* Confidential treatment has been requested for portions of this
exhibit. The copy filed herewith omits the information subject to the
confidentiality request. Omissions are designated as "*". A complete
version of this exhibit has been filed separately with the Securities and
Exchange Commission.
This Agreement contains information specifically developed for TAM Linhas
Aereas, SA, by GE. Accordingly, TAM Linhas Aereas, SA. will not disclose all or
any part of this Agreement to any Third Party except as permitted by Article
XIII.E.
THIS GENERAL TERMS AGREEMENT NO. GE-00-0059 (hereinafter referred to as this
"Agreement"), dated as of the ________ day of __________________, 2001, by and
between General Electric Company, a corporation organized under the law of the
State of New York, U.S A., (including it's successors and assigns), acting
through its GE Aircraft Engine Group located in Evendale, Ohio, U.S.A.
(hereinafter referred to as "GE"), GE Engine Services Distribution, L.L.C., a
Delaware limited liability company having its principal office at Xxx Xxxxxxx
Xxx XX 000, Xxxxxxxxxx, Xxxx 00000 (hereinafter referred to as "GE-LLC") and TAM
Linhas Aereas, SA, a corporation organized under the law of Brazil (hereinafter
referred to as "Airline"). GE, GE-LLC and Airline are also referred to in this
Agreement as the "Parties" or individually as a "Party".
WITNESSETH
WHEREAS, Airline has acquired, or is in the process of acquiring a certain
number of wide-body aircraft equipped with installed GE Engines, and
WHEREAS, GE and Airline desire to enter into appropriate Sections of this
Agreement for (i) a standing offer by GE to sell and a continuing opportunity
for Airline to purchase from GE, Spare Engines and support equipment for such
installed and Spare Engines and (ii) Product Services to be supplied by GE in
support of such installed and Spare Engines, and
WHEREAS, GE-LLC and Airline desire to enter into appropriate Sections of this
Agreement for a standing offer by GE-LLC to sell and a continuing opportunity
for Airline to purchase from GE-LLC, Spare Parts for such installed and Spare
Engines.
FURTHER, the parties agree that GE-LLC is a 100% owned subsidiary of GE.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
respective Parties hereto agree as follows to the respective Sections of this
Agreement. Capitalized terms used herein that are otherwise undefined shall have
the meanings ascribed to them in Section I ("Definitions") of Exhibit B, unless
the context requires otherwise.
SECTION I - GE AS SELLER
ARTICLE I - GE PRODUCTS
Airline may purchase and GE shall sell under the terms and subject to the
conditions hereinafter set forth, the items identified as GE Products in the
attached Exhibit A, (hereinafter referred to as "GE Product(s)"), GE shall also
provide certain Product services as described in Exhibit B.
ARTICLE II - GE PRODUCT PRICES
A. In General. The selling price of GE Products will be the respective prices
which are both (i) quoted by GE for such items in procurement data issued
in accordance with Air Transport Association of America ("ATA")
Specification 2000 (as the same may be revised or superseded from time to
time, the "Procurement Data") or GE's written quotation or proposal from
time to time and (ii) confirmed in a purchase order placed by Airline and
accepted by GE. GE shall quote such prices in U.S. Dollars and Airline
shall pay for GE Products in U.S. Dollars. All GE Product prices include
the cost of GE's standard tests, inspection and
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GE PROPRIETARY INFORMATION
commercial packaging. Transportation costs and costs resulting from special
inspection, packaging, testing or other special requirements, requested by
Airline, will be paid for by Airline.
B. Other. Spare Engine prices will be quoted as Base Prices, subject to
escalation using the appropriate GE Engine escalation provisions then in
effect. The selling price for a Spare Engine is established at the time of
Delivery. A copy of GE's current escalation formula is set forth in Exhibit
C hereto. No change to such escalation provisions will apply to Airline
until GE provides Airline at least ninety days prior written notice.
ARTICLE III - GE PRODUCT ORDER PLACEMENT
A. Applicable Sections of this Agreement shall constitute the terms and
conditions applicable to all purchase orders which may hereafter be placed
by Airline and accepted by GE for GE Products in lieu of all printed terms
and conditions appearing on Airline's purchase orders; except, that, the
description of GE Products, price, quantity, delivery dates and shipping
instructions shall be as set forth on each purchase order accepted by GE.
B. Airline shall place purchase orders for GE Products quoted by GE, in
accordance with GE's quotation for said GE Products.
C. GE's acknowledgment of each purchase order shall constitute acceptance
thereof.
ARTICLE IV - DELIVERY, TITLE, TRANSPORTATION, RISK OF LOSS PACKAGING OF GE
PRODUCTS
A. GE shall supply GE Products under each purchase order placed by Airline and
accepted by GE, on a mutually agreed upon schedule consistent with GE lead
times and set forth in each purchase order. Shipment of such GE Products
shall be from Evendale, Ohio, U.S.A. and/or Durham, North Carolina, U.S.A,
as appropriate. Shipment dates are subject to (1) prompt receipt by GE of
all information necessary to permit GE to proceed with work immediately and
without interruption, and (2) Airline's compliance with the payment terms
set forth herein.
B. Delivery of all GE Products shall be as follows (hereinafter "Delivery"):
(i) (a) if such Products are shipped via ocean freight, delivery shall be
to Airline immediately after such time as the Products first leave the
territorial waters of the United States of America; (b) if such
Products are shipped via air freight, delivery shall be to Airline
immediately after such time as the Products first leave the overlying
air space of the United States of America; and (c) if such Products
are shipped via ground transport, delivery shall be to Airline
immediately after such time as the Products first cross the United
States of America border and enter into a foreign country. If such
Products are shipped via a combination of ocean freight, air freight
and/or ground transport, delivery shall be to Airline immediately
after such time as the Products first leave the territorial waters of
the United States of America, or leave the overlying air space of the
United States of America, or cross the United States of America border
and enter into a foreign country, whichever shall first occur; or
(ii) in the event shipment cannot be made for reasons set forth in
Paragraph F of this Article IV, delivery shall be to storage.
Upon Delivery, title to GE Products as we11 as risk of loss thereof or
damage thereto shall pass to Airline. Airline shall be responsible for all
risk and expense in obtaining ail import licenses and carrying out all
customs formalities for the importation of goods.
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GE PROPRIETARY INFORMATION
C. Notwithstanding that Delivery of GE Products shall be as set forth in
Paragraph B of this Article IV, Airline shall arrange for transportation on
behalf of GE of such GE Products from the point of shipment described in
Paragraph A of this Article IV until Delivery in accordance with
paragraph B of this Article IV. Further notwithstanding that Airline is
responsible for arranging transportation of all GE Products that it
purchases from GE, GE agrees to contact Airline's freight forwarder prior
to shipment in order to facilitate the transportation activity. For
shipment of major items such as spare engines which (i) require that the
ground transportation carrier enter GE's facilities and (ii) necessitate
GE's assistance in placing such GE Products into the hands of the carrier,
GE agrees to contact the carrier directly to arrange the carrier's
scheduled arrival at GE's facility, Also, GE agrees, unless otherwise
directed by Airline or Airline's freight forwarder, to select a carrier who
will act as Airline's agent to transport GE products on the initial leg of
ground transportation. GE will insure against the risk of loss or damage to
each such GE Products until GE relinquishes physical control thereof to the
carrier at point of shipment. The Airline shall be the exporter of record,
and shall agree to comply, and shall be responsible for complying with the
applicable US export control laws and all US government licensing and
reporting requirements as covered by the Bureau of Export Administration
Regulations and the US Census Bureau.
D. During the period of transportation of GE Products from the point of
shipment as described in Paragraph A of this Article IV until Delivery in
accordance with Paragraph B of this Article IV, GE shall likewise bear the
risk of loss and ensure that, in the event of loss of or damage to such GE
Products, it is fully insured against any carrier having custody of the GE
Products at the time of the loss or damage, whether transportation is
arranged on Airline's own aircraft or otherwise. Upon Delivery, risk of
loss shall, as stated above, pass to Airline and Airline shall thereafter
take measures it deems appropriate with respect thereto.
E. Airline shall pay the cost of the transportation of the GE Products from
the point of shipment as described in Paragraph A of this Article IV until
Delivery in accordance with Paragraph B of this Article IV and GE shall pay
the cost of insuring such GE Products against the risk of loss or damage
during such transportation.
F. If the GE Product cannot be shipped when ready due to any cause specified
in Article IV of Section III - Excusable Delay, GE may place such GE
Product in storage. In such event, all expenses incurred by GE for
activities such as, but not limited to, preparation for and placement into
storage and handling, storage, inspection, preservation and insurance shall
be paid by Airline upon presentation of GE's invoices. If shipment cannot
be made due to causes beyond Airline's control, placement of such GE
Product into storage shall be at no charge to Airline.
G. Unless otherwise instructed by Airline, GE shall ship each GE Product
packaged in accordance with GE's normal standards for domestic shipment or
export shipment, as applicable. Any special boxing or preparation for
shipment specified by Airline shall be for Airline's account and
responsibility. The cost of any re-shipping stand or container is not
included in the price of the GE Product. In the event any such GE owned
items are not returned by Airline to the original point of shipment, in
re-usable condition within one hundred twenty (120) days after shipment,
Airline will pay GE the price of such items upon presentation of GE's
invoice.
H. Airline's order number shall be indicated on all shipments, packing sheets,
bills of lading and invoices.
I. Notwithstanding the distinctions set forth in this Article VI as to when
shipment of a GE Product occurs as opposed to when Delivery of such GE
Product occurs, for all other purposes of the Agreement (including but not
limited to (i) escalation of base price per Article II of Section I, (ii)
dates to be provided in Airline's purchase orders under Article III of
Section I, (iii) payment in accordance with Article V of Section I and (iv)
Section II (Warranties and Guarantees) of Exhibit B) the terms "deliver" or
"delivery" with respect to a GE Product shall be deemed to mean the
shipment of that GE Product. However, use of the terms "delivery" or
"deliver" and "shipment" or "ship" shall not be construed so that any acts
will pass title or risk of loss or damage with respect to the GE Products
to Airline prior to the time specified in Paragraph B of this Article IV.
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GE PROPRIETORY INFORMATION
ARTICLE V - PAYMENT FOR GE PRODUCTS
Airline shall pay GE with respect to GE Products purchased hereunder as set
forth in the attached Exhibit D.
