest fails to make any Predelivery Payment *** or if AVSA has
terminated this Agreement pursuant to Clause 21.
6.9 Payment in Full
Except as provided for herein, Northwest's obligation to make payments
to AVSA hereunder will not be affected by and will be determined
without regard to any set off, counterclaim, recoupment, defense or
other right that Northwest may have against AVSA or any other person
and all such payments will be made without deduction or withholding of
any kind.
16
7 - PLANT REPRESENTATIVES - INSPECTION
7.1 Inspection Procedures
7.1.1 All work to be carried out on the Aircraft and all materials and parts
thereof will at all reasonable times during business hours be open to
inspection by duly authorized representatives of Northwest or its
designee at the respective works of the Associated Contractors and, if
possible, at the works of their respective subcontractors, and such
representatives will, to carry out the aforesaid inspection, have
access to such relevant technical data as is reasonably necessary for
this purpose (except that, if access to any part of the respective
works where construction is in progress or materials or parts are
stored is restricted for security reasons, the Associated Contractors
will be allowed a reasonable time to make the items available for
inspection elsewhere). The procedures for such inspections will be
agreed upon between AVSA's and Northwest's representatives prior to any
inspection.
7.1.2 For the purposes of Subclause 7.1.1 above and commencing with the date
of this Agreement until the delivery of the last Aircraft, AVSA will
furnish free-of-charge adequate secretarial assistance and suitable
space, office equipment and facilities in or conveniently located with
respect to Daimler-Benz's works in Hamburg, Germany, for the use of not
more than four (4) representatives of Northwest during the
aforementioned period. ***.
7.1.3 All inspections, examinations and discussions with AVSA's, the
Associated Contractors' or their respective subcontractors' engineering
or other personnel by Northwest and its said representatives will be
performed in such manner as not to delay or hinder the work to be
carried out on the Aircraft or the proper performance of this
Agreement. In no event will Northwest or its representatives be
permitted to inspect any aircraft other than the Aircraft.
17
7.2 INDEMNITY
SELLER'S INDEMNITY
AVSA WILL INDEMNIFY AND HOLD HARMLESS NORTHWEST, ITS DIRECTORS,
OFFICERS, AGENTS AND EMPLOYEES FROM AND AGAINST ALL LIABILITIES,
DAMAGES, LOSSES, COSTS AND EXPENSES (I) FOR ALL INJURIES TO AND DEATHS
OF PERSONS (EXCEPTING INJURIES TO OR DEATH OF NORTHWEST'S
REPRESENTATIVES PARTICIPATING IN ANY TESTS, CHECKOUTS OR INSPECTIONS
UNDER THIS CLAUSE 7) CAUSED BY NORTHWEST OR ITS REPRESENTATIVES, AND
(II) FOR ANY LOSS OF OR DAMAGE TO PROPERTY (EXCEPTING LOSS OF OR DAMAGE
TO PROPERTY OF NORTHWEST'S SAID REPRESENTATIVES) CAUSED BY NORTHWEST OR
ITS REPRESENTATIVES, IN EITHER CASE WHEN ARISING OUT OF OR IN
CONNECTION WITH ANY SUCH TESTS, CHECKOUTS, OR INSPECTIONS UNDER THIS
CLAUSE 7. THIS INDEMNITY OF AVSA WILL NOT APPLY FOR ANY SUCH
LIABILITIES, DAMAGES, LOSSES, COSTS OR EXPENSES ARISING OUT OF OR
CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF NORTHWEST'S
SAID REPRESENTATIVES.
NORTHWEST WILL INDEMNIFY AND HOLD HARMLESS AVSA, THE MANUFACTURER, EACH
OF THE ASSOCIATED CONTRACTORS AND THEIR RESPECTIVE SUBCONTRACTORS AND
THEIR RESPECTIVE OFFICERS, AGENTS AND EMPLOYEES FROM AND AGAINST ALL
LIABILITIES, DAMAGES, LOSSES, COSTS AND EXPENSES (I) FOR INJURIES TO OR
DEATHS OF NORTHWEST'S REPRESENTATIVES PARTICIPATING IN ANY TESTS,
CHECKOUTS, OR INSPECTIONS UNDER THIS CLAUSE 7, (II) FOR LOSS OF OR
DAMAGE TO PROPERTY OF NORTHWEST'S SAID REPRESENTATIVES, AND (III)
ARISING OUT OF OR CAUSED BY THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE
OF NORTHWEST'S SAID REPRESENTATIVES. WITH RESPECT TO SUBCLAUSES (I) AND
(II) OF THE PRECEDING SENTENCE, NORTHWEST WILL NOT BE OBLIGATED TO
INDEMNIFY OR HOLD HARMLESS AVSA WHERE THE LIABILITIES, DAMAGES, LOSSES,
COSTS OR EXPENSES ARISE FROM AVSA'S NEGLIGENCE OR WILLFUL MISCONDUCT.
IN THE EVENT ANY CLAIM IS MADE OR LAWSUIT IS BROUGHT AGAINST EITHER
PARTY (OR ITS RESPECTIVE DIRECTORS, OFFICERS, AGENTS OR EMPLOYEES) FOR
DAMAGES FOR DEATH OR INJURY, OR FOR PROPERTY DAMAGE, THE LIABILITY FOR
WHICH HAS BEEN ASSUMED BY THE OTHER PARTY PURSUANT TO THIS SUBCLAUSE
7.2, THE FORMER (INDEMNITEE) WILL PROMPTLY GIVE NOTICE TO THE OTHER
PARTY (INDEMNITOR), AND THE INDEMNITOR WILL ASSUME AND CONDUCT THE
DEFENSE THEREOF, AND WILL HAVE THE RIGHT TO EFFECT ANY SETTLEMENT WHICH
IT, IN
18
ITS OPINION, DEEMS PROPER AND WHICH IMPOSES NO LIABILITY OR OTHER
OBLIGATION ON THE INDEMNITEE.
IN THE EVENT THAT THE INDEMNITOR DOES NOT ASSUME AND CONDUCT THE
DEFENSE OF THE CLAIM OR LAWSUIT, THEN THE INDEMNITEE WILL HAVE THE
RIGHT TO PROCEED WITH DEFENSE OF THE CLAIM OR LAWSUIT AS IT DEEMS
APPROPRIATE AND WILL HAVE AN ACTION AGAINST THE INDEMNITOR FOR ANY
JUDGMENTS, SETTLEMENTS, COSTS OR EXPENSES INCURRED IN CONDUCTING SAID
DEFENSE. FOR THE PURPOSE OF THIS SUBCLAUSE 7.2, A CLAIM OR LAWSUIT
AGAINST THE MANUFACTURER OR ANY OF THE ASSOCIATED CONTRACTORS OR ANY OF
THEIR RESPECTIVE SUBCONTRACTORS OR ANY OF THEIR RESPECTIVE DIRECTORS,
OFFICERS, AGENTS OR EMPLOYEES WILL BE DEEMED TO BE A LAWSUIT AGAINST
AVSA.
19
8 - NORTHWEST'S ACCEPTANCE
8.1 Acceptance Procedures
8.1.1 AVSA or any Affiliate thereof acting as AVSA's designee will give to
Northwest not less than *** days prior written notice of the proposed
time when acceptance tests of an Aircraft will be conducted, and, in
the event that Northwest elects to attend such tests, Northwest will
comply with the reasonable requirements of AVSA with the intention of
completing all tests within *** Working Days after commencement. The
tests will take place at Daimler-Benz's works in Hamburg, Germany (or
at such other facilities of the Associated Contractors or any
Affiliates thereof as AVSA may specify in its notice to Northwest
pursuant to this Subclause 8.1.1) and will be carried out by the
personnel of the Manufacturer (accompanied, if Northwest so wishes, by
representatives of Northwest up to a total of *** acting as observers,
of whom not more than *** will have access to the cockpit at any one
time). During flight tests, these representatives will comply with the
instructions of the Manufacturer's representatives. The Manufacturer
will not normally be required in the course of such acceptance tests to
fly any of the Aircraft for more than an aggregate of *** hours.
8.1.2 AVSA will offer to Northwest a briefing prior to acceptance of each
Aircraft and *** hour simulator session for *** pilots, prior to
acceptance of the first Aircraft. This briefing will provide specific
information related to acceptance flights.
8.1.3 The acceptance tests must demonstrate the satisfactory functioning of
the Aircraft at the time of delivery in accordance with the
Specification (except for immaterial variances from the Specification).
In the event that Northwest, after having received proper notice in
accordance with Subclause 8.1.1, does not attend the tests scheduled
for an Aircraft or fails to so cooperate, AVSA may complete them in the
absence of Northwest, whereupon Northwest will be deemed to have
accepted the tests, if such tests demonstrate the satisfactory
functioning of the Aircraft as aforesaid, and AVSA will furnish such
data with respect to such tests as Northwest may reasonably request.
8.1.4 If the acceptance tests for an Aircraft are not successfully completed
or there is a defect, Northwest, within *** Working Days after such
tests, will give notice to AVSA specifying such unsuccessful completion
or defect. Thereafter AVSA will, without hindrance from Northwest,
carry out any necessary changes and, as soon as practicable thereafter,
resubmit the Aircraft for new acceptance tests to demonstrate the
elimination of the defect, such tests to be held and carried out in
accordance with Subclause 8.1, provided, however, rather than accept a
delay in delivery of any such Aircraft, Northwest and AVSA may agree to
deliver such Aircraft with subsequent correction of the defect by
Northwest ***.
8.2 Use of Aircraft
AVSA will be entitled to use any Aircraft prior to its delivery to
Northwest:
20
(i) without Northwest's prior consent, to the extent necessary to
carry out the normal manufacturing process of the Aircraft
(but in no event for more than *** flight hours in the case of
each Aircraft),
(ii) without Northwest's prior consent, to obtain the certificates
required under Clause 2 hereof ***, or
(iii) with Northwest's prior consent (such consent not to be
unreasonably withheld), for the purposes of demonstration
flights to third parties (the "Demonstration Flights").
Such use will not affect either AVSA's obligation to deliver any
Aircraft hereunder or Northwest's obligation to accept delivery of any
Aircraft hereunder. Northwest will have the right, however, to obtain a
credit from AVSA for *** flight hours accumulated during Demonstration
Flights. ***. Such credit will be equal to the product of (i) the
number of flight hours accumulated *** for Demonstration Flights and
(ii) US$ *** (US dollars -- ***). Northwest will accept delivery of any
Aircraft used in accordance with this Subclause 8.2 without any
reduction in price for depreciation, or wear and tear resulting from
such use.
8.3 Certificate of Acceptance
When the Aircraft is "ready for delivery" as defined below in Subclause
9.2, Northwest will forthwith give to AVSA a signed Certificate of
Acceptance in the form attached as Exhibit F in respect of the relevant
Aircraft. Should Northwest fail to so deliver the said Certificate,
then Northwest will be deemed to be in default as though it had without
cause rejected delivery of such Aircraft when duly tendered to it
hereunder and will thereafter bear all costs and expenses resulting
from such delay in delivery.
8.4 Finality of Acceptance
Northwest's acceptance of delivery of each Aircraft will constitute
waiver by Northwest of any right it may have under the Uniform
Commercial Code as adopted by the State of New York or otherwise to
revoke such acceptance for any reason, whether known or unknown to
Northwest at the time of acceptance.
8.5 INDEMNITY
8.5.1 SCOPE
IN CONNECTION WITH THE PROVISION OF SERVICES UNDER THIS CLAUSE
8, AVSA AND NORTHWEST PROVIDE THE INDEMNITIES SET FORTH IN
SUBCLAUSES 8.5.2 AND 8.5.3.
21
8.5.2 AVSA'S INDEMNITY
AVSA WILL INDEMNIFY AND HOLD HARMLESS NORTHWEST, ITS
DIRECTORS, OFFICERS, AGENTS AND EMPLOYEES FROM AND AGAINST
ALL LIABILITIES, DAMAGES, LOSSES, COSTS AND EXPENSES
(I) FOR ALL INJURIES TO AND DEATHS OF PERSONS (EXCEPTING
INJURIES TO AND DEATHS OF NORTHWEST'S REPRESENTATIVES
PARTICIPATING IN ANY GROUND OR FLIGHT TESTS UNDER THIS
CLAUSE 8) CAUSED BY NORTHWEST OR ITS REPRESENTATIVES,
AND
(II) FOR ANY LOSS OF OR DAMAGE TO PROPERTY (EXCEPTING LOSS OF
OR DAMAGE TO PROPERTY OF NORTHWEST'S SAID
REPRESENTATIVES) CAUSED BY NORTHWEST OR ITS
REPRESENTATIVES,
IN EITHER CASE WHEN ARISING OUT OF OR IN CONNECTION WITH THE
OPERATION OF THE AIRCRAFT DURING ANY GROUND OR FLIGHT TESTS
UNDER THIS CLAUSE 8.
THIS INDEMNITY OF AVSA WILL NOT APPLY FOR ANY SUCH LIABILITIES,
DAMAGES, LOSSES, COSTS OR EXPENSES ARISING OUT OF OR CAUSED BY THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF NORTHWEST'S SAID
REPRESENTATIVES.
8.5.3 NORTHWEST'S INDEMNITY
NORTHWEST WILL INDEMNIFY AND HOLD HARMLESS AVSA, THE MANUFACTURER, EACH
OF THE ASSOCIATED CONTRACTORS AND THEIR RESPECTIVE SUBCONTRACTORS AND
EACH OF THEIR RESPECTIVE DIRECTORS, OFFICERS, AGENTS AND EMPLOYEES FROM
AND AGAINST ALL LIABILITIES, DAMAGES, LOSSES, COSTS AND EXPENSES
(I) FOR INJURIES TO OR DEATHS OF NORTHWEST'S SAID
REPRESENTATIVES PARTICIPATING IN ANY GROUND OR FLIGHT
TESTS UNDER THIS CLAUSE 8,
(II) FOR LOSS OF OR DAMAGE TO PROPERTY OF NORTHWEST'S SAID
REPRESENTATIVES, AND
(III) ARISING OUT OF OR CAUSED BY THE WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE OF NORTHWEST'S SAID REPRESENTATIVES.
WITH RESPECT TO SUBCLAUSES (I) AND (II) OF THE PRECEDING SENTENCE,
22
NORTHWEST WILL NOT BE OBLIGATED TO INDEMNIFY OR HOLD HARMLESS AVSA
WHERE THE LIABILITIES, DAMAGES, LOSSES, COSTS OR EXPENSES ARISE FROM
AVSA'S NEGLIGENCE OR WILLFUL MISCONDUCT.
8.5.4 CLAIMS
IN THE EVENT ANY CLAIM IS MADE OR LAWSUIT IS BROUGHT AGAINST EITHER
PARTY (OR ITS RESPECTIVE DIRECTORS, OFFICERS, AGENTS OR EMPLOYEES) FOR
DAMAGES FOR DEATH OR INJURY OR FOR PROPERTY DAMAGE, THE LIABILITY FOR
WHICH HAS BEEN ASSUMED BY THE OTHER PARTY PURSUANT TO THIS SUBCLAUSE
8.5, THE FORMER (INDEMNITEE) WILL PROMPTLY GIVE NOTICE TO THE OTHER
PARTY (INDEMNITOR), AND THE INDEMNITOR WILL ASSUME AND CONDUCT THE
DEFENSE THEREOF, AND WILL EFFECT ANY SETTLEMENT WHICH IT, IN ITS
OPINION, DEEMS PROPER AND WHICH DOES NOT IMPOSE ANY LIABILITY OR OTHER
OBLIGATION ON THE INDEMNITEE.
IN THE EVENT THAT THE INDEMNITOR DOES NOT ASSUME AND CONDUCT THE
DEFENSE OF THE CLAIM OR SUIT, THEN THE INDEMNITEE WILL HAVE THE RIGHT
TO PROCEED WITH DEFENSE OF THE CLAIM OR LAWSUIT AS IT DEEMS APPROPRIATE
AND WILL HAVE AN ACTION AGAINST THE INDEMNITOR FOR ANY JUDGMENTS,
SETTLEMENTS, COSTS OR EXPENSES INCURRED IN CONDUCTING SAID DEFENSE
(INCLUDING LEGAL FEES AND RELATED EXPENSES AS WELL AS THOSE COSTS
INCURRED BY IT ESTABLISHING ITS RIGHT TO INDEMNIFICATION HEREUNDER).
FOR THE PURPOSE OF THIS SUBCLAUSE 8.5, A CLAIM OR LAWSUIT AGAINST THE
MANUFACTURER OR ANY OF THE ASSOCIATED CONTRACTORS OR ANY OF THEIR
RESPECTIVE SUBCONTRACTORS OR ANY OF THEIR RESPECTIVE DIRECTORS,
OFFICERS, AGENTS OR EMPLOYEES WILL BE DEEMED TO BE A LAWSUIT AGAINST
AVSA.
23
9 - DELIVERY
9.1 Delivery Schedule
Subject to the provisions of this Agreement, AVSA will have the Firm
Aircraft ready for delivery at Daimler-Benz's works in Hamburg,
Germany, and Northwest will accept the same, during the months set
forth below. ***.
Aircraft No. Month/Year of Delivery Aircraft No. Month/Year of Delivery
------------ ---------------------- ------------ ----------------------
1 *** 1999 26 *** 2001
2 *** 1999 27 *** 2001
3 *** 1999 28 *** 2001
4 *** 1999 29 *** 2001
5 *** 1999 30 *** 2001
6 *** 1999 31 *** 2002
7 *** 1999 32 *** 2002
8 *** 1999 33 *** 2002
9 *** 1999 34 *** 2002
10 *** 1999 35 *** 2002
11 *** 2000 36 *** 2002
12 *** 2000 37 *** 2002
13 *** 2000 38 *** 2002
14 *** 2000 39 *** 2002
15 *** 2000 40 *** 2002
16 *** 2000 41 *** 2003
17 *** 2000 42 *** 2003
18 *** 2000 43 *** 2003
19 *** 2000 44 *** 2003
20 *** 2000 45 *** 2003
21 *** 2001 46 *** 2003
22 *** 2001 47 *** 2003
23 *** 2001 48 *** 2003
24 *** 2001 49 *** 2003
25 *** 2001 50 *** 2003
Not later than *** days prior to the date scheduled for acceptance
tests for a particular Aircraft, AVSA will give Northwest notice of the
anticipated date within the relevant month set forth above on which
such Aircraft will be ready for delivery. Not later than *** days prior
to such date notified to Northwest, AVSA will (i) confirm to Northwest
that such anticipated delivery date is firm or (ii) in the event AVSA
cannot confirm such date as being firm, confirm a new date, which will
be no more than *** Working Days in Germany before or after the
originally scheduled date.
24
9.2 Certificate of Airworthiness
Each Aircraft will for the purpose of this Agreement be deemed to be
"ready for delivery" upon the satisfactory completion of its acceptance
tests in accordance with Clause 8 and the issuance of an LBA
Certificate of Airworthiness for Export in the "Transport Category"
with respect thereto and AVSA's compliance with the other obligations
to be performed by it under Clause 2 hereof.
9.3 Title
Title to and risk of loss of and damage to the Aircraft will pass to
Northwest upon delivery following execution of the Certificate of
Acceptance and upon payment of the Final Contract Price for such
Aircraft. AVSA will provide Northwest with such appropriate documents
of title or other documents as Northwest may reasonably request.
9.4 Overdue Payment or Flyaway
In the event that:
(i) the delivery of and payment of the Final Contract Price for
the Aircraft is delayed more than *** Working Days after the
firm delivery date established pursuant to Subclause 9.1 due
to the fault of Northwest, or
(ii) within *** days after delivery of the Aircraft Northwest has
failed to remove such Aircraft from the place of delivery for
whatever reason (except for reasons attributable to AVSA)
then Northwest will on demand reimburse AVSA for all reasonable costs
and expenses (including, without limitation, costs and expenses
attributable to storage, preservation and protection, insurance and
taxes) actually sustained by AVSA and resulting from any such delay or
failure. Such reimbursement will be in addition to any other rights
that AVSA may have as a result of any such delay or failure.
9.5 Flyaway Expenses
Except for expenses to be borne by AVSA as provided in Subclause 4.4 of
this Agreement, all expenses of, and in connection with, fly-away from
Daimler-Benz's works will be borne by Northwest, ***.
25
10 - EXCUSABLE DELAY
10.1 Scope
Neither AVSA nor the Manufacturer will be responsible for or be deemed
to be in default on account of delays in delivery or failure to deliver
or otherwise in the performance of this Agreement or any part hereof
(i) due to causes reasonably beyond AVSA's, the Manufacturer's or any
Associated Contractor's control (unless such cause is beyond such
control due to AVSA's, the Manufacturer's or the Associated
Contractor's fault or negligence) or (ii) not occasioned by AVSA's, the
Manufacturer's or any Associated Contractor's fault or negligence
("Excusable Delay"), including, but not limited to: acts of God or the
public enemy, natural disasters, fires, floods, hail storms, explosions
or earthquakes; epidemics or quarantine restrictions; serious
accidents; actual total or constructive total loss; any law, decision,
regulation, directive or other act (whether or not having the force of
law) of any government or of the Council of the European Community or
the Commission of the European Community or of any national, Federal,
State, municipal or other governmental department, commission, board,
bureau, agency, court or instrumentality, domestic or foreign;
governmental priorities, regulations or orders affecting allocation of
materials, facilities or a completed Aircraft; war, civil war or
warlike operations, terrorism, insurrection or riots; failure of
transportation; strikes or labor troubles causing cessation, slow down
or interruption of work; delay in obtaining any airworthiness
certification for a previously uncertificated Aircraft part, component
or computer software after due and timely diligence to procure such
certification; inability after due and timely diligence to procure
materials, accessories, equipment or parts; general hindrance in
transportation; or failure of a subcontractor or Vendor to furnish
materials, components, accessories, equipment or parts.
It is expressly understood and agreed that each of (i) any delay caused
by Northwest's negligence or fault, and (ii) delay in delivery or
otherwise in the performance of this Agreement by AVSA due in whole or
in part to any delay in or failure of the delivery of, or any other
event or circumstance relating to, the Propulsion Systems or Buyer
Furnished Equipment, will constitute Excusable Delay for AVSA. AVSA
will as soon as practicable after becoming aware of any delay falling
within the provisions of this Subclause 10.1 (a) notify Northwest of
such delay and of the probable extent thereof and (b) subject to the
following provisions, as soon as practicable after the removal of the
cause or causes for delay, resume,***, the performance of those
obligations affected under this Agreement.
AVSA and Northwest acknowledge that nothing in this Subclause 10.1
shall be deemed to obligate AVSA to undertake or forego any action with
respect to any strike or labor troubles which AVSA would not otherwise
undertake or forego in the exercise of sound business judgement.
10.2 Unanticipated Delay
26
In the event that the delivery of any Aircraft is delayed by reason of
an Excusable Delay for a period of more than *** months after the end
of the calendar month in which delivery is otherwise required
hereunder, Northwest will be entitled to terminate this Agreement with
respect only to the Aircraft so affected upon written notice given to
AVSA within *** days after the expiration of such *** month period. In
the event such delay continues for an additional *** month period after
the expiration of such *** month period and Northwest has not
theretofore terminated this Agreement with respect to such Aircraft,
either party will have the option to terminate this Agreement with
respect to the Aircraft so affected upon written notice given to the
other within *** days after the end of such additional *** month
period. Such termination, as aforesaid, will discharge all obligations
and liabilities of the parties hereunder with respect to such affected
Aircraft, except that AVSA will repay to Northwest all amounts required
by *** with respect to such affected Aircraft, ***. Northwest will not
be entitled to receive such repayment nor to terminate this Agreement
as to any Aircraft under this Clause 10 by reason of an Excusable Delay
if such delay is caused solely by Northwest's negligence or Northwest's
fault.
10.3 Anticipated Delay
In respect of any Aircraft, AVSA may conclude, based on a reasonable
and good faith appraisal of the facts, that Excusable Delays will (i)
cause delay in delivery of such A(degree)ircraft for a period of more
than *** months after the end of the calendar month in which delivery
is otherwise required or (ii) prevent delivery of such Aircraft. In
such event, in good faith and in accordance with its normal scheduling
procedures, AVSA will give written notice to Northwest of either (i)
such delay and its related rescheduling reflecting such delay(s) or
(ii) such nondelivery. Within *** days after Northwest's receipt of
such notice, Northwest (and,***, AVSA) may terminate this Agreement as
to such rescheduled or nondeliverable Aircraft by giving written notice
to the other party. Such termination will discharge all obligations and
liabilities of the parties hereunder with respect to such affected
Aircraft, except that AVSA will repay to Northwest all amounts required
by *** with respect to such affected Aircraft,***. Northwest will not
be entitled to receive such repayment nor to terminate this Agreement
as to any Aircraft under this Clause 10 by reason of an Excusable Delay
if such delay is caused solely by Northwest's negligence or Northwest's
fault.
10.4 Delivery Date
If, following notice of an anticipated delay under Subclause 10.3, this
Agreement is not terminated in accordance with the provisions of such
Subclause (with respect to the affected Aircraft), then the date of
delivery otherwise required hereunder will be extended by a period
equal to the delay specified in such notice.
10.5 Lost, Destroyed or Damaged Aircraft
In the event that prior to delivery any Aircraft is lost, destroyed or
damaged beyond
27
economic repair, AVSA will notify Northwest in writing within *** days
after such event. Such notice will specify the earliest date,
consistent with AVSA's and the Manufacturer's other contractual
commitments and production capabilities, by which AVSA would be able to
deliver a replacement for such Aircraft. This Agreement will terminate
as to such Aircraft unless Northwest gives AVSA written notice, within
*** days after receipt by Northwest of the notice from AVSA of such
loss, destruction or damage, that Northwest desires AVSA to deliver to
Northwest a replacement for such Aircraft. If Northwest gives such
notice to AVSA, AVSA will deliver to Northwest, at the earliest date
consistent with AVSA's and the Manufacturer's other contractual
commitments and production capabilities, an aircraft to replace the
Aircraft lost, destroyed or damaged beyond repair, and the parties will
execute an amendment to this Agreement to evidence the delivery date
for such replacement aircraft; provided, however, that nothing herein
will obligate AVSA to deliver such replacement aircraft if its
manufacture would require the reactivation of the Manufacturer's
production line for the model of aircraft purchased hereunder. The
terms and conditions of this Agreement applicable to the Aircraft lost,
destroyed or damaged beyond economic repair (including without
limitation, the price and price revision provisions in Clauses 4 and 5
hereof) will apply to the replacement aircraft; ***. In the event of
termination of this Agreement as to a particular Aircraft as a result
of such loss, destruction or damage the obligations and liabilities of
the parties hereunder with respect to such Aircraft will be discharged.
AVSA will repay to Northwest the amount required pursuant to *** with
respect to such lost, destroyed or damaged Aircraft ***. Northwest will
not be entitled to receive repayment nor to terminate this Agreement as
to any Aircraft under this Subclause 10.5 if such loss, destruction or
damage is caused by Northwest's or its representatives' gross
negligence or willful misconduct.
10.6 REMEDIES
THIS CLAUSE 10 *** SET FORTH THE SOLE AND EXCLUSIVE REMEDY OF NORTHWEST
FOR EXCUSABLE DELAYS IN DELIVERY OR FAILURE TO DELIVER, AND NORTHWEST
HEREBY WAIVES ALL RIGHTS, INCLUDING WITHOUT LIMITATION ANY RIGHTS TO
DAMAGES OR SPECIFIC PERFORMANCE, TO WHICH IT WOULD OTHERWISE BE
ENTITLED IN RESPECT THEREOF. NORTHWEST WILL NOT BE ENTITLED TO CLAIM
THE REMEDIES AND RECEIVE THE BENEFITS PROVIDED IN THIS CLAUSE 10 TO THE
EXTENT THE DELAY REFERRED TO IN THIS CLAUSE 10 IS CAUSED SOLELY BY THE
NEGLIGENCE OR FAULT OF NORTHWEST OR ITS REPRESENTATIVES.
In the event this Agreement is terminated with respect to an Aircraft
pursuant to the provisions of this Clause 10, ***.
28
11 - INEXCUSABLE DELAY
11.1 Liquidated Damages
Should an Aircraft not be ready for delivery to Northwest within ***
days after the month of delivery specified in this Agreement (as such
month may otherwise be changed pursuant to this Agreement) for reasons
other than as are covered by Clause 10, Northwest will, in respect of
any subsequent delay in delivery of such Aircraft, have the right to
claim and AVSA will in respect of any subsequent delay pay to Northwest
as liquidated damages for the delay in delivery of such Aircraft US$
*** (US dollars -- ***
11.2 Total Liability
Notwithstanding Subclause 11.1, the total liability of AVSA under this
Clause 11 with respect to any Aircraft will in no event exceed the
total sum of US$ *** (US dollars - - ***).
11.3 Written Claim
Northwest's right to recover such damages in respect of an Aircraft is
conditional upon a claim therefor being submitted in writing to AVSA by
Northwest no later than *** days after the date when such Aircraft was
scheduled to have been ready for delivery.
11.4 Six-Month Delay
In the event that such subsequent delay in delivery exceeds six (6)
months, Northwest will have the further right, exercisable by written
notice to AVSA given after such six (6) month period, to terminate this
Agreement in respect only of the Aircraft that is the subject of such
delay, whereupon AVSA will repay to Northwest hereunder all amounts
required by *** in relation to such Aircraft ***. ***
11.5 Twelve-Month Delay
In the event that such subsequent delay in delivery exceeds twelve (12)
months, AVSA will have the right, exercisable by written notice to
Northwest given no more than *** after such twelve (12) month period,
to terminate this Agreement in respect only of the Aircraft that is
subject to such delay *** AVSA will repay to Northwest all amounts
required by *** in relation to such Aircraft ***.