SECTION II - GE-LLC AS SELLER
ARTICLE I - GE-LLC PRODUCTS
Airline may purchase and GE-LLC shall sell under the terms and subject to the
conditions hereafter set forth, the items identified as GE-LLC Products in the
attached Exhibit A-1, (hereinafter referred to as "GE-LLC Product(R)").
ARTICLE II - GE-LLC PRICES
A. In General. The selling price of all GE-LLC Products will be the respective
prices which are both (i) quoted in GE-LLC's Spare Parts Price Catalog, as
revised from time to time (the "Spare Parts Catalog" or "Catalog") or in
Procurement Data and (ii) confirmed in a purchase order placed by Airline
and accepted by GE-LLC. GE-LLC shall quote such prices in U.S. Dollars, and
Airline shall pay for GE-LLC Products in U.S. Dollars Transportation costs
and costs resulting from special inspection, packaging, testing or other
special requirements requested by Airline, will be paid for by Airline.
B. Spare Parts Available Through Catalog. The selling price of Spare Parts
will be set forth in the most current Catalog or in Procurement Data. The
price of a new Spare Part which is first listed in Procurement Data may be
changed in subsequent Procurement Data revisions until such time as the
Spare Part is included in the Catalog. GE-LLC will advise Airline in
writing ninety (90) days in advance of any changes in prices affecting a
significant portion of the prices in the Catalog. During such ninety (90)
day period, GE-LLC shall not be obligated to accept Airline purchase orders
for quantities of Spare Parts in excess of up to ninety (90) days of
Airline's normal usage beyond the effective date of the announced price
change.
ARTICLE III - GE-LLC PRODUCT ORDER PLACEMENT
A. Applicable Sections of this Agreement shall constitute the terms and
conditions applicable to all purchase orders which may hereafter be placed
by Airline and accepted by GE-LLC for GE-LLC Products in lieu of all
printed terms and conditions appearing on Airline's purchase orders; except
that, the description of GE-LLC Products, price, quantity, delivery dates
and shipping instructions shall be as set forth on each purchase order
accepted by GE-LLC.
B. Airline shall place purchase orders for GE-LLC Products quoted by GE-LLC,
in accordance with GE-LLC's quotation for said GE-LLC Products.
C. Airline may place purchase orders for Spare Parts using any of the
following methods: telephone, facsimile transmission, ARNC or SITA
utilizing ATA Specification 2000 (chapter 3 format) or Airline purchase
order as prescribed in the Spare Parts Catalog or GE-LLC's quotation.
D. Airline shall place purchase orders for initial provisioning quantities of
Spare Parts as provided in the attached Exhibit B within one hundred eighty
days (180) following receipt from GE-LLC of initial Provisioning Data
relating thereto.
E. GE-LLC's acknowledgment of each purchase order shall constitute acceptance
thereof.
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GE PROPRIETARY INFORMATION
ARTICLE IV - DELIVERY, TITLE, TRANSPORTATION, RISK OF LOSS PACKAGING OF GE-LLC
PRODUCTS
A. GE-LLC shall supply GE-LLC Products under each purchase order placed by
Airline and accepted by GE-LLC, on a mutually agreed upon schedule
consistent with GE-LLC lead times and set forth in each purchase order.
Shipment of such GE-LLC Products shall be from Erlanger, Kentucky, U.S.A.
or point of drop shipment, at GE-LLC's option. Shipment dates are subject
to (1) prompt receipt by GE-LLC of all information necessary to permit
GE-LLC to proceed with work immediately and without interruption, and (2)
Airline's compliance with the payment terms set forth herein.
B. Delivery of all GE-LLC Products shall be as follows (hereinafter
"Delivery"):
(i) (a) if such Products are shipped via ocean freight, delivery shall be
to Airline immediately after such time as the Products first leave the
territorial waters of the United States of America; (b) if such
Products are shipped via air freight, delivery shall be to Airline
immediately after such time as the Products first leave the overlying
air space of the United States of America; and (c) if such Products
are shipped via ground transport, delivery shall be to Airline
immediately after such time as the Products first cross the United
States of America border and enter into a foreign country. If such
Products are shipped via a combination of ocean freight, air freight
and/or ground transport, delivery shall be to Airline immediately
after such time as the Products first leave the territorial waters of
the United States of America, or leave the overlying air space of the
United States of America, or cross the United States of America border
and enter into a foreign country, whichever shall first occur; or
(ii) in the event shipment cannot be made for reasons set forth in
Paragraph F of this Article IV, delivery shall be to storage.
Upon Delivery, title to GE-LLC Products as well as risk of loss thereof or
damage thereto shall pass to Airline. Airline shall be responsible for all
risk and expense in obtaining all import licenses and carrying out all
customs formalities for the importation of goods.
C. Notwithstanding that Delivery of GE-LLC Products shall be as set forth in
Paragraph B of this Article IV, Airline shall arrange for transportation on
behalf of GE-LLC of such GE-LLC Products from the point of shipment
described in Paragraph A of this Article IV until delivery in accordance
with Paragraph B of this Article IV. Further notwithstanding that Airline
is responsible for arranging transportation of all GE-LLC Products that it
purchases from GE-LLC, GE-LLC agrees to contact Airline's freight forwarder
prior to shipment in order to facilitate the transportation activity. The
Airline shall be the exporter of record, and shall agree to comply, and
shall be responsible for complying with the applicable US export control
laws and all US government licensing and reporting requirements as covered
by the Bureau of Export Administration Regulations and the US Census
Bureau.
D. During the period of transportation of GE-LLC Products from the point of
shipment as described in Paragraph A of this Article IV until Delivery in
accordance with Paragraph B of this Article IV, GE-LLC shall likewise bear
the risk of loss and ensure that, in the event of loss of or damage to such
GE-LLC Products, it is fully insured against any carrier having custody of
the GE-LLC Products at the time of the loss or damage, whether
transportation is arranged on Airline's own aircraft or otherwise. Upon
delivery, risk of loss shall, as stated above, pass to Airline and Airline
shall thereafter take measures it deems appropriate with respect thereto.
E. Airline shall pay the cost of the transportation of the GE-LLC Products
from the point of shipment as described in Paragraph A of this Article IV
until Delivery in accordance with Paragraph B of this Article IV and GE-LLC
shall pay the cost of insuring such GE-LLC Products against the risk of
loss or damage during such transportation.
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GE PROPRIETARY INFORMATION
F. If the GE-LLC Product cannot be shipped when ready due to any cause
specified in Article IV of Section III - Excusable Delay, GE-LLC may place
such GE-LLC Product in storage. In such event, all expenses incurred by
GE-LLC for activities such as, but not limited to, preparation for and
placement into storage and handling, storage, inspection, preservation and
insurance shall be paid by Airline upon presentation of GE's invoices. If
shipment cannot be made due to causes beyond Airline's control, placement
of such GE-LLC Product into storage shall be at no charge to Airline.
G. GE-LLC shall ship GE-LLC Products packaged and labeled in accordance with
ATA Specification No. 300, Revision 17, or to a revision mutually agreed in
writing between GE-LLC and Airline. GE-LLC shall notify Airline, where
applicable, that certain GE-LLC Products are packed in unit package
quantities (UPQ's) or multiples thereof.
H. Airline's order number shall be indicated on all shipments, packing sheets,
bills of lading and invoices.
I. Notwithstanding the distinctions set forth in this Article VI as to when
shipment of a GE-LLC Product occurs as opposed to when Delivery of such
GE-LLC Product occurs, for all other purposes of the Agreement (including
but not limited to (i) dates to be provided in Airline's purchase orders
under Article III of Section II, (ii) payment in accordance with Article V
of Section II and (iii) Section II (Warranties and Guarantees) of Exhibit
B) the terms "deliver" or "delivery" with respect to a GE-LLC Product shall
be deemed to mean the shipment of that GE-LLC Product. However, use of the
terms "delivery" or "deliver" and "shipment" or "ship" shall not be
construed so that any acts will pass title or risk of loss or damage with
respect to the GE-LLC Products to Airline prior to the time specified in
Paragraph B of this Article IV.
ARTICLE V - PAYMENT FOR GE-LLC PRODUCTS
Airline shall pay GE-LLC with respect to GE-LLC Products purchased hereunder as
set forth in the attached Exhibit D-1.
SECTION III - GE AND GE-LLC AS SELLER
ARTICLE I - GENERAL
Solely for purposes of this Section III of the Agreement, the abbreviation
"Seller" shall refer to both GE and GE-LLC since each entity will be subject to
these terms. In addition, again solely for purposes of this Section III of the
Agreement, the term "Product(s)" shall refer to both GE Products) and GE-LLC
Product(s).
ARTICLE II - TAXES
A. The Airline shall be responsible for the payment of any taxes (including
without limitation, sales, use, ad valorem, excise, turnover or value added
taxes), duties, fees, charges, imposts, tariffs, or assessments of any
nature (but excluding income taxes imposed by any Government other than the
Government of Brazil+) ("Taxes"), legally assessed or levied by any
Governmental authority against Seller or its employees as a result of any
sale, delivery, transfer, use, export, import, or possession of Product, or
otherwise in connection with this Agreement.
B. If claim is made against Seller for any such Taxes, Seller shall
immediately notify Airline and, if requested by Airline, Seller shall not
pay except under protest, and if payment is made, Seller, if requested by
Airline, shall use all reasonable efforts to obtain a refund thereof. If
all or any part of any such Taxes are refunded, Seller shall repay to
Airline such part thereof as Airline shall have paid. Airline shall pay to
Seller, upon demand, all expenses (including penalties, interest and
attorney's fees) incurred by Seller in protesting payment and in
endeavoring to obtain such refund.
+ The General Electric Company excluding its subsidiaries does not have a
taxable ___ in Brazil.
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GE PROPRIETARY INFORMATION
C. All payments by Airline to Seller under this Agreement shall be free of all
withholdings of any nature whatsoever except to the extent otherwise
required by law, and if any such withholding is so required, Airline shall
pay an additional amount such that after the deduction of all amounts
required to be withheld, the net amount received by Seller shall equal the
amount that Seller would have received if such withholding had not been
required
ARTICLE III - WARRANTY AND CF6-80E1 PRODUCT SUPPORT PLAN
Notwithstanding the distinction between GE Products and GE-LLC Products,
applicable warranties relating to all Products, either purchased by Airline
directly from GE or GE-LLC or installed on Airline's aircraft as original
equipment, are as set forth in Section II of Exhibit B (the Product Support
Plan) to this Agreement and are exclusively offered and administered by GE.
Sections I and X of Exhibit B respectively set forth definitions and conditions
applicable to such warranties.
Likewise, traditional product support activities designed for the Products are
set forth in Sections III through IX of Exhibit B and are the responsibility of
GE.
ARTICLE IV - EXCUSABLE DELAY
Seller shall not be liable for delays in delivery or failure to perform due to
(1) causes beyond its reasonable control, or (2) acts of God, acts of Airline,
acts of civil or military authority, fires, strikes, floods, epidemics, war,
civil disorder, riot, delays in transportation, or (3) inability due to causes
beyond its reasonable control to obtain necessary labor, material, or
components. In the event of any such delay, the date of delivery shall be
extended for a period equal to the time lost by reason of the delay. This
provision shall not, however, relieve Seller from using reasonable efforts to
continue performance whenever such causes are removed. Seller shall promptly
notify Airline when such delays occur or impending delays are likely to occur
and shall continue to advise it of new shipping schedules and changes thereto.
In the event an excusable delay continues for a period of six months or more
beyond the scheduled delivery date, Airline or Seller may, upon thirty days
written notice to the other, cancel the part of any purchase order so delayed
and Seller shall return to Airline all payments relative to the canceled part of
the order and Airline shall pay Seller its reasonable cancellation charges.
ARTICLE V - PATENTS
A. Seller shall handle all claims and defend any suit or proceeding brought
against Airline insofar as based on a claim that without further
combination, any Product furnished under this Agreement constitutes an
infringement of any patent of the United States or of any patent of any
other country that is signatory to Article 27 of the Convention on
International Civil Aviation signed by the United States at Chicago on
December 7, 1944, in which Airline is authorized to operate or in which
another airline pursuant to lawful interchange, lease or similar
arrangement, operates aircraft of Airline. This paragraph shall apply only
to Products manufactured to Seller's design.
B. Seller's liability hereunder is conditioned upon Airline promptly notifying
Seller in writing and giving Seller authority, information and assistance
(at Seller's expense) for the defense of any suit or proceeding. In case
such Product is held in such suit or proceeding to constitute infringement
and the use of said Product is enjoined, Seller shall expeditiously, at its
own expense and at its option, either (1) procure for Airline the right to
continue using said Product; (2) replace same with satisfactory and
noninfringing Product; or (3) modify same so it becomes satisfactory and
noninfringing. Seller shall not be responsible to Airline or to said other
airline, for incidental or consequential damage, including, but not limited
to, costs, expenses, liabilities and loss of profits resulting from loss of
use under this Article V.
C. The remedies described in paragraphs (A) and (B) above do not apply to any
Product or Part (1) not purchased by Airline from Seller (except for
Products or Parts installed as Original Equipment on aircraft owned, leased
or
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GE PROPRIETARY INFORMATION
operated by Airline); (2) that was changed, modified, or not used for its
intended purpose; or (3) that was manufactured by Seller to Airline's
unique specifications or directions. Seller assumes no liability for patent
infringement as to such items.
The obligations recited in this Article V shall constitute the sole and
exclusive remedies of Airline (and any other operator of Airline's GE-powered
aircraft) and the sole and exclusive liability of Seller for actual and alleged
patent infringement.
ARTICLE VI - INFORMATION AND DATA
A. All information and data, including, but not limited to, all repair
processes and procedures, manuals, designs, drawings, blueprints, tracings,
plans, models, layouts, specifications, and memoranda, (the 'Information
and Data") which may be furnished or made available to Airline, directly or
indirectly, as the result of this Agreement shall remain the property of
Seller. All Information and Data is proprietary to Seller and shall neither
be used by Airline nor furnished by Airline to any other person, firm or
corporation for any purpose nor permitted out of Airline's possession, nor
divulged to any other person, firm or corporation, without GE's express
written consent, which consent shall not be unreasonably withheld
(particularly with regard to reasonable disclosures to the Centra Tecnico
Aerospacial ("CTA"), as required by the CTA, that are necessary for
Airline's normal operation or use of the Products). However,
notwithstanding the foregoing, Airline may use such Information and Data
for modification, overhaul, or maintenance work performed by Airline on
Airline's Products; except that all repairs or repair processes that
require substantiation (including, but not limited to, high technology
repairs) will be the subject of a separate license and substantiated repair
agreement between Seller and Airline. Airline shall take all steps
reasonably necessary to insure compliance by its employees, agents, and
subcontractors with this Article VI.
B. Nothing in this Agreement shall convey to Airline the right to reproduce or
cause the reproduction of any Product of a design identical or similar to
that of the Product purchased hereunder or give to Airline a license under
any patents or rights owned or controlled by Seller.
C. Airline acquires no ownership rights in any of the computer software that
may be provided to Airline by Seller under this Agreement. Airline shall
only be licensed to use such computer software under the terms and
conditions of separate written agreements between the Airline and the
appropriate owner of such software.
ARTICLE VII - FAA CERTIFICATION REQUIREMENTS
A. All Products, when required by the U.S. Government, shall, at time of
delivery:
1. Conform to a Type Certificate issued by the FAA.
2. Conform to applicable regulations issued by the FAA, provided such
regulations are promulgated prior to the date of Airline's purchase
order issued under this Agreement for such Products.
B. If, subsequent to the date of acceptance of the purchase order for such
Products but prior to their delivery by Seller to Airline, the FAA issues
changes in regulations covering Products sold under this Agreement and such
changes in regulations are promulgated after the date of Airline purchase
orders for such Products, then all costs associated with any Product
modifications necessitated thereby will be shared equally by Seller and
Airline; provided however, that costs associated with any modifications to
the airframe required by such Product modifications shall not be borne by
Seller.
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GE PROPRIETARY INFORMATION
C. Any delay occasioned by complying with such regulations set forth in
Paragraph B above shall be deemed an Excusable Delay under Article IV of
Section III hereof, and, in addition, appropriate adjustments shall be made
in the specifications to reflect the effect of compliance with such
regulations.
ARTICLE VIII - TERMINATION FOR INSOLVENCY
A. Upon the commencement of any bankruptcy or reorganization proceeding by or
against any party hereto (the "Defaulting Party"), the other Parties hereto
may, upon written notice to the Defaulting Party, cease to perform any and
all of its obligations under this Agreement and the purchase orders
hereunder (including, without limitation, continuing work in progress and
making deliveries or progress payments or down payments) unless the
Defaulting Party shall provide adequate assurance, in the opinion of the
other Parties hereto, that the Defaulting Party will continue to perform
all of its obligations under this Agreement and the purchase orders
hereunder in accordance with the terms hereof, and will promptly compensate
the other Parties hereto for any actual pecuniary loss resulting from the
Defaulting Party being unable to perform in full its obligations hereunder
and under the purchase orders. If the Defaulting Party or the trustee
thereof shall fail to promptly provide such adequate assurance, upon notice
to the Defaulting Party by the other Parties hereto, this Agreement and all
purchase orders hereunder shall be canceled. Notwithstanding the preceding
two sentences, in the event that GE-LLC is the Defaulting Party. Airline
shall give GE the opportunity to perform any of GE-LLC's obligations under
this Agreement prior to Airline ceasing to perform any of its obligations.
B. Any Party, at its option, may cancel this Agreement or any purchase order
hereunder with respect to any or all of the Products to be furnished
hereunder which are undelivered or not furnished on the effective date of
such cancellation by giving the other Parties written notice, as
hereinafter provided, at any time after a receiver of the other's assets is
appointed on account of insolvency, or the other makes a general assignment
for the benefit of its creditors and such appointment of a receiver shall
remain in force undismissed, unvacated or unstayed for a period of sixty
days thereafter. Such notice of cancellation shall be given thirty days
prior to the effective date of cancellation, except that, in the case of a
voluntary General assignment for the benefit of creditors, such notice need
not precede the effective date of cancellation.
ARTICLE IX - LIMITATION OF LIABILITY
The liability of Seller to Airline arising out of, connected with, or resulting
from the manufacture, sale, possession, use or handling of any Product
(including Engines installed on Airline's owned or leased aircraft as Original
Equipment) or furnishing of services, whether in contract, tort (including,
without limitation, negligence) or otherwise, shall be as set forth in the
Product Support Plan included in Exhibit B hereof, and shall not in any event
exceed the purchase price of the Product, service or other thing giving rise to
Airline's claim. The foregoing shall constitute the sole remedy of Airline and
the sole liability of Seller. In no event shall Seller be liable for special,
incidental or consequential damages, including but not limited to, damage to, or
loss of use, revenue or profit with respect to any aircraft, engine, or part
thereof. THE WARRANTIES AND GUARANTEES SET FORTH IN SECTION II OF EXHIBIT B (THE
"CF6-80E1 PRODUCT SUPPORT PLAN") TO THIS AGREEMENT ARE EXCLUSIVE AND IN LIEU OF
ALL OTHER WARRANTIES AND GUARANTEES WHETHER WRITTEN, STATUTORY, ORAL, OR IMPLIED
(INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR ANY IMPLIED WARRANTY ARISING FROM COURSE OF DEALING COURSE
OF PERFORMANCE, OR USAGE OF TRADE).
For the purpose of this Article IX, the term "Seller" means General Electric
Company, its subsidiaries (including but not limited to GE Engine Services
Distribution, L.L.C.), assigns, subcontractors, suppliers, Product co-producers,
and the respective directors, officers, employees, and Agents of each.
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GE PROPRIETARY INFORMATION
ARTICLE X - EXPORT SHIPMENT
If Seller agrees in writing upon Airline's written request, to assist Airline to
arrange for export shipment of Products, Airline shall pay Seller for all fees
and expenses including, but not limited to, those covering preparation of
consular invoices, freight, storage, and warehouse to warehouse (including war
risk) insurance, upon submission of Seller's invoices. In such event, Seller
will assist Airline in applying for any required export license and in preparing
consular documents according to Airline's instructions or in the absence
thereof, according to its best judgment but without liability for error or
incorrect declarations including, but not limited to, liability for fines or
other charges.