11.6 Price Revision
Notwithstanding the provisions of Clause 5,***, the Base Price of each
Aircraft ***.
11.7 Buyer Furnished Equipment
29
*** pursuant to the provisions of this Clause 11, *** prior to
exercising its rights under this Subclause 11.7.
11.8 REMEDIES
THIS CLAUSE 11 *** SET FORTH THE SOLE REMEDY OF NORTHWEST FOR DELAYS IN
DELIVERY OR FAILURE TO DELIVER, OTHER THAN SUCH DELAYS AS ARE COVERED
BY CLAUSE 10, AND NORTHWEST HEREBY WAIVES ALL RIGHTS, INCLUDING WITHOUT
LIMITATION ANY RIGHTS TO INCIDENTAL AND CONSEQUENTIAL DAMAGES OR
SPECIFIC PERFORMANCE, TO WHICH IT WOULD OTHERWISE BE ENTITLED IN
RESPECT THEREOF. NORTHWEST WILL NOT BE ENTITLED TO CLAIM THE REMEDIES
AND RECEIVE THE BENEFITS PROVIDED IN THIS CLAUSE 11 WHERE THE DELAY
REFERRED TO IN THIS CLAUSE 11 IS CAUSED SOLELY BY THE NEGLIGENCE OR
FAULT OF NORTHWEST OR ITS REPRESENTATIVES.
30
12 - WARRANTIES AND SERVICE LIFE POLICY
12.1 STANDARD WARRANTY
12.1.1 Nature of Warranty
12.1.2 Exceptions
12.1.3 Warranty Periods
12.1.4 Buyer's Remedy and Seller's Obligation
12.1.5 Warranty Claim Requirements
12.1.6 Warranty Administration
12.1.7 In-house Warranty
12.1.8 Standard Warranty Transferability
12.1.9 Warranty for Corrected, Replacement or Repaired
Warranted Parts
12.1.10 Good Airline Operation - Normal Wear and Tear
12.2 SELLER SERVICE LIFE POLICY
12.2.1 Definitions
12.2.2 Periods and Seller's Undertakings
12.2.3 Seller's Participation in the Cost
12.2.4 General Conditions and Limitations
12.2.5 Transferability
12.3 VENDOR WARRANTIES
12.3.1 Seller's Support
12.3.2 Vendor's Default
31
12.4 INTERFACE COMMITMENT
12.4.1 Interface Problem
12.4.2 Seller's Responsibility
12.4.3 Vendor's Responsibility
12.4.4 Joint Responsibility
12.4.5 General
12.5 EXCLUSIVITY OF WARRANTIES AND GENERAL LIMITATIONS OF
LIABILITY
12.6 DUPLICATE REMEDIES
12.7 NEGOTIATED AGREEMENT
12 - WARRANTIES AND SERVICE LIFE POLICY
AVSA, in its capacity as "Buyer" under its arrangements with the
Manufacturer, has negotiated and obtained the following Standard
Warranty, Service Life Policy, Vendor Warranties and Interface
Commitment from the Manufacturer with respect to the Aircraft,
subject to the terms, conditions, limitations and restrictions
(including, but not limited to, the Exclusivity of Warranties and
General Limitations of Liability and Duplicate Remedies provisions)
all as hereinafter set out. AVSA hereby assigns to Northwest, and
Northwest hereby accepts, all of the rights and obligations of AVSA
in its capacity as "Buyer" as aforesaid under the said Standard
Warranty, Service Life Policy, Vendor Warranties and Interface
Commitment, and AVSA subrogates Northwest into all such rights and
obligations in respect of the Aircraft. AVSA hereby warrants to
Northwest that it has all requisite authority to make the foregoing
assignment and effect the foregoing subrogation to and in favor of
Northwest and that it will not enter into any amendment of the
provisions so assigned without the prior written consent of
Northwest. Capitalized terms utilized in the following quoted
provisions have the meanings assigned thereto in this Agreement,
except that the term "Seller" refers to the Manufacturer and the term
"Buyer" refers to AVSA.
QUOTE
12.1 STANDARD WARRANTY
12.1.1 Nature of Warranty
Subject to the limitations and conditions as hereinafter provided, and
except as
32
provided in Subclause 12.1.2, the Seller warrants to the Buyer that
each Aircraft and each Warranted Part will at the time of delivery to
the Buyer:
(i) be free from defects in material,
(ii) be free from defects in workmanship, including, without
limitation, processes of manufacture,
(iii) be free from defects in design (including, without limitation,
selection of materials) having regard to the state of the art
at the date of such design, and
(iv) be free from defects arising from failure to conform to the
Specification, except as to those portions of the
Specification relating to performance or where it is expressly
stated that such portions of the Specification are estimates
or approximations or design aims.
For the purposes of this Agreement, the term "Warranted Part" will
mean any Seller proprietary component, equipment, accessory or part
that is installed on an Aircraft at the time of delivery of such
Aircraft and that (a) is installed on such Aircraft, (b) is
manufactured to the detail design of the Seller or a subcontractor of
it and (c) bears a part number of the Seller at the time of such
delivery.
12.1.2 Exceptions
The warranties set forth in Subclause 12.1.1 will not apply to Buyer
Furnished Equipment, nor to the engine and its associated parts, nor
to any component, accessory, equipment or part purchased by the Buyer
that is not a Warranted Part, provided, however, that:
(i) any defect in the Seller's workmanship in respect of the
installation of such items in the Aircraft, including any
failure by the Seller to conform to the installation
instructions of the manufacturers of such items that
invalidates any applicable warranty from such manufacturers,
will constitute a defect in workmanship for the purpose of
this Subclause 12.1 and be covered by the warranty set forth
in Subclause 12.1.1(ii), and
(ii) any defect inherent in the Seller's design of the
installation, in view of the state of the art at the date of
such design, that impairs the use of such items will
constitute a defect in design for the purposes of this
Subclause 12.1 and be covered by the warranty set forth in
Subclause 12.1.1(iii).
12.1.3 Warranty Period
The warranties described in Subclauses 12.1.1 and 12.1.2 hereinabove
will be limited to those defects that become apparent within ***
after delivery of the affected Aircraft.
12.1.4 Buyer's Remedy and Seller's Obligation
33
12.1.4.1 The Buyer's remedy and the Seller's obligation and liability under
Subclauses 12.1.1 and 12.1.2 hereinabove are limited to, at the
Seller's expense and option, the repair, replacement or correction of,
or the supply of modification kits rectifying the defect to, any
defective Warranted Part. Alternatively, the Seller may at its sole
option furnish a credit to the Buyer for the future purchase of
Material equal to the price at which the Buyer is then entitled to
acquire a replacement for the defective Warranted Part. Nothing herein
contained will obligate the Seller to correct any failure to conform to
the Specification with respect to components, equipment, accessories or
parts that the parties agree in writing at the time of delivery of the
affected Aircraft are acceptable deviations or have no material adverse
effect on the use, operation or performance of an Aircraft.
12.1.4.2 In the event a defect covered by Subclause 12.1.1(iii) becomes apparent
within the applicable period set forth in Subclause 12.1.3(ii), and the
Seller is obligated to correct such defect, the Seller will also, if so
requested by the Buyer in writing, make such correction in any Aircraft
that has not already been delivered to the Buyer. However, the Seller
will not be responsible nor deemed to be in default on account of any
delay in delivery of any Aircraft or otherwise, in respect of
performance of this Agreement, due to the Seller's undertaking to make
such correction and, rather than accept a delay in delivery of any such
Aircraft, the Buyer and the Seller may agree to deliver such Aircraft
with subsequent correction of the defect by the Buyer at the Seller's
expense, or the Buyer may elect to accept delivery and thereafter file
a Warranty Claim as though the defect had become apparent immediately
after delivery of such Aircraft.
12.1.5 Warranty Claim Requirements
The Buyer's remedy and the Seller's obligation and liability under this
Subclause 12.1, with respect to each claimed defect, are subject to the
following conditions precedent:
(i) the existence of a defect covered by the provisions of this
Subclause 12.1,
(ii) the defect's having become apparent within the applicable
warranty period, as set forth in Subclause 12.1.3,
(iii) the Buyer's having submitted to the Seller proof reasonably
satisfactory to the Seller that the claimed defect is due to a
matter embraced within this Subclause 12.1, and that such
defect did not result from any act or omission of the Buyer,
including, but not limited to, any failure to operate and
maintain the affected Aircraft or part thereof in accordance
with the standards or any matter set forth or covered in
Subclause 12.1.10,
(iv) the Buyer's having returned as soon as reasonably practicable
the Warranted Part
34
claimed to be defective to such repair facilities as may be
designated by the Seller, except where the Buyer elects to
repair a defective Warranted Part in accordance with the
provisions of Subclause 12.1.7, and
(v) the Seller's having received a Warranty Claim fulfilling the
conditions of and in accordance with the provisions of
Subclause 12.1.6 below.
12.1.6 Warranty Administration
The warranties set forth in Subclause 12.1 will be administered as
hereinafter provided:
(i) Claim Determination
Warranty Claim determination by the Seller will be reasonably
based upon the claim details, reports from the Seller's
regional representative, historical data logs, inspections,
tests, findings during repair, defect analysis and other
suitable documents and information.
(ii) Transportation ***
Transportation *** for sending a defective Warranted Part to
the facilities designated by the Seller will be borne by the
Buyer ***.
(iii) Return of an Aircraft
In the event that the Buyer desires to return an Aircraft to
the Seller for consideration of a Warranty Claim, the Buyer
will notify the Seller of its intention to do so and the
Seller will, prior to such return, have the right to inspect
such Aircraft and thereafter, without prejudice to its rights
hereunder, to repair such Aircraft, at its sole option, either
at the Buyer's facilities or at another place acceptable to
the Seller. Return of any Aircraft by the Buyer to the Seller
***.
(iv) On-Aircraft Work by the Seller
In the event that a defect necessitates the dispatch by the
Seller of a working team to repair or correct such defect at
the Buyer's facilities, or in the event that the Seller
accepts the return of an Aircraft to perform or have performed
such repair or correction, then all related expenses incurred
in performing such repair or correction will be borne ***.
Any work performed by the Seller to rectify defects, which if
performed by the Buyer would not be eligible for a warranty
credit under the terms of Subclause 12.1.7 (v), will be at the
Buyer's expense. ***.
35
The Seller will perform on-Aircraft work, subject to either of
the following conditions being met:
(a) in the Seller's opinion, such work must require the
technical expertise of the Seller, or
(b) both of
(i) the downtime of each affected Aircraft would
exceed *** days, not including any scheduled
maintenance downtime, and
(ii) the number of man hours quoted in the
Seller's Service Bulletin or batch of
Service Bulletins for their embodiment on
any Aircraft would exceed ***, it being
understood that for batches of Service
Bulletins, the Seller will only count
individual Service Bulletins with more than
*** hours of elapsed time.
If the Seller is requested to perform the work, the Seller and
the Buyer will agree on a schedule and place for the work to
be performed.
(v) Warranty Claim Substantiation
In connection with each claim by the Buyer under this
Subclause 12.1, the Buyer will file a claim on the Buyer's
form ("Warranty Claim") within *** days after such defect
becomes apparent. Such form must contain at least the
following ***:
(a) description of defect and action taken, if any,
(b) date of incident and/or of removal,
(c) description of the defective part,
(d) part number,
(e) serial number (if applicable),
(f) position on Aircraft, according to Catalog Sequence
Number (CSN) of the Illustrated Parts Catalog,
Component Maintenance Manual or Structural Repair
Manual (as such documents are defined in the A319
Product Support Agreement) as applicable,
(g) total flying hours or calendar times, as applicable,
at the date of
36
appearance of a defect,
(h) time since last shop visit at the date of defect
appearance,
(i) Manufacturer's serial number of the Aircraft and/or
its registration number,
(j) Aircraft total flying hours and/or number of landings
at the date of defect appearance,
(k) claim number,
(l) date of claim, and
(m) date of delivery of an Aircraft or part to the Buyer.
and in the case of a Warranty Claim under Subclause 12.1.7,
the additional data required under Subclause 12.1.7(iv).
Claims are to be addressed as follows:
Warranty Administration
ASCO
000 Xxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX, 00000
or any other address of which the Seller provides three (3)
Working Days' notice to the Buyer.
***
(vi) Replacements
Replacements made pursuant to this Subclause 12.1 will be made
within the lead time defined in the Seller's Spare Parts Price
List. Replaced components, equipment, accessories or parts
will become the Seller's property.
Title to and risk of loss of any Aircraft, component,
accessory, equipment or part returned by the Buyer to the
Seller will at all times remain with the Buyer, except that
(i) when the Seller has possession of a returned Aircraft,
component, accessory, equipment or part to which the Buyer has
title, the Seller will have such responsibility therefor as is
chargeable by law to a bailee for hire, but the Seller will
not be liable for loss of use, and (ii) title to and risk of
loss of a
37
returned component, accessory, equipment or part will pass to
the Seller upon shipment by the Seller to the Buyer of any
item furnished by the Seller to the Buyer as a replacement
therefor. Upon the Seller's shipment to the Buyer of any
replacement component, accessory, equipment or part provided
by the Seller pursuant to this Subclause 12.1, title to and
risk of loss of such component, accessory, equipment or part
will pass to the Buyer.
(vii) Rejection
The Seller will provide reasonable written substantiation in
case of rejection of a claim. In such event the Buyer will pay
to the Seller reasonable inspection and test charges incurred
by the Seller in connection with the investigation and
processing of such claim. Transportation, insurance, and any
other costs associated with the return of any Warranted Part
or any other item, equipment, component or part for which the
Buyer's warranty claim is rejected by the Seller will be borne
by the Buyer.
(viii) Inspection
The Seller will have the right to inspect the affected
Aircraft and documents and other records relating thereto in
the event of any claim under this Subclause 12.1.
12.1.7 In-house Warranty
(i) Authorization
The Buyer is hereby authorized to perform the repair of
Warranted Parts, subject to the terms of this Subclause 12.1.7
("In-house Warranty"). The Buyer will notify the Seller's
representative of its decision to perform any in-house repairs
before such repairs are commenced, unless it is not practical
to do so, in which case the Buyer will notify the Seller of
the in-house repair as soon as reasonably practicable.
(ii) Conditions of Authorization
The Buyer will be entitled to the benefits under this
Subclause 12.1.7 for repair of Warranted Parts:
(a) only if adequate facilities and qualified personnel
are available to the Buyer,
(b) in accordance with the Seller's written instructions
set forth in documents such as the Aircraft
Maintenance Manual, Component Maintenance Manual
(Manufacturer), Component Maintenance Manual (Vendor)
and Structural Repair Manual, and
38
(c) only to the extent specified by the Seller, or, in
the absence of such specification, to the extent
reasonably necessary to correct the defect, in
accordance with the standards set forth in Subclause
12.1.10.
(iii) Seller's Rights
The Seller will have the right, provided that no unreasonable
delay will result, to have any Warranted Part, or any part
removed therefrom, which is claimed to be defective, returned
to the Seller, as set forth in Subclause 12.1.6(ii), if, in
the reasonable judgment of the Seller, the nature of the
defect requires technical investigation.
The Seller will further have the right, provided that no
unreasonable delay will result, to have a representative
present during the disassembly, inspection and testing of any
Warranted Part claimed to be defective.
(iv) In-house Warranty Claim Substantiation
Claims for In-house Warranty credit will be filed within the
time period set forth in and will contain the same information
required in, Warranty Claims under Subclause 12.1.6(v) and in
addition will include:
(a) a report of technical findings with respect to the
defect,
(b) for parts required to remedy the defect:
- part numbers,
- serial numbers (if applicable),
- description of the parts,
- quantity of parts,
- unit price of parts,
- total price of parts,
- related Seller's or third party's invoices (if
applicable),
(c) detailed number of labor hours,
39
(d) agreed In-house Warranty Labor Rate (defined below in
Subclause 12.1.7 (v) (a)), and
(e) total claim value.
(v) Credit
The Buyer's sole remedy, and the Seller's sole obligation and
liability, in respect of In-house Warranty claims, will be a
credit to the Buyer's account in U.S. Dollars. The credit to
the Buyer's account will be equal to the direct labor cost
expended in performing a repair and to the direct cost of
materials incorporated in the repair. Such costs will be
determined as set forth below.
(a) To determine direct labor costs, only man hours spent
on disassembly, inspection, repair, reassembly, and
final inspection and test (including flight tests if
flight tests prove necessary to complete a repair
under the In-house Warranty) of the Warranted Part
alone will be counted. Man hours required for
maintenance work concurrently being carried out on
the Aircraft or Warranted Part will not be included.
The man hours counted as set forth above will be
multiplied by an agreed labor rate representing ***
of the Buyer's composite average hourly labor rate
(excluding all fringe benefits, premium time
allowances, social security charges, business taxes
and similar items) paid to the Buyer's employees
whose jobs are directly related to the performance of
the repair (the "In-house Warranty Labor Rate").
(b) Direct material costs are determined by the prices at
which the Buyer acquired such material, excluding any
parts and materials used for overhaul and furnished
free of charge by the Seller.
(vi) Limitation on Credit
The Buyer will in no event be credited for repair costs
(including labor and material) for any Warranted Part
exceeding *** of the Seller's then current catalog price ***
for a replacement of such defective Warranted Part.
Such cost will be substantiated in writing by the Seller upon
reasonable request by the Buyer.
(vii) Scrapped Material
40
The Buyer will retain any Warranted Part defective beyond
economic repair and any defective part removed from a
Warranted Part during repair until the earlier of *** days
after submission of a claim for In-house Warranty credit
relating thereto or the Seller's written advice to the Buyer
that such Warranted Part should be scrapped. Such parts will
be returned to the Seller within *** days of receipt of the
Seller's request to that effect.
Notwithstanding the foregoing, the Buyer may, with the
agreement of the Seller's Field Representative, scrap any such
defective parts that are beyond economic repair and not
required for technical evaluation.
Scrapped Warranted Parts will be evidenced by a record of
scrapped material certified by an authorized representative of
the Buyer, which will be kept in the Buyer's file for at least
the duration of the warranty periods set forth in this
Subclause 12.1.
(viii) LIMITATIONS ON LIABILITY OF SELLER
THE SELLER WILL NOT BE LIABLE FOR ANY RIGHT, CLAIM OR REMEDY,
AND THE BUYER WILL INDEMNIFY THE SELLER AGAINST THE CLAIMS OF
ANY THIRD PARTIES FOR ANY DEFECT, NONCONFORMANCE OR PROBLEM OF
ANY KIND, ARISING OUT OF OR IN CONNECTION WITH ANY REPAIR OF
WARRANTED PARTS OR ANY OTHER ACTIONS UNDERTAKEN BY THE BUYER
UNDER THIS SUBCLAUSE 12.1.7 WHICH WAS NOT IN COMPLIANCE WITH
THE TERMS THEREOF, INCLUDING BUT NOT LIMITED TO: (I) LIABILITY
IN CONTRACT OR TORT, (II) LIABILITY ARISING FROM THE BUYER'S
ACTUAL OR IMPUTED NEGLIGENCE, INTENTIONAL TORTS AND/OR STRICT
LIABILITY, AND/OR (III) LIABILITY TO ANY THIRD PARTIES.
12.1.8 Standard Warranty Transferability
The warranties provided for in this Subclause 12.1 for any Warranted
Part will accrue to the benefit of any airline in revenue service
other than the Buyer, if the Warranted Part enters into the
possession of any such airline as a result of a pooling or leasing
agreement between such airline and the Buyer or upon the Buyer's sale
of the Aircraft to any such airline in accordance with Subclause
19.3, in accordance with the terms and subject to the limitations and
exclusions of the foregoing warranties and to applicable laws or
regulations.
12.1.9 Warranty for Corrected, Replacement or Repaired Warranted Parts
41
Whenever any Warranted Part that contains a defect for which the Seller
is liable under Subclause 12.1 has been corrected, repaired or replaced
pursuant to the terms of this Clause 12, the period of the Seller's
warranty with respect to such corrected, repaired or replacement
Warranted Part, whichever may be the case, will be the remaining
portion of the original warranty in respect of such corrected, repaired
or replacement Warranted Part. In the event that a defect is
attributable to a defective repair or replacement by the Buyer, a
Warranty Claim with respect to such defect will not be allowable,
notwithstanding any subsequent correction or repairs, and will
immediately terminate the remaining warranties under this Subclause
12.1 in respect of the affected Warranted Part.
12.1.10 Good Airline Operation - Normal Wear and Tear
The Buyer's rights under this Subclause 12.1 are subject to the
Aircraft and each component, equipment, accessory and part thereof
being maintained, overhauled, repaired and operated in accordance with
good commercial airline practice and in general compliance with all
technical documentation and maintenance recommendations of the Seller
(if any), the Manufacturer, the Vendors or the manufacturer of the
Powerplants and its associated parts and all applicable rules,
regulations and directives of the FAA.
The Seller's liability under this Subclause 12.1 will not extend to
normal wear and tear nor to:
(i) any Aircraft or component, equipment, accessory or part
thereof that has been repaired, altered or modified after
delivery by a party other than the Seller or in a manner other
than that set forth in Subclause 12.1.7 or otherwise approved
by the Seller;
(ii) any Aircraft or component, equipment, accessory or part
thereof that has been operated in a damaged state; or
(iii) any component, equipment, accessory or part from which the
trademark, trade name, part or serial number or other
identification marks have been removed.
This waiver of the Seller's liability by the Buyer will not apply in
the cases of Subclause 12.1.10 (i) and Subclause 12.1.10 (ii) above if
the Buyer submits reasonable evidence that the defect did not arise
from nor was contributed to by either of said cases.
12.2 SELLER SERVICE LIFE POLICY
42
In addition to the warranties set forth in Subclause 12.1 above, the
Seller further agrees that should a Failure occur in any Item, then,
subject to the general conditions and limitations set forth in
Subclause 12.2.4 below, the provisions of this Subclause 12.2 will
apply.
12.2.1 Definitions
For the purposes of this Subclause 12.2, the following definitions will
apply:
12.2.1.1 "Item" means any of the Seller components, equipment, accessories or
parts listed in Exhibit G hereto which are installed on an Aircraft at
any time during the period of effectiveness of the Service Life Policy
as defined below in Subclause 12.2.2.
12.2.1.2 "Failure" means any breakage of, or defect in, an Item that has
occurred, that can reasonably be expected to occur on a repetitive or
fleetwide basis, and that materially impairs the utility or safety of
the Item, provided that any such breakage of, or defect in, any Item
did not result from any breakage or defect in any other Aircraft part
or component or from any other extrinsic force.
12.2.2 Periods and Seller's Undertaking
Subject to the general conditions and limitations set forth in
Subclause 12.2.4 below, the Seller agrees that if a Failure occurs in
an Item within *** years after the delivery of said Aircraft to the
Buyer, the Seller will, at its own discretion, as promptly as
practicable and for a price that reflects the Seller's financial
participation in the cost as hereinafter provided, either:
12.2.2.1 design and furnish to the Buyer a correction for such Item subject to a
Failure and provide any parts required for such correction (including
Seller designed standard parts but excluding industry standard parts
unless a part of an Item), or,
12.2.2.2 replace such Item.
12.2.3 Seller's Participation in the Cost
Any part or Item that the Seller is required to furnish to the Buyer
under this Service Life Policy in connection with the correction or
replacement of an Item will be furnished to the Buyer at the Seller's
current sales price therefor, less the Seller's financial
participation, which will be determined in accordance with the
following formula:
C (N - T)
P = -------------
N
43
where
P: financial participation of the Seller,
C: the Seller's then current sales price for the required Item or
required Seller designed parts,
T: total time in months, at time of Failure, since delivery of
the particular Aircraft in which the Item subject to such
Failure was originally installed,
N: *** months.
12.2.4 General Conditions and Limitations
12.2.4.1 Notwithstanding Subclause 12.2.3, the undertakings given in this
Subclause 12.2 will not be valid during the period applicable to an
Item under Subclause 12.1.
12.2.4.2 The Buyer's remedy and the Seller's obligation and liability under
this Service Life Policy are subject to compliance by the Buyer with
the following conditions precedent:
(i) The Buyer will maintain log books and other historical records
with respect to each Item adequate to enable determination as
to whether the alleged Failure is covered by this Service Life
Policy and, if so, to define the portion of the cost to be
borne by the Seller in accordance with Subclause 12.2.3 above.
(ii) The Buyer will keep the Seller informed of any significant
incidents relating to an Aircraft, howsoever occurring or
recorded, if the failure to so inform the Seller materially
prejudices the Seller's position.
(iii) The conditions of Subclause 12.1.10 will have been complied
with.
(iv) The Buyer will carry out specific structural inspection
programs for monitoring purposes as may be established from
time to time by the Seller. Such programs will be, to the
extent possible, compatible with the Buyer's operational
requirements and will be carried out at the Buyer's expense.
Reports relating thereto will be regularly furnished to the
Seller.
(v) In the case of any breakage or defect, the Buyer will report
the same in writing to the Seller within *** days after any
breakage or defect in an Item becomes apparent, whether or not
said breakage or defect can reasonably be expected to occur in
any other Aircraft, and the Buyer will inform the Seller in
sufficient detail about the breakage or defect to enable the
Seller to determine whether said
44
breakage or defect is subject to this Service Life Policy.
12.2.4.3 Except as otherwise provided in this Subclause 12.2, any claim under
this Service Life Policy will be administered as provided in, and
will be subject to the terms and conditions of, Subclause 12.1.6.
12.2.4.4 In the event that the Seller will have issued a modification
applicable to an Aircraft, the purpose of which is to avoid a
Failure, the Seller may elect to offer to supply to the Buyer the
necessary modification kit free of charge ***. If such a kit is so
offered to the Buyer, then, in respect of such Failure and any
Failures that could ensue therefrom, the validity of the Seller's
commitment under this Subclause 12.2 will be subject to the Buyer's
incorporating such modification in the relevant Aircraft, within a
reasonable time, as promulgated by the Seller and in accordance with
the Seller's instructions.
12.2.4.5 THIS SERVICE LIFE POLICY IS NEITHER A WARRANTY, PERFORMANCE
GUARANTEE, NOR AN AGREEMENT TO MODIFY ANY AIRCRAFT OR
AIRFRAME COMPONENTS TO CONFORM TO NEW DEVELOPMENTS
OCCURRING IN THE STATE OF AIRFRAME DESIGN AND
MANUFACTURING ART. THE SELLER'S OBLIGATION UNDER THIS
SUBCLAUSE 12.2 IS TO MAKE ONLY THOSE CORRECTIONS TO THE
ITEMS OR FURNISH REPLACEMENTS THEREFOR AS PROVIDED IN THIS
SUBCLAUSE 12.2. THE BUYER'S SOLE REMEDY AND RELIEF FOR THE
NONPERFORMANCE OF ANY OBLIGATION OR LIABILITY OF THE SELLER
ARISING UNDER OR BY VIRTUE OF THIS SERVICE LIFE POLICY WILL BE
IN MONETARY DAMAGES, LIMITED TO THE AMOUNT THE BUYER
REASONABLY EXPENDS IN PROCURING A CORRECTION OR
REPLACEMENT FOR ANY ITEM THAT IS THE SUBJECT OF A FAILURE
COVERED BY THIS SERVICE LIFE POLICY AND TO WHICH SUCH
NONPERFORMANCE IS RELATED, LESS THE AMOUNT THAT THE BUYER
OTHERWISE WOULD HAVE BEEN REQUIRED TO PAY UNDER THIS
SUBCLAUSE 12.2 IN RESPECT OF SUCH CORRECTED OR REPLACEMENT
ITEM. WITHOUT LIMITING THE EXCLUSIVITY OF WARRANTIES AND
GENERAL LIMITATIONS OF LIABILITY PROVISIONS SET FORTH IN
SUBCLAUSE 12.5, THE BUYER HEREBY WAIVES, RELEASES AND
RENOUNCES ALL CLAIMS TO ANY FURTHER DIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF PROFITS AND ALL
OTHER RIGHTS, CLAIMS AND REMEDIES, ARISING UNDER OR BY
VIRTUE OF THIS SERVICE LIFE POLICY.
12.2.5 Transferability
Except as provided in Subclause 19.3, the Buyer's rights under this
Subclause 12.2 will not be assigned, sold, leased, transferred or
otherwise alienated by operation of law or otherwise, without the
Seller's prior written consent.
45
Any unauthorized assignment, sale, lease, transfer or other
alienation of the Buyer's rights under this Service Life Policy will,
as to the particular Aircraft involved, immediately void this Service
Life Policy in its entirety.
12.3 VENDOR WARRANTIES
12.3.1 Seller's Support
Prior to delivery of the first Aircraft under this Agreement, the
Seller will obtain from all Vendors listed in the Supplier Product
Support Agreements manual enforceable and transferable warranties and
indemnities against patent infringements for all of the components,
equipment, accessories and parts of the Vendors that are installed in
an Aircraft at the time of delivery thereof ("Vendor Parts," it being
understood that such term will not include the Propulsion Systems,
Buyer Furnished Equipment or other equipment selected by the Buyer to
be supplied by Vendors with whom the Seller has no existing
enforceable warranty agreements). The Seller will also obtain
enforceable and transferable Vendor service life policies from
landing gear Vendors for structural landing gear elements. The Seller
undertakes to supply to the Buyer such Vendor warranties, Vendor
service life policies and indemnities against patent infringements
substantially in the form summarized in the Supplier Product Support
Agreements manual.
12.3.2 Vendor's Default
12.3.2.1 In the event that any Vendor under any standard warranty or indemnity
against patent infringements obtained by the Seller pursuant to
Subclause 12.3.1 or Clause 13 hereof defaults in the performance of
any material obligation under such warranty or indemnity against
patent infringements with respect to a Vendor Part, and the Buyer
submits within a reasonable time to the Seller reasonable proof that
such default has occurred, then Subclause 12.1 or Clause 13 of this
Agreement will apply to the extent the same would have been
applicable had such Vendor Part been a Warranted Part except that,
for obligations covered under Subclause 12.1 ***.
12.3.2.2 In the event that any Vendor under any Vendor service life policy
obtained by the Seller pursuant to Subclause 12.3.1 hereof defaults
in the performance of any material obligation with respect thereto,
and the Buyer submits within reasonable time to the Seller reasonable
proof that such default has occurred, then Subclause 12.2 of this
Agreement will apply to the extent the same would have been
applicable had such component, equipment, accessory or part been
listed in Exhibit G hereto.
12.3.2.3 At the Seller's request, the Buyer will assign to the Seller, and the
Seller will be subrogated to, all of the Buyer's rights against the
relevant Vendor, with respect to and
46
arising by reason of such default and the Buyer will provide
reasonable assistance to enable the Seller to enforce the rights so
assigned.
12.4 INTERFACE COMMITMENT
12.4.1 Interface Problem
If the Buyer experiences any technical problem in the operation of an
Aircraft or its systems due to a malfunction ***, the cause of which,
after due and reasonable investigation, is not readily identifiable
by the Buyer, but which the Buyer reasonably believes to be
attributable to the design characteristics of one or more components
of the Aircraft (an "Interface Problem"), the Seller will, if
requested by the Buyer, and without additional charge to the Buyer,
except for transportation of the Seller's personnel to the Buyer's
facilities, promptly conduct or have conducted an investigation and
analysis of such problem to determine, if possible, the cause or
causes of the problem and to recommend such corrective action as may
be feasible, provided, however, that if the Seller determines, after
such due and reasonable investigation, that the Interface Problem was
due to or caused by any default by the Buyer in performance of its
obligations hereunder, the Buyer will pay to the Seller all
reasonable costs and expenses incurred by the Seller during such
investigation. The Buyer will furnish to the Seller all data and
information in the Buyer's possession relevant to the Interface
Problem and will cooperate with the Seller in the conduct of the
Seller's investigations and such tests as may be required.
At the conclusion of such investigation the Seller will promptly
advise the Buyer in writing of the Seller's opinion as to the cause
or causes of the Interface Problem and the Seller's recommendations
as to corrective action.
12.4.2 Seller's Responsibility
If the Seller determines that the Interface Problem is primarily
attributable to the design of a Warranted Part, the Seller will, if
requested by the Buyer, correct the design of such Warranted Part,
pursuant to the terms and conditions of Subclause 12.1.
12.4.3 Vendor's Responsibility
If the Seller determines that the Interface Problem is primarily
attributable to the design of a component, equipment, accessory or
part other than a Warranted Part ("Vendor Component"), the Seller
will, if requested by the Buyer, reasonably assist the Buyer in
processing any warranty claim the Buyer may have against the
manufacturer of such Vendor Component.
12.4.4 Joint Responsibility
47
If the Seller determines that the Interface Problem is attributable
partially to the design of a Warranted Part and partially to the
design of any Vendor Component, the Seller will, if requested by the
Buyer, seek a solution to the Interface Problem through cooperative
efforts of the Seller and any Vendor involved. The Seller will
promptly advise the Buyer of such corrective action as may be
proposed by the Seller and any such Vendor. Such proposal will be
consistent with any then existing obligations of the Seller hereunder
and of any such Vendor to the Buyer. Such corrective action, when
reasonably accepted by the Buyer, will constitute full satisfaction
of any claim the Buyer may have against either the Seller or any such
Vendor with respect to such Interface Problem.
12.4.5 General
12.4.5.1 All requests under this Subclause 12.4 will be directed both to the
Seller and the affected Vendors.
12.4.5.2 Except as specifically set forth in this Subclause 12.4, this
Subclause 12.4 will not be deemed to impose on the Seller any
obligations not expressly set forth elsewhere in this Agreement.
12.4.5.3 All reports, recommendations, data and other documents furnished by
the Seller to the Buyer pursuant to this Subclause 12.4 will be
deemed to be delivered under this Agreement and will be subject to
the terms, covenants and conditions set forth in this Clause 12 and
in Subclause 22.4.
12.5 EXCLUSIVITY OF WARRANTIES AND
GENERAL LIMITATIONS OF LIABILITY
THIS CLAUSE 12 (INCLUDING ITS SUBPROVISIONS) SETS FORTH THE EXCLUSIVE
WARRANTIES, EXCLUSIVE LIABILITIES AND EXCLUSIVE OBLIGATIONS OF THE
SELLER, AND THE EXCLUSIVE REMEDIES AVAILABLE TO THE BUYER, WHETHER
UNDER THIS AGREEMENT OR OTHERWISE, ARISING FROM ANY DEFECT OR
NONCONFORMITY OR PROBLEM OF ANY KIND IN ANY AIRCRAFT, COMPONENT,
EQUIPMENT, ACCESSORY, PART OR SERVICE DELIVERED UNDER THIS AGREEMENT.
THE BUYER RECOGNIZES THAT THE RIGHTS, WARRANTIES AND REMEDIES IN THIS
CLAUSE 12 ARE ADEQUATE AND SUFFICIENT TO PROTECT THE BUYER FROM ANY
DEFECT OR NONCONFORMITY OR PROBLEM OF ANY KIND IN THE GOODS AND
SERVICES SUPPLIED UNDER THIS AGREEMENT. THE BUYER HEREBY WAIVES,
RELEASES AND RENOUNCES ALL OTHER WARRANTIES, OBLIGATIONS, GUARANTEES
48
AND LIABILITIES OF THE SELLER AND ALL OTHER RIGHTS, CLAIMS AND
REMEDIES OF THE BUYER AGAINST THE SELLER, WHETHER EXPRESS OR IMPLIED
BY CONTRACT, TORT, OR STATUTORY LAW OR OTHERWISE, WITH RESPECT TO ANY
NONCONFORMITY OR DEFECT OR PROBLEM OF ANY KIND IN ANY AIRCRAFT,
COMPONENT, EQUIPMENT, ACCESSORY, PART OR SERVICE DELIVERED UNDER THIS
AGREEMENT, INCLUDING BUT NOT LIMITED TO:
(1) ANY IMPLIED WARRANTY OF MERCHANTABILITY AND/OR FITNESS
FOR ANY GENERAL OR PARTICULAR PURPOSE;
(2) ANY IMPLIED OR EXPRESS WARRANTY ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE;
(3) ANY RIGHT, CLAIM OR REMEDY FOR BREACH OF CONTRACT;
(4) ANY RIGHT, CLAIM OR REMEDY FOR TORT, UNDER ANY THEORY OF
LIABILITY, HOWEVER ALLEGED, INCLUDING, BUT NOT LIMITED TO,
ACTIONS AND/OR CLAIMS FOR NEGLIGENCE, GROSS NEGLIGENCE,
INTENTIONAL ACTS, WILLFUL DISREGARD, IMPLIED WARRANTY, PRODUCT
LIABILITY, STRICT LIABILITY OR FAILURE TO WARN;
(5) ANY RIGHT, CLAIM OR REMEDY ARISING UNDER THE UNIFORM
COMMERCIAL CODE OR ANY OTHER STATE OR FEDERAL STATUTE;
(6) ANY RIGHT, CLAIM OR REMEDY ARISING UNDER ANY
REGULATIONS OR STANDARDS IMPOSED BY ANY INTERNATIONAL,
NATIONAL, STATE OR LOCAL STATUTE OR AGENCY;
(7) ANY RIGHT, CLAIM OR REMEDY TO RECOVER OR BE COMPENSATED FOR:
(a) LOSS OF USE OR REPLACEMENT OF ANY AIRCRAFT,
COMPONENT, EQUIPMENT, ACCESSORY OR PART PROVIDED
UNDER THIS AGREEMENT;
(b) LOSS OF, OR DAMAGE OF ANY KIND TO, ANY AIRCRAFT,
COMPONENT, EQUIPMENT, ACCESSORY OR PART PROVIDED
UNDER THIS AGREEMENT;
(c) LOSS OF PROFITS AND/OR REVENUES;
49
(d) ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGE.
THE WARRANTIES AND SERVICE LIFE POLICY PROVIDED BY THIS AGREEMENT
WILL NOT BE EXTENDED, ALTERED OR VARIED EXCEPT BY A WRITTEN
INSTRUMENT SIGNED BY THE SELLER AND THE BUYER. IN THE EVENT THAT ANY
PROVISION OF THIS CLAUSE 12 SHOULD FOR ANY REASON BE HELD UNLAWFUL,
OR OTHERWISE UNENFORCEABLE, THE REMAINDER OF THIS CLAUSE 12 WILL
REMAIN IN FULL FORCE AND EFFECT.
12.6 DUPLICATE REMEDIES
The remedies provided to the Buyer under this Clause 12 as to any
defect in respect of the Aircraft or any part thereof are mutually
exclusive and not cumulative. The Buyer will be entitled to the
remedy that provides the maximum benefit to it, as the Buyer may
elect, pursuant to the terms and conditions of this Clause 12 for any
such particular defect for which remedies are provided under this
Clause 12; provided, however, that the Buyer will not be entitled to
elect a remedy under one part of this Clause 12 that constitutes a
duplication of any remedy elected by it under any other part hereof
for the same defect. The Buyer's rights and remedies herein for the
nonperformance of any obligations or liabilities of the Seller
arising under these warranties will be in monetary damages limited to
the amount the Buyer expends in procuring a correction or replacement
for any covered part subject to a defect or nonperformance covered by
this Clause 12, and the Buyer will not have any right to require
specific performance by the Seller ***.
UNQUOTE
In consideration of the assignment and subrogation by AVSA under this
Clause 12 in favor of Northwest in respect of AVSA's rights against
and obligations to the Manufacturer under the provisions quoted
above, Northwest hereby accepts such assignment and subrogation and
agrees to be bound by all of the terms, conditions and limitations
therein contained, specifically including, without limitation, the
following:
THIS CLAUSE 12 (INCLUDING ITS SUBCLAUSES) SETS FORTH THE EXCLUSIVE
WARRANTIES, EXCLUSIVE LIABILITIES AND EXCLUSIVE OBLIGATIONS OF AVSA,
AND THE EXCLUSIVE REMEDIES AVAILABLE TO NORTHWEST, WHETHER UNDER THIS
AGREEMENT OR OTHERWISE, ARISING FROM ANY DEFECT OR NONCONFORMITY OR
PROBLEM OF ANY KIND IN ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY,
PART OR SERVICE DELIVERED UNDER THIS AGREEMENT.
NORTHWEST RECOGNIZES THAT THE RIGHTS, WARRANTIES AND REMEDIES IN THIS
CLAUSE 12 ARE ADEQUATE AND SUFFICIENT TO PROTECT NORTHWEST FROM ANY
DEFECT OR NONCONFORMITY OR PROBLEM OF ANY KIND IN THE GOODS AND
SERVICES SUPPLIED UNDER THIS AGREEMENT. NORTHWEST HEREBY WAIVES,
RELEASES AND
50
RENOUNCES ALL OTHER WARRANTIES, OBLIGATIONS, GUARANTEES AND
LIABILITIES OF AVSA AND ALL OTHER RIGHTS, CLAIMS AND REMEDIES OF
NORTHWEST AGAINST AVSA, WHETHER EXPRESS OR IMPLIED BY CONTRACT, TORT,
OR STATUTORY LAW OR OTHERWISE, WITH RESPECT TO ANY NONCONFORMITY OR
DEFECT OR PROBLEM OF ANY KIND IN ANY AIRCRAFT, COMPONENT, EQUIPMENT,
ACCESSORY, PART OR SERVICE DELIVERED UNDER THIS AGREEMENT, INCLUDING,
BUT NOT LIMITED TO:
(1) ANY IMPLIED WARRANTY OF MERCHANTABILITY AND/OR FITNESS
FOR ANY GENERAL OR PARTICULAR PURPOSE;
(2) ANY IMPLIED OR EXPRESS WARRANTY ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE;
(3) ANY RIGHT, CLAIM OR REMEDY FOR BREACH OF CONTRACT;
(4) ANY RIGHT, CLAIM OR REMEDY FOR TORT, UNDER ANY THEORY OF
LIABILITY, HOWEVER ALLEGED, INCLUDING, BUT NOT LIMITED TO,
ACTIONS AND/OR CLAIMS FOR NEGLIGENCE, GROSS NEGLIGENCE,
INTENTIONAL ACTS, WILLFUL DISREGARD, IMPLIED WARRANTY, PRODUCT
LIABILITY, STRICT LIABILITY OR FAILURE TO WARN;
(5) ANY RIGHT, CLAIM OR REMEDY ARISING UNDER THE UNIFORM
COMMERCIAL CODE OR ANY OTHER STATE OR FEDERAL STATUTE;
(6) ANY RIGHT, CLAIM OR REMEDY ARISING UNDER ANY
REGULATIONS OR STANDARDS IMPOSED BY ANY INTERNATIONAL,
NATIONAL, STATE OR LOCAL STATUTE OR AGENCY;
(7) ANY RIGHT, CLAIM OR REMEDY TO RECOVER OR BE COMPENSATED FOR:
(a) LOSS OF USE OR REPLACEMENT OF ANY AIRCRAFT,
COMPONENT, EQUIPMENT, ACCESSORY OR PART PROVIDED
UNDER THIS AGREEMENT;
(b) LOSS OF, OR DAMAGE OF ANY KIND TO, ANY AIRCRAFT,
COMPONENT, EQUIPMENT, ACCESSORY OR PART PROVIDED
UNDER THIS AGREEMENT;
(c) LOSS OF PROFITS AND/OR REVENUES;
51
(d) ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGE.
THE WARRANTIES AND SERVICE LIFE POLICY PROVIDED BY THIS AGREEMENT
WILL NOT BE EXTENDED, ALTERED OR VARIED EXCEPT BY A WRITTEN
INSTRUMENT SIGNED BY AVSA AND NORTHWEST. IN THE EVENT THAT ANY
PROVISION OF THIS CLAUSE 12 SHOULD FOR ANY REASON BE HELD UNLAWFUL,
OR OTHERWISE UNENFORCEABLE, THE REMAINDER OF THIS CLAUSE 12 WILL
REMAIN IN FULL FORCE AND EFFECT.
The remedies provided to Northwest under this Clause 12 as to any
defect in respect of the Aircraft or any part thereof are mutually
exclusive and not cumulative. Northwest will be entitled to the
remedy that provides the maximum benefit to it, as Northwest may
elect, pursuant to the terms and conditions of this Clause 12 for any
such particular defect for which remedies are provided under this
Clause 12; provided, however, that Northwest will not be entitled to
elect a remedy under one part of this Clause 12 that constitutes a
duplication of any remedy elected by it under any other part hereof
for the same defect. Northwest's rights and remedies herein for the
nonperformance of any obligations or liabilities of AVSA arising
under these warranties will be in monetary damages limited to the
amount Northwest expends in procuring a correction or replacement for
any covered part subject to a defect or nonperformance covered by
this Clause 12, and Northwest will not have any right to require
specific performance by AVSA ***.
12.7 NEGOTIATED AGREEMENT
Northwest and AVSA agree that this Clause 12 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, inter alia, the provisions of this Clause 12, specifically
including the Exclusivity of Warranties and General Limitations of
Liability provisions and the Duplicate Remedies provisions set forth
in Subclause 12.5 and following Subclause 12.6.
52
13 - PATENT INDEMNITY
AVSA, in its capacity as "Buyer" under its arrangements with the
Manufacturer, has negotiated and obtained the following Patent
Indemnity from the Manufacturer with respect to the Aircraft, subject
to the terms, conditions, limitations and restrictions (including,
but not limited to, the waiver, release and renunciation provision)
all as hereinafter set out. AVSA hereby assigns to Northwest, and
Northwest hereby accepts, all of the rights and obligations of AVSA
in its capacity as "Buyer" as aforesaid under the said Patent
Indemnity and AVSA subrogates Northwest into all such rights and
obligations in respect of the Aircraft. AVSA hereby warrants to
Northwest that it has all requisite authority to make the foregoing
assignment and effect the foregoing subrogation to and in favor of
Northwest and that it will not enter into any amendment of the
provisions so assigned without the prior written consent of
Northwest. Capitalized terms utilized in the following quoted
provisions have the meanings assigned thereto in this Agreement,
except that the term "Seller" refers to the Manufacturer and the term
"Buyer" refers to AVSA.
QUOTE
13.1 Scope
The Seller will indemnify the Buyer from and against any damages,
costs and expenses including reasonable legal costs (excluding
damages, costs, expenses, loss of profits and other liabilities in
respect of or resulting from loss of use of any Aircraft):
(1) to the extent of *** thereof in case of any actual or alleged
infringement by any Aircraft or any Warranted Part or the use
thereof of
(a) any British, French, German, Spanish or US patent, or
(b) any patent issued under the laws of any other country
in which Northwest may lawfully operate the Aircraft,
provided that:
(i) from the time of design of such Aircraft,
accessory, equipment or part and until
infringement claims are resolved, such
country and the flag country of the Aircraft
is each a party to the Chicago Convention on
International Civil Aviation of December 7,
1944, and is fully entitled to all benefits
of Article 27 thereof, or in the
alternative,
(ii) from such time of design and until
infringement claims are resolved, such
country and the flag country of the Aircraft
is each a party to the International
Convention for the Protection of Industrial
Property of March 20, 1883 (known as the
"Paris Convention").
53
(2) to the extent of *** thereof in case of any actual or alleged
infringement by any Aircraft or any Warranted Part or the use
thereof of any patent issued under the laws of any country not
covered by (1) above in which the Buyer is from time to time
lawfully operating the Aircraft.
The Seller's undertaking under this Clause 13 will not apply to
components, accessories, equipment or parts which are not Warranted
Parts.
13.2 Seller's Action
Should the Buyer be enjoined from using any part of an Aircraft by
reason of infringement of a patent covered by Subclause 13.1, the
Seller will, at its option and expense, either (i) procure for the
Buyer the right to use such part free of any liability for patent
infringement or (ii) as soon as possible replace such part with a
noninfringing substitute otherwise complying with the requirements of
this Agreement.
13.3 Seller's Obligation
The Seller's obligation hereunder with respect to any actual or
alleged infringement is conditioned upon commencement of suit against
the Buyer for infringement or the Buyer's receipt of a written claim
alleging infringement, and upon written notice by the Buyer to the
Seller within *** days after receipt by the Buyer of notice of the
institution of such suit or receipt of such claim, giving particulars
thereof. The Seller will have the option but not the obligation at
any time to conduct negotiations with the party or parties charging
infringement and may intervene in any suit commenced. Whether or not
the Seller intervenes in any such suit, it will be entitled at any
stage of the proceedings to assume, conduct or control the defense
thereof.
The Seller's obligation hereunder with respect to any actual or
alleged infringement is also conditioned upon (i) the Buyer's
promptly furnishing to the Seller all the data, papers, records and
other assistance within the control of the Buyer material to the
resistance of or defense against any such charge or suits for
infringement, (ii) the Buyer's use of diligent efforts in full
cooperation with the Seller to reduce royalties, damages, costs and
expenses involved, (iii) the Seller's prior approval of the Buyer's
payment, assumption or admission of any liabilities, expenses, costs
or royalties for which the Seller is asked to respond and (iv) the
Buyer's not otherwise acting in a manner prejudicial to its or the
Seller's defense of the action.
13.4 WAIVER
THE INDEMNITY PROVIDED IN THIS CLAUSE 13 AND THE OBLIGATIONS AND
LIABILITIES OF THE SELLER UNDER THIS CLAUSE 13 ARE
54
EXCLUSIVE AND IN SUBSTITUTION FOR, AND THE BUYER HEREBY WAIVES,
RELEASES AND RENOUNCES ALL OTHER INDEMNITIES, WARRANTIES,
OBLIGATIONS, GUARANTEES AND LIABILITIES ON THE PART OF THE SELLER AND
RIGHTS, CLAIMS AND REMEDIES OF THE BUYER AGAINST THE SELLER, EXPRESS
OR IMPLIED, ARISING BY LAW OR OTHERWISE (INCLUDING WITHOUT LIMITATION
ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY ARISING FROM OR
WITH RESPECT TO LOSS OF USE OR REVENUE OR CONSEQUENTIAL DAMAGES),
WITH RESPECT TO ANY ACTUAL OR ALLEGED PATENT INFRINGEMENT OR THE LIKE
BY ANY AIRCRAFT, ACCESSORY, EQUIPMENT OR PART, OR THE USE OR SALE
THEREOF, PROVIDED THAT, IN THE EVENT THAT ANY OF THE AFORESAID
PROVISIONS SHOULD FOR ANY REASON BE HELD UNLAWFUL OR OTHERWISE
INEFFECTIVE, THE REMAINDER OF THIS SUBCLAUSE 13.4 WILL REMAIN IN FULL
FORCE AND EFFECT. THIS PATENT INDEMNITY WILL NOT BE EXTENDED, ALTERED
OR VARIED EXCEPT BY A WRITTEN INSTRUMENT SIGNED BY THE SELLER AND THE
BUYER.
UNQUOTE
In consideration of the assignment and subrogation by AVSA under this
Clause 13 in favor of Northwest in respect of AVSA's rights against
and obligations to the Manufacturer under the provisions quoted
above, Northwest hereby accepts such assignment and subrogation and
agrees to be bound by all of the terms, conditions and limitations
therein contained (specifically including, without limitation, the
waiver, release and renunciation provision).
THE INDEMNITY PROVIDED IN THIS CLAUSE 13 AND THE OBLIGATIONS AND
LIABILITIES OF AVSA UNDER THIS CLAUSE 13 ARE EXCLUSIVE AND IN
SUBSTITUTION FOR, AND NORTHWEST HEREBY WAIVES, RELEASES AND RENOUNCES
ALL OTHER INDEMNITIES, WARRANTIES, OBLIGATIONS, GUARANTEES AND
LIABILITIES ON THE PART OF AVSA AND RIGHTS, CLAIMS AND REMEDIES OF
NORTHWEST AGAINST AVSA, EXPRESS OR IMPLIED, ARISING BY LAW OR
OTHERWISE (INCLUDING WITHOUT LIMITATION ANY OBLIGATION, LIABILITY,
RIGHT, CLAIM OR REMEDY ARISING FROM OR WITH RESPECT TO LOSS OF USE OR
REVENUE OR CONSEQUENTIAL DAMAGES), WITH RESPECT TO ANY ACTUAL OR
ALLEGED PATENT INFRINGEMENT OR THE LIKE BY ANY AIRCRAFT, ACCESSORY,
EQUIPMENT OR PART, OR THE USE OR SALE THEREOF, PROVIDED THAT, IN THE
EVENT THAT ANY OF THE AFORESAID PROVISIONS SHOULD FOR ANY REASON BE
HELD UNLAWFUL OR OTHERWISE INEFFECTIVE, THE REMAINDER OF THIS CLAUSE
WILL REMAIN IN FULL FORCE AND EFFECT. THIS PATENT INDEMNITY WILL NOT
BE EXTENDED, ALTERED OR VARIED EXCEPT BY A
55
WRITTEN INSTRUMENT SIGNED BY AVSA AND NORTHWEST.
56
14 - TECHNICAL PUBLICATIONS
Technical publications will be supplied to Northwest pursuant to
Clause 2 of the A319 Product Support Agreement.
57
15 - FIELD ASSISTANCE
Field services will be provided to Northwest pursuant to Clause 3 of
the A319 Product Support Agreement.
58
16 - TRAINING
Training and training aids will be provided to Northwest pursuant to
Clause 4 of the A319 Product Support Agreement.
59
17 - VENDORS' PRODUCT SUPPORT
17.1 Vendor Product Support Agreements
17.1.1 AVSA has obtained product support agreements transferable to
Northwest from Vendors of Seller Furnished Equipment listed in the
Specification ("Product Support Agreements").
17.1.2 These Product Support Agreements are based on the "World Airlines and
Suppliers Guide" and include Vendor commitments as contained in the
Supplier Product Support Agreements with respect to warranties and
guarantees (copies of which have been provided to Northwest).
17.2 Vendor Compliance
AVSA will monitor Vendor compliance with support commitments defined
in the Product Support Agreements and will take remedial action
together with Northwest if requested by Northwest in writing.
17.3 Vendor Part Repair Stations
17.3.1 The Manufacturer has developed with the Vendors a program aimed at
building a comprehensive network of repair stations in North America
for those Vendor Parts originating from outside this territory.
17.3.2 As a result of the above, most Vendor Parts are now repairable in
North America, and corresponding repair stations are listed in a
document, the AOG and Repair Guide, which is issued and regularly
updated by the Manufacturer.
Vendor Parts that have to be repaired outside North America will be
sent by Northwest to ***. All such Vendor Parts will be returned to
Northwest with all applicable FAA tagging.
17.3.3 AVSA will support Northwest in cases where the agreed repair turn
time of an approved repair station is not met by causing
free-of-charge loans or exchanges (as specified in the relevant
Supplier Product Support Agreements manual) to be offered to
Northwest.
60
18 - BUYER FURNISHED EQUIPMENT AND DATA
18.1 Installation and Delivery
18.1.1 Without additional charge, and in accordance with the Specification,
AVSA will cause the Manufacturer to provide for the installation of
the Buyer Furnished Equipment.
18.1.2 AVSA will cause the Manufacturer to advise Northwest of the dates by
which, in the planned release of engineering for an Aircraft, the
Manufacturer reasonably requires a written detailed description of
the dimensions and weight of Buyer Furnished Equipment for such
Aircraft and information necessary for the installation and operation
thereof, and Northwest will furnish such detailed description and
information by the dates so specified. Such dimensions and weights
will not thereafter be revised unless mutually agreed and set forth
in an SCN.
18.1.3 AVSA will also cause the Manufacturer to furnish in sufficient time
to Northwest a schedule of dates by and locations to which Buyer
Furnished Equipment for such Aircraft must be delivered to the
Manufacturer to permit installation in and delivery of such Aircraft
in accordance with the delivery schedule referred to in Clause 9.
Northwest will furnish such equipment to the Manufacturer at such
locations by such dates. Northwest, at its own expense, will also
furnish or cause to be present at the works where such Buyer
Furnished Equipment is to be installed, when reasonably requested by
the Manufacturer, field service representatives to provide the
Manufacturer technical advice regarding the installation and
calibration of Buyer Furnished Equipment.
18.2 Specification and Airworthiness Approvals
Northwest warrants that all Buyer Furnished Equipment (other than
Buyer Furnished Equipment manufactured by the Manufacturer) will meet
the requirements of the Specification, will comply with applicable
LBA and FAA regulations and will be approved by the LBA and the FAA
for installation and use on an Aircraft at the time of delivery of
such Aircraft. AVSA will bear no expense in connection with adjusting
and calibrating Buyer Furnished Equipment to the extent necessary to
obtain LBA and FAA approval, unless such work is due to an Aircraft
Interface Problem, mishandling or excessive use on the part of AVSA
or the Manufacturer.
18.3 Delay and Nonperformance
Any delay or failure in complying with the warranty in the foregoing
Subclause 18.2, in providing the descriptive information and services
mentioned in Subclause 18.1 hereof, in furnishing the Buyer Furnished
Equipment or in obtaining any required approval of such equipment
under the LBA or FAA regulations will be the responsibility of
Northwest, to the extent that such delay or failure will in turn,
61
(i) delay the performance of any act to be performed by or on
behalf of AVSA or the Manufacturer, or
(ii) cause the Final Contract Price of the Aircraft to be increased
by the amount of AVSA's additional reasonable and
substantiated costs, if any, attributable to such delay or
failure by Northwest, including, without limitation, storage,
taxes, insurance and costs of out-of-sequence installation,
and any resulting cost will be borne by Northwest.
Further, in any such event, AVSA shall give written notice to
Northwest and, unless Northwest has cured such noncompliance within
*** Working Days after such notice, AVSA may elect to take any of the
actions set forth below in Subclauses 18.3.2, 18.3.3 or 18.3.4.
18.3.2 At Northwest's request, AVSA will be entitled to cause the
Manufacturer to purchase and install the Buyer Furnished Equipment
involved, in which event the Final Contract Price of the affected
Aircraft will be increased by the purchase price of such Buyer
Furnished Equipment plus reasonable costs and expenses incurred by
the Manufacturer for handling charges, transportation, insurance,
packaging and, if so required and not already provided for in the
Final Contract Price of such Aircraft, for adjustment and
calibration.
18.3.3 If (i) delivery of the Buyer Furnished Equipment is delayed by more
than *** days after the date specified by the Manufacturer for the
delivery of such Buyer Furnished Equipment or (ii) the Buyer
Furnished Equipment required to obtain certification of the Aircraft
in accordance with Subclause 2.3 hereof is not approved by the LBA or
the FAA within *** days after the date specified by the Manufacturer
for the delivery of such Buyer Furnished Equipment, then,
notwithstanding the terms of Subclause 2.3, AVSA will be entitled to
deliver the affected Aircraft where it is then located with no
obligation to install such Buyer Furnished Equipment. Upon such
delivery AVSA will be relieved of all obligations to install such
Buyer Furnished Equipment.