ARTICLE XI - GOVERNMENTAL AUTHORIZATION
Airline shall be responsible for obtaining any required authorization such as
export licenses, import licenses, exchange permits or any other required
governmental authorization. Airline shall restrict disclosure of all information
and data furnished thereto under this Agreement and shall ship the direct
product of such information and data to only those destinations which are
authorized by the U.S. Government. At the request of Airline, Seller will
provide Airline with a list of such authorized destinations. Seller shall not be
liable if any authorization is delayed, denied, revoked, restricted or not
renewed and Airline shall not be relieved of its obligation to pay Seller
hereunder.
ARTICLE XII - NOTICES
Any notices under this Agreement shall become effective upon except and shall be
in writing and be delivered or sent by mail or electronic transmission to the
respective parties at the following addresses, which may be changed by written
notice:
If to: TAM Linhas Aereas, SA If to: General Electric Company
Xx. Xxxxxxxx 000 - XX Xxxxxxxx Xxxxxxx
Xxxx 0 - 0x. andar, One Xxxxxxx Way - F17
Xxxxxx Xxxx, Aeroporto Xxxxxxxxxx, Xxxx 00000-0000 XXX
Sao Paulo, Brazil 04355-O40
Attn: Attn: Director, Commercial Contracts
Facsimile Number _____________ Facsimile Number: (000) 000-0000
Telephone Number _____________ Telephone Number: (000) 000-0000
If to: GE Engine Services Distribution,
L.L.C.
Xxx Xxxxxxx Xxx, XX 000
Xxxxxxxxxx, XX 00000-0000
Attn: President
Facsimile Number: (000) 000-0000
Telephone Number: (000) 000-0000
Notice sent by the U.S. mail, postage prepaid, shall be deemed received within
seven days after deposit.
ARTICLE XIII - MISCELLANEOUS
A. Assignment of Agreement. This Agreement may not be assigned, in whole or in
part, by either Party without the prior written consent of the other Party;
except, that, Airline's consent shall not be required for the assignment by
Seller of all or a portion of the Agreement to a subsidiary of Seller,
provided that Seller shall remain primarily liable for such performance.
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GE PROPRIETARY INFORMATION
B. Exclusivity of Agreement. Except as otherwise expressly provided to the
contrary, the rights herein granted and this Agreement are for the benefit
of the Parties hereto and are not for the benefit of any Third Person, firm
or corporation, and noting herein contained shall be construed to create
any fights in any Third Party under, as the result of, or in connection
with this Agreement.
C. Applicable Law; Venue. All aspects of this Agreement and the obligations
arising hereunder will be governed in accordance with the law of the State
of New York, U.S.A. except, that New York conflict of law rules will not
apply if the result would be the application of the laws of another
jurisdiction. The United Nations Convention on Contracts for the
International Sale of Goods shall not apply to this Agreement. In the event
of an unresolved dispute, each of the Parties hereby irrevocably agree to
submit to the non-exclusive jurisdiction of the state and federal courts
(as appropriate) of New York, U.S.A. The Parties hereby waive any objection
that such courts lack personal jurisdiction or are an inconvenient forum.
D. Entire Agreement; Modification. This Agreement contains the entire and only
agreement between the parties, and it supersedes all pre-existing
agreements between such parties, respecting the subject matter hereof; and
any representation, promise or condition in connection therewith not
incorporated herein shall not be binding upon either Party. No
modification, renewal, extension, waiver, or termination of this Agreement
or any of the provisions herein contained shall be binding upon the Party
against whom enforcement of such modification, renewal, extension, waiver
or termination (except as provided in Article VIII of Section III hereof)
is sought, unless it is made in writing and signed on behalf of Seller and
Airline by duly authorized executives.
E. Confidentiality of Information. This Agreement contains information
specifically for Airline, GE and GE-LLC and nothing herein contained shall
be divulged by Airline, GE or GE-LLC to any third person, firm or
corporation, without the prior written consent of the other Parties, which
consent shall not be unreasonably withheld; except, that, consent shall not
be required for disclosure to the respective insurers and professional
advisors of the Parties who must likewise agree to be bound by this
confidentiality clause, Airline's consent shall not be required for GE or
GE-LLC to divulge to their partners information from, or with respect to
this Agreement, it being understood that each such partner will also be
bound by the provisions of Paragraph E of this Article XIII. Additionally,
neither GE nor GE-LLC's consent shall be required for Airline to divulge to
the necessary representatives of the Brazillian Government (as may be
required by the laws and/or regulations of Brazil) information from, or
with respect to this Agreement, it being understood that Airline shall
ensure that each such representative will also comply with and be bound by
the provisions of this Paragraph E of this Article XIII.
F. Duration of Agreement. This Agreement shall remain in full force and effect
until (1) Airline ceases to operate at least one aircraft powered by
Products set forth herein, (2) less than five aircraft powered by such
Products are in commercial airline service, (3) this Agreement is
terminated in whole or in part under either the provisions of Article IV of
Section III. - Excusable Delay or Article VIII of Section III. -
Termination for Insolvency hereof, or (4) by mutual consent of the parties,
whichever occurs first. Nothing herein shall affect the rights and
obligations and limitations set forth in this Agreement as to Products
ordered for delivery and work performed prior to termination of this
Agreement.
G. Survival Of Certain Clauses. The rights and obligations of the Parties
under the following Articles of Section III, as amended, and related
Exhibits shall survive the expiration, termination, completion or
cancellation of this Agreement:
Article II Taxes
Article VI Information and Data
Article IX Limitation of Liability
Article XI Governmental Authorization
Article XIII Miscellaneous, paragraphs C. and E.
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GE PROPRIETARY INFORMATION
In addition, the rights and obligations of the parties under Section I
Article V - Payment, and the rights and obligations of the parties under
Section II Article V - Payment shall survive the expiration, termination,
completion or cancellation of this Agreement.
H. General Rules of Contract Interpretation. Article and paragraph headings
contained in this Agreement are inserted for convenience of reference only
and do not limit or restrict the interpretation of this Agreement. Words
used in the singular shall have a comparable meaning when used in the
plural and vice versa, unless the contrary intention appears. Words such as
"hereunder", "hereof and "herein" and other words beginning with "here"
refer to the whole of this Agreement, including Amendments, and not to any
particular Article. References to Articles, Sections, Paragraphs,
Attachments or Exhibits will refer to the specified Article, Section,
Paragraph, Attachment or Exhibit of this Agreement unless otherwise
specified.
I. Language. This Agreement, order, Data, notices, shipping invoices,
correspondence and other writings furnished hereunder shall be in the
English language.
J. Severability. The invalidity or unenforceability of any part of this
Agreement or the invalidity of its application to a specific situation or
circumstance shall not effect the validity of the remainder of this
Agreement, or its application to other situations or circumstances. In
addition, if a part of this Agreement becomes invalid, the Parties will
endeavor in good faith to reach agreement on a replacement provision which
will reflect, as nearly as possible, the intent of the original provision.
K Waiver. The failure at any time of any Party to enforce any of the
provisions of this Agreement or to require performance by the other Parties
of any of its provisions shall in no way affect the validity of this
Agreement or the right of the other Parties thereafter to enforce each and
every such provision. The express waiver by any Party of any provision,
condition, or requirement of this Agreement, shall not constitute a waiver
of any subsequent obligation to comply with such provision, condition, or
requirement
L. Guarantee. General Electric Company hereby guarantees unconditionally the
obligations of Seller-LLC as set forth in this Agreement. In the event that
Seller-LLC fails to perform any obligation under this Agreement and
Seller-LLC does not remedy such failure within ten (10) days (or such
longer period authorized in writing by Airline) after having received
written notice from Airline requesting it to do so, the General Electric
Company undertakes to perform Seller-LLC's obligations, or remedy or have
remedied such failure for Airline, without cost to Airline.
Counterparts: This Agreement may be signed by the Parties in separate
counterparts, and any single counterpart or set of counterparts, when signed and
delivered to the other Parties shall together constitute one and the same
document and be an original Agreement for all purposes.
-12-
GE PROPRIETARY INFORMATION
IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of
the day and the year first above written.
TAM LINHAS AEREAS, SA GENERAL ELECTRIC COMPANY
By: /s/ By: /s/ XXXXX X. XXXXXX
--------------------------------- ------------------------------------
Typed Name: Typed Name: XXXXX X. XXXXXX
Title: Contracts Director Title: GEN. MGR. - CFL
Date: May 9, 2001 Date: MAY 7, 2001
GE ENGINE SERVICES DISTRIBUTION, LL.C.
By: /s/
------------------------------------
Typed Name:
Title: AUTHORIZED REPRESENTATIVE
Date: MAY 11, 2001
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GE PROPRIETARY INFORMATION
EXHIBIT A
CF6-80E1A3 SERIES PRODUCTS APPLICABLE TO
AIRLINE'S TYPE A330-200 AIRCRAFT
GE Products Shall Include:
I. Model CF6-80E1A3 Turbofan Engines as certified by the U.S. Federal Aviation
Administration ("FAA") and as specified in the applicable purchase order or
in any letter agreement hereto.
II. Related optional equipment for the above Engines.
III. Other CF6 Products as may be offered for sale by GE from time to time.
IV. Technical Data, training or other thing furnished by GE under this
Agreement.
***
A-1
GE PROPRIETARY INFORMATION
Exhibit 10.7
EXHIBIT A-1
CF6-80E1A3 SERIES PRODUCTS APPLICABLE TO
AIRLINE'S TYPE A330-200 AIRCRAFT
GE-LLC PRODUCTS SHALL INCLUDE:
I. Spare Parts.
II. Engine Modules:
A. Fan Module
B. Core Module (HPC - Combustor - 1st Stage HPT Nozzle)
C. High Pressure Turbine ("HPT") Module
D. Low Pressure Turbine ("LPT") Module
E. Accessory Gearbox
III. Other GE-LLC Products as may be offered for sale by GE-LLC from time to
time.
***
A-2
GE PROPRIETARY INFORMATION
EXHIBIT B
CF6-8OEI PRODUCT SUPPORT PLAN
GENERAL
Solely for purposes of this Exhibit, the abbreviation "GE" shall refer to both
General Electric Company and GE Engine Services Distribution, L.L.C., as the
case may be, since each entity will be subject to these terms.
SECTION I - DEFINITIONS
These definitions shall apply for all purposes of this Agreement, unless the
context requires otherwise. The meanings shall be equally applicable to both the
singular and the plural forms of the terms defined, unless the context requires
otherwise.
1. "Agreement" means the General Terms Agreement between GE, GE-LLC and Airline
to which this Exhibit B is attached.
2. "Article" means an Article of this Agreement.
3. "ATA" means the Air Transport Association of America.
4. "Base Price" means the price established in the GE proposal, quotation or
purchase order (as applicable) for a specific GE Product which corresponds to an
appropriate Base Composite Price Index in such proposal, quotation or purchase
order (as applicable).
5. "Base Composite Price Index" means the index stated in the published prices
announced by GE from time to time which corresponds to the Base Price.
6. "Catalog" means GE-LLC's most recent Engine Spare Parts Price Catalog for the
appropriate engine model which describes the selling price and delivery lead
time for identified Spare Parts.
7. "Data" includes, but is not limited to, GE and GE-LLC Product information in
any form or medium, such as technical information, technology, printed or
computer aided designs, drawings, blueprints, tracings, plans, models, movies,
pictures, layouts, specifications, Product manufacturing or Product repair
procedures or techniques, reports, financial information, technical data
furnished in accordance with Section IV of Exhibit B to this Agreement, and
other Product related Information or memoranda furnished under this Agreement.
8. "Engine" means the Engine described in Exhibit A.
9. "Ex Works" has the meaning accorded thereto in Incoterms, 2000 Edition.
10. "Exhibit" means an exhibit to this Agreement, including all modifications
and amendments thereto.
11. "Expendable Parts" means those Parts which must routinely be replaced during
Inspection, repair, or maintenance, whether or not such Parts have been damaged
and other Parts which are customarily replaced at each such inspection and
maintenance period such as filter inserts and other short-lived items which are
not dependent on wear out but replaced at predetermined intervals.
(12) "FAA" means the Federal Aviation Administration of the Department of
Transportation of the United States, and any successor agency thereof.
B-1
GE PROPRIETARY INFORMATION
13. "Failed Parts" means those Parts and Expendable Parts suffering a Failure or
mutually determined to have caused the Engine to be unserviceable and incapable
of continued operation without requiring corrective action and shall include any
Part or Expendable Part with a defect in material or workmanship discovered
prior to the initial use of a Part or Expendable Part.
14. "Failure" means the breakage of a Part, malfunction of a Part, or injury to
a Part, rendering it unserviceable for any reason within GE's or GE-LLC's
control. Failure shall also include any defect in material or workmanship
discovered prior to the initial use of a Part. Failure does not include normal
wear and tear and deterioration which can be restored by overhaul or repair.
15. "Flight Cycle" means the complete running of an Engine from start through
any condition of flight and ending at Engine shutdown. A "touch and go landing"
used during pilot training shall be considered as a "Flight Cycle."
16. "Flight Hours" means the cumulative number of airborne hours in operation of
each Engine computed from the time an aircraft leaves the ground until it
touches the ground at the end of a flight.
17. "Foreign Object Damage" means any damage to the Engine caused by objects
which are not part of the Engine and Engine Optional Equipment.
18. "Incoterms" means International Chamber of Commerce Incoterms, 2000 Edition.
19. "Inspection" means an observation of an Engine or Parts thereof, through
disassembly or other means, for the purpose of determining serviceability.
20. "Labor Allowance" means a GE credit calculated by multiplying the
established labor rate by man-hours allowed for disassembly, reassembly (when
applicable), and for Parts repair. If a Labor Allowance is granted for a repair,
it shall not exceed the credit which would have been quoted if the Part had not
been repairable.
21. "Module" means a the appropriate major serialized subassembly of the Engine
described on Exhibit A of this Agreement.
22. "Original Equipment" means the installed Engines or GE-LLC Products supplied
to Airline through the aircraft manufacturer as part of Airline's new Aircraft.
23. "Part" means only those Engine and Module Parts which have been sold
originally to Airline by GE or GE-LLC for commercial use. The term excludes
parts which were furnished on new Engines and Modules but are procured directly
from vendors. Such parts are covered by the Vendor Warranty and the General
Electric "Vendor Warranty Back Up" described in Section II of Exhibit B of this
Agreement. Also excluded are Expendable Parts and customary short-lived items
such as filter inserts.
24. "Part Time" means the total number of Flight Hours flown by a Part since
delivery to Airline.
25. "Parts Credit Allowance" means the credit granted by GE or GE-LLC to Airline
in connection with the Failure of a Part based on the price of a replacement
part at the time the part is removed. This credit may take the form of a
replacement Part at GE's or GE-LLC's option.
26. "Parts Cycles" means the total number of Flight Cycles accumulated by a Part
since its delivery to Airline.
27. "Parts Repair" means the GE recommended rework or restoration of Failed
Parts to a serviceable condition, excluding repair of normal wear and tear and
deterioration.
B-2
GE PROPRIETARY INFORMATION
28. "Scheduled Inspection" means the Inspection of an Engine conducted when an
Engine has approximately completed a planned operating interval.
29. "Scrapped Parts" means those Parts determined to be unserviceable and not
repairable by virtue of reliability, performance or repair costs. Such Parts
shall be disposed of by Airline unless requested by GE for engineering analysis,
in which event any handling and shipping shall be at GE's expense.
30. "Spare Engine" means an Engine, except installed Engines, which is purchased
by Airline from GE for commercial use.
31. "Spare Parts" - see Part.
32. "Ultimate Life" of a Part means the approved limitation on use of a Part, in
cumulative Flight Hours or Flight Cycles, which either GE or a U.S. Government
authority establishes as the maximum period of allowed operational time for such
Parts in Airline service, with periodic repair and restoration. The term does
not include individual Failure from wear and tear or other cause not related to
the total usage capability of all such Parts in Airline service.
33. "Third Party" means any individual, firm, company, corporation, partnership,
joint venture, association, trust, unincorporated organization or body, or any
country, state, jurisdiction or government, or any agency, authority,
instrumentality or political subdivision thereof, in each case whether having a
distinct legal personality or not, other than GE, GE-LLC and Airline.
SECTION II - WARRANTIES
A. New Engine Warranty
1 GE warrants each new Engine and Module against Failure for * as
follows:
a. Parts Credit Allowance will be granted for any Failed Parts.
b. Labor Allowance for disassembly, reassembly, test and Parts
Repair of any new Engine part will be granted for replacement of
Failed Parts.
c Such Parts Credit Allowance, test and Labor Allowance will be:
* from new to * and decreasing pro rata from *
2. As an alternative to the above allowances, GE shall upon request of
Airline:
a. Arrange to have failed Engines and Modules repaired as
appropriate, at a facility designated by GE at no charge to
Airline for * and at a charge to Airline increasing pro rata
from *
b. Transportation to and from the designated facility shall be at
Airline's expense.
B-3
GE PROPRIETARY INFORMATION
B. New Parts Warranty
In addition to the warranty granted for new Engines and Modules GE warrants
new Engine and Module Parts as follows;
1. During the * for such Parts and Expendable Parts, GE will grant *
Parts Credit Allowance or Labor Allowance for repair labor for failed
Parts.
2. GE will grant a pro rata Parts Credit Allowance for Scrapped Parts
decreasing from * at the applicable hours designated in Table 1.
C. Ultimate Life Warranty
1. GE warrants Ultimate Life limits on the following parts:
a. Fan and Compressor Disks/Spools
b. Fan and Compressor Shafts
c. Turbine Disks/Shafts
d. Turbine Spacer and Impeller
e. Compressor Discharge Pressure (CDP) Seal and support
f. HPT Rotor Diffuser
2. GE will grant a * Parts Credit Allowance of, * when * and a credit
allowance decreasing * from * Credit will be granted only when such
Parts are permanently removed from service by a GE or U.S. Government
imposed Ultimate Life Limitation of less than *
D. Campaign Change Warranty
1. A campaign change will be declared by GE when a new Part design
introduction, Part modification, Part Inspection, or premature
replacement of an Engine or Module is required by a time compliance GE
Service Bulletin or FAA Airworthiness Directive. Campaign change may
also be declared for GE Service Bulletins requesting new Part
introduction no later than the next Engine or Module shop visit GE
will grant the following Parts Credit Allowances:
Engines and Modules
(i) * for Parts in inventory or removed from service when *
(ii) Pro rata for Parts in inventory or removed from service
decreasing *
(iii) * for Parts in inventory or removed from service with *
regardless of warranty status.
2. Labor Allowance - GE will grant * Labor Allowance for disassembly,
reassembly, modification, testing, or Inspection of GE-supplied
Engines, Modules or Parts therefor when such action is required to
comply with a mandatory time compliance GE Service Bulletin or FAA
Airworthiness Directive. A Labor Allowance will be granted by GE for
other GE issued Service Bulletins if so specified in such Service
Bulletins.
B-4
GE PROPRIETARY INFORMATION
3. Life Controlled Rotating Parts retired by Ultimate Life limits
including FAA Airworthiness Directive, are excluded from Campaign
Change Warrant.
E. Warranty Pass-On
If requested by Airline and agreed to by GE in writing, GE will extend
warranty support for Engines sold by Airline to commercial airline
operators, or to other aircraft operators. Such warranty support will be
limited to the New Engine Warranty, New Parts Warranty, Ultimate Life
Warranty and Campaign Change Warranty and will require such operator(s) to
agree in writing to be bound by and comply with all the terms and
conditions, including the limitations, applicable to such warranties as set
forth in this Agreement.
F. Vendor Back-Up Warranty
1. GE controls and accessories vendors provide a warranty on their
products used on GE Engines. This warranty applies to controls and
accessories sold to GE for delivery on installed or spare Engines and
controls and accessories sold by the vendor to the airlines on a
direct purchase basis. In the event the controls and accessories
suffer a failure during the vendor's warranty period, Airline will
submit a claim directly to the vendor in accordance with the terms and
conditions of the vendor's warranty.