18.3.4 If (i) the Buyer Furnished Equipment is delayed by more than *** days
after the date specified by the Manufacturer for the delivery of such
Buyer Furnished Equipment or (ii) the Buyer Furnished Equipment is
not required for certification of the Aircraft and is not approved by
the LBA or the FAA within *** days after the date specified by the
Manufacturer for the delivery of such Buyer Furnished Equipment, then
AVSA will be entitled to deliver the Aircraft with no obligation to
install such Buyer Furnished Equipment. Northwest may also elect to
have the Aircraft so delivered, whereupon AVSA will be relieved of
all obligations to install such Buyer Furnished Equipment.
18.4 Any Buyer Furnished Equipment installed on an Aircraft and
subsequently removed
62
due to the fault of Northwest will be removed at Northwest's expense.
18.5 Tax-Free Zones
Northwest will cause all Buyer Furnished Equipment to be delivered at
its own expense to the following address, unless AVSA notifies
Northwest otherwise in writing.
For all Buyer Furnished Equipment
DAIMLER-BENZ AEROSPACE AIRBUS GmbH
Division Hamburger Xxxxxxxxxxx
Xxxxxxxxx 00
00000 XXXXXXX
XXXXXXX
18.6 Risk of Loss
Title to and risk of loss of Buyer Furnished Equipment will at all
times remain with Northwest. When Buyer Furnished Equipment is in the
possession of AVSA, AVSA will have only such responsibility therefor
as is chargeable by law to a bailee for hire, but will not be liable
for loss of use. ***.
18.7 AVSA-Supplied Buyer Furnished Equipment
If Northwest requests AVSA to cause the Manufacturer to supply
directly certain items that are considered Buyer Furnished Equipment
pursuant to the Specification, and if compliance with such request by
AVSA and the Manufacturer in their judgment will not affect the
delivery date of an Aircraft referred to in Clause 9, then AVSA will
order such items subject to the execution of an SCN reflecting the
effect on price and any other items and conditions of this Agreement.
In such a case, AVSA will be entitled to the payment of a reasonable
handling charge and will bear no liability in respect of product
support commitments assumed by the Vendor of such Buyer Furnished
Equipment. The provisions of Subclauses 18.2 and 18.3 will apply to
Buyer Furnished Equipment covered under this Subclause 18.7 except in
the event of any delay in approval or delivery of such Buyer
Furnished Equipment attributable to the action of AVSA, the
Manufacturer or the Associated Contractor.
63
19 - ASSIGNMENT
19.1 Successors and Assigns
Subject to the provisions of this Clause 19, this Agreement shall
inure to the benefit of and be binding upon the successors and
assigns of the parties hereto. This Agreement and/or the rights of
either party hereunder will not be assigned or transferred in any
manner whatsoever, in whole or in part, by either party without the
prior written consent of the other party, such consent not to be
unreasonably withheld by AVSA in the case of any assignment by
Northwest of its rights hereunder to one or more institutions
providing financing for the purchase of particular Aircraft by
Northwest hereunder with respect to such Aircraft and to the extent
reasonably required to effect such financing, so long as the duties
and obligations of AVSA hereunder are not changed and Northwest
remains primarily and directly liable for all obligations of the
"Buyer" hereunder. Notwithstanding the foregoing, Northwest may
assign its rights hereunder to any Affiliate of Northwest without the
prior written consent of AVSA if prior to or concurrently with such
assignment (x) Northwest executes and delivers to AVSA an instrument
in writing confirming to AVSA that Northwest remains liable for all
obligations, liabilities and responsibilities of the "Buyer"
hereunder and (y) such Affiliate executes and delivers to AVSA an
instrument in writing confirming to AVSA that such Affiliate assumes
all obligations, liabilities and responsibilities of the "Buyer"
hereunder and agrees that it will remain an Affiliate of Northwest so
long as any Aircraft subject to such assignment remains to be
delivered hereunder.
Notwithstanding the definition of Affiliate, for the exclusive
purpose of this Subclause 19.1, the term "Affiliate" shall include
any person or entity in connection with joint venture operations
between Northwest and KLM Royal Dutch Airlines "KLM".
Notwithstanding anything herein to the contrary, AVSA may at any time
without Northwest's consent, assign any of its rights to receive
money and any of its duties to effect the sale and delivery of any
Aircraft or any of its responsibilities, duties or obligations to
perform any other obligations hereunder to the Manufacturer, any of
the Associated Contractor, ASCO or to any Affiliate of the Seller,
the Manufacturer or any Associated Contractor ***.
19.2 AVSA's Designations
AVSA may at any time by notice to Northwest designate particular
facilities or particular personnel of the Manufacturer, ASCO, any of
the Associated Contractors or any Affiliate of the Manufacturer or
any Associated Contractor at which or by whom the services to be
performed under this Agreement will be performed. AVSA may also
designate the Manufacturer, any Associated Contractor or any
Affiliate of the Manufacturer or any Associated Contractor as the
party responsible on behalf of AVSA
64
for providing to Northwest all or any of the services described in
this Agreement. ***.
19.3 Assignment in Case of Resale or Lease
In the event of the resale or lease of any Aircraft by Northwest
following delivery thereof to Northwest, and subject to the delivery
to AVSA of reasonable financial guarantees and protections and other
terms as AVSA may reasonably require, Northwest's rights with respect
to such Aircraft solely under Clauses 12, 13 and 17 and this
Subclause 19.3 of this Agreement, will inure to the benefit of such
purchaser or lessee, as the case may be. Northwest will furnish to
AVSA a true copy of such agreement with such purchaser or lessor,
clearly stating that such purchaser or lessor acknowledges that it is
bound by and will comply with all applicable terms, conditions and
limitations of this Agreement. No assignment under this Subclause
19.3 shall be deemed to increase AVSA's obligations.
65
20 - DATA RETRIEVAL
On AVSA's reasonable request, Northwest will provide AVSA with all
the necessary data, as customarily compiled by Northwest and
pertaining to the operation of the Aircraft, to assist AVSA in making
an efficient and coordinated survey of all reliability, maintenance,
operational and cost data with a view to improving the safety,
availability and operational costs of the Aircraft.
66
21 - TERMINATION FOR CERTAIN EVENTS
21.1 Any of the following will be considered a material breach of
Northwest's or AVSA's obligations under this Agreement ("Material
Breach"):
(1) AVSA, Northwest or any other party will commence any case,
proceeding or other action with respect to AVSA or Northwest
in any jurisdiction relating to bankruptcy, insolvency,
reorganization or relief from debtors or seeking a
reorganization, arrangement, winding-up, liquidation,
dissolution or other relief with respect to its debts and such
case, proceeding or action is not dismissed within sixty (60)
days.
(2) An action is commenced seeking the appointment of a receiver,
trustee, custodian or other similar official for AVSA or
Northwest for all or substantially all of its assets and such
action is not stayed or dismissed within sixty (60) days, or
AVSA or Northwest makes a general assignment for the benefit
of its creditors.
(3) An action is commenced against AVSA or Northwest seeking
issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its
assets and such action is not dismissed within sixty (60)
days.
(4) AVSA or Northwest is generally unable to pay its debts as they
come due.
(5) There is a liquidation, winding up or analogous event with
respect to Northwest or AVSA.
(6) Northwest fails to make any Predelivery Payment required to be
made pursuant to this Agreement when such payment comes due or
fails to make payment of all or part of the Final Contract
Price required to be made pursuant to Subclause 6.3 of this
Agreement.
(7) Northwest defaults on any payment of principal or interest on
any indebtedness or in the payment of any guarantee
obligation, to AVSA or any of its Affiliates.
(8) Northwest defaults on any payment of any lease obligation to
AVSA or any of its Affiliates relating to any Aircraft.
(9) Northwest defaults in its obligation to take delivery of an
Aircraft, or AVSA defaults in its obligation to deliver an
Aircraft as provided in this Agreement.
(10) Northwest or AVSA, or any of AVSA's affiliates, defaults in
any material respect in the observance or performance of any
other material covenant or undertaking contained in this
Agreement, and such default continues beyond the applicable
grace period (if any).
67
(11) AVSA or any of its Affiliates defaults in any material respect
in the observance or performance of any material covenant or
undertaking in the A319 Product Support Agreement, and such
default continues beyond the applicable grace period (if any).
21.2 In the event of any Material Breach by either party, the other party
will at its option have the right to resort to any remedy under
applicable law, including, without limitation, the right by written
notice, effective immediately, to (i) suspend its performance under
the Agreement, (ii) in the case of AVSA, reschedule the delivery
dates for Aircraft or for other goods and services, (iii) terminate
this Agreement with respect to any or all Aircraft, services, data
and other items undelivered or unfurnished on the effective date of
such termination, (iv) in the case of AVSA, retain, as part of the
damages for breach and not as a penalty, an amount equal to all
Predelivery Payments and all other payments made theretofore under
this Agreement, and ***.
68
22 - MISCELLANEOUS PROVISIONS
22.1 Notices
All notices and requests required or authorized hereunder will be
given in writing either by personal delivery to a responsible officer
of the party to whom the same is given or by commercial courier,
certified air mail (return receipt requested), facsimile or other
electronic transmission at the addresses and numbers set forth below.
The date upon which any such notice or request is so personally
delivered, or if such notice or request is given by commercial
courier, certified air mail, facsimile or other electronic
transmission, the date upon which sent, will be deemed to be the
effective date of such notice or request.
AVSA will be addressed at:
0, xxxx-xxxxx Xxxxxxx Xxxxxxxx
00000 XXXXXXX XXXXXX
Attention: Director - Contracts
Telephone: 00 000 00 00 00
Facsimile: 33 561 30 40 11
Northwest will be addressed at:
Northwest Airlines, Inc.
0000 Xxxxxxxxx Xxxxx
Xx. Xxxx, XX 00000
Courier:
Northwest Airlines, Inc.
0000 Xxxx Xxx Xxxxxxx
Xxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
From time to time, the party receiving the notice or request may
designate another address or another person.
22.2 Waiver
The failure of either party to enforce at any time any of the
provisions of this Agreement, to exercise any right herein provided
or to require at any time performance by the other party of any of
the provisions hereof will in no way be construed to be a
69
present or future waiver of such provisions nor in any way to affect
the validity of this Agreement or any part hereof or the right of the
other party thereafter to enforce each and every such provision. The
express waiver by either party of any provision, condition or
requirement of this Agreement will not constitute a waiver of any
future obligation to comply with such provision, condition or
requirement.
22.3 INTERPRETATION AND LAW
THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND THE
PERFORMANCE THEREOF WILL BE DETERMINED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
THE PARTIES HEREBY ALSO AGREE THAT THE UNITED NATIONS CONVENTION ON
CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS WILL NOT APPLY TO THIS
TRANSACTION.
22.4 Confidentiality
Subject to any legal or governmental requirements of disclosure, the
parties (which for this purpose will include their employees, agents
and advisors) will maintain the terms and conditions of this
Agreement and any reports or other data furnished hereunder strictly
confidential. Without limiting the generality of the foregoing,
Northwest will use reasonable efforts to limit the disclosure of the
contents of this Agreement to the extent legally permissible in any
filing required to be made by Northwest with any governmental agency
and will make such applications as will be necessary to implement the
foregoing. AVSA agrees to provide to Northwest, no less than fifteen
(15) Working Days prior to the date by which Northwest is required to
make any such filing, provided however that Northwest shall have
given AVSA a minimum of thirty (30) days notice, a redacted version
of this Agreement. Northwest agrees to use such redacted version for
filing of this Agreement with the Securities and Exchange Commission,
and Northwest's filing will include a request for confidential
treatment of this Agreement. Northwest and AVSA will consult with
each other prior to the making of any public disclosure or filing,
permitted hereunder, of this Agreement or the terms and conditions
thereof. The provisions of this Subclause 22.4 will survive any
termination of this Agreement.
22.5 Severability
In the event that any provision of this Agreement should for any
reason be held to be without effect, the remainder of this Agreement
will remain in full force and effect. To the extent permitted by
applicable law, each party hereto hereby waives any provision
70
of law which renders any provision of this Agreement prohibited or
unenforceable in any respect.
22.6 Alterations to Contract
This Agreement, including its Exhibits, Appendixes and Letter
Agreements, contains the entire agreement between the parties with
respect to the subject matter hereof and thereof and supersedes any
previous understanding, commitments or representations whatsoever,
whether oral or written (including, without limitation, that certain
Airbus A319 Memorandum of Understanding dated June 10, 1997
(Reference AVSA 5192.10, between AVSA and Northwest). This Agreement
will not be varied except by an instrument in writing of even date
herewith or subsequent hereto executed by both parties or by their
fully authorized representatives.
22.7 Inconsistencies
In the event of any inconsistency between the terms of this Agreement
and the terms contained in either (i) the Specification, or (ii) any
other Exhibit or Letter Agreement attached to this Agreement, in each
such case the terms of such Specification, Exhibit or Letter
Agreement will prevail over the terms of this Agreement. For the
purpose of this Subclause 22.7, the term Agreement will not include
the Specification or any other Exhibit or Letter Agreement hereto.
22.8 Language
All correspondence, documents and any other written matters in
connection with this Agreement will be in English.
22.9 Headings
All headings in this Agreement are for convenience of reference only
and do not constitute a part of this Agreement.
22.10 Counterparts
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered will be an
original, but all such counterparts will together constitute but one
and the same instrument.
22.11 Opinion of Counsel
Northwest will, concurrently with the execution of this Agreement,
deliver to AVSA an opinion of counsel for Northwest reasonably
satisfactory to AVSA and dated as of such
71
date to the effect that (i) the execution, delivery and performance
of this Agreement and the A319 Product Support Agreement are within
the corporate power of Northwest, and (ii) this Agreement and the
A319 Product Support Agreement have been duly executed and delivered
by and constitute legal, valid and binding obligations of Northwest
enforceable in accordance with their terms.
72
IN WITNESS WHEREOF, these presents were entered into as of the day and year
first above written.
AVSA, S.A.R.L.
By:
----------------------------
Title:
NORTHWEST AIRLINES, INC.
By:
----------------------------
Title:
73
EXHIBIT A
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The A319 Standard Specification is contained in a separate folder.
EXHIBIT B
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RFC DESCRIPTION OF CUSTOMER OPTIONS
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EXHIBIT B
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RFC DESCRIPTION OF CUSTOMER OPTION
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EXHIBIT B
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RFC DESCRIPTION OF CUSTOMER OPTION
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4
EXHIBIT C
---------
SCN FORM
--------
EXHIBIT D
---------
AIRFRAME PRICE REVISION FORMULA
l. BASE PRICE
The Base Price of the Airframe, and Nacelles and Thrust Reversers, is
as quoted in Paragraph 4 of this Agreement.
2. BASE PERIOD
The above Base Prices have been established in accordance with the
averaged economic conditions prevailing in December 1996/January
1997/February 1997 and corresponding to theoretical delivery conditions
prevailing in January 1998, as defined by ECIb and ICb forecast index
values indicated in Paragraph 4 of this Exhibit D.
The Base Price is subject to adjustment for changes in economic
conditions as measured by data obtained from the US Department of
Labor, Bureau of Labor Statistics, and in accordance with the
provisions of Paragraphs 4 and 5 of this Exhibit D.
ECIb and ICb index values indicated in Paragraph 4 of this Exhibit D
will not be subject to any revision of these indexes after execution of
the definitive documentation.
3. REFERENCE INDEXES
Labor Index: "Aircraft Manufacturing," Standard Industrial
Classification 3721 (hereinafter referred to as "ECI-SIC-3721W"),
published quarterly by the US Department of Labor, Bureau of Labor
Statistics, in "News" (Table 6: WAGES AND SALARIES: Employment Cost
Index for wages and salaries only, private industry workers, by
industry and occupational group"). (Base month and year June 1989 =
100.)
Material Index: "Industrial Commodities" (hereinafter referred to as
"IC-Index"), published monthly by the US Department of Labor, Bureau of
Labor Statistics, in "PPI Detailed Report" (Table 6: Producer price
indexes and percentage change for commodity groupings and individual
items, not seasonally adjusted). (Base year 1982 = 100.)
4. REVISION FORMULA
Pn = (Pb + F) (0.75 ECIn/ECIb + 0.25 ICn/ICb)
Where
Pn = Revised Base Price of the Airframe at delivery of the Aircraft.
Pb = Base Price of the Airframe (including Nacelles and Thrust
Reversers, if applicable) at economic conditions December
1996/January 1997/February 1997 averaged (January 1998 delivery
conditions).
F = (0.005 x N x Pb) Where N = The calendar year of delivery of the
Aircraft minus 1998.
ECIn = The arithmetic average of the latest published values available
at the date of A319 Aircraft delivery for ECI-SIC-3721W for the
11th, 12th and 13th months prior to the month of delivery of
the Aircraft (1 decimal), where the quarterly value for the
third month of a quarter (March, June, September and December)
will be deemed to apply for the two preceding months.
ECIb = ECI-SIC-3721W for December 1996/January 1997/February 1997
averaged (= 131.6).
ICn = The arithmetic average of the latest published values available
at the date of A319 Aircraft delivery for the IC-Index for the
11th, 12th and 13th months prior to the month of delivery of
the Aircraft (l decimal).
ICb = IC-Index for December 1996/January 1997/February 1997 averaged
(= 126.4).
In determining the Revised Base Price at delivery of the Aircraft, each
quotient shall be calculated to the nearest ten thousandth (4
decimals). If the next succeeding place is five (5) or more, the
preceding decimal place shall be raised to the next higher figure. The
final factor shall be rounded to the nearest ten thousandth (4
decimals).
After final computation, Pn shall be rounded to the next whole number
(0.5 or more rounded to l).
2
5. GENERAL PROVISIONS
5.1 Substitution of Indexes
In the event that:
(i) the US Department of Labor substantially revises the methodology of
calculation of any of the indexes referred to hereinabove, or
(ii) the US Department of Labor discontinues, either temporarily or
permanently, any of the indexes referred to hereinabove, or
(iii) the data samples used to calculate any of the indexes referred to
hereinabove are substantially changed,
the most nearly comparable index published by a recognized financial
institution, financial publication or university shall be used as a
substitute index.
Such substitute index will reflect as closely as possible the actual
variations of the wages or of the material costs, as the case may be,
used in the calculation of the original index.
As a result of this selection of a substitute index, the price revision
formula will be adjusted for the successive utilization of the original
index and of the substitute index.
5.2 Final Index Values
The Revised Base Price at the date of Aircraft delivery will be final
and will not be subject to further adjustments of any kind and for any
reason to the applicable indexes as published at the date of Aircraft
delivery.
3
EXHIBIT E
---------
POWERPLANTS PRICE REVISION FORMULA
l. REFERENCE PRICE
The Reference Price of a set of two (2) CFM International CFM 56-5A4 engines and
additional equipment is as quoted in Subclause 4.1.2.1(i) of this Agreement.
This Reference Price is subject to adjustment for changes in economic conditions
as measured by data obtained from the US Department of Labor, Bureau of Labor
Statistics, and in accordance with the provisions of Paragraphs 4 and 5 of this
Exhibit E.
2. REFERENCE PERIOD - REFERENCE COMPOSITE PRICE INDEX
The above Reference Price has been established in accordance with the economic
conditions prevailing in September 1990 (March 1991 theoretical delivery
conditions), as defined, according to CFM International, by the Reference
Composite Price Index of 126.54.
3. REFERENCE INDEXES
Labor Index: "Aircraft Engines and Engine Parts," Standard Industrial
Classification 3724--Average hourly earnings (hereinafter referred to as "HE SIC
3724"), published by the US Department of Labor, Bureau of Labor Statistics, in
"Employment and Earnings," Establishment Data: Hours and Earnings (Table B-15:
Average hours and earnings of production or nonsupervisory workers on private
nonfarm payrolls by detailed industry).
Material Index (I): "Industrial Commodities" (hereinafter referred to as
"IC-Index"), published by the US Department of Labor, Bureau of Labor
Statistics, in "PPI Detailed Report" (Table 6: Producer price indexes and
percentage change for commodity groupings and individual items, not seasonally
adjusted). (Base year 1982 = 100.)
Material Index (II): "Metals and Metal Products" Code l0 (hereinafter referred
to as "MMP-Index"), published by the US Department of Labor, Bureau of Labor
Statistics, in "PPI Detailed Report" (Table 6: Producer price indexes and
percentage change for commodity groupings and individual items, not seasonally
adjusted). (Base year 1982 = 100.)
Energy Index: "Fuels and Related Products and Power" Code 5 (hereinafter
referred to as "EP-Index"), published by the US Department of Labor, Bureau of
Labor n "PPI Detailed Report" (Table 6: Producer price indexes and percentage
change for commodity groupings and individual items, not seasonally adjusted).
(Base year 1982 = 100.)
4. REVISION FORMULA
Pn = Pb x CPIn
-----
126.54
Where
Pn = Revised Reference Price of a set of two (2) engines at delivery
of the A319 Aircraft.
Pb = Reference Price as defined above.
CPIn = Composite Price Index for the sixth month prior to the month of
delivery of the A319 Aircraft.
Said Composite Price Index is composed as follows:
CPIn = 0.55 (HEn x 100) + 0.10 ICn + 0.25 MMPn + 0.10 EPn
---
(11.16)
Where
HEn = HE SIC 3724 for the sixth month prior to the month of delivery
of the A319 Aircraft; the quotient HEn/11.16 is rounded to the
nearest third decimal place. The product by 0.55 is rounded to
the nearest second decimal place.
ICn = IC-Index for the sixth month prior to the month of delivery of
the A319 Aircraft.
MMPn = MMP-Index for the sixth month prior to the month of delivery of
the A319 Aircraft. The product by 0.25 is rounded to the
nearest second decimal place.
EPn = EP-Index for the sixth month prior to the month of delivery of
the A319 Aircraft.
The Composite Price Index shall be determined to the second decimal
place. If the next succeeding decimal place is five (5) or more, the
preceding decimal figure shall be raised to the next higher figure.
The final factor shall be rounded to the nearest thousandth (3
decimals).
2
5. GENERAL PROVISIONS
5.1 The Revised Reference Price at delivery of the A319 Aircraft shall be
the final price and will not be subject to further adjustments in the
indexes.
5.2 If no final index value is available for any of the applicable months,
the published preliminary figures will be the basis on which the
Revised Reference Price will be computed.
5.3 If the US Department of Labor substantially revises the methodology of
calculation of the indexes referred to in this Exhibit E or
discontinues any of these indexes, AVSA shall, in agreement with CFM
International, apply a substitute for the revised or discontinued
index, such substitute index to lead in application to the same
adjustment result, insofar as possible, as would have been achieved by
continuing the use of the original index as it may have fluctuated had
it not been revised or discontinued.
Appropriate revision of the formula shall be made to accomplish this
result.
5.4 Should the above escalation provisions become null and void by action
of the US Government, the Reference Price shall be adjusted to reflect
increases in the cost of labor, material and fuel which have occurred
from the period represented by the applicable Reference Price Indexes
to the sixth month prior to the scheduled delivery of the A319
Aircraft.
5.5 The Revised Reference Price at delivery of the A319 Aircraft in no
event shall be less than the Reference Price defined in Paragraph 1 of
this Exhibit E.
3
EXHIBIT F
---------
CERTIFICATE OF ACCEPTANCE
In accordance with the terms of that certain Airbus A319 Purchase Agreement
(the "Purchase Agreement") dated as of September 19, 1997 between AVSA,
S.A.R.L. ("AVSA") and NORTHWEST AIRLINES, INC. ("NWA"), the acceptance
inspection relating to the AIRBUS A319 aircraft (the "Aircraft"),
manufacturer's serial no. , FAA Registration No. , with two (2)
CFM56-5A4 series propulsion systems installed thereon, serial nos.
(position #1) and (position #2) has taken place at Hamburg, Germany, on
the day of , .
In view of said inspection having been carried out with satisfactory results,
NWA hereby accepts delivery of the Aircraft as being in conformity with the
provisions of the Purchase Agreement.
This acceptance shall not impair the rights of NWA that derive from the
warranties relating to the Aircraft set forth in the Purchase Agreement.
NWA specifically recognizes that it has waived any right it may have at law or
otherwise to revoke this acceptance of the Aircraft.
RECEIPT AND ACCEPTANCE OF THE
ABOVE-DESCRIBED AIRCRAFT
ACKNOWLEDGED
NORTHWEST AIRLINES, INC.
By:
---------------------------------
Title:
------------------------------
EXHIBIT G
---------
SELLER SERVICE LIFE POLICY
1. The Items covered by the Service Life Policy pursuant to Subclause
12.2 are those Seller Items of primary and auxiliary structure
described hereunder.
2. WINGS - CENTER AND OUTER WING BOX
2.1 Spars
2.2 Ribs Inside the Wing Box
2.3 Upper and Lower Panels of the Wing Box
2.4 Fittings
2.4.1 Attachment fittings for the flap structure
2.4.2 Attachment fittings for the engine pylons
2.4.3 Attachment fittings for the main landing gear
2.4.4 Attachment fittings for the center wing box
2.5 Auxiliary Support Structure
2.5.1 For the slats:
2.5.1.1 Ribs supporting the track rollers on wing box structure
2.5.1.2 Ribs supporting the actuators on wing box structure
2.5.2 For the ailerons:
2.5.2.1 Hinge brackets and ribs on wing box rear spar or shroud box
2.5.2.2 Actuator fittings on wing box rear spar or shroud box
2.5.3 For airbrakes, spoilers, lift dumpers:
2.5.3.1 Hinge brackets and ribs on wing box rear spar or shroud box
2.5.3.2 Actuator fittings on wing box rear spar or shroud box
3. FUSELAGE
3.1 Fuselage Structure
3.1.1 Fore and aft bulkheads
3.1.2 Pressurized floors and bulkheads surrounding the main and nose
gear wheel well and centre wing box
3.1.3 Skins with doublers, stringers and frames from the forward
pressure bulkheads to the frame supporting the rear attachment of
horizontal stabilizer
3.1.4 Window and windscreen attachment structure but excluding
transparencies
3.1.5 Passenger and cargo doors internal structure
3.1.6 Xxxxx excluding scuff plates and upper beams surrounding passenger
and cargo door apertures
3.1.7 Cockpit floor structure and passenger cabin floor beams excluding
floor panels and seat rails
3.1.8 Keel beam structure
3.2 Fittings
3.2.1 Landing gear attachment fittings
3.2.2 Support structure and attachment fittings for the vertical and
horizontal stabilizers
2
4. STABILIZERS
4.1 Horizontal Stabilizer Main Structural Box
4.1.1 Spars
4.1.2 Ribs
4.1.3 Upper and lower skins and stringers
4.1.4 Attachment fittings to fuselage and trim screw actuator
4.1.5 Elevator support structure
4.1.5.1 Hinge bracket
4.1.5.2 Servocontrol attachment brackets
4.2 Vertical Stabilizer Main Structural Box
4.2.1 Spars
4.2.2 Ribs
4.2.3 Skins and stringers
4.2.4 Attachment fittings to fuselage
4.2.5 Rudder support structure
4.2.5.1 Hinge brackets
4.2.5.2 Servocontrol attachment brackets
5. Bearing and roller assemblies, bearing surfaces, bushings, bolts,
rivets, access and inspection doors, including manhole doors,
latching mechanisms, all system components, commercial interior
parts, insulation and related installation and connecting devices
are excluded from this Seller Service Life Policy.
3
LETTER AGREEMENT NO. 1
As of September 19, 1997
Northwest Airlines, Inc.
0000 Xxxx Xxx Xxxxxxx
Xxxxx, Xxxxxxxxx 00000
Re: PURCHASE INCENTIVES
Dear Ladies and Gentlemen:
Northwest Airlines, Inc. ("Northwest"), and AVSA, S.A.R.L.
("AVSA"), have entered into an Airbus X000-000 Xxxxxxxx Agreement, dated as of
even date herewith (the "Agreement"), which covers, among other things, the sale
by AVSA and the purchase by Northwest of certain Aircraft, under the terms and
conditions set forth in said Agreement. Northwest and AVSA have agreed to set
forth in this Letter Agreement No. 1 (the "Letter Agreement") certain additional
terms and conditions regarding the sale of the Aircraft. Capitalized terms used
herein and not otherwise defined in this Letter Agreement will have the meanings
assigned thereto in the Agreement. The terms "herein," "hereof" and "hereunder"
and words of similar import refer to this Letter Agreement.
Both parties agree that this Letter Agreement will constitute an
integral, nonseverable part of said Agreement, that the provisions of said
Agreement are hereby incorporated herein by reference, and that this Letter
Agreement will be governed by the provisions of said Agreement, except that if
the Agreement and this Letter Agreement have specific provisions that are
inconsistent, the specific provisions contained in this Letter Agreement will
govern.
1. CREDIT MEMORANDA
1.1 AVSA will provide to Northwest upon delivery of each A319 Aircraft
the credit memoranda listed below in Subparagraphs 1.1(i) to
1.1(viii), inclusive. Hereinafter, the *** are collectively
referred to as the "AVSA Credit Memoranda."
(i) ***
(ii) ***
(iii) ***
(iv) ***
(v) ***
(vi) ***
(vii) ***
(viii) ***
1.2 The AVSA Credit Memoranda have been established in accordance with
January 1998 delivery conditions (dollars) and will be revised to the
actual delivery date of each Aircraft in accordance with the Airframe
Price Revision Formula set forth in Exhibit D to the Agreement.
1.3 Except as otherwise provided in Paragraph 2 of this Letter Agreement,
the AVSA Credit Memoranda will, in each case and at Northwest's option,
be
(i) applied by AVSA against the Final Contract Price of each
Aircraft ***, the AVSA Credit Memoranda (excluding any portion
thereof applied pursuant to Subparagraph 1.3 (ii) of this
Letter Agreement) will be deemed to be applied to the Final
Contract Price of such Aircraft),
(ii) used by Northwest for the purposes specified ***.
(iii) used by Northwest for the purchase of goods and services from
AVSA or any of its Affiliates.
2. FLIGHT TRAINING SUPPORT
2.1 ***
2.2 Additional Flight Training Arrangements
2.2.1 Northwest or its Affiliate may purchase from AVSA or its Affiliates
additional flight training equipment and data package upgrades. A list
of such training equipment and services and associated prices is
included in Appendix 1 hereto.
2.2.2 In the event Northwest or its Affiliate order such flight training
equipment or data package upgrades from AVSA or its Affiliates, AVSA
agrees to the following payment by Northwest for such flight training
equipment and data package upgrades, up to a total value of ***:
*** in flight training equipment and data package upgrade value, in
accordance with Appendix 1 hereto, Northwest will
(i) pay to AVSA or its Affiliates ***, and, in addition,
2
(ii) provide AVSA or its Affiliates or cause to be provided ***.
2.2.3 ***
2.2.4 ***
2.3 Training Service Agreement
AVSA or its Affiliates and Northwest or its Affiliate will enter into a
separate training agreement covering the different training services
that Northwest or its Affiliate could provide to AVSA, the
Manufacturer, or any of their Affiliates. Under such agreement, neither
AVSA, nor the Manufacturer, nor any of their Affiliates will be liable
for any training provided to their customers by Northwest or its
Affiliate, and Northwest and AVSA, or their respective Affiliates, will
agree on appropriate provisions prior to execution of such training
agreement.
***
3. ***
3.1 AVSA will provide, or cause to be provided, ***.
3.2 AVSA will arrange for the delivery of the ***.
4. CERTAIN AIRCRAFT EQUIPMENT SUPPORT
4.1 ***
AVSA will provide, ***.
4.2 ***
Should Northwest elect to install ***.
5. JOINT PROMOTION
5.1 For the promotion of the Aircraft in Northwest's fleet, AVSA will
provide to Northwest ***.
5.2 ***
6. ASSIGNMENT
3
Notwithstanding any other provision of this Letter Agreement or of
the Agreement, this Letter Agreement and the rights and obligations
of Northwest hereunder will not be assigned or transferred in any
manner without the prior written consent of AVSA, and any attempted
assignment or transfer in contravention of the provisions of this
Paragraph 6 will be void and of no force or effect.
4
If the foregoing correctly sets forth our understanding, please execute
the original and one (1) copy hereof in the space provided below and return a
copy to AVSA.
Very truly yours,
AVSA, S.A.R.L.
By:
---------------------------
Its:
--------------------------
Accepted and Agreed
NORTHWEST AIRLINES, INC.
By:
-------------------------
Its:
-------------------------
5
APPENDIX 1
----------
FLIGHT TRAINING EQUIPMENT / DATA PACKGE PRICES
The amounts in this table are quoted in US dollars in January 1997 delivery
conditions and will be multiplied by a factor of *** to provide for a price
revision from January 1997 to January 1998. Thereafter, the amounts will be
revised annually in January in accordance with the Airframe Price Revision
Formula.
Total Amount
-------------------------------------------------------------------------------------------------------------
1A) Upgrade / Update of Northwest's three (3) existing A320 data *** package
licenses (not including the A319 version, CFM only engines simulated)
--------------
-------------------------------------------------------------------------------------------------------------
1B) Upgrade / Update of Northwest's three (3) existing A320 data ***
package licenses
(not including the A319 version, CFM and IAE engines simulated)
------------- ---
(i) for the first upgrade
(ii) for the second upgrade
(iii) for the third upgrade
-------------------------------------------------------------------------------------------------------------
1C) Upgrade / Update of Northwest's three (3) existing A320 data ***
package licenses
(including the A319 version, CFM and IAE engines simulated)
---------- ---
(i) for the first upgrade
(ii) for the second upgrade
(iii) for the third upgrade
-------------------------------------------------------------------------------------------------------------
2) Supply of one (1) new A320 customized data package, covering *** CFM engines
only, applicable to FTD level 7 or additional Northwest full-flight simulators
(price per unit)
-------------------------------------------------------------------------------------------------------------
*** ***
-------------------------------------------------------------------------------------------------------------
*** ***
-------------------------------------------------------------------------------------------------------------
*** ***
-------------------------------------------------------------------------------------------------------------
*** ***
-------------------------------------------------------------------------------------------------------------
6
LETTER AGREEMENT NO. 2
As of September 19, 1997
Northwest Airlines, Inc.
0000 Xxxx Xxx Xxxxxxx
Xxxxx, Xxxxxxxxx 00000
Re: OPTION AIRCRAFT AND ORDER FLEXIBILITY
Dear Ladies and Gentlemen:
Northwest Airlines, Inc. ("Northwest"), and AVSA, S.A.R.L. ("AVSA"),
have entered into an Airbus X000-000 Xxxxxxxx Agreement, dated as of even date
herewith (the "Agreement"), which covers, among other things, the sale by AVSA
and the purchase by Northwest of certain Aircraft, under the terms and
conditions set forth in said Agreement. Northwest and AVSA have agreed to set
forth in this Letter Agreement No. 2 (the "Letter Agreement") certain additional
terms and conditions regarding the sale of the Aircraft. Capitalized terms used
herein and not otherwise defined in this Letter Agreement will have the meanings
assigned thereto in the Agreement. The terms "herein," "hereof" and "hereunder"
and words of similar import refer to this Letter Agreement.
Both parties agree that this Letter Agreement will constitute an
integral, nonseverable part of said Agreement, that the provisions of said
Agreement are hereby incorporated herein by reference, and that this Letter
Agreement will be governed by the provisions of said Agreement, except that if
the Agreement and this Letter Agreement have specific provisions that are
inconsistent, the specific provisions contained in this Letter Agreement will
govern.
1. ADDITIONAL DEFINITIONS
For the purpose of this Letter Agreement only, the term "Available
Delivery Position(s)" in the singular or plural shall mean any delivery
positions ***, it being understood that such Available Delivery
Positions will be subject to *** Available Delivery Positions pursuant
to the provisions of this Letter Agreement.
Notwithstanding the foregoing, all Option Aircraft delivery dates
pursuant to Subparagraph 2.5, and all Roll-Over Option Aircraft
Delivery Dates, shall ***.
2. OPTION AIRCRAFT
2.1 Option to Firmly Order
Northwest shall have the right to firmly order up to one hundred (100)
additional Airbus single-aisle aircraft together with all components,
equipment, parts and accessories installed in or on such aircraft and
the propulsion systems installed thereon upon delivery in accordance
with this Paragraph 2.
2.2 Option Aircraft Type
2.2.1 Option Aircraft are designated either an Airbus Industrie A319-100
model aircraft (the "A319 Option Aircraft") or an Airbus Industrie
A320-200 model aircraft (the "A320 Option Aircraft") in accordance with
Subparagraph 2.5 below.
2.2.2 The airframe specification of the A319 Option Aircraft shall be as set
forth in Subclause 2.2 of the Agreement and the powerplants shall be
those defined in Clause 1 of the Agreement as Propulsion Systems.
2.2.3 The airframe specification of the A320 Option Aircraft shall be as set
forth in Subparagraph 2.7.1 herein and the powerplants shall be those
defined in Subparagraph 2.7.2 herein.
2.3 Option Exercise
The option to firmly order an Option Aircraft shall be exercised by
Northwest's written notice to AVSA given no later than *** months prior
to the scheduled month of delivery of such Option Aircraft in
accordance with the Option Aircraft Delivery Schedule set out in
Subparagraph 2.5 below ( the "Option Exercise"). Each Option Exercise
shall only become effective upon AVSA's receipt from Northwest of the
payments referenced in Subparagraph 2.4 below.
2.4 Option Fee and Predelivery Payment
2.4.1 Upon each Option Exercise, Northwest will pay to AVSA a nonrefundable
option fee of US$ *** per Option Aircraft for which Northwest has
exercised its option to firmly order such Option Aircraft (the "Option
Fee"). ***.
2.4.2 ***
2.4.3 In the event that Northwest fails to (i) invoke an Option Exercise in
accordance with the provisions of Subparagraph 2.3 above and (ii) pay
to AVSA the corresponding Option Fee and (iii) ***, Northwest's right
to purchase such Option Aircraft shall expire, and AVSA will have no
further obligation under this Letter Agreement or the Agreement with
respect to such Option Aircraft.
2.5 Delivery
2
The Option Aircraft for which Northwest has effected an Option Exercise
will be delivered in Hamburg, Germany (in the case of A319 Option
Aircraft) or Toulouse, France (in the case of A320 Option Aircraft)
according to the following schedule (the "Option Aircraft Delivery
Schedule"):
Option Aircraft Month/Year of Delivery Option Aircraft Month/Year of Delivery
--------------- ---------------------- --------------- ----------------------
No./Type No./Type
-------- --------
1 / *** January 2000 26 / *** ***
2 / *** *** 27 / *** ***
3 / *** *** 28 / *** ***
4 / *** *** 29 / *** ***
5 / *** *** 30 / *** ***
6 / *** *** 31 / *** ***
7 / *** *** 32 / *** ***
8 / *** *** 33 / *** ***
9 / *** *** 34 / *** ***
10 / *** *** 35 / *** ***
11 / *** *** 36 / *** ***
12 / *** *** 37 / *** ***
13 / *** *** 38 / *** ***
14 / *** *** 39 / *** ***
15 / *** *** 40 / *** ***
16 / *** *** 41 / *** ***
17 / *** *** 42 / *** ***
18 / *** *** 43 / *** ***
19 / *** *** 44 / *** ***
20 / *** *** 45 / *** ***
21 / *** *** 46 / *** ***
22 / *** *** 47 / *** ***
23 / *** *** 48 / *** ***
24 / *** *** 49 / *** ***
25 / *** *** 50 / *** ***
3
2.6 Roll-Over Options
2.6.1 Upon each Option Exercise with respect to an A319 Option Aircraft, AVSA
shall grant Northwest the option to purchase an additional Airbus
Industrie A319-100 model aircraft (the "A319 Roll-Over Option
Aircraft"). Further, upon each Option Exercise with respect to an A320
Option Aircraft, AVSA shall grant Northwest the option to purchase an
additional Airbus Industrie A320-200 model aircraft (the "A320
Roll-Over Option Aircraft"). The terms and conditions of this Letter
Agreement with respect to the A319 Option Aircraft shall apply to the
A319 Roll-Over Option Aircraft, and the terms and conditions of this
Letter Agreement with respect to A320 Option Aircraft shall apply to
the A320 Roll-Over Option Aircraft, unless otherwise specified herein,
including, but not limited to, the provisions of Subparagraphs 2.3 and
2.4 above. For the purposes of this Letter Agreement, the terms A319
Roll-Over Option Aircraft and A320 Roll-Over Option Aircraft are
collectively referred to as the "Roll-Over Option Aircraft."
2.6.2 Upon each Option Exercise, AVSA shall notify Northwest in writing of
the delivery date for the Roll-Over Option Aircraft (the "Roll-Over
Option Aircraft Delivery Date"). The Roll-Over Option Aircraft Delivery
Date shall be added to the end of the then-existing Option Aircraft
Delivery Schedule (but in no event will ***, unless otherwise agreed
between AVSA and Northwest), and shall be deemed to amend the Option
Aircraft Delivery Schedule. AVSA shall undertake ***.
2.7 A320 Option Aircraft Matters
The term "A320 Aircraft" shall be defined as any and all of the A320
Option Aircraft, the A320 Roll-Over Option Aircraft, and any A320
Aircraft converted from an A319 Aircraft under the terms of this Letter
Agreement.
2.7.1 Airframe Configuration
The A320 Aircraft will be manufactured in accordance with the A320-200
Standard Specification, Document No. D.000.02000, Issue 4, dated March
30, 1995. A copy of such A320-200 Standard Specification is annexed
hereto as Appendix 1 to this Letter Agreement. Such A320-200 Standard
Specification will be amended by the SCNs set forth in Appendix 2
hereto.
2.7.2 Powerplants
The A320 Aircraft will be delivered with two (2) CFM56-5A1 Powerplants
each composed of the powerplant (as such term is defined in Chapters
70-80 of ATA Specification 100 (Revision 22), but limited to the
equipment, components, parts and accessories included in the
powerplant, as so defined), that have been sold to the Manufacturer by
CFMI International, and a nacelle and thrust reverser for each such
4
powerplant (the "A320 Propulsion System").
2.7.3 A320 Aircraft Price
The base prices and purchase incentives for the A320 Aircraft shall be
as set forth in Appendix 3 to this Letter Agreement.
3. APPLICABILITY OF PURCHASE AGREEMENT PROVISIONS
3.1 When firmly ordered, each A319 Option Aircraft and each A319 Roll-Over
Option Aircraft (and each A319 Aircraft converted from an A320 Option
Aircraft or from an A320 Roll-Over Option Aircraft) shall be an
Aircraft for the purposes of the provisions of Clauses 1 through 22 of
the Agreement and the provisions of Letter Agreements Nos. 1 (re:
Purchase Incentives), 3 (re: Predelivery Payments), 4 (re: Aircraft
Customization), 5 ***, 6 (re: A319-100 Guarantees), and 11 (re:
Miscellaneous Matters) to the Agreement, except as provided for in
Subparagraph 3.2 hereof. ***.
3.2 It is understood that with respect to A319 Aircraft, the Powerplant
prices cited in Subclause 4.1 of the Agreement and the price revision
formula referred to in Subclause 5.2 of the Agreement concerning the
Powerplants and related equipment have been confirmed by CFM
International for A319 Aircraft with deliveries on or prior to ***.
Thereafter, such prices and price revision formula remain subject to
modifications that might be communicated by the Powerplant manufacturer
to AVSA, the Manufacturer and/or Northwest.
3.3 When firmly ordered, each A320 Aircraft shall be an Aircraft for the
purposes of the applicable provisions of Clauses 1 through 22 of the
Agreement, and the provisions of Letter Agreements Nos. 3 (re:
Predelivery Payments), 4 (re: Aircraft Customization), and 11 (re:
Miscellaneous Matters) to the Agreement shall apply to the A320
Aircraft.
***.
4. FLEXIBILITY RIGHTS
4.1 Flexibility Rights and Applicability
In addition to its offer for Option Aircraft and Roll-Over Option
Aircraft, AVSA grants Northwest the following flexibility rights
(individually and collectively referred to as "Flexibility Right(s)":
(i) "Conversion Right": Northwest shall have the right to convert
(a) *** Firm Aircraft scheduled for delivery commencing
with ***, and
(b) *** Option Aircraft that has been converted to an
Aircraft pursuant to
5
Paragraph 2 herein,
into Airbus A319 type aircraft, Airbus A320 type aircraft or
Airbus A321 type aircraft (the "Converted Aircraft") under the
terms and conditions of this Letter Agreement.
(ii) ***
(iii) ***
(iv) ***
4.2 Irrevocable Exercise of Flexibility Rights
No Aircraft may be the subject of a successful exercise of a Conversion
Right, *** more than once.
4.3 Flexibility Leadtimes
4.3.1 Northwest may notify AVSA of its exercise of one of the Flexibility
Rights by written notice (the "Request Notice") delivered to AVSA on or
prior to the first day of the month that is *** months prior to the
month of scheduled delivery of the Aircraft or Option Aircraft that is
subject to such Flexibility Right. ***.
4.3.2 ***
4.4 Flexibility Rights Exercise Procedure
4.4.1 After receipt of Northwest's Request Notice, AVSA will offer within ***
business days Available Delivery Positions as follows:
(i) with respect to ***.
(ii) with respect to ***.
(iii) with respect to ***.
(iv) with respect *** Available Delivery Positions of the nature
referred to in the final sentence of Paragraph 1 of this
Letter Agreement.
4.4.2 Northwest may request from AVSA in writing (the "Reservation Notice")
within *** business days after receipt of AVSA's offer of the Available
Delivery Positions ***.
4.4.3 For the *** business days following the receipt by AVSA of Northwest's
Reservation Notice,
(i) ***, and
6
(ii) all Available Delivery Positions ***.
Should Northwest fail to enter into an amendment to this Agreement
reflecting the revised delivery schedule (the "Flexibility Amendment")
within *** days after receipt by AVSA from Northwest of the Reservation
Notice, then Northwest's ***. AVSA agrees that it will promptly execute
each Flexibility Amendment executed by Northwest pursuant to this
Paragraph 4 within such *** period.
5. AVSA'S RESCHEDULING RIGHTS
5.1 AVSA's Rights
Notwithstanding the provisions of Clause 9 of the Agreement, AVSA and
Northwest agree that AVSA shall have the right to request from
Northwest the rescheduling of *** delivery dates in accordance with the
provisions of this Paragraph 5 ("AVSA's Rescheduling Request"). AVSA's
Rescheduling Request will apply to each *** (the "Rescheduled
Aircraft") and may be exercised only once with respect to each
Rescheduled Aircraft. ***.
5.2 AVSA Rescheduling Request Procedure
The procedure for AVSA's Rescheduling Request shall be consistent with
the procedures described in Subparagraph 4.4 above ***.
6. REVIEW OF DELIVERY POSITION AVAILABILITY
AVSA agrees to review with Northwest on a quarterly basis all Available
Delivery Positions ***.
7. ASSIGNMENT
Notwithstanding any other provision of this Letter Agreement or of the
Agreement, this Letter Agreement and the rights and obligations of
Northwest hereunder will not be assigned or transferred in any manner
without the prior written consent of AVSA, and any attempted assignment
or transfer in contravention of the provisions of this Paragraph 7 will
be void and of no force or effect.
7
If the foregoing correctly sets forth our understanding, please execute
the original and one (1) copy hereof in the space provided below and return a
copy to AVSA.
Very truly yours,
AVSA, S.A.R.L.
By:
-----------------------
Its:
----------------------
Accepted and Agreed
NORTHWEST AIRLINES, INC.
By:
-----------------------------
Its:
----------------------------
8
APPENDIX 1
----------
The A320-200 Standard Specification, Document No. D.000.02000, Issue 4, dated
March 30, 1995, is contained in a separate folder.
1
APPENDIX 2
----------
LIST OF SCNs APPLICABLE TO THEA320 AIRCRAFT
RFC DESCRIPTION OF CUSTOMER OPTIONS
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APPENDIX 2
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LIST OF SCNs APPLICABLE TO THE A320 AIRCRAFT
RFC DESCRIPTION OF CUSTOMER OPTIONS
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APPENDIX 2
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LIST OF SCNs APPLICABLE TO THE A320 AIRCRAFT
RFC DESCRIPTION OF CUSTOMER OPTIONS
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APPENDIX 3
----------
A320 AIRCRAFT PRICES
1. PRICES
The Base Price of each A320 Aircraft is the sum of:
(i) the Base Price of the Airframe as set out in Subparagraph
1.2 below, and
(ii) the Base Price of the A320 Propulsion Systems as set out in
Subparagraph 1.3 below.
1.2 Base Price of the Airframe
1.2.1 The Base Price of the Airframe will be the sum of the Base Prices set
forth below in (i), (ii) and (iii):
(i) the Base Price of the Standard A320 Airframe, as defined in
the A320-200 Standard Specification set forth in Appendix 1 to
this Letter Agreement (excluding Buyer Furnished Equipment,
A320 Propulsion Systems and SCNs), at delivery conditions
prevailing in January 1998, which is:
US$ ***
(US dollars -- ***, and
(ii) the Base Price of any and all SCNs mutually agreed upon prior
to the signature of the Agreement and set forth in Appendix 2
to this Letter Agreement, at delivery conditions prevailing in
January 1998, which is:
US$ ***
(US dollars -- ***, and
(iii) the Base Price of seats and galleys, at delivery conditions
prevailing in January 1998 in the amount of:
US$ ***
(US dollars -- ***)
1.2.2 The Base Price of the Airframe of each A320 Aircraft will be revised to
the actual delivery date of such A320 Aircraft in accordance with the
Airframe Price Revision Formula set forth in Subclause 5.1 to the
Agreement.
1.2.3 ***
1.3 Base Price of the A320 Propulsion Systems
The Base Price of the A320 Propulsion Systems is the sum of (i) and
(ii) below:
(i) Base Price of the A320 Powerplants
The Base Price of a set of A320 Powerplants and additional
standard equipment at delivery conditions prevailing in
January 1998, which is:
US$ ***
(US dollars -- ***).
Said Base Price has been calculated with reference to the
Reference Price indicated by CFMI International of US$ *** (US
dollars -- ***) in accordance with economic conditions
prevailing in October 1985 (cpi 108.66).
Said Reference Price is subject to adjustment to the date of
delivery of the A320 Aircraft in accordance with the
Powerplants Price Revision Formula set forth in Appendix 4 to
this Letter Agreement.
(ii) Base Price of Nacelles and Thrust Reversers
The Base Price of a set of two (2) nacelles and two (2) thrust
reversers for the A320 Powerplants at delivery conditions
prevailing in January 1998, which is:
US$ ***
(US dollars -- ***).
Said Base Price is subject to adjustment to the date of
delivery of the A320 Aircraft in accordance with the Airframe
Price Revision Formula set forth in Subclause 5.1 to the
Agreement.
1.4 Validity of Propulsion Systems Prices
It is understood that the prices cited above and the price revision
formula referred to in Subparagraph 1.3 concerning the A320 Powerplants
and related equipment have been confirmed by CFM International for A320
Aircraft with deliveries on or prior to ***. Thereafter, such prices
and price revision formula remain subject to modifications that might
be communicated by the Powerplant manufacturer to AVSA, the
Manufacturer and/or Northwest.
2. PURCHASE INCENTIVES
2.1 AVSA will provide to Northwest upon delivery of each A320 Aircraft the
credit memoranda listed below in Subparagraphs 2.1(i) to 2.1(v),
inclusive. Hereinafter, the *** are collectively referred to as the
"AVSA A320 Credit Memoranda."
(i) ***
2
(ii) ***
(iii) ***
(iv) *** and
(v) ***
2.2 The AVSA A320 Credit Memoranda have been established in accordance with
January 1998 delivery conditions (dollars) and will be revised to the
actual delivery date of each A320 Aircraft in accordance with the
Airframe Price Revision Formula set forth in Subclause 5.1 to the
Agreement.
2.3 The AVSA A320 Credit Memoranda will, in each case and at Northwest's
option, be
(i) applied by AVSA against the Final Contract Price of each A320
Aircraft *** (excluding any portion thereof applied pursuant
to Subparagraph 2.3 (ii) of this Appendix) will be deemed to
be applied to the Final Contract Price of such Aircraft),
(ii) ***, or
(iii) used by Northwest for the purchase of goods and services from
AVSA or any of its Affiliates.
3
APPENDIX 4
----------
POWERPLANTS PRICE REVISION FORMULA
1. REFERENCE PRICE
The Reference Price of a set of two (2) CFM International CFM 56-5A1
engines and additional equipment is as quoted in Subparagraph 1.3(i) of
Appendix 3 to this Letter Agreement.
This Reference Price is subject to adjustment for changes in economic
conditions as measured by data obtained from the US Department of
Labor, Bureau of Labor Statistics, and in accordance with the
provisions of Paragraphs 4 and 5 of this Appendix 4.
2. REFERENCE PERIOD - REFERENCE COMPOSITE PRICE INDEX
The above Reference Price has been established in accordance with the
economic conditions prevailing in October 1985 (April 1986 theoretical
delivery conditions), as defined, according to CFM International, by
the Reference Composite Price Index of 108.66
3. REFERENCE INDEXES
Labor Index: "Aircraft Engines and Engine Parts," Standard Industrial
Classification 3724--Average hourly earnings (hereinafter referred to
as "HE SIC 3724"), published by the US Department of Labor, Bureau of
Labor Statistics, in "Employment and Earnings," Establishment Data:
Hours and Earnings (Table B-15: Average hours and earnings of
production or nonsupervisory workers on private nonfarm payrolls by
detailed industry).
Material Index (I): "Industrial Commodities" (hereinafter referred to
as "IC-Index"), published by the US Department of Labor, Bureau of
Labor Statistics, in "PPI Detailed Report" (Table 6: Producer price
indexes and percentage change for commodity groupings and individual
items, not seasonally adjusted). (Base year 1982 = 100.)
Material Index (II): "Metals and Metal Products" Code l0 (hereinafter
referred to as "MMP-Index"), published by the US Department of Labor,
Bureau of Labor Statistics, in "PPI Detailed Report" (Table 6: Producer
price indexes and percentage change for commodity groupings and
individual items, not seasonally adjusted).
(Base year 1982 = 100.)
Energy Index: "Fuels and Related Products and Power" Code 5
(hereinafter referred to as "EP-Index"), published by the US Department
of Labor, Bureau of Labor Statistics, in "PPI Detailed Report" (Table
6: Producer price indexes and percentage change for commodity groupings
and individual items, not seasonally adjusted).
(Base year 1982 = 100.)
4. REVISION FORMULA
Pn = Pb x CPIn
108.66
Where
Pn = Revised Reference Price of a set of two (2) engines
at delivery of the A320 Aircraft.
Pb = Reference Price as defined above.
CPIn = Composite Price Index for the sixth month prior to
the month of delivery of the A320 Aircraft.
Said Composite Price Index is composed as follows:
CPIn = 0.55 (HEn x 100) + 0.10 ICn + 0.25 MMPn + 0.10 EPn
---
(11.16)
Where
HEn = HE SIC 3724 for the sixth month prior to
the month of delivery of the A320 Aircraft;
the quotient HEn/11.16 is rounded to the
nearest third decimal place. The product by
0.55 is rounded to the nearest second
decimal place.
ICn = IC-Index for the sixth month prior to the
month of delivery of the A320 Aircraft.
MMPn = MMP-Index for the sixth month prior to the
month of delivery of the A320 Aircraft. The
product by 0.25 is rounded to the nearest
second decimal place.
EPn = EP-Index for the sixth month prior to the
month of delivery of the A320 Aircraft.
The Composite Price Index shall be determined to the second decimal
place. If the next succeeding decimal place is five (5) or more, the
preceding decimal figure shall be raised to the next higher figure.
The final factor shall be rounded to the nearest thousandth (3
decimals).
5. GENERAL PROVISIONS
5.1 The Revised Reference Price at delivery of the A320 Aircraft shall be
the final price and will not be subject to further adjustments in the
indexes.
5.2 If no final index value is available for any of the applicable months,
the published preliminary figures will be the basis on which the
Revised Reference Price will be computed.
2
5.3 If the US Department of Labor substantially revises the methodology of
calculation of the indexes referred to in this Appendix 4 or
discontinues any of these indexes, AVSA shall, in agreement with CFM
International, apply a substitute for the revised or discontinued
index, such substitute index to lead in application to the same
adjustment result, insofar as possible, as would have been achieved by
continuing the use of the original index as it may have fluctuated had
it not been revised or discontinued.
Appropriate revision of the formula shall be made to accomplish this
result.
5.4 Should the above escalation provisions become null and void by action
of the US Government, the Reference Price shall be adjusted to reflect
increases in the cost of labor, material and fuel which have occurred
from the period represented by the applicable Reference Price Indexes
to the sixth month prior to the scheduled delivery of the A320
Aircraft.
5.5 The Revised Reference Price at delivery of the A320 Aircraft in no
event shall be less than the Reference Price defined in Paragraph 1 of
this Appendix 4.
3
LETTER AGREEMENT NO. 3
As of September 19, 1997
Northwest Airlines, Inc.
0000 Xxxx Xxx Xxxxxxx
Xxxxx, Xxxxxxxxx 00000
Re: PREDELIVERY PAYMENTS
Dear Ladies and Gentlemen:
Northwest Airlines, Inc. ("Northwest"), and AVSA, S.A.R.L. ("AVSA"),
have entered into an Airbus X000-000 Xxxxxxxx Agreement, dated as of even date
herewith (the "Agreement"), which covers, among other things, the sale by AVSA
and the purchase by Northwest of certain Aircraft, under the terms and
conditions set forth in said Agreement. Northwest and AVSA have agreed to set
forth in this Letter Agreement No. 3 (the "Letter Agreement") certain additional
terms and conditions regarding the sale of the Aircraft. Capitalized terms used
herein and not otherwise defined in this Letter Agreement will have the meanings
assigned thereto in the Agreement. The terms "herein," "hereof" and "hereunder"
and words of similar import refer to this Letter Agreement.
Both parties agree that this Letter Agreement will constitute an
integral, nonseverable part of said Agreement, that the provisions of said
Agreement are hereby incorporated herein by reference, and that this Letter
Agreement will be governed by the provisions of said Agreement, except that if
the Agreement and this Letter Agreement have specific provisions that are
inconsistent, the specific provisions contained in this Letter Agreement will
govern.
1. PREDELIVERY PAYMENTS
AVSA hereby agrees to accept and Northwest agrees it will make
Predelivery Payments in the manner set forth in this Letter
Agreement.
2. *** PREDELIVERY PAYMENTS
2.1 Firm Aircraft
Upon execution of the Agreement and this Letter Agreement, ***.
2.2 Option Aircraft
2.2.1 In accordance with Subparagraph 2.4.1 of Letter Agreement No. 2 to
the Agreement, Northwest will pay to AVSA an Option Fee upon each
Option Exercise.
***
2.2.2 ***
2.2.3 In the event that, ***.
2.3 ***
2.3.1 ***
2.3.2 In the event that ***
2.4 ***
3. ***
3.1 In addition *** in accordance with Paragraph 2.2 hereof, ***
Subparagraphs 3.2 and 3.3 below.