2. In the event a controls and accessories vendor fails to provide a
warranty at least as favorable as the GE New Engine Warranty (for
complete controls and accessories) or New Parts Warranty (for
components thereof), or if provided, rejects a proper claim from
Airline, GE will intercede on behalf of Airline to resolve the claim
with the vendor. In the event GE is unable to resolve a proper claim
with the vendor, GE will honor a claim from Airline under the
provisions and subject to the limitations of GE's New Engine or New
Parts Warranty, as applicable. Settlements under Vendor Back-Up
Warranty will exclude credits for resultant damage to or from controls
and accessories procured directly by Airline from vendors.
G. Vendor Interface Warranty
Should any CF6 control or accessory, for which GE is responsible, develop a
problem due to its environment or interface with other controls and
accessories or with an Engine, Module or equipment supplied by the aircraft
manufacturer, GE will be responsible for initialing corrective action. If
the vendor disclaims warranty responsibility for Parts requiring
replacement, GE will apply the provisions of its New Parts Warranty to such
Part whether it was purchased originally from GE or directly from the
vendor.
H. Condition Monitoring Warranty
1. GE warrants CF6 Condition Monitoring Equipment, installed on new
Engines, in accordance with the provisions of its New Engine Warranty
as heretofore set forth, except that no Labor Allowance will be
granted for disassembly and reassembly of any new Engine component due
to inoperative or malfunctioning Condition Monitoring Equipment.
2. GE warrants CF6 condition monitoring equipment, purchased as Spare
Parts, in accordance with the provisions of its New Parts Warranty as
heretofore set forth.
I. Special Tools and Test Equipment Warranty
1. GE warrants to Airline that the special tools and test equipment sold
hereunder will, at the time of delivery, be free from defects in
material, workmanship and title.
B-5
GF PROPRIETARY INFORMATION
2. If it appears within * from the date of shipment by GE that any
special tool or test equipment delivered hereunder does not meet the
warranties specified in Paragraph 1 above and the Airline so notifies
GE in writing prior to the expiration of * after the end of that *
period, GE shall, at its option upon Airline's satisfactory
demonstration that such special tool or test equipment was defective
at the time of delivery, correct any such defects either by repairing
the defective item or by making available a repair or replacement
item, Ex Works, GE's plant, or by refunding the purchase price of such
item. At the request of GE, Airline, at its expense, shall ship the
defective item to a location on the Airline's system designated by GE.
3. GE reserves the right to make changes in design and add improvements
without incurring any obligation to make, at GEs expense, the same on
other special tools or test equipment previously sold by GE.
4. This Special Tools and Test Equipment Warranty is applicable only if
the special tools and test equipment are operated, handled, used,
maintained, and repaired in accordance with GE's then-current
recommendations as stated in its manuals, bulletins, or other written
instructions.
J. Special Guarantees
In addition to the Warranties specified above, GE offers the following
special guarantees to Airline to provide assurance of effective
performance, high reliability and economical operation of the Engine. These
guarantees are subject to the conditions set forth in Attachment A hereto.
These guarantees apply to Airline's CF6-80E1A3 powered A330 aircraft.
1. Extended New Engine Warranty
GE guarantees that Airline's new Engines and Engine Modules will
operate without Failure requiring removal for the first * Engine
Right Hours ("EFH").
Should an Engine or Engine Module be removed due to a Failure covered
by this guarantee, GE will provide * Parts Credit Allowance and
Labor Allowance necessary to repair the Engine or Engine Module during
the first * EFH. In no event will GE pay Airline for the same
occurrence or event under this guarantee and the New Engine Warranty.
2. Performance Retention Guarantee
GE guarantees that the cumulative fleet average Engine cruise fuel
consumption of new Engines will not, due to Engine deterioration,
increase by more than * for the CF6-80E1A3 Engine during the first
* of Airline's Engine following delivery of the first Aircraft.
Attachment D hereto describes the method to be used to determine the
baseline and subsequent performance levels of fuel consumption.
If the actual cumulative fleet average Engine cruise fuel consumption
increase due to Engine deterioration exceeds the guarantee at any
time during the guarantee period, GE will reimburse Airline for the
excess fuel consumed for that portion of the guarantee period during
which the guarantee is exceeded, computed at Airline's average monthly
cost of fuel. Reimbursement will be in the form of a credit against
purchases from GE.
B-6
GE PROPRIETARY INFORMATION
3. Exhaust Gas Temperature ("EGT") Guarantee
GE guarantees that each new Engine will operate for the first * EFH
without removal from the Aircraft due to exceeding the certified
maximum takeoff EGT limit.
If during the applicable guarantee period an Engine is removed from an
Aircraft solely for exceeding such takeoff EGT limit, GE will issue a
credit in the amount of * for each qualifying removal.
For an Engine which has experienced a Module change prior to such a
removal, this guarantee will apply to such Engine until the
highest-time Module in the Engine reaches the total applicable number
of EFH under the guarantee. Coverage under this guarantee does not
include EGT deterioration due to mechanical failure, as distinct from
normal wear
4. Aerodynamic Stall Guarantee
GE guarantees that Airline will have no Aerodynamic Stalls (Engine
Surges) due to the Engine from any start of take-off roll to end of
landing run) during the first * of Airline's Engine following the
delivery of the first Aircraft. If during the guarantee period the
guarantee is not met, GE will provide Airline a credit against
purchases from GE in the amount of * for each such event.
Aerodynamic Stalls (Engine Surges) due to Engine maintenance or
operational error or which are the result of (i) a mechanical Failure
of a Part or (ii) FOD, are excluded from this guarantee.
5. * Minutes Extended Twin Operations (ETOPS) Guarantee
GE guarantees that, during the * years following delivery of Airline's
first CF6-80E1A3 powered aircraft, the CF6-S0E1A3 engine hardware sold
by GE to the aircraft manufacturer for installation on Airline's
aircraft, as well as the spare CF6-80E1A3 Engines and Parts purchased
by Airline from GE, will not be the sole cause of preventing Airline's
aircraft from obtaining, or maintaining, approval for * minutes ETOPS
operation within the prescribed time and reliability limitations set
by the FAA for operation of such aircraft.
If at any time during the term of the guarantee the CF6-80E1A3 powered
aircraft loses ETOPS certification, and such loss is the direct and
sole caused of the CF6-80E1A3 Engine, GE will issue a credit to
Airline for the incremental fuel costs incurred by Airline as a result
of having to operate the CF6-80E1A3 powered aircraft on non-ETOPS
flight paths.
This guarantee does not extend to ETOPS related requirements imposed
upon Airline while operating the aircraft which specifically relate to
the operation and maintenance performance of Airline.
In no event shall GE's compensation to Airline for fuel resulting from
a failure to meet this guarantee exceed * per Aircraft.
6. Shop Visit Rate Guarantee
GE guarantees that Airline's * year cumulative Engine shop visit rate
will not exceed *. If at the end of the * year period the guaranteed
rate is exceeded, GE will provide Airline a credit against purchases
from GE in the amount of * for each Qualifying Shop Visit in excess of
the guaranteed rate.
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GE PROPRIETARY INFORMATION
Criteria for a "Qualifying Shop Visit" is listed in an Attachment C
hereto. Shop visits for which Airline is otherwise reimbursed shall be
excluded from this guarantee. Also, Airline's compliance with GE's
workscope recommendations shall be a condition of this guarantee.
7. In-Flight Shut Down ("IFSD") Rate Guarantee
GE guarantees that Airline's * cumulative Engine caused IFSD rate will
not exceed * per * If at the end of the guarantee period the
guaranteed rate is exceeded, GE will provide Airline a credit against
purchases from GE in the amount of * for each IFSD in excess of the
guaranteed rate.
For purposes of this guarantee, an "IFSD" is defined as (i) when an
Engine Part Fails or malfunctions causing an Engine-imposed shutdown
during flight or (ii) subject to investigation to verify compliance
with the Flight Crew Operating Manual, when the flight crew elects to
shut off fuel to the Engine during flight solely due to an Engine Part
Failure or malfunction.
8. Delay and Cancellations("D&C") Rate Guarantee
GE guarantees that Airline's * cumulative Engine-caused Delay (in
excess of 15 minutes) and Cancellation rate will not exceed * per *
scheduled departures. If at the end of the guarantee period the
guaranteed rate is exceeded, GE will provide Airline a credit against
purchases from GE in the amount of * for each Engine-caused
Cancellation in excess of the guaranteed rate.
"Delays and Cancellations" are defined in Attachment B hereto.
9. Remote Site Removal Rate Guarantee
GE guarantees that Airline's Engine Remote Site Removal rate during
the first * of its Engine revenue service will not exceed * per * EFH.
If at the end of the guarantee period the guaranteed rate is exceeded,
GE will provide Airline a credit against purchases from GE in the
amount of * for each removal in excess of the guaranteed rate.
For purposes of this guarantee, "Remote Site Removal" is defined as an
Engine-caused Failure requiring Engine removal from the aircraft at
any location except Airline's main base or where a spare Engine is
available.
10. Maintenenance Cost Guarantee
Provided (i) Airline utilizes a remote diagnostics service
satisfactory to GE for fleet trending and troubleshooting; (ii) the
Engines are maintained in accordance with GE's Workscope Planning
Guide and (iii) the overhaul of the Engines is performed at a repair
facility satisfactory to GE, GE guarantees that Airline's Cumulative
Net Engine Maintenance Cost for the CF6-80E1A3 Engines during the
Initial * of such operation will not exceed * per * for material plus
the equivalent of maintenance man-hours of labor per EFH at the
warranty labor rate agreed to between GE and Airline to perform shop
maintenance on such Engines during such period.
For purposes of this guarantee, Airline's "Cumulative Net Engine
Maintenance Cost" for such Engines shall be defined as (i) the actual
price of Engine Parts purchased by Airline through GE Spare Parts
Catalog sales to replace CF6-80E1A3 Engine Parts scrapped during the
guarantee period, less (i) any material credits issued under warranty,
another guarantee, or other program considerations, (ii)
B-8
GE PROPRIETARY INFORMATION
Ultimate Life Parts, (iii) material handling charges or surcharges by
repair agencies, outside services (except for high technology repairs
as stated below), transportation charges, taxes, duties, insurance, as
well as (iv) parts (no) sold by GE required to repair QEC, Reversers,
exhaust nozzles and Nacelies plus (II) the actual total cost to
Airline for high-tech repairs to Engine Parts performed outside
Airline's shop plus (III) the above described cost of shop labor.