3.2 In respect of ***.
3.3 In respect of ***
(i) with respect to ***
(ii) with respect to ***, and
(iii) ***
3.4 Northwest confirms to AVSA that, as of the date hereof, its senior
unsecured debt rating (as determined in accordance with the
methodology set forth in the definition of "Applicable Eurodollar
Margin" in the Credit Agreement dated as of December 15, 1995, as
amended and restated as of October 6, 1996, among Northwest and
various lending institutions (as attached hereto as Appendix 1) is
the following:
(i) BB - as quoted by S&P (the "S&P Base Rating"), and,
(ii) Ba2 as quoted by Xxxxx'x (the "Xxxxx'x Base Rating," and,
together with the S&P Base Rating, collectively referred to as
the "Base Ratings").
3.5 Northwest and AVSA agree that, in the event that prior to
delivery ***
(i) ***
(ii) ***
2
*** reasonably acceptable to AVSA.
Further, ***
4. MISCELLANEOUS
4.1 ***
(i) a portion of the *** equal to the amount of ***with respect to
each Aircraft (and the *** and the aggregate ***, if any,
shall be reduced by ***, such reduction to be applied in
chronological ***), or, in the event such Aircraft is subject
to ***, a portion of the *** equal to the amount set forth in
*** as to such Aircraft in the circumstances contemplated in
***, or upon the *** as to such Aircraft in the circumstances
contemplated in ***, or
(ii) the entire *** upon the *** by Northwest pursuant to ***.
Such amounts *** to the extent applicable in accordance with any such
***. For the avoidance of doubt, the ***.
4.2 AVSA and Northwest acknowledge that for the purposes of ***, each ***
(i) upon the as to the Aircraft to which it relates under *** in the
circumstances contemplated in such ***, (ii) upon the *** as to the
Aircraft to which it relates under *** in the circumstances
contemplated in such ***, or (iii) upon the *** by Northwest pursuant
to ***.
5. ASSIGNMENT
Notwithstanding any other provision of this Letter Agreement or of
the Agreement, this Letter Agreement and the rights and obligations
of Northwest hereunder will not be assigned or transferred in any
manner without the prior written consent of AVSA, and any attempted
assignment or transfer in contravention of the provisions of this
Paragraph 5 will be void and of no force or effect.
3
If the foregoing correctly sets forth our understanding, please
execute the original and one (1) copy hereof in the space provided below and
return a copy to AVSA.
Very truly yours,
AVSA, S.A.R.L.
By: ________________________
Its: _______________________
Accepted and Agreed
NORTHWEST AIRLINES, INC.
By: ________________________
Its: ________________________
4
APPENDIX 1
----------
"Applicable Eurodollar Margin" and "Applicable Commitment Fee
Percentage" shall mean, as of any date of determination, the percentage set
forth below under the appropriate heading corresponding to the senior unsecured
debt rating of the Borrower ***:
--------------------------------------------------------------------------------
*** ***
Senior Unsecured Debt Rating of
the Borrower
Level (S&P/Xxxxx'x)
--------------------------------------------------------------------------------
1 A- or higher or A3 or higher *** ***
--------------------------------------------------------------------------------
2 BBB+ or Baa1 *** ***
--------------------------------------------------------------------------------
3 BBB or Baa2 *** ***
--------------------------------------------------------------------------------
4 BBB- or Baa3 *** ***
--------------------------------------------------------------------------------
5 BB+ or Ba1 *** ***
--------------------------------------------------------------------------------
6 BB or Ba2 *** ***
--------------------------------------------------------------------------------
7 BB- or Ba3 *** ***
--------------------------------------------------------------------------------
8 lower than BB- or lower than Ba3 *** ***
--------------------------------------------------------------------------------
***, as the case may be.
In the event either Rating Agency ceases to rate the Borrower's
senior unsecured debt for any reason, then the rating of NWA by such Rating
Agency with respect to the senior unsecured debt of NWA *** shall be used for
purposes of ***, as the case may be.
Any necessary adjustment in the Applicable Eurodollar Margin or the
Applicable Commitment Fee Percentage, as the case may be, pursuant to the terms
hereof shall become effective immediately upon any change in a Rating.
1
LETTER AGREEMENT NO. 4
As of September 19, 1997
Northwest Airlines, Inc.
0000 Xxxx Xxx Xxxxxxx
Xxxxx, Xxxxxxxxx 00000
Re: AIRCRAFT CUSTOMIZATION
Dear Ladies and Gentlemen:
Northwest Airlines, Inc. ("Northwest"), and AVSA, S.A.R.L. ("AVSA"),
have entered into an Airbus X000-000 Xxxxxxxx Agreement, dated as of even date
herewith (the "Agreement"), which covers, among other things, the sale by AVSA
and the purchase by Northwest of certain Aircraft, under the terms and
conditions set forth in said Agreement. Northwest and AVSA have agreed to set
forth in this Letter Agreement No. 4 (the "Letter Agreement") certain additional
terms and conditions regarding the sale of the Aircraft. Capitalized terms used
herein and not otherwise defined in this Letter Agreement will have the meanings
assigned thereto in the Agreement. The terms "herein," "hereof" and "hereunder"
and words of similar import refer to this Letter Agreement.
Both parties agree that this Letter Agreement will constitute an
integral, nonseverable part of said Agreement, that the provisions of said
Agreement are hereby incorporated herein by reference, and that this Letter
Agreement will be governed by the provisions of said Agreement, except that if
the Agreement and this Letter Agreement have specific provisions that are
inconsistent, the specific provisions contained in this Letter Agreement will
govern.
1. AIRCRAFT WEIGHTS
AVSA will increase the maximum take-off weight ("MTOW") of each
Aircraft that is an A319 type Aircraft from 64 metric tonnes as
specified in Subclause 2.2 of the Agreement, to *** metric tonnes,
subject to the provisions of this Paragraph 1.
AVSA and Northwest will enter, as soon as feasible following
execution of the Agreement, into an SCN applicable to all Firm
Aircraft that are A319 type aircraft specifying such MTOW upgrade
from 64 metric tonnes to *** metric tonnes (the "MTOW Upgrade SCN").
AVSA will make available the MTOW Upgrade SCN to Northwest at
identical terms as provided in Paragraph 1 of this Letter Agreement
for each Aircraft, other than Firm Aircraft, that is an A319
Aircraft.
The price for the MTOW Upgrade SCN for each Aircraft that is an
A319 model Aircraft is US *** in January 1998 delivery conditions
(dollars), subject to price revision in accordance with the
Airframe Price Revision Formula. ***:
a) ***
b) ***
c) ***
2. ENGINE CONVERSION
2.1 Engine Conversion prior to Delivery
Should Northwest wish to convert the CFM56-5A4 Powerplants into
CFM56-5A5 Powerplants, on any of the A319 type Aircraft not yet
delivered to Northwest, then AVSA will perform such conversion,
provided that Northwest executes the associated SCN at least ***
months prior to the month of delivery of the corresponding A319
Aircraft. Such SCN will identify the price difference of the
Powerplants manufacturer's reference prices of the CFM56-5A4
Powerplants and the CFM56-5A5 Powerplants. ***
Should Northwest request, on an exceptional basis, to convert the
Powerplants of the Aircraft within *** prior to the month of
delivery of the corresponding A319 Aircraft, then AVSA will provide
a quote for such Powerplant change upon Northwest's request.
2.2 Engine Conversion after Delivery
Should Northwest wish to convert the CFM56-5A4 Powerplants into
CFM56-5A5 Powerplants, on A319 type Aircraft already delivered to
Northwest pursuant to the Agreement, then AVSA will provide, upon
receipt of Northwest's purchase order, the asscociated Service
Bulletin at a price of US ***, such price being quoted in January
1998 delivery conditions and to be revised in accordance with the
Airframe Price Revision Formula. This Service Bulletin will cover
the Airframe related modifications only, including the update of the
applicable Aircraft Flight Manual as well as the applicable Airframe
data plates. However, any changes in the prices of the Powerplants,
and the Powerplant name plates are excluded from this quotation.
3. CUSTOMIZATION
The Base Prices of SCNs and seats and galleys as listed in Exhibit B
to the Agreement are as stated in Subclauses 4.1.1.1(ii) and (iii)
of the Agreement. Such Base Prices are exclusive of Buyer Furnished
Equipment.
4. AVSA FURNISHED EQUIPMENT / BUYER FURNISHED EQUIPMENT
4.1 Exhibit B to the Agreement includes certain BFE that is converted into
SFE. Northwest and AVSA will, as soon as feasible after execution of
the Agreement, enter into applicable SCN's with respect to those BFE to
SFE conversions. ***.
2
4.2 At Northwest's election and within the leadtimes quoted in Appendix 1
to this Letter Agreement, Northwest may specify that certain Seller
Furnished Equipment as listed in Appendix 1 hereto be purchased by
Northwest, thus changing such Seller Furnished Equipment into Buyer
Furnished Equipment. In the event that Northwest elects to change
Seller Furnished Equipment into Buyer Furnished Equipment, AVSA and
Northwest will execute an SCN reflecting Northwest's request and
specifying the applicable credit amount listed in Appendix 1 hereto
(the "SFE to BFE SCN"). Upon execution of the SFE to BFE SCN, AVSA will
provide Northwest with a credit as stated in the SFE to BFE SCN for
such change (the "SFE to BFE Credit").
4.3 The SFE to BFE Credit has been established in accordance with January
1998 delivery conditions (dollars) and will be revised to the actual
delivery date of each Aircraft in accordance with the Airframe Price
Revision Formula set forth in Exhibit D to the Agreement.
4.4 Upon delivery of each Aircraft, the SFE to BFE Credit will be applied
by AVSA against the Final Contract Price of each Aircraft ***.
4.5 AVSA confirms *** for the provision, installation or handling of Seller
Furnished Equipment converted to Buyer Furnished Equipment in
accordance with this Paragraph 4.
4.6 Unless specified to the contrary herein, the terms of Clause 18 of the
Agreement will apply to Seller Furnished Equipment that is converted to
Buyer Furnished Equipment pursuant to this Paragraph 4.
4.7 The AVSA-Supplied Buyer Furnished Equipment in the Aircraft
Customization as set forth in Exhibit B to the Agreement and in
Appendix 3 to Letter Agreement No. 2 are ***.
5. SPECIFICATION CHANGES
5.1 Pursuant to the terms contained in this Xxxxxxxxx 0, Xxxxxxxxx may
chose to cancel certain SCNs listed in Exhibit B to the Agreement. The
SCNs that may be so cancelled and applicable leadtimes for cancellation
are listed in Appendix 2 hereto (the "Cancelable SCN(s)").
5.2 In the event that Northwest chooses to cancel the Cancelable SCN(s),
Northwest will notify AVSA in writing of such request. Northwest and
AVSA will execute an SCN (i) reflecting Northwest's request to
eliminate the Cancelable SCN(s) from the Specification and (ii)
specifying the applicable credit amount listed in Appendix 2 hereto
(the "Cancellation SCN"). Further, upon execution of each Cancellation
SCN, AVSA will provide Northwest with a credit for such change as
listed in Appendix 2 hereto (the "Cancellation SCN Credit").
5.3 The Cancellation SCN Credit has been established in accordance with
January 1998
3
delivery conditions (dollars) and will be revised to the actual
delivery date of each Aircraft in accordance with the Airframe Price
Revision Formula set forth in Exhibit D to the Agreement.
5.4 Upon delivery of each Aircraft, the Cancellation SCN Credit will be
applied by AVSA against the Final Contract Price of each Aircraft ***.
6. CERTAIN REGULATORY CHANGES
Should AVSA be required pursuant to Subclause 3.4 of the Agreement
to incorporate a change in the Specification of the Aircraft before
delivery of an Aircraft to enable Northwest to obtain a Standard
Airworthiness Certificate for such Aircraft by reason of the
promulgation of any law or regulation applicable to the Aircraft ***.
7. ASSIGNMENT
Notwithstanding any other provision of this Letter Agreement or of
the Agreement, this Letter Agreement and the rights and obligations
of Northwest hereunder will not be assigned or transferred in any
manner without the prior written consent of AVSA, and any attempted
assignment or transfer in contravention of the provisions of this
Paragraph 7 will be void and of no force or effect.
4
If the foregoing correctly sets forth our understanding, please execute
the original and one (1) copy hereof in the space provided below and return a
copy to AVSA.
Very truly yours,
AVSA, S.A.R.L.
By: ________________________
Its: ________________________
Accepted and Agreed
NORTHWEST AIRLINES, INC.
By: ________________________
Its: ________________________
5
APPENDIX 1
----------
SELLER FURNISHED EQUIPMENT TO BUYER FURNISHED EQUIPMENT CREDITS
Notification Leadtime: no later than *** months prior to delivery of the
applicable Aircraft.
Credit Amount
Quantity Description/Part Number Vendor/Remarks (1/98 DC)
-------- ----------------------- -------------- ---------
*** *** *** ***
---------------------------------------------------------------------
*** *** *** ***
---------------------------------------------------------------------
*** *** *** ***
---------------------------------------------------------------------
*** *** *** ***
---------------------------------------------------------------------
*** *** *** ***
---------------------------------------------------------------------
*** *** *** ***
---------------------------------------------------------------------
*** *** *** ***
---------------------------------------------------------------------
*** *** *** ***
---------------------------------------------------------------------
*** *** *** ***
---------------------------------------------------------------------
*** *** *** ***
---------------------------------------------------------------------
*** *** *** ***
---------------------------------------------------------------------
*** *** *** ***
---------------------------------------------------------------------
*** *** *** ***
---------------------------------------------------------------------
*** *** *** ***
---------------------------------------------------------------------
*** ***
---------------------------------------------------------------------
6
APPENDIX 2
----------
CREDITS FOR ELIMINATION OF CUSTOMIZATION ITEMS
Notification Leadtime: no later than *** months prior to delivery of the
applicable Aircraft
Credit
RFC No. Title (1/98 DC)
*** *** ***
--------------------------------
*** *** ***
--------------------------------
*** *** ***
--------------------------------
*** *** ***
--------------------------------
*** *** ***
--------------------------------
*** *** ***
--------------------------------
*** *** ***
--------------------------------
*** *** ***
--------------------------------
7
LETTER AGREEMENT NO. 5
As of September 19, 1997
Northwest Airlines, Inc.
0000 Xxxx Xxx Xxxxxxx
Xxxxx, Xxxxxxxxx 00000
Re: RELIABILITY GUARANTEES
Dear Ladies and Gentlemen:
Northwest Airlines, Inc. ("Northwest"), and AVSA, S.A.R.L. ("AVSA"),
have entered into an Airbus X000-000 Xxxxxxxx Agreement, dated as of even date
herewith (the "Agreement"), which covers, among other matters, the sale by AVSA
and the purchase by Northwest of certain Aircraft, under the terms and
conditions set forth in said Agreement. Northwest and AVSA have agreed to set
forth in this Letter Agreement No. 5 (the "Letter Agreement") certain additional
terms and conditions regarding the sale of the Aircraft. Capitalized terms used
herein and not otherwise defined in this Letter Agreement will have the meanings
assigned thereto in the Agreement. The terms "herein," "hereof" and "hereunder"
and words of similar import refer to this Letter Agreement.
Both parties agree that this Letter Agreement will constitute an
integral, nonseverable part of said Agreement, that the provisions of said
Agreement are hereby incorporated herein by reference, and that this Letter
Agreement will be governed by the provisions of said Agreement, except that if
the Agreement and this Letter Agreement have specific provisions that are
inconsistent, the specific provisions contained in this Letter Agreement will
govern.
AVSA, under its arrangement with the Manufacturer, has negotiated and
obtained the following reliability guarantees from the Manufacturer with respect
to the Aircraft, subject to the terms, conditions, limitations and restrictions
all as hereinafter set out. *** Capitalized terms used in the following quoted
provisions and not otherwise defined therein shall have the meanings assigned
thereto in the Agreement, except that the term "Seller" refers to the
Manufacturer and the term "Buyer" refers to AVSA.
QUOTE
1. SCOPE, COMMENCEMENT, DURATION
The reliability guarantees contained in this Letter Agreement (the
"Guarantees") extend to
1
the fleet of Aircraft operated by the Buyer (the "Guaranteed
Aircraft"), shall commence with delivery of the first Aircraft and ***.
2. DEFINITION
2.1 Scheduled Departure
A "Scheduled Departure" is a departure of a Guaranteed Aircraft as set
forth in the Buyer's time table, and any scheduled charter flight of a
Guaranteed Aircraft.
2.2 Chargeable Event
A "Chargeable Event" will be deemed to have occurred when a Guaranteed
Aircraft does not leave the gate within one (1) minute after its
scheduled departure time for the Northwest delay code reasons listed
below, as such delay codes are defined in Northwest Airlines' System
Delay Code Bulletin dated December 31, 1996 (the "Codes"). These Codes
may be changed during the Term, provided, however, that material
changes in the Codes will be mutually agreed between the Buyer and the
Seller.
Included Codes:
CIM - RESET / RECYCLE / EXERCISE COMPONENTS
DFM - DEFERRAL
EQM - EQUIPMENT CHANGE DUE TO MECHANICAL MALFUNCTION
IRM - IRREGULAR ROUTING - MAINTENANCE
LQM - LATE EQUIPMENT - MAINTENANCE
MPM - PLANNED MAINTENANCE ROUTING
MTM - MECHANICAL MALFUNCTION
NOM - MAINTENANCE - CHECKED OK
XXX - PASSENGER ACCOMMODATION - MAINTENANCE (provided that
the originating flight was an A319 aircraft)
PCM - LATE MAINTENANCE - PASSENGER
PRM - PART(S) ROBBED
RBM - RETURN TO GATE DUE TO MAINTENANCE
XOM - MAINTENANCE - CHECKED OK
XRM - PART(S) ROBBED
XTM - MECHANICAL MALFUNCTION
XQM - EQUIPMENT MAINTENANCE
2.3 Exclusions
The following will not be counted as Chargeable Events:
- repetitive delays or cancellations that occur as a result of
failure to apply correct trouble shooting procedures in
accordance with the Trouble Shooting Manual; and
2
- delays attributable to the Propulsion Systems.
2.4 Completion Factor
The Completion Factor is the percentage of the completed scheduled
arrivals of Guaranteed Aircraft, based on the Codes in Subparagraph 2.2
hereof which start with "X".
2.5 Achieved On-Time Performance
"Achieved On-Time Performance," expressed as a percent, shall be
computed quarterly (a "Computation") for each calendar quarter (the
"Computation Period") as follows:
Total number of Scheduled Departures
Achieved without Chargeable Events during the
On-Time = Computation Period X 100
Performance ------------------------------------
Total number of Scheduled Departures
during the Computation Period
3. GUARANTEES
3.1 Achieved On-Time Performance Guarantee
***
3.2 Completion Factor Guarantee
***
3.3 Increase of Guarantee Levels
***
4. BUYER'S AND SELLER'S OBLIGATION
4.1 Buyer's and Seller's Obligations
The Buyer's and Seller's specialists will meet, not later than three
(3) months before delivery of the first Guaranteed Aircraft, to
mutually agree on the details of the appropriate reporting procedure(s)
for the Guarantees.
4.2 Buyer's Obligations
3
***
4.3 Seller's Obligations
During the Term, the Seller will provide technical and operational
analyses of delays and cancellations and will develop corrections
intended to reduce delays and, in the event that the Achieved On-Time
Performance or the Completion Factor fall below the guaranteed levels
set forth in Paragraph 3 herein, the Seller shall, not later than six
(6) months (where practicable) after notification by the Buyer and at
no charge to the Buyer :
***
5. SUSPENSION AND ADJUSTMENT
5.1 Suspension of Guarantees
The provisions of the Guarantees will be suspended during any
Computation Period during which:
Rf < Ro - 0.5%
Where:
Ro is the dispatch reliability, expressed as a percentage, as computed
by the Manufacturer and published in the "Quarterly Service Report," of
the fleet of aircraft of the same type as the Guaranteed Aircraft
operated by major airlines in the U.S., but excluding the Guaranteed
Aircraft, during a Computation Period.
Rf is the dispatch reliability, expressed as a percentage, as computed
by the Manufacturer and published in the "Quarterly Service Report," of
the Guaranteed Aircraft fleet during the same Computation Period.
5.2 Adjustment of Guarantees
Any significant certification, regulatory or Aircraft operation changes
implemented by the Buyer that have a material adverse effect on the
operational characteristics of the Guaranteed Aircraft shall be cause
for reevaluation or adjustment of the guaranteed levels set forth in
Paragraph 3 by mutual agreement between the Buyer and the Seller.
6. REVIEW MEETINGS
6.1 Specialists' Review Meeting
An Achieved On-Time Performance / Completion Factor review meeting
between the
4
Seller's and the Buyer's representatives shall be scheduled at the end
of each six (6) month period during the Term, or at more frequent
intervals to be mutually agreed. Representatives of the Buyer and the
Seller shall participate in the meeting and will:
a) review current Achieved On-Time Performance and Completion
Factor,
b) review the correctness of Code and cancellation allocations,
c) review the Buyer's training levels set forth in Subparagraph
3.3,
d) consider corrective action, if required, and
e) review any issues arising out of the implementation of the
provisions of Paragraph 4 above.
6.2 Reliability Council
In recognition of the mutual benefits accruing to the Buyer and the
Seller from Airbus aircraft reliability improvements, the Buyer and the
Seller hereby establish a reliability council (the "Reliability
Council") to improve the Achieved On-Time Performance and Completion
Factor (as defined in this Letter Agreement) of all Airbus aircraft in
the Buyer's fleet. The Reliability Council shall be comprised of
(i) for the Buyer, the Senior Vice President - Technical
Operations and Airport Affairs, the Vice President - Finance
and Assistant Treasurer and the Vice President - Line
Maintenance Operations, and
(ii) on behalf of the Seller, the President of ASCO, and the
President of Airbus Industrie of North America
and such other members as the Buyer and Seller may agree.
The Seller agrees to the Buyer's inviting the Propulsion Systems
manufacturer to participate in the Reliability Council, it being
understood that the participation of the Propulsion Systems
manufacturer shall not be deemed to extend the Seller responsibilities
under this Letter Agreement to Propulsion Systems matters and issues.
During the Term, the Reliability Council shall meet quarterly to review
the Buyer's Achieved On-Time Performance and Completion Factor and to
devise strategies and programs to improve performance in these areas.
At the end of the Term, the Buyer and the Seller shall mutually agree
on further cooperation with respect to reliability matters.
The Buyer and the Seller shall commit such resources of their
respective organizations as are required to assure that the Reliability
Council will be an effective tool for the
5
purposes set forth above.
6.3 Buyer's Target Completion Factor
***
7. LIABILITY LIMITATION
The Seller's liability for failure to meet this Guarantee shall be
governed solely by the terms of this Guarantee.
UNQUOTE
8. REMEDIES
8.1 At the end of each calendar quarter during the Term of the Guarantee,
AVSA and Northwest shall jointly compare the quarterly average Achieved
On-Time Performance and Completion Factor with the quarterly average
Achieved On-Time Performance and Completion Factor as set forth in
Subparagraphs 3.1 and 3.2, or 3.3 above (if applicable).
For each calendar quarter during the Term during which an Achieved
On-Time Performance or Completion Factor shortfall is found, AVSA shall
***:
(i) in the case of Achieved On-Time Performance, ***
(ii) in the case of Completion Factor, ***.
***
9. ASSIGNMENT
Notwithstanding any other provision of this Letter Agreement or of the
Agreement, this Letter Agreement and the rights and obligations of
Northwest hereunder shall not be assigned or transferred in any manner
without the prior written consent of AVSA, and any attempted assignment
or transfer in contravention of the provisions of this Paragraph 9
shall be void and of no force or effect.
6
If the foregoing correctly sets forth our understanding, please execute the
original and one (1) copy hereof in the space provided below and return a copy
to AVSA.
Very truly yours,
AVSA, S.A.R.L.
By: ________________________
Its: ________________________
Accepted and Agreed
NORTHWEST AIRLINES, INC.
By: ________________________
Its: ________________________
7
LETTER AGREEMENT NO. 6
As of September 19, 1997
Northwest Airlines, Inc.
0000 Xxxx Xxx Xxxxxxx
Xxxxx, Xxxxxxxxx 00000
Re: X000-000 XXXXXXXXXX
Dear Ladies and Gentlemen:
Northwest Airlines, Inc. ("Northwest"), and AVSA, S.A.R.L. ("AVSA"),
have entered into an Airbus X000-000 Xxxxxxxx Agreement, dated as of even date
herewith (the "Agreement"), which covers, among other things, the sale by AVSA
and the purchase by Northwest of certain Aircraft, under the terms and
conditions set forth in said Agreement. Northwest and AVSA have agreed to set
forth in this Letter Agreement No. 6 (the "Letter Agreement") certain additional
terms and conditions regarding the sale of the Aircraft. Capitalized terms used
herein and not otherwise defined in this Letter Agreement will have the meanings
assigned thereto in the Agreement. The terms "herein," "hereof" and "hereunder"
and words of similar import refer to this Letter Agreement.
Both parties agree that this Letter Agreement will constitute an
integral, nonseverable part of said Agreement, that the provisions of said
Agreement are hereby incorporated herein by reference, and that this Letter
Agreement will be governed by the provisions of said Agreement, except that if
the Agreement and this Letter Agreement have specific provisions that are
inconsistent, the specific provisions contained in this Letter Agreement will
govern.
PART A A319-100 PERFORMANCE GUARANTEES
AVSA, under its arrangement with the Manufacturer, has negotiated and
obtained the following performance guarantees from the Manufacturer with respect
to the Aircraft, subject to the terms, conditions, limitations and restrictions
all as hereinafter set out. AVSA hereby guarantees to Northwest the performance
by the Manufacturer of its obligations under these reliability guarantees and
hereby assigns to Northwest, and Northwest hereby accepts, all of AVSA's rights
and obligations as aforesaid under the said performance guarantees, and AVSA
subrogates Northwest into all such rights and obligations in respect of the
Aircraft. AVSA hereby warrants to Northwest that it has all requisite authority
to make the foregoing assignment and effect the foregoing subrogation to and in
favor of Northwest and that it will not enter into any amendment of the
provisions so assigned or subrogated without the prior written consent of
Northwest. Capitalized terms used in the following quoted provisions and not
otherwise defined therein shall have the meanings assigned thereto in the
Agreement, except that the term "Seller" refers to the Manufacturer and the term
"Buyer" refers to AVSA.
QUOTE
PREAMBLE
A. Assumptions:
The guarantees defined below in this Part A are applicable at
the time of delivery to each A319-100 Aircraft as described in
the A319-100 Standard Specification Ref. J.000.01000, Issue 3,
dated March 29, 1995, including Temporary Revision 1, dated
August 25, 1995, on the basis of the following assumptions:
(i) Maximum Take Off Weight (MTOW) of ***
(ii) fitting of either
(x) the CFM International CFM56-5A4 engines
(22,000 lbs thrust), or
(y) the CFM International CFM56-5A5 engines
(23,500 lbs thrust),
except where otherwise noted.
B. Definitions:
(i) For the purpose of this Part A of this Letter
Agreement only, the term "Aircraft" is defined as any
and all of the Airbus A319-100 model aircraft to be
acquired by the Buyer under the Agreement.
(ii) ***
1. GUARANTEED PERFORMANCE
1.1. Speed
The level flight airspeed at an Aircraft gross weight of *** pounds at
a pressure altitude of 35,000 feet using maximum cruise thrust in ISA
conditions shall not be less than a true Mach number of ***.
1.2 En-Route One Engine Inoperative
Each Aircraft shall meet FAR 25 regulations minimum en-route climb
gradient (currently 1.1%) with one engine inoperative, the other
operating at the maximum continuous thrust available at the altitude
with air conditioning bleeds on, without anti-icing, at a gross weight
of *** pounds in the cruise configuration in ISA conditions, at a
geometric altitude of *** feet.
1.3 Take-off distance
2
1.3.1 With respect only to Aircraft delivered with CFM56-5A4 engines, FAR
take-off length at an Aircraft gross weight of *** pounds at a start of
ground run at sea level pressure altitude at ISA conditions shall not
be more than *** feet.
1.3.2 With respect only to Aircraft delivered with CFM56-5A5 engines, FAR
take-off length at an Aircraft gross weight of *** pounds at a start of
ground run at sea level pressure altitude at ISA conditions shall not
be more than *** feet.
1.4 Take-off performance
1.4.1 With respect only to Aircraft delivered with CFM56-5A4 engines, FAR
permissible take-off weight shall not be less than *** pounds in the
following conditions (assumed representative of ***):
Pressure altitude: ***
Runway length: ***
Slope: ***
Obstacles: ***
1.4.2 With respect only to Aircraft delivered with CFM56-5A5 engines, FAR
permissible take-off weight shall not be less than *** pounds in the
same conditions as set forth in Subparagraph 1.4.1 of Part A above
(assumed representative of ***.
1.4.3 With respect only to Aircraft delivered with CFM56-5A4 engines, FAR
permissible take-off weight shall not be less than *** pounds in the
following conditions (assumed representative of ***):
Pressure altitude: ***
Runway length: ***
Slope: ***
Obstacles: ***
1.4.4 With respect only to Aircraft delivered with CFM56-5A5 engines, FAR
permissible take-off weight shall not be less than *** pounds in the
same conditions as set forth in Subparagraph 1.4.3 of Part A above
(assumed representative of ***).
1.5 Second segment climb
Each Aircraft shall meet FAR 25 regulations for one engine inoperative
climb after take-off, undercarriage retracted, at a weight
corresponding to the stated weight at the start of the ground run, at
the altitude and temperature, and in the configuration of flap angle
and take-off safety speed, required to comply respectively with the
performance guaranteed in Subparagraph 1.3 and 1.4 of this Part A.
1.6 Climb performance
3
Each Aircraft shall be capable of climbing from 1,500 feet to pressure
altitude of 35,000 feet at an Aircraft gross weight of *** pounds in
ISA conditions using a climb profile of 250/280kt CAS/M.076 with a
minimum rate of climb of 300 feet per minute in *** minutes.
1.7 Landing distance
FAR certified landing field length at an Aircraft gross weight of ***
pounds at sea level pressure altitude shall not be greater than ***
feet.
1.8 External noise
Each Aircraft will comply with FAR Part 36 Amendment 9 and with ICAO
Annex 16 Chapter 3 with cumulative margins from flyover, sideline, and
approach of *** EPNdB.
2. FUEL BURN GUARANTEE
2.1 *** Aircraft Specific Range
The level flight specific range at an Aircraft gross weight of ***
pounds at a pressure altitude of 35,000 feet operating at M.78 at ISA
conditions shall not be less than *** nautical miles per pound of fuel
for each Aircraft (the "Guaranteed *** Aircraft Specific Range").
2.2 *** Specific Range
With respect to the ***, the level flight specific range at an Aircraft
gross weight of *** pounds at a pressure altitude of 35,000 feet
operating at M.78 at ISA conditions shall not be less than *** nautical
miles per pound of fuel *** (the "Guaranteed *** Specific Range").
3. MISSION PAYLOAD RANGE GUARANTEE
3.1 Mission No. 1 - ***
Each Aircraft shall be capable of carrying a guaranteed payload of not
less than
*** pounds for Aircraft delivered with CFM56-5A4 engines,
*** pounds for Aircraft delivered with CFM56-5A5 engines
over an equivalent still air stage distance of *** nautical miles
(assumed representative of *** for a summer operation) when operated
under the conditions described below.
4
a) Available takeoff weight is assumed to be
(i) *** pounds for Aircraft delivered with CFM56-5A4 engines,
and
(ii) *** pounds for Aircraft delivered with CFM56-5A5 engines.
b) The destination airport conditions are such to allow the
required landing weight to be used without performance
restrictions and without exceeding the Maximum Landing Weight
as defined in the A319 Standard Specification referenced in
the Preamble.
Profile assumes the following:
c) Allowance of 250 pounds for engine start and taxi out.
Take-off and initial climb to 1,500 feet above airfield
elevation with acceleration to climb speed in ISA conditions
(two minutes time and fuel allowance). No distance credit for
takeoff climb to 1,500 feet. Climb from 1,500 feet above
airfield elevation up to a cruise altitude using maximum climb
thrust and cruise at a pressure altitude of 39,000 feet at a
fixed Mach number of 0.78 and descent to 1,500 feet above
airfield elevation are conducted in ISA conditions. Climb
speeds to be used should be 250kt/280kt/M76 and descent speeds
should be M76/250kt to 1500 feet. An allowance of 300 pounds
of fuel is assumed for approach and landing at the destination
and also includes an allowance for maneuvering fuel. No
distance credit for approach and landing and maneuvering.
d) Stage distance is defined as the distance covered during
climb, cruise, and descent as described in c. above.
e) Trip fuel is defined as the fuel used during take-off and
initial climb, climb, cruise, descent, approach and landing
and maneuvering as described in c. above.
f) Total fuel required shall not exceed *** pounds. Total fuel
required is defined as taxi out allowance, trip fuel, and fuel
on landing as described in (g) below.
g) At the end of approach and landing *** pounds of fuel shall
remain in the tanks.
h) The mission payload guarantee is based on an Operating Weight
Empty (OWE) composed of the actual Manufacturer's Weight Empty
plus the following fixed allowances:
*** pounds for customer changes
*** pounds for operator items
3.2. Mission No. 2 - ***
5
Each Aircraft shall be capable of carrying a guaranteed payload of not
less than *** pounds over an equivalent still air stage distance of ***
nautical miles (assumed representative of *** for a winter operation)
when operated under the conditions described below.
a) Available takeoff weight is assumed to be *** pounds.
b) The destination airport conditions are such to allow the
required landing weight to be used without performance
restrictions and without exceeding the Maximum Landing Weight
as defined in the A319 Standard Specification referenced in
the Preamble.
Profile assumes the following:
c) Allowance of 250 pounds for engine start and taxi out.
Take-off and initial climb to 1,500 feet above airfield
elevation with acceleration to climb speed in ISA conditions
(two minutes time and fuel allowance). No distance credit for
takeoff climb to 1,500 feet. Climb from 1,500 feet above
airfield elevation up to a cruise altitude using maximum climb
thrust and cruise at a pressure altitude of 35,000 feet
stepping to 39,000 feet at a fixed Mach number of 0.78 and
descent to 1,500 feet above airfield elevation are conducted
in ISA conditions. Climb speeds to be used should be
250kt/280kt/M76 and descent speeds should be M76/250kt to 1500
feet. An allowance of 300 pounds of fuel is assumed for
approach and landing at the destination and also includes an
allowance for maneuvering fuel. No distance credit for
approach and landing and maneuvering.
d) Stage distance is defined as the distance covered during
climb, cruise, and descent as described in c. above.
e) Trip fuel is defined as the fuel used during take-off and
initial climb, climb, cruise, descent, approach and landing
and maneuvering as described in (c) above.
f) Total fuel required shall not exceed *** pounds. Total fuel
required is defined as taxi out allowance, trip fuel, and fuel
on landing as described in (g) below.
g) At the end of approach and landing *** pounds of fuel shall
remain in the tanks.
h) The mission payload guarantee is based on an Operating Weight
Empty (OWE) composed of the actual Manufacturer's Weight Empty
plus the following fixed allowances:
*** pounds for customer changes
*** pounds for operator items
4. WEIGHT GUARANTEES
6
4.1 Manufacturer's Weight Empty
The Seller guarantees that the Manufacturer's Weight Empty (as defined
in the A319- 100 Standard Specification set forth in the Preamble) of
each Aircraft, which will be derived from the weighing of each
Aircraft, shall not be more than *** pounds for any individual Aircraft
and shall not be more than *** pounds for the ***.
4.2 Structural Usable Load
The Seller guarantees that the excess of the Maximum Zero Fuel Weight
(as defined in the A319 Standard Specification set forth in the
Preamble) of each Aircraft over the Operating Weight Empty (as defined
below) of such Aircraft shall not be less than *** pounds for any
individual Aircraft and shall not be less than *** pounds for the ***.
Operating Weight Empty is the sum of the Manufacturer's Weight Empty
(as defined in the Type Specification set forth in the Preamble) plus
the following fixed allowances:
*** pounds for customer changes
*** pounds for operator items
5. GENERAL GUARANTEE CONDITIONS
5.1. Aircraft Configuration
Seller reserves the right to make reasonable and appropriate
adjustments to the guarantees set forth in this Part A for any
configuration change or deviation from the A319-100 Standard
Specification which is agreed between Buyer and Seller subsequent to
the date hereof, provided that any such adjustment is made
contemporaneously with such A319-100 Standard Specification change or
deviation.
5.2. Performance Definitions
5.2.1. Performance and noise certification rules will be those required to
obtain FAR certification under the FAA Airworthiness Code as defined in
the Type Specification.
5.2.2. All performance data is based on the International Standard Atmosphere
and specified variations. Unless otherwise stated all altitudes are
pressure altitudes.
5.2.3. Unless otherwise stated, take-off and landing performance is based upon
a hard, smooth, dry and level runway surface with zero wind.
5.2.4. Take-off and landing performance is based on the brakes and tires as
specified in the aircraft configuration defined in the Preamble.
7
5.2.5. Devices such as flaps, landing gear, speed brakes, wheel brakes,
anti-skid and engines will be employed in the manner which provides the
best performance standard consistent with approved operations.
5.2.6. All guaranteed performance in this Part A is based upon no air bleed
from the engines for airframe or engine anti-icing.
5.2.7. For take-off and take-off climb performance, landing and landing climb
performance, no air will be bled from the engine for air conditioning.
5.2.8. For en route performance, engine bleeds consistent with normal
operation of the air conditioning system, including recirculation, are
assumed.
5.2.9. Normal electrical services will be in use consistent with the typical
load schedule given in the A319 Standard Specification.
5.2.10. All guaranteed performance in this Part A assumes the use of approved
fuel with a Lower Heating Value (the "LHV") of 18,590 BTU/lb. and with
a specific gravity of 6.7 pounds / gallon as such.
5.3. Compliance
5.3.1. The Seller shall provide to Buyer a guarantee compliance report
providing the compliance data for each Aircraft immediately prior to
acceptance of the Aircraft by the Buyer (the "Guarantee Compliance
Report") ***
5.3.2. Compliance with the en-route one engine inoperative, takeoff distance,
takeoff performance, second segment climb, landing distance, and
external noise guarantees will be demonstrated with reference to
performance data contained in the approved Flight Manual.
Compliance with climb performance and speed will be demonstrated with
reference to the IFP.
5.3.3. ***
5.3.4. The actual *** Aircraft specific range, used for determining compliance
with the fuel burn and mission payload guarantees, will be defined as
the IFP performance level corrected by the Correction Factor.
5.3.5. The actual *** specific range, used for determining compliance with the
fuel burn guarantee, will be defined upon delivery of each individual
Aircraft as the ***.
5.3.6. Fuel Burn Guarantee Compliance
8
Compliance with the fuel burn guarantees shall be determined as
follows:
(i) with respect to each Aircraft, if its actual *** Aircraft
specific range meets the guarantee level set forth in
Subparagraph 2.1 of this Part A.
(ii) with respect to the ***, if, upon delivery of any Aircraft,
the *** specific range meets the guarantee level set forth in
Subparagraph 2.2 of this Part A. ***
5.3.7 Compliance with the mission payload guarantees will be based on the
actual *** Aircraft specific range as defined in Section 5.3.4 of this
Part A and the actual Manufacturer's Weight Empty of the applicable
Aircraft as determined pursuant to Subparagraph 5.3.8 of this Part A.
5.3.8 Compliance with the weight guarantees shall be demonstrated with
reference to a weight compliance report.
6. ADJUSTMENT OF GUARANTEES
Should any change be made to any law, governmental regulation or
requirement or interpretation thereof ("Rule Change") by any
governmental agency subsequent to the date of the Agreement, and should
such Rule Change (i) affect the Aircraft configuration or performance
or both, and (ii) be required to obtain the Standard Airworthiness
Certificate, the guarantees set forth herein shall be appropriately
modified to reflect the effect(s) of any such Rule Change(s).
7. EXCLUSIVE GUARANTEES
The guarantees set forth in this Part A supersede any similar
guarantees from AVSA that may be stated in the A319 Standard
Specification or any other document, except for the guarantees set
forth in Part B to this Letter Agreement.
8. REMEDIES
8.1 General
8.1.1 In the event that the Seller fails to demonstrate compliance by one or
more Aircraft ***, with any of the guarantees set forth in this Part A,
the Seller shall
***
8.2 Fuel Burn
The Compensation for failure to comply with either the guarantee set
forth in
9
Subparagraph 2.1 or Subparagraph 2.2 of Part A of this Letter Agreement
shall be ***
8.2.1 Deficiency of *** Aircraft
In the event that an *** Aircraft fails to comply with the guarantee
set forth in Subparagraph 2.1 of this Part A, the amount of
Compensation ***
8.2.2 Deficiency of ***
In the event that the *** fails to comply with the guarantee set forth
in Subparagraph 2.2 of this Part A, the amount of Compensation ***
8.3 Payload
The Compensation for failure to comply with either the guarantees set
forth in Subparagraph 1.3, 1.4, Paragraph 3 or Subparagraph 4.2 of Part
A of this Letter Agreement shall be ***
8.3.1 Mission Payload Range
In the event that any Aircraft fails to meet either of the mission
payload range guarantees in Paragraph 3 of this Part A, the amount of
Compensation ***
8.3.2 Standard Usable Load
In the event that any Aircraft or the *** fail to meet the guarantee
levels specified in Subparagraph 4.2 of this Part A, the Compensation
shall be ***
8.3.3 Take-Off
In the event that an Aircraft fails to meet the take-off guarantees set
forth in Subparagraph 1.3 or 1.4 of this Part A, the amount of
Compensation shall be ***, provided that the Buyer demonstrates to the
Seller that such deficiency adversely impacts the Buyer's operation of
the affected Aircraft. With respect to Subparagraph 1.4 of this Part A,
the amount of Compensation hereunder shall be ***
8.3.4 Landing
In the event that an Aircraft fails to meet the landing guarantee set
forth in Subparagraph 1.7 of this Part A, the amount of Compensation
shall be ***, provided that the Buyer demonstrates to the Seller that
such deficiency adversely impacts the Buyer's operation of the affected
Aircraft.
8.4 Manufacturer's Weight Empty
10
In the event that the Manufacturer's Weight Empty (MWE) of an ***
Aircraft or of the *** exceeds the guarantee levels specified in
Subparagraph 4.1 of this Part A, the amount of Compensation shall be
***.
8.5 Limitations and Conditions
(i) The Seller shall have the right to review and verify data
collected by the Buyer which is provided to Seller for Seller
to perform the calculations of Compensation due hereunder.
(ii) If at any time following delivery of an Aircraft the Seller
restores the required performance level of an Aircraft which
has initially failed to meet the performance guarantee
requirements of Paragraphs 1, 2, 3, or 4 of this Part A, and
the Seller demonstrates compliance for such specific Aircraft
in accordance with the applicable compliance provisions of
this Part A, all payments of Compensation required under this
Part A with respect to such initial failure shall cease and
the Seller shall have no further obligation to the Buyer under
this Part A for such initial failure in respect of such
Aircraft. Seller shall demonstrate compliance by ***,
gathering data and producing a Guarantee Compliance Report
which demonstrates compliance for such specific Aircraft in
accordance with the applicable compliance provisions of this
Part A.
The compliance level achieved by such Aircraft shall be taken
into account for all ***calculations for the purposes of this
Part A.
(iii) ***
(iv) ***
(v) The Seller's maximum liability ***.
(vi) *** as aforesaid shall be deemed to settle any and all claims
and remedies of the Buyer against the Seller under this Part A
(***), but shall not settle or modify in any respect any other
claim or remedy of the Buyer against the Seller.
UNQUOTE
11
PART B ***
AVSA, under its arrangement with the Manufacturer, has negotiated and
obtained the following performance guarantees from the Manufacturer
with respect to the Aircraft, subject to the terms, conditions,
limitations and restrictions all as hereinafter set out. AVSA hereby
guarantees to Northwest the performance by the Manufacturer of its
obligations under these reliability guarantees and hereby assigns to
Northwest, and Northwest hereby accepts, all of AVSA's rights and
obligations as aforesaid under the said performance guarantees, and
AVSA subrogates Northwest into all such rights and obligations in
respect of the Aircraft. AVSA hereby warrants to Northwest that it has
all requisite authority to make the foregoing assignment and effect the
foregoing subrogation to and in favor of Northwest and that it will not
enter into any amendment of the provisions so assigned or subrogated
without the prior written consent of Northwest. Capitalized terms used
in the following quoted provisions and not otherwise defined therein
shall have the meanings assigned thereto in the Agreement, except that
the term "Seller" refers to the Manufacturer and the term "Buyer"
refers to AVSA.
QUOTE
PREAMBLE
A. Assumptions:
The guarantees defined below in this Part B are applicable to
A319-100 Aircraft as described in the A319-100 Standard
Specification Ref. J.000.01000, Issue 3, dated March 29, 1995,
including Temporary Revision 1, dated August 25, 1995, on the
basis of the following assumptions:
(i) Maximum Take Off Weight (MTOW) of ***
(ii) fitting of either
(x) the CFM International CFM56-5A4 engines
(22,000 lbs thrust), or
(y) the CFM International CFM56-5A5 engines
(23,500 lbs thrust), except where otherwise
noted.
B. Definitions:
(i) For the purpose of this Part B of this Letter
Agreement only, the term "Aircraft" is defined as any
and all of the Airbus A319-100 model aircraft to be
acquired by the Buyer under the Agreement.
(ii) ***
12
1. GENERAL PROVISIONS
1.1 ***
1.2 The *** Guarantees in this Part B are contingent upon:
***
1.3. ***
2. FUEL BURN GUARANTEE
2.1 *** (expressed as a percentage) determined in accordance with the
In-Flight Performance Program (IFP) to be supplied by the Seller.
2.2 ***
The Seller guarantees to the Buyer that the *** shall not be worse than
the IFP ***:
***
3. MISSION PAYLOAD GUARANTEE
The *** as stated in paragraph 2.2 of this part B shall allow the
carrying of a guaranteed payload of not less than:
***
over an equivalent still air stage distance of *** nautical miles
(assumed representative of *** for a winter operation) when operated
under the conditions described below.
a) In case of the *** as stated in Subparagraph 2.2 of this Part
B is modified according to Subparagraph 1.3 of this Part B,
the above guaranteed payload shall be modified accordingly,
using the following relationship:
***
b) Available takeoff weight is assumed to be *** pounds.
c) The destination airport conditions are such to allow the
required landing weight to be used without performance
restrictions and without exceeding the Maximum Landing Weight
as defined in Type Specification referenced in the Preamble.
Profile assumes the following:
13
d) Allowance of 250 pounds for engine start and taxi out.
Take-off and initial climb to 1,500 feet above airfield
elevation with acceleration to climb speed in ISA conditions
(two minutes time and fuel allowance). No distance credit for
takeoff climb to 1,500 feet. Climb from 1,500 feet above
airfield elevation up to a cruise altitude using maximum climb
thrust and cruise at a pressure altitude of 35,000 feet
stepping to 39,000 feet at a fixed Mach number of 0.78 and
descent to 1,500 feet above airfield elevation are conducted
in ISA conditions. Climb speeds to be used should be
250kt/280kt/M76 and descent speeds should be M76/250kt to 1500
feet. An allowance of 300 pounds of fuel is assumed for
approach and landing at the destination and also includes an
allowance for maneuvering fuel. No distance credit for
approach and landing and maneuvering.
e) Stage distance is defined as the distance covered during
climb, cruise, and descent as described in (d) above.
f) Trip fuel is defined as the fuel used during take-off and
initial climb, climb, cruise, descent, approach and landing
and maneuvering as described in (d) above.
g) Total fuel required shall not exceed *** pounds. Total fuel
required is defined as taxi out allowance, trip fuel, and fuel
on landing as described in (h) below.
h) At the end of approach and landing *** pounds of fuel shall
remain in the tanks.
i) The mission payload guarantee is based on an Operating Weight
Empty (OWE) composed of the actual *** Manufacturer's Weight
Empty (MWE) as demonstrated at delivery *** (but in no event
more than *** pounds), plus the following fixed allowances:
***
4. GENERAL GUARANTEE CONDITIONS
4.1. Aircraft Configuration
Seller reserves the right to make reasonable and appropriate
adjustments to the guarantees in this Part B for any configuration
change or deviation from the A319 Standard Specification which is
agreed between Buyer and Seller subsequent to the date hereof, provided
that any such adjustment is made contemporaneously with such A319
Standard Specification change or deviation.
4.2. Compliance
4.2.1. ***
14
4.2.2. ***
4.2.3. ***
4.2.4. ***
4.2.5. ***
4.2.6. ***
4.2.7. ***
4.2.8 ***
5. REMEDIES
5.1 General
5.1.1 In the event that the *** exceeds the guaranteed levels set forth in
Subparagraph 2.2 of this Part B, then the Buyer and the Seller ***.
5.1.2 ***
5.1.3 ***
5.1.4 ***
5.2 Fuel Burn - ***
In the event that the *** fails to comply with the guarantee set forth
in Subparagraph 2.2 of this Part B, ***.
5.3 Mission Payload Range
In the event that the *** fails to meet the mission payload range
guarantee set forth in Paragraph 3 of this Part B, ***.
5.4 Limitations and Conditions
(i) The Seller shall have the right to review and verify data
collected by the Buyer which is provided to Seller for Seller
to perform the calculations of compensation due hereunder.
(ii) ***
15
(iii) The Seller's maximum liability ***.
(iv) ***
(v) *** shall be deemed to settle any and all claims and remedies
of the Buyer against the Seller under this Part B, but shall
not settle or modify in any respect any other claim or remedy
of the Buyer against the Seller.
(vi) The intent of Part B of this Letter Agreement is to provide
benefits to the Buyer as a result of the failure of the
Buyer's Aircraft (***) to achieve the performance level
stipulated in the guarantees set forth in this Part B. It is
not the intent, however, to duplicate benefits provided to the
Buyer by the Seller under Part A of this Letter Agreement as a
result of the same failure. ***.
(vii ) ***
UNQUOTE
16
PART C GENERAL CONDITIONS
1. NORTHWEST ACCEPTANCE OF PERFORMANCE GUARANTEES
In consideration of the assignment and subrogation by AVSA under Part A
and Part B of this Letter Agreement in favor of Northwest in respect of
AVSA's rights against and obligations to the Manufacturer under the
provisions quoted above, Northwest hereby accepts such assignment and
subrogation and agrees to be bound by all of the terms, conditions and
limitations therein contained.
2. EXCLUSIVE LIABILITIES
SUBJECT TO SUBPARAGRAPH 8.5 (vi) OF PART A OF THIS LETTER AGREEMENT AND
SUBPARAGRAPH 5.4 (v) OF PART B OF THIS THIS LETTER AGREEMENT, THIS
LETTER AGREEMENT SETS FORTH THE EXCLUSIVE GUARANTEES, WARRANTIES,
EXCLUSIVE LIABILITIES AND EXCLUSIVE OBLIGATIONS OF AVSA, AND THE
EXCLUSIVE REMEDIES AVAILABLE TO NORTHWEST, ARISING FROM ANY FAILURE OF
ANY AIRCRAFT *** TO DEMONSTRATE COMPLIANCE WITH ANY OF THE GUARANTEES
SET FORTH IN THIS LETTER AGREEMENT, INCLUDING BUT NOT LIMITED TO ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS, ANY IMPLIED WARRANTY
ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF
TRADE, ANY OBLIGATION OR LIABILITY OF AVSA OR ANY RIGHT, CLAIM OR
REMEDY OF NORTHWEST IN CONTRACT OR IN TORT, WHETHER OR NOT ARISING FROM
AVSA'S NEGLIGENCE, ACTUAL OR IMPUTED, INTENTIONAL ACT, OR STRICT
LIABILITY AND ANY OBLIGATION OR LIABILITY OF AVSA OR ANY RIGHT, CLAIM
OR REMEDY OF NORTHWEST FOR LOSS OF OR DAMAGE TO ANY AIRCRAFT,
COMPONENT, EQUIPMENT, ACCESSORY OR PART, FOR LOSS OF USE, REVENUE OR
PROFIT WITH RESPECT TO ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY OR
PART, OR FOR ANY OTHER DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
PROVIDED THAT IN THE EVENT THAT ANY OF THE AFORESAID PROVISION SHOULD
FOR ANY REASON BE HELD UNLAWFUL OR OTHERWISE INEFFECTIVE THE REMAINDER
OF THIS PARAGRAPH C.2 SHALL REMAIN IN FULL FORCE AND EFFECT. THE
PERFORMANCE GUARANTEES SET FORTH IN THIS LETTER AGREEMENT NO. 6 SHALL
NOT BE EXTENDED, ALTERED OR VARIED EXCEPT BY A WRITTEN INSTRUMENT
SIGNED BY AVSA AND NORTHWEST.
4. ASSIGNMENT
Notwithstanding any other provisions hereof or of the Agreement,
this Letter Agreement and the rights and obligations of Northwest
hereunder shall not be assigned or transferred in any manner without
the prior written consent of AVSA and any attempted assignment or
transfer in contravention of the provisions of this sentence shall
be void and of no force and effect, provided
17
however that the consent of AVSA shall not be necessary for an assignment by
Northwest of its rights hereunder to any Affiliate of Northwest if prior to or
concurrently with such assignment (x) Northwest executes and delivers to AVSA an
instrument in writing confirming to AVSA that Northwest remains liable for all
obligations, liabilities and responsibilities of the "Buyer" hereunder and (y)
such Affiliate executes and delivers to AVSA an instrument in writing confirming
to AVSA that such Affiliate assumes all obligations, liabilities and
responsibilities of the "Buyer" hereunder and agrees that it will remain an
Affiliate of the "Buyer" so long as any Aircraft subject to such assignment
remains to be delivered under the Agreement.
18
If the foregoing terms and conditions are satisfactory, please indicate
your acceptance thereof by signing in the place indicated below.
Very truly yours,
AVSA, S.A.R.L.
By:
-------------------------------
Its:
-------------------------------
Agreed and Accepted
NORTHWEST AIRLINES, INC.
By:
-------------------------------
Its:
-------------------------------
19
APPENDIX 1
----------
***
APPENDIX 2
----------
***
APPENDIX 3
----------
1) Delivery schedule used for performance retention guarantees definition
Part B
Aircraft No. Month/Year of Delivery Aircraft No. Month/Year of Delivery
------------ ---------------------- ------------ ----------------------
1 *** 1999 26 *** 2001
2 *** 1999 27 *** 2001
3 *** 1999 28 *** 2001
4 *** 1999 29 *** 2001
5 *** 1999 30 *** 2001
6 *** 1999 31 *** 2002
7 *** 1999 32 *** 2002
8 *** 1999 33 *** 2002
9 *** 1999 34 *** 2002
10 *** 1999 35 *** 2002
11 *** 2000 36 *** 2002
12 *** 2000 37 *** 2002
13 *** 2000 38 *** 2002
14 *** 2000 39 *** 2002
15 *** 2000 40 *** 2002
16 *** 2000 41 *** 2003
17 *** 2000 42 *** 2003
18 *** 2000 43 *** 2003
19 *** 2000 44 *** 2003
20 *** 2000 45 *** 2003
21 *** 2001 46 *** 2003
22 *** 2001 47 *** 2003
23 *** 2001 48 *** 2003
24 *** 2001 49 *** 2003
25 *** 2001 50 *** 0000
XXXXXXXX 3
----------
***
2
LETTER AGREEMENT NO. 7
As of September 19, 1997
Northwest Airlines, Inc.
0000 Xxxx Xxx Xxxxxxx
Xxxxx, Xxxxxxxxx 00000
Re: OTHER MATTERS
Dear Ladies and Gentlemen:
Northwest Airlines, Inc. ("Northwest"), and AVSA, S.A.R.L. ("AVSA"),
have entered into an Airbus A319 Purchase Agreement, dated as of even date
herewith including all exhibits, appendixes and letter agreements thereto (the
"Agreement"), which covers, among other matters, the sale by AVSA and the
purchase by Northwest of certain Aircraft, under the terms and conditions set
forth in said Agreement. Northwest and AVSA have agreed to set forth in this
Letter Agreement No. 7 (the "Letter Agreement") certain additional terms and
conditions regarding the sale of the Aircraft. Capitalized terms used herein and
not otherwise defined in this Letter Agreement will have the meanings assigned
thereto in the Agreement. The terms "herein," "hereof" and "hereunder" and words
of similar import refer to this Letter Agreement.
Both parties agree that this Letter Agreement will constitute an
integral, nonseverable part of said Agreement, that the provisions of said
Agreement are hereby incorporated herein by reference, and that this Letter
Agreement will be governed by the provisions of said Agreement, except that if
the Agreement and this Letter Agreement have specific provisions that are
inconsistent, the specific provisions contained in this Letter Agreement will
govern.
1. ***
1.1 ***
***
1.2 ***
2. ASSIGNMENT
Notwithstanding any other provision of this Letter Agreement or of the
Agreement, this Letter Agreement and the rights and obligations of Northwest
hereunder will not be assigned or transferred in any manner without the prior
written consent of AVSA, and any attempted assignment or transfer in
contravention of the provisions of this Paragraph
2 will be void and of no force or effect.
2
If the foregoing correctly sets forth our understanding, please execute
the original and one (1) copy hereof in the space provided below and return a
copy to AVSA.
Very truly yours,
AVSA, S.A.R.L.
By:
----------------------------
Its:
----------------------------
Accepted and Agreed
NORTHWEST AIRLINES, INC.
By:
---------------------------
Its:
---------------------------
3
LETTER AGREEMENT NO. 8
As of September 19, 1997
Northwest Airlines, Inc.
0000 Xxxx Xxx Xxxxxxx
Xxxxx, Xxxxxxxxx 00000
Re: A319-100 AIRCRAFT FINANCING ***
Dear Ladies and Gentlemen:
Northwest Airlines, Inc. ("NWA") and AVSA, S.A.R.L. ("AVSA") have
entered into an Airbus X000-000 Xxxxxxxx Agreement dated as of even date
herewith (the "Agreement") which covers, among other matters, the sale by AVSA
and the purchase by NWA of certain A319-100 aircraft (the "Aircraft") as
described in the specifications annexed to said Agreement. NWA and AVSA have
agreed to set forth in this Letter Agreement (this "Letter Agreement") certain
additional terms and conditions regarding the sale of the Aircraft provided for
in the Agreement. The terms "herein", "hereof" and "hereunder" and words of
similar import refer to this Letter Agreement. Capitalised terms used herein and
not otherwise defined in this Letter Agreement will have the meanings assigned
thereto in the Agreement. The term "Lender" shall mean each of AVSA or an
affiliate of AVSA (for which purposes Airbus Finance Company Limited ("AFC") or
any of its affiliates will be treated as an affiliate).
This Letter Agreement shall not constitute part of the Agreement, but shall be a
separate and independent contract of financial accommodation.
A. Aircraft Financing
1. AVAILABILITY ***
1.1 In determining the cost of financing for NWA at delivery of each
Aircraft, exposure under certain other financing arrangements between
NWA and Airbus Industrie and its affiliates (for which purposes AFC or
any of its affiliates will be treated as an affiliate) *** will be
taken into account. It will be assumed, for the purposes of calculating
*** under the facility outlined herein, at time of delivery of each
Aircraft that *** of *** to *** will be the aggregate of (a) ***, (b)
the unamortised principal balance at the time under the ***, (c)
amounts of initial principal drawn but not fully repaid under the
financing support outlined in *** and (d) the amount of *** drawn
but not fully repaid in respect of each Aircraft delivered and financed
under the facility described herein.