However, the cost of such outside high-tech repairs will only be
included under the guarantee up to the amount otherwise charged by GE
for such repair. Also, Engine line maintenance labor is not covered by
this guarantee.
The above described * per' * guaranteed rate for material cost will be
adjusted annually for escalation in accordance with the appropriate
provisions of Attachment E hereto, using a Base Composite Price Index
(B1) of GE (January 2000).
If at the end of the guarantee period the guarantee level is exceeded,
GE will provide Airline, in the form of a credit against subsequent
purchases from GE of goods and /or services, an amount equal to * of a
cumulative combination of excess Cumulative Net Engine Maintenance
Cost, Engine Parts scrapped due to service bulletin compliance will be
included in the material portion of the guarantee at a mutually
agreeable rate provided that the service bulletins are agreed to by
Airline and GE. In cases where a Parts Repair procedure is required
and is not available from GE within * months from receipt of Airline's
request for such repair procedure, the Part awaiting repair may,
unless GE and Airline agree otherwise, be Scrapped and the replacement
purchase from GE will be covered by this guarantee.
K. THE WARRANTIES AND SPECIAL GUARANTEES SET FORTH IN THIS PRODUCT SUPPORT
PLAN OR ANY LETTER AGREEMENT HERETO ARE EXCLUSIVE AND IN LIEU OF ALL OTHER
WARRANTIES AND GUARANTEES, WHETHER WRITTEN, STATUTORY, ORAL, OR IMPLIED
(INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR ANY IMPLIED WARRANTY ARISING FROM COURSE OF
DEALING, COURSE OF PERFORMANCE, OR USAGE OF TRADE). THESE WARRANTIES AND
REMEDIES ARE SUBJECT TO THE GENERAL CONDITIONS SET FORTH IN SECTION X OF
THIS EXHIBIT B.
SECTION III - SPARE PARTS PROVISIONING
A. Provisioning Data
1. In connection with Airline's initial provisioning of Spare Parts, GE
or GE-LLC shall furnish Airline with data in accordance with ATA
Specification 200 using Revision No.20, or a revision mutually agreed
to in writing by GE and Airline.
2. It is the intention of the parties hereto to comply with the
requirements of the ATA Specification 200 and any future changes
thereto, except that neither party shall deny the other the right to
negotiate reasonable changes in the procedures or requirements of the
Specification which procedures or requirements, if complied with
exactly, would result in an undue operating burden or unnecessary
economic penalty.
The data to be provided by GE or GE-LLC to Airline shall encompass all
Parts listed in GE-LLC's Illustrated Parts Catalogs. GE-LLC further
agrees to become total supplier of Initial Provisioning Data for all
vendor Spare Parts in accordance with Paragraph 1. above.
3. Beginning on a xxxx no earlier than eighteen (18) months and no later
than twelve (12) months prior to delivery of Airline's first aircraft,
or as mutually agreed, GE-LLC shall provide to Airline a complete set
of Initial Provisioning Data and shall progressively revise this data
until ninety (90) days after delivery of the first aircraft or as
mutually agreed. A status report will be issued periodically.
Provisioning data will
B-9
GE PROPRIETARY INFORMATION
be reinstituted for subsequent spare Engines reflecting the latest
modification status. GE-LLC will make available a list of major
suppliers as requested by Airline. GE-LLC will provide, or cause to be
provided on behalf of its vendors, the same service detailed in this
clause.
B. Pre-Provisioning Conference
A pre-provisioning conference, attended by the GE-LLC and Airline personnel
directly responsible for initial provisioning of Spare Parts hereunder,
will be held at a mutually agreed time and place prior to the placing by
Airline of initial provisioning orders. The purpose of this conference is
to discuss systems, procedures and documents available to the Airline for
the initial provisioning cycle of the Products.
C. Changes
GE-LLC shall have the right to make corrections and changes in the Initial
Provisioning Data in accordance with Chapter 2 (Initial Provisioning) of
ATA 200 Specification entitled "Integrated Data Processing Supply" using
Revision No. 20, or a revision mutually agreed to in writing by GE-LLC and
Airline. So long as Airline operates one (1) aircraft powered by CF6
Engines and there are five (5) such aircraft powered by CF6 Engines in
commercial airline service, GE-LLC will progressively revise Airline's
Procurement Data tape in accordance with Chapter 3 (Order Administration)
of ATA Specification 200 entitled "Integrated Data Processing Supply" using
Revision No. 20, or a revision mutually agreed to in writing by GE-LLC and
Airline.
D. Return Of Parts
Airline shall have the right to return to GE-LLC, at GE-LLC's expense, any
new or unused Part which has been shipped in excess of the quantity ordered
or which is not the part number ordered or which is in a discrepant
condition except for damage in transit.
E. Parts Buy-Back
Within the first * after delivery of the first aircraft to Airline, GE-LLC
will agree (i) to repurchase at the invoiced price, any initially
provisioned Spare Parts purchased from GE-LLC which GE-LLC recommended that
Airline purchase, in the event such Parts are found to be surplus to
Airline's needs; or (ii) to exchange with Airline the equivalent value
thereof in other Spare Parts. Such Parts must be new and unused, in
original GE packaging, and shall meet GE Inspection requirements. Parts
which become surplus to Airline's needs by reason of Airline's decision to
upgrade or dispose of Products are excluded from this provision. Shipping
costs for Parts returned will be paid by Airline.
F. Parts of Modified Design
1. GE-LLC shall have the right to make modifications to design or changes
in the Spare Parts sold to Airline hereunder.
2. GE-LLC will from time to time inform Airline in accordance with the
means set forth in ATA Specification 2000, when such Spare Parts of
modified design become available for shipment hereunder.
3. Spare Parts of the modified design will be supplied unless Airline
advises GE-LLC in writing of its contrary desire within ninety (90)
days of the issuance of the Service Bulletin specifying the change to
the modified Parts. In such event, Airline may negotiate for the
continued supply of Spare Parts of the premodified design at a rate of
delivery and price to be agreed upon.
B-10
GE PROPRIETARY INFORMATION
G. Spare Parts Availability
1. GE-LLC will ship reasonable quantities (three months normal usage) of
Spare Parts which are included in GE-LLC's Spare Parts Catalog
within * day lead time of IV. Spare Parts for I. above which are
manufactured by GE or supplied by GE-LLC for commercial use as
components of a new Engine or purchased from GE-LLC for commercial use
as replacement (spare) parts. Following receipt of an acceptable
purchase order from Airline:
Lead time for Spare Parts and other material which are not included in
GE-LLC's Spare Parts Catalog will be shipped as quoted by GE-LLC.
2. GE-LLC will maintain a stock of Spare Parts to cover Airline's
emergency needs. For purposes of this Paragraph, emergency is
understood by GE-LLC and Airline to mean the occurrence of any one of
the following conditions.
AOG - Aircraft on Ground
Critical - Imminent AOG or Work Stoppage
Expedite - Less than Normal Lead Time
Airline will order Spare Parts according to lead time as provided in
Paragraph 1. above, but should Airline's Spare Parts requirements
arise as a result of an emergency. Airline can draw such Spare Parts
from GE-LLC's stock. A 24-hour telephone service is available to
Airline for this purpose. If an emergency does exist, GE-LLC will use
its best efforts to ship required Spare Part(s) within the time period
set forth below following receipt of an acceptable purchase order from
Airline.
AOG - *
Critical - *
Expedite - *
SECTION IV - TECHNICAL DATA
A. GE shall make available to Airline the technical data, including revisions
thereof, at no charge, in the quantities as specified in Exhibit E and at a
time and to a location as mutually agreed.
Such technical data shall be prepared by GE in accordance with the
applicable provisions of ATA Specification * (including necessary
deviations) as the same may be revised from time to time.
If Airline requires GE to furnish the technical data in a form different
from that normally furnished by GE pursuant to ATA Specification *, or in
quantities greater than those specified in Exhibit E, GE will, upon
written request from Airline, furnish Airline with a written quotation for
furnishing such technical data.
Revisions to the above technical data shall be furnished by GE to Airline
at no charge for quantities equivalent to the quantities specified in
Exhibit E for as long as Airline operates * CF6-80E1 powered aircraft and
there is a total of * CF6-80E1 powered aircraft in commercial airline
service. Such quantities of revisions may be mutually modified in order
to reflect any change in Airline's CF6-80E1 operation.
GE shall incorporate in the Engine Illustrated Parts Catalog and Engine
Shop Manual all appropriate GE service bulletins for as long as Airline
receives revisions to technical data. Premodified and postmodified
configurations shall be included by GE unless Airline informs GE that a
configuration is no longer required.
B-11
GE PROPREITARY INFORMATION
GE shall incorporate in the Engine Illustrated Parts Catalog and the Engine
Manual all appropriate GE Service Bulletins for as long as Airline receives
revisions to technical information or data. Premodified and postmodified
configurations shall be included by GE unless Airline informs GE that a
configuration is no longer required.
B. GE will require each vendor to furnish technical data consisting of copies
of a component maintenance manual and service bulletins. Such vendor
publications shall be furnished by GE to Airline in accordance with and
subject to the same provisions as those set forth in Paragraph A. above.
C. GE will also require its ground support equipment vendors, where
appropriate, to furnish to Airline, at no charge, technical data determined
by GE to be necessary for Airline to maintain, overhaul and calibrate
special tools and test equipment. Such vendor-furnished technical data
shall be furnished in accordance with and subject to the same provisions as
those set forth in Paragraph A. above, except that the technical data shall
be prepared in accordance with the applicable provisions of ATA 101
Specification, as the same may be revised from time to time.
D. The following technical data, not covered by ATA Specifications, shall be
furnished by GE to Airline in the quantities and at a time and to a
location as mutually agreed:
- Installation Manual (if required)
- General Facility Study
- Parts serialization records
E. Where applicable, technical data as described in the above Paragraphs A.,
B. and D., furnished by GE or by GE vendors to Airline hereunder, shall be
printed in the simplified English language.
F. All technical data furnished herein by GE to Airline shall be subject to
the provisions of Article X, "Information and Data", of this Agreement.