1.2 Further, for the purposes of determining *** under the *** it will be
assumed that the amount of *** of *** to *** under each *** at time of
delivery of each Aircraft will be *** at the time, unless permanently
*** prior to such time. In the event that *** is successful in
restructuring in full the *** in respect of any ***, then the amount of
exposure for the purposes of calculating *** under the facility
described herein will be *** of the *** value per A320 aircraft.
1.3 For the purposes of determining *** of the facility under Sub-paragraph
4.2 below, amortisation of delivered and financed Aircraft under the
facility will be disregarded. *** provided by *** in respect of any of
the Aircraft will not be taken into account in determining *** under
the facility described herein. For the avoidance of doubt, Option
Aircraft or Roll-Over Option Aircraft subsequently converted to Firm
Aircraft (as defined in the Agreement) or Converted Aircraft (as
defined in the Agreement) will not be covered by the facility described
herein.
2. ELECTION OF FINANCING
Subject to the terms and conditions set forth herein, and, in
particular to the terms of Paragraph 1.0 above, NWA may elect, with
respect to any of the Aircraft or Converted Aircraft up to a maximum of
***) Aircraft from the initially firmly ordered ***, by informing AVSA
in writing at least *** prior to delivery of such Aircraft to use the
facility offered by AVSA as set forth in this section A. NWA may select
either of the short or long term debt alternatives in respect of any
Aircraft by providing written notice to AVSA no less than *** prior to
scheduled delivery of each such Aircraft (the "Preliminary Notice
Date"). NWA will be required to provide final written irrevocable
notice (the "Final Notice Date") no less than *** prior to scheduled
delivery of such Aircraft. In the event that NWA fails to give notice
of its election to AVSA by the Preliminary Notice Date then AVSA will
automatically be obliged to provide *** (as defined below) in respect
of such Aircraft (unless NWA elects at such time to defer its decision
to take *** in accordance with the terms of section *** below) and to
provide or arrange the short-term debt alternative outlined below in
Paragraph 5.0 in respect of such Aircraft under the terms hereunder
outlined. Notwithstanding the foregoing, and in order to facilitate
administrative planning, AVSA will be entitled to enquire of NWA from
time to time and in advance of the Preliminary Notice Date as to NWA's
likely intentions with regard to the financing of a relevant Aircraft.
NWA hereby undertakes to provide a good faith response to any such
enquiry which will not be binding on its ultimate intentions.
3. POWERPLANTS MANUFACTURER
CFMI will be responsible for providing financing *** in respect of
every *** Aircraft for which NWA will have elected to have supported.
AVSA will be responsible for arranging financing *** in respect of
every *** Aircraft for which NWA will have elected to have supported.
For the avoidance of doubt, the order in which such support is to be
furnished by AVSA and CFMI will be the sequence in which NWA takes
delivery and requests such support rather than the applicable delivery
position number.
2
4. THE FACILITY
4.1 Structure
If NWA gives AVSA timely notice of its election with respect to any
Aircraft, as provided in Paragraph 2.0 above, to use the financing set
forth in this Paragraph 4.0, then AVSA will provide, or arrange for a
Lender to provide, on the terms set forth below, a secured long-term
debt financing (each an "A319 Long-Term Credit") of such Aircraft to
NWA. NWA will be the borrower or lessee under the A319 Long-Term
Credit. The amount of debt to be arranged or provided in any
transaction shall not exceed *** of such Aircraft. The A319 Long-Term
Credit financing may, at NWA's option, take either of the following
forms, or a combination thereof:
(i) Senior secured financing pursuant to structures which provide
Section 1110 protection; ***; or
(ii) Structured as ***
4.2 Interest Rate
(i) The rate of interest applicable to each A319 Long-Term Credit
will be determined as set forth below:
The prevailing rate (expressed as *** at which *** could
borrow the same amount with the same tenor and on comparable
terms and security *** will be the "AVSA Benchmark Rate" wise,
the prevailing rate (expressed as *** at which NWA could
borrow the same amount with the same tenor and on comparable
terms and security at the same time *** will be the "NWA
Benchmark Rate ***. The rate of interest applicable to a
particular A319 Long-Term Credit will be the ***
(ii) Interest will be payable *** in the case of an A319 Long-Term
Credit pursuant to Sub-paragraph 4.1 (i) hereof or *** in the
case of Sub-paragraph 4.1 (ii) hereof. Such interest payments
will be made on the same dates as installments of principal
are payable.
4.3 Financing Term
NWA may elect that each A319 Long-Term Credit may extend for any term
up to a maximum of *** commencing upon delivery of the relevant
Aircraft. Amortisation of the principal balance of each A319 Long-Term
Credit will be on the basis of a ***. An A319 Long-Term Credit pursuant
to Sub-paragraph 4.1 (ii) utilised in a ***.
4.4 Transfer and Assignment
3
*** NWA hereby agrees to cooperate with each Lender to accommodate the
efforts of the Lender to transfer, resell, assign or securitise the
Financing *** There will, however, be ***. Each Lender will reimburse
NWA's reasonable and adequately documented external legal and
investment bank fees and expenses in respect of any resale, assignment,
transfer, or securitisation.
(i) ***
(ii) If an initial Lender desires to effect the resale, transfer or
securitisation transaction in a registered public offering in
the United States, NWA hereby agrees to cooperate in the
preparation and filing of such registration statements and
other documents and to take such other actions as may
reasonably be requested by the Lender in order to assist in
the prompt completion of such public offering. ***
(iii) ***
(iv) In furtherance of any of the matters covered by this
Sub-paragraph 4.4, AVSA, each Lender and NWA shall undertake
in good faith to define a mutually beneficial process by which
the parties would coordinate each Lender's efforts to transfer
debt or debt securities with NWA's plans and efforts to raise
capital.
5. SHORT-TERM DEBT FINANCING
If NWA gives AVSA timely notice of its election with respect to any
Aircraft, as provided in Paragraph 1 above, to use the financing
alternative set forth in this Paragraph 5, then AVSA will provide, or
arrange, on the terms set forth below, a secured short-term debt
financing (an "A319 Short-Term Credit") of such Aircraft to NWA. The
amount of debt to be arranged or provided in any such A319 Short-Term
Credit transaction shall not exceed ***. The term of an A319 Short-Term
Credit will not exceed *** from delivery of the relevant Aircraft.
Interest will accrue and be paid *** by NWA at the rate of ***.
Notwithstanding the foregoing, NWA may select on a per Aircraft basis
*** as the interest base for the term of the A319 Short-Term Credit at
least *** before drawdown in place of *** The principal balance of such
financing will ***. In consideration, the Lender will be granted ***.
Terms and conditions of the financing will conform to those applicable
to ***, as appropriately modified in the definitive documentation. The
documentation will contain customary terms regarding ***. NWA may ***.
6. REPLACEMENT LONG-TERM DEBT FINANCING
In the event that in respect of any Aircraft NWA does not elect at
delivery to take an A319 Long-Term Credit then at any time, subject to
written notice from NWA to AVSA of at least *** (the "A319 Replacement
Long-Term Credit Notice Date"), AVSA will provide a *** long-term debt
financing (an "A319 Replacement Long-Term Credit") to NWA in order to
replace in full an A319 Short-Term Credit or *** in respect of such
Aircraft. Notwithstanding the foregoing, however, and in order to
facilitate administrative
4
planning, AVSA will be entitled to enquire of NWA from time to time and
in advance of the A319 Replacement Long-Term Credit Notice Date as to
NWA's likely intentions with regard to the financing of a relevant
Aircraft. NWA hereby undertakes to provide a good faith response to any
such enquiry which will not be binding on its ultimate intentions. Such
A319 Replacement Long-Term Credit will be available to be drawn *** and
will be provided on substantially the same terms as *** for such
Aircraft except in the following ways:
A) ***
B) ***
C) ***
7. FINANCING ARRANGEMENTS
Each A319 Long-Term Credit, A319 Short-Term Credit or A319 Replacement
Long-Term Credit (each a "Financing"), as appropriate, shall be
arranged on terms consistent with this Letter Agreement and as
subsequently negotiated among AVSA, NWA and the Lender. The
documentation will contain customary terms regarding ***. The
documentation will also contain customary terms regarding *** as
appropriate.
7.1 Transaction Expenses and Conditions
NWA will pay the Lender's reasonable and adequately documented external
transaction expenses in relation to the Financing which will be
reimbursed by NWA at ***. In the event, however, that NWA selects ***
in the context of the A319 Long-Term Credit, then the Lender shall
agree that *** may be treated as financed transaction expenses in such
***. In the event that NWA requests an A319 Long-Term Credit in respect
of an Aircraft at the Preliminary Notice Date but decides at the Final
Notice Date not to pursue this option, NWA will reimburse all AVSA's
reasonable external legal expenses actually incurred and associated
with the establishment and negotiation of such A319 Long-Term Credit
for the period between the Preliminary Notice Date and the Final Notice
Date.
The Financing will reflect market terms and conditions. In the event
that AVSA and NWA have a disagreement as to market terms and
conditions, NWA and AVSA will consult *** in order to resolve such
disagreement.
Each Financing will contain appropriate conditions precedent *** (in
the case of an A319 Long-Term Credit and an A319 Short-Term Credit)
and/or, as appropriate, (ii) draw down of an A319 Replacement Long-Term
Credit ***
7.2 Quiet Enjoyment
(A) Each Lender will covenant to NWA that it shall not, through
its own actions or
5
inactions, interfere with, or suffer to exist with respect to
the Aircraft any lien attributable to the Lender which might
interfere with, NWA's (or any permitted sub-lessee's or
lessee's) continued possession, use and operation of, and
quiet enjoyment (including, without limitation, ***) of, the
Aircraft during the term of the Financing in accordance with
the terms thereof so long as NWA shall not have been duly
declared, or deemed to be declared, in default pursuant to the
Financing.
(B) ***
(C) ***
7.3 ***
8. OTHER TERMS AND CONDITIONS
Terms and Conditions applicable to each Financing shall include the
following:
8.1 Insurance
NWA will provide insurance (including public liability, property
damage, war risk and hijacking insurance) with respect to the Aircraft
against risks customarily insured against by NWA for similar aircraft,
provided that public liability and property damage insurance shall be
in an amount of at least *** per occurrence. NWA will also provide
all-risk hull insurance in an amount equal to the outstanding principal
balance from time to time (subject to self-insurance described below).
NWA will retain the right to insure the Aircraft for amounts in excess
of ***.
NWA may self insure by way of deductible, premium adjustment or
franchise provisions or otherwise, but in no case shall the aggregate
amount of self-insurance with respect to public liability, property
damage and all-risk hull insurance exceed during any policy year, with
respect to all of the aircraft in NWA's fleet (including, without
limitation, the Aircraft), ***.
If at any time the Aircraft is not covered by insurance as required by
the preceding paragraph NWA may not operate the Aircraft and must
maintain ground insurance.
8.2 Maintenance
NWA will maintain the Aircraft in as good an operating condition as
when initially delivered to NWA under the facility, ordinary wear and
tear excepted, in compliance with applicable laws and regulations and a
maintenance programme approved by the government of registry, and in
such condition as may be necessary to enable the Aircraft's
airworthiness certification to be maintained in good standing at all
times (with exceptions as to temporary periods of storage in accordance
with applicable regulations
6
and as to the grounding by the FAA of all Airbus A319 series aircraft
powered by engines of the same type as those with which the Aircraft
shall be equipped at the time of such grounding), utilising, except
during any period that a sublease (or lease in the case where NWA is
the borrower) is in effect, the same manner of maintenance used by NWA
with respect to similar aircraft operated by NWA and utilising, during
any period that a sublease is in effect (or lease in the case where NWA
is the borrower), the same manner of maintenance used by the sublessee
(or lessee) with respect to similar aircraft operated by the sublessee
(or lessee). NWA will have the right at any time during the term of any
Financing to substitute for any engine another compatible engine having
a value and utility (except for maintenance cycle condition) of the
engine being replaced.
8.3 Events of Default
Events of default for each Financing shall be as follows:
(i) failure to make any payment of principal or interest *** for a
period of *** after due, and failure to make any other payment
for a period of ***.
(ii) failure to maintain required insurance and any such failure is
not cured within ***.
(iii) failure to perform in any material respect any other covenants
and such failure continues for a period ***.
(iv) material failure of representations or warranties (other than
tax representations and warranties) to be true and correct and
the same remains uncured for a period of ***.
(v) customary bankruptcy and insolvency events of default. ***
8.4 Sublease or Lease
Provided an event of default shall not have occurred and be continuing,
NWA will have the right at any time to sublease, ***, the Aircraft (i)
without Lender consent to any air carrier holding ***, (ii) to any
entity approved in writing by the Lender, (iii) without Lender consent
to any entity domiciled in a country designated on Exhibit 1 hereto (it
being understood that the Lender will use reasonable efforts to include
*** on such list (for the purposes of sublease or lease or
reregistration, as appropriate) to the extent that the inclusion of any
such countries is reasonably commercially available without adversely
affecting any of the other terms or provisions of the transaction for
the Lender, or (iv) without Lender consent to *** in a country that
would not otherwise be restricted, in any event for a period or period
not to exceed the term of each A319 Long-Term Credit or A319
Replacement Long-Term Credit, as appropriate, and further provided
that, at any time whilst *** or any of their affiliates is a Lender,
the number of *** and/or *** (as appropriate) to *** does not exceed
*** (including ***) supported at such time by ***,
7
and provided further that the number of *** (as appropriate) does not
exceed ***. Any such ***. In addition to the rights to *** NWA, without
prior approval, may *** do any of the following: (i) subject the
Aircraft or engines or parts to normal interchange or pooling or
similar arrangements; (ii) deliver possession of the Aircraft or any
engine to third parties for testing, modification, maintenance, repair
or overhaul; (iii) install any engine on other airframes; and (iv)
subject the Aircraft or any engine to (a) the United States Civil
Reserve Air Fleet Program, (b) contracts with the United States
government or agency thereof, or (c) "wet" leases with third parties.
8.5 Aircraft Registration
The Aircraft will initially be registered with the FAA. NWA may at any
time reregister the Aircraft in a foreign country in accordance with
the terms contained in Exhibit 2 hereto, it being understood that there
are no ***. It is also agreed that such terms should reflect terms ***.
B. ***
1. ***
2. ***
2.1 ***
2.2 ***
2.3 ***
3. ***
4. ***
5. ***
6. ***
7. ***
9. ***
10. ***
10.1 ***
(a) ***
8
(b) ***
(c) ***
(d) ***
(e) ***
(h) ***
10.2 ***
(a) ***
(b) ***
(c) ***
(d) ***
(e) ***
10.3 ***
10.4 ***
10.5 ***
(a) ***
(b) ***
(c) ***
10.6 ***
10.7 ***
(a) ***
(b) ***
(c) ***
9
(i) ***
(ii) ***
10.8 ***
10.9 ***
10.10 ***
10.11 ***
10.12 ***
(a) ***
(b) ***
11. ***
12. ***
C. General
1. TERMINATION
During the term of this Letter Agreement, each of the commitments of
AVSA set forth herein shall be subject to the non-occurrence of any of
the events described in this Paragraph C.1.0, and should any event
described in Sub-paragraphs (a), (b) or (c) to this occur, this Letter
Agreement and the commitments of AVSA hereunder shall automatically
terminate without notice of any kind and without prejudice to any other
rights or remedies that may be exercised by AVSA.
(a) NWA shall have:
(1) made a general assignment for the benefit of
creditors or become insolvent;
(2) filed a voluntary petition in bankruptcy;
(3) petitioned for or acquiesced in the appointment of
any custodian, receiver, trustee or similar officer
to liquidate or conserve its business or any
substantial part of its assets;
(4) commenced under the laws of any competent
jurisdiction any proceedings
10
involving its insolvency, bankruptcy, reorganisation,
readjustment of debt, dissolution or liquidation or
any other similar proceeding for the relief of
debtors;
(5) become the object of any proceeding or action of the
type described in (3) or (4) above that remains
undismissed or unstayed for a period of thirty (30)
or more days; or
(6) admitted in writing and become unable generally to
pay its debts as they become due.
(b) The Agreement shall have terminated on account of a material
breach by NWA or for any other reason or if NWA shall be in
material default of any of its obligations thereunder ***
(c) NWA or any of its affiliates shall have materially defaulted
under any Financing or with respect to any other monetary
obligation owing to AVSA or any of its affiliates whether or
not related to any Financing.
2. ASSIGNMENT
Notwithstanding any other provision of this Letter Agreement or of the
Agreement, this Letter Agreement and the rights and obligations of NWA
and AVSA hereunder (excluding, for the avoidance of doubt, for the
purposes of this Paragraph the rights and obligations under a Financing
***) will not be assigned or transferred or mortgaged or pledged in any
manner without the prior written consent of either party hereunder, and
any attempted assignment or transfer in contravention of the provisions
of this Paragraph will be void and of no force and effect.
3. ***
4. MISCELLANEOUS PROVISIONS
(a) Notices
All notices and requests required or authorised hereunder
shall be given in writing either by personal delivery to a
responsible officer of the party to whom the same is given or
by commercial courier or mail or by electronic transmission to
the addresses set forth below. The date upon which any such
notice or request is so personally delivered or delivered by
commercial courier or mail, or if such notice or request is
given by electronic transmission, the date upon which sent,
shall be deemed to be the effective date of such notice or
request.
AVSA shall be addressed at:
11
2, rond-point Xxxxxxx Xxxxxxxx
00000 XXXXXXX, XXXXXX
Attention: Director - Contracts
Telephone: (00) 0 00 00 00 00
Telex: AVSA 521155F
Fax: (00) 0 00 00 00 00
And NWA shall be addressed at:
0000 Xxxx Xxx Xxxxxxx
Xxxxx, Xxxxxxxxx 00000, XXX
Attention: Senior Vice President and Treasurer
and Vice President of Northwest Aircraft Inc.
Telephone: (0) 000 000 0000
Fax: (0) 000 000 0000
or at such other address or to such other address or to such other
person as the party receiving the notice or request may designate from
time to time.
(b) Waiver
The failure of either party to enforce at any time any of the
provisions of this Letter Agreement, or to exercise any right herein
provided, or to require at any time performance by any other party of
any of the provisions hereof, will in no way be construed to be a
present or future waiver of such provisions nor in any way to affect
the validity of this Letter Agreement or any part hereof or the right
of the other party thereafter to enforce each and every provision. The
express waiver by either party of any provision, condition or
requirement of this Letter Agreement shall not constitute a waiver of
any future obligation to comply with such provision, condition or
requirement.
(c) Interpretation and Law
THIS LETTER AGREEMENT AND ANY DOCUMENTS PERTAINING TO ANY OF THE
FINANCING PROVIDED HEREUNDER WILL BE GOVERNED BY AND CONSTRUED, AND THE
PERFORMANCE THEREOF WILL BE DETERMINED, IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE IN SUCH STATE BY
RESIDENTS THEREOF AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE;
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. Each
of AVSA and NWA (i) hereby irrevocably submits itself to the
non-exclusive jurisdiction of the courts of the State of New York, New
York County, of the United States, and to the non-exclusive
jurisdiction of the United States District Court for the Southern
District of New York, for the purposes of any suit, action or other
12
proceeding arising out of this Letter Agreement, the subject matter
hereof or any of the transactions contemplated hereby brought by any
party or parties hereto, and (ii) hereby waives, and agrees not to
assert, by way of motion, as a defence, or otherwise, in any such suit,
action or proceeding, to the extent permitted by applicable law, any
defence based on sovereign or other immunity or that any suit, action
or proceeding is brought in an inconvenient forum, that the venue of
such suit, action or proceeding is improper, or that this Letter
Agreement or the subject matter hereof or any of the transactions
contemplated hereby may not be enforced in or by such courts.
(d) Confidentiality
Subject to any legal or governmental requirements of disclosure, the
parties (which for this purpose shall include their employees, agents
and advisers) shall maintain the terms and conditions of this Letter
Agreement strictly confidential. Without limiting the generality of the
foregoing, NWA and AVSA will limit the disclosure of the contents of
this Letter Agreement, to the extent legally permissible, in any filing
required to be made with any governmental agency and shall make such
applications as shall be necessary to implement the foregoing. NWA and
AVSA shall consult with each other prior to the making of any public
disclosure or filing, otherwise permitted hereunder, of this Letter
Agreement or the terms and conditions hereof. In the event that NWA
receives any other disclosure request from any government or any
branch, agency or instrumentality thereof or any government-related
entity, which NWA believes would be advisable to satisfy in whole or in
part, NWA and AVSA will consult and AVSA will not unreasonably withhold
its consent to such disclosure. Notwithstanding anything in this
Paragraph to the contrary, AVSA may deliver a copy of this Letter
Agreement to CFMI. The provisions of this Paragraph shall survive any
termination of this Letter Agreement.
(e) Severability
In the event that any provision of this Letter Agreement should for any
reason be held to be without effect, the remainder of this Letter
Agreement shall remain in full force and effect. To the extent
permitted by applicable law, each party hereto hereby waives any
provision of law which renders any provision of this Letter Agreement
prohibited or unenforceable in any respect.
(f) Alterations to Contract
This Letter Agreement contains the entire agreement between the parties
with respect to the subject matter hereof and supersedes any previous
understanding, commitments or representations whatsoever, oral or
written.
(g) Language
All correspondence, documents and any other written matters in
connection with this Letter Agreement shall be in English.
13
(h) Headings
All headings in this Letter Agreement are for convenience of reference
only and do not constitute a part of this Letter Agreement.
(i) Counterparts
This Letter Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one
and the same instrument.
If the foregoing correctly sets forth our understanding, please execute the
original and one (1) copy hereof in the space provided below and return a copy
to AVSA.
Very truly yours,
AVSA, S.A.R.L.
By:
-------------------------
Its:
------------------------
Date:
-----------------------
Accepted and Agreed
NORTHWEST AIRLINES, INC.
By:
-------------------------
Its:
------------------------
Date:
-----------------------
14
EXHIBIT 1
Schedule of domiciles of ***
1 So long as on the date of entering into the proposed *** such country and the
United States have diplomatic relations as good as those in effect as of the
date of this Letter Agreement with respect to the applicable Aircraft.
EXHIBIT 2
The Lender will agree that, ***
1
LETTER AGREEMENT NO. 9
As of September 19, 1997
Northwest Airlines, Inc.
0000 Xxxx Xxx Xxxxxxx
Xxxxx, Xxxxxxxxx 00000
Re: ***
Dear Ladies and Gentlemen:
Northwest Airlines, Inc. ("Northwest"), and AVSA, S.A.R.L. ("AVSA"),
have entered into an Airbus A319 Purchase Agreement, dated as of even date
herewith (the "Agreement"), which covers, among other matters, the sale by AVSA
and the purchase by Northwest of certain Aircraft, under the terms and
conditions set forth in said Agreement. Northwest and AVSA have agreed to set
forth in this Letter Agreement No. 9 (the "Letter Agreement") certain additional
terms and conditions regarding the sale of the Aircraft. Capitalized terms used
herein and not otherwise defined in this Letter Agreement will have the meanings
assigned thereto in the Agreement. The terms "herein," "hereof" and "hereunder"
and words of similar import refer to this Letter Agreement.
Both parties agree that this Letter Agreement will constitute an
integral, nonseverable part of said Agreement, that the provisions of said
Agreement are hereby incorporated herein by reference, and that this Letter
Agreement will be governed by the provisions of said Agreement, except that if
the Agreement and this Letter Agreement have specific provisions that are
inconsistent, the specific provisions contained in this Letter Agreement will
govern.
1. ***
1.1 ***
1.2 ***
1.2.1 ***
1.2.2 ***:
(i) ***;
(ii) ***;
(iii) ***; and
(iv) ***
2. ASSIGNMENT
Notwithstanding any other provision of this Letter Agreement or of the
Agreement, this Letter Agreement and the rights and obligations of Northwest
hereunder will not be assigned or transferred in any manner without the prior
written consent of AVSA, and any attempted assignment or transfer in
contravention of the provisions of this Paragraph 2 will be void and of no force
or effect.
2
If the foregoing correctly sets forth our understanding, please execute
the original and one (1) copy hereof in the space provided below and return a
copy to AVSA.
Very truly yours,
AVSA, S.A.R.L.
By:
---------------------------
Its:
--------------------------
Accepted and Agreed
NORTHWEST AIRLINES, INC.
By:
---------------------------
Its:
--------------------------
3
LETTER AGREEMENT NO. 10
As of September 19, 0000
Xxxxxxxxx Xxxxxxxx, Inc.
0000 Xxxx Xxx Xxxxxxx
Xxxxx, Xxxxxxxxx 00000
Re: A319-100 SPECIAL APPLICATION
Dear Ladies and Gentlemen:
Northwest Airlines, Inc. ("Northwest"), and AVSA, S.A.R.L. ("AVSA"),
have entered into an Airbus X000-000 Xxxxxxxx Agreement, dated as of even date
herewith (the "Agreement"), which covers, among other things, the sale by AVSA
and the purchase by Northwest of certain Aircraft, under the terms and
conditions set forth in said Agreement. Northwest and AVSA have agreed to set
forth in this Letter Agreement No. 10 (the "Letter Agreement") certain
additional terms and conditions regarding the sale of the Aircraft. Capitalized
terms used herein and not otherwise defined in this Letter Agreement will have
the meanings assigned thereto in the Agreement. The terms "herein," "hereof" and
"hereunder" and words of similar import refer to this Letter Agreement.
Both parties agree that this Letter Agreement will constitute an
integral, nonseverable part of said Agreement, that the provisions of said
Agreement are hereby incorporated herein by reference, and that this Letter
Agreement will be governed by the provisions of said Agreement, except that if
the Agreement and this Letter Agreement have specific provisions that are
inconsistent, the specific provisions contained in this Letter Agreement will
govern.
1. Airbus Industrie Financial Services ("AIFS") and NWA have entered into
the Restated and Amended Loan Agreement (the "AIFS Term Loan") dated as
of 29 March 1996. AIFS is interested in *** and NWA is interested in
*** before the stated maturity of the AIFS Term Loan.
2. AVSA agrees to procure that AIFS, or its agent, will meet with NWA
within ninety (90) days of signature of the Agreement with a view to
discussing in good faith how the objectives identified above might be
met. ***.
3. ***
4. ASSIGNMENT
Notwithstanding any other provision of this Letter Agreement or of the
Agreement, this Letter Agreement and the rights and obligations of
Northwest hereunder will not
be assigned or transferred in any manner without the prior written
consent of AVSA, and any attempted assignment or transfer in
contravention of the provisions of this Paragraph 4 will be void and of
no force or effect.
If the foregoing correctly sets forth our understanding, please execute
the original and one (1) copy hereof in the space provided below and return a
copy to AVSA.
Very truly yours,
AVSA, S.A.R.L.
By:
-----------------------
Its:
----------------------
Accepted and Agreed
NORTHWEST AIRLINES, INC.
By:
----------------------------
Its:
---------------------------
2
LETTER AGREEMENT NO. 11
As of September 19, 0000
Xxxxxxxxx Xxxxxxxx, Inc.
0000 Xxxx Xxx Xxxxxxx
Xxxxx, Xxxxxxxxx 00000
Re: MISCELLANEOUS MATTERS
Dear Ladies and Gentlemen:
Northwest Airlines, Inc. ("Northwest"), and AVSA, S.A.R.L. ("AVSA"),
have entered into an Airbus X000-000 Xxxxxxxx Agreement, dated as of even date
herewith (the "Agreement"), which covers, among other things, the sale by AVSA
and the purchase by Northwest of certain Aircraft, under the terms and
conditions set forth in said Agreement. Northwest and AVSA have agreed to set
forth in this Letter Agreement No. 1 (the "Letter Agreement") certain additional
terms and conditions regarding the sale of the Aircraft. Capitalized terms used
herein and not otherwise defined in this Letter Agreement will have the meanings
assigned thereto in the Agreement. The terms "herein," "hereof" and "hereunder"
and words of similar import refer to this Letter Agreement.
Both parties agree that this Letter Agreement will constitute an
integral, nonseverable part of said Agreement, that the provisions of said
Agreement are hereby incorporated herein by reference, and that this Letter
Agreement will be governed by the provisions of said Agreement, except that if
the Agreement and this Letter Agreement have specific provisions that are
inconsistent, the specific provisions contained in this Letter Agreement will
govern.
1. ADDITIONAL AGREEMENTS ON TAX, DUTIES AND IMPOSTS
With respect to the provisions of Subclause 4.3 of the Agreement,
Northwest and AVSA agree that taxes, duties, tariffs, imposts or
similar charges levied, assessed, charged or collected under the
laws of ***
2. INEXCUSABLE DELAY
2.1 AVSA hereby agrees to ***
2.2 AVSA hereby agrees to ***
2.3 ***
3. ASSIGNMENT
Notwithstanding any other provision of this Letter Agreement or of the
Agreement, this Letter Agreement and the rights and obligations of Northwest
hereunder will not be assigned or transferred in any manner without the prior
written consent of AVSA, and any attempted assignment or transfer in
contravention of the provisions of this Paragraph 3 will be void and of no force
or effect.
2
If the foregoing correctly sets forth our understanding, please execute
the original and one (1) copy hereof in the space provided below and return a
copy to AVSA.
Very truly yours,
AVSA, S.A.R.L.
By:
---------------------------
Its:
--------------------------
Accepted and Agreed
NORTHWEST AIRLINES, INC.
By:
---------------------------
Its:
--------------------------
3