SECTION V - TECHNICAL TRAINING
A. General
This general provision describes the current maintenance training to be
provided by GE at GE's training facilities in Springdale, Ohio. GE will
provide, at no charge to Airline, except as otherwise provided herein, a
number of student days" for maintenance training as defined hereunder:
- 100 Student Days" for the first CF6-80E1 powered aircraft delivered to
Airline
- 20 additional Student Days" for any such additional aircraft
"Student Days = number of students X number of class days
Such days will be applied against courses selected from the list set forth
in paragraph C (Standard Maintenance Training) listed on the next page. Any
additional training beyond this threshold shall be at Airline's cost. It is
necessary for Airline to use such maintenance training days prior to
delivery of the first aircraft, unless the parties have otherwise agreed in
writing.
All instruction, examinations and materials shall be prepared and presented
in the English language and in the units of measure used by GE. Airline
will provide interpreters, if required, for Airline's personnel.
B-12
GE PROPRIETARY INFORMATION
GE shall incorporate in the Engine Illustrated Parts Catalog and the Engine
Manual all appropriate GE Service Bulletins for as long as Airline receives
revisions to technical information or data. Premodified and postmodified
configurations shall be included by GE unless Airline informs GE that a
configuration is no longer required.
B. GE will require each vendor to furnish technical data consisting of copies
of a component maintenance manual and service bulletins. Such vendor
publications shall be furnished by GE to Airline in accordance with and
subject to the same provisions as those set forth in Paragraph A. above.
C. GE will also require its ground support equipment vendors, where
appropriate, to furnish to Airline, at no charge, technical data determined
by GE to be necessary for Airline to maintain, overhaul and calibrate
special tools and test equipment. Such vendor-furnished technical data
shall be furnished in accordance with and subject to the same provisions as
those set forth in Paragraph A. above, except that the technical data shall
be prepared in accordance with the applicable provisions of ATA 101
Specification, as the same may be revised from time to time.
D. The following technical data, not covered by ATA Specifications, shall be
furnished by GE to Airline in the quantities and at a time and to a
location as mutually agreed:
- Installation Manual (if required)
- General Facility Study
- Parts serialization records
E. Where applicable, technical data as described in the above Paragraphs A,
B, and D., furnished by GE or by GE vendors to Airline hereunder, shall be
printed in the simplified English language.
F. All technical data furnished herein by GE to Airline shall be subject to
the provisions of Article X, "Information and Data", of this Agreement.
SECTION V - TECHNICAL TRAINING
A. General
This general provision describes the current maintenance training to be
provided by GE at GE's training facilities in Springdale, Ohio. GE will
provide, at no charge to Airline, except as otherwise provided herein, a
number of student days* for maintenance training as defined hereunder:
- 100 Student Days* for the first CF6-80E1 powered aircraft delivered to
Airline
- 20 additional Student Days* for any such additional aircraft '
* Student Days = number of students X number of class days
Such days will be applied against courses selected from the list set forth
in paragraph C (Standard Maintenance Training) listed on the next page. Any
additional training beyond this threshold shall be at Airline's cost. It is
necessary for Airline to use such maintenance training days prior to
delivery of the first aircraft, unless the parties have otherwise agreed in
writing.
All instruction, examinations and materials shall be prepared and presented
in the English language and in the units of measure used by GE. Airline
will provide interpreters, if required, for Airline's personnel.
B-12
GE PROPRIETARY INFORMATION
Airline will be responsible for the living and medical expenses of
Airline's personnel during maintenance training. For maintenance training
provided at Springdale, Ohio, GE will assist Airline's personnel in making
arrangements for hotels and transportation between selected lodging and the
training facility.
B. Maintenance Training Conference
No later than twelve months prior to delivery of Airline's first
CF6-80E1-powered aircraft, GE and Airline will conduct a maintenance
training conference call in order to schedule and discuss the maintenance
training. Alternatively, Airline is welcome to visit GE's training
facilities and discuss such training. During such maintenance conference
call or visit, Airline will indicate the courses selected and arrange a
mutually acceptable schedule.
C. Standard Maintenance Training
Standard maintenance training will consist of computer-based training in
classroom presentations supported by training materials and, when
applicable, hands-on practice. Training material will be based on ATA
Specification 104 guidelines.
ATA104-Level I - General Familiarization
ATA104-Level II - Ramp and Transit
ATA104-Level III - Line and Base Maintenance
ATA104-level IV - Specialized Training:
Borescope Inspection
Fan Trim Balance
Major Module Replacement
Module Replacement
D. Optional Maintenance Training
Non-standard maintenance training courses are described in the current GE
Training Course Syllabus and GE will provide a quote upon request.
E. Training at a Facility Other Than GE's Facilities
If requested prior to the conclusion of the maintenance training planning
conference call or visit, GE will conduct the classroom training described
in paragraph C (Standard Maintenance Training) at a mutually acceptable
alternate training site, subject to the following conditions:
1. Airline will be responsible for providing acceptable classroom space
and training equipment required to present the GE courseware.
2. Airline will pay GE's travel and living charges for each GE instructor
for each day, or fraction thereof, that such instructor is away from
Springdale, Ohio, including travel time.
3. Airline will reimburse GE for round-trip transportation for GE's
instructors and training materials between Springdale, Ohio, and such
alternate training site.
4. Those portions of the training that require use of GE's training
devices shall be conducted at GE designated facilities.
B-13
GE PROPRIETARY INFORMATION
F. Supplier Training
The standard maintenance training includes sufficient information on the
location, operation and servicing of Engine equipment, accessories and
parts provided by suppliers to support line maintenance functions.
If Airline requires additional maintenance training with respect to any
supplier-provided equipment, accessories or parts, Airline will schedule
such training directly with the supplier.
G. Student Training Material
1. Manuals. When required, GE will provide at the beginning of each
maintenance training course, one set of training manuals, or
equivalent, for each student attending such course.
2. Line Maintenance.
GE will provide one set of the following training material, per
course, as applicable:
2.1 Video Tapes - GE will loan to Airline a set of video tapes on 3/4
inch U-matic or 1/2 inch VHS cassettes in NTSC, PAL or SECAM
standard, as selected by Airline.
2.2 Computer-Based Training (CBT) - GE will provide CBT courseware
and instructions for courseware installation and operation.
3. Courses Other Than Line Maintenance
GE will provide one set of the following training material, per
course, as applicable.
3.1 Video Tapes - GE will loan to Airline a set of video tapes on 3/4
inch U-matic or 1/2 inch VHS cassettes in NTSC, PAL or SECAM
standard, as selected by Airline.
3.2 Computer-Based Training (CBT) - GE will provide CBT courseware
and instructions for courseware installation and operation.
SECTION VI - CUSTOMER FACTORY AND FIELD SUPPORT
GE shall make available to Airline on an as-required basis, at no charge, a
field service representative as GE's representative at Airline's main base.
These specialists will assist Airline in areas of unscheduled maintenance action
and Product scrap approval and will provide rapid communication between
Airline's maintenance base and GE's factory personnel.
SECTION VII - PRODUCT SUPPORT ENGINEERING
Factory based engineers who are specialized in powerplant engineering problems
will make visits to Airline, at no charge to Airline, when problems are
encountered. These engineers will coordinate with the CF6 Engine design
engineers and Airline's powerplant engineering group. Where specific design
problems require a better understanding of Airline's experience, design
engineers will work directly with Airline's powerplant engineering personnel to
solve the problem.
B-14
GE PROPRIETARY INFORMATION
SECTION VIII - OPERATIONS ENGINEERING
Flight operations engineering personnel will be available, at no charge to
Airline, for consultation with respect to recommended operating practices to
enhance Engine reliability, safety, and operations costs. Consultations may be
in the form of teleconference messages, or on-site seminars and surveys.
SECTION IX - GROUND SUPPORT EQUIPMENT
Upon Airline's specific request, GE will provide to Airline, at no charge,
assembly drawings related to Engine maintenance and repair tooling GE has
designed for the Engine, including complete specifications for the special test
equipment which is developed, Engine maintenance tooling, lifting devices,
transportation devices, and accessory or component stands will be offered for
sale to Airline if Airline does not elect to purchase this equipment from GE
licensed vendors.
SECTION X - GENERAL CONDITIONS - CF6-80E1 PRODUCT SUPPORT PLAN
A. Airline will maintain adequate operational and maintenance records and make
these available for GE inspection.
B. The warranty and guarantee provisions of this CF6-80E1 Product Support Plan
will not apply to any Product if it has been reasonably determined by GE
that the Engine, Module or any Parts thereof:
- Has not been properly installed or maintained; or
- Has been operated contrary to applicable GE recommendations as
contained in its Manuals, Bulletins, or other written instructions; or
- Has been repaired or altered outside of GE facilities in such a way as
to impair its safety of operation or efficiency; or
- Has been subjected to misuse, neglect or accident; or
- Has been subjected to Foreign Object Damage; or
- Has been subjected to any other defect or cause not within the control
of GE; or
- Has been subjected to the control or use of another engine
manufacturer; or
- Has not been sold originally by GE to Airline for commercial use.
C. The express provisions of this CF6-80E1 Product Support Plan set forth the
maximum liability of GE with respect to claims of any kind, including,
without limitation, negligence arising out of the manufacture, sale,
possession, use or handling of the Products or Parts thereof or therefor,
and in no case shall GE's liability to Airline exceed the purchase price of
the Product giving rise to Airline's claim. In no event shall GE be liable
for incidental or consequential damages. For the purpose of this Section X,
the term "GE" means General Electric Company, its subsidiaries, assigns,
subcontractors, suppliers, Product co-producers, and the respective
directors, officers, employees, and agents of each.
D. Except as provided in the Vendor Back-up Warranty provisions in Paragraph
F. of Section II hereof, no Parts Credit Allowance will be granted and no
claim for loss or liability will be recognized by GE for Parts of the
Engine, whether original, repair, replacement, or otherwise, unless sold
originally by GE to Airline for commercial use.
E. Airline shall apprise GE of any Failure subject to the conditions of this
CF6 Product Support Plan within sixty (60) days after the discovery of such
Failure. Any Part for which a Parts Credit Allowance is requested by
Airline shall be returned to GE upon specific request by GE. Upon return to
GE, such Part shall become the property of GE unless GE directs otherwise.
Transportation expenses shall be borne by GE.
B-15
GE PROPRIETARY INFORMATION
F. The warranty applicable to a replacement Part provided under the terms of
the New Engine Warranty or New Parts Warranty shall be the same as the
warranty on the original Part. The unexpired portion of the applicable
warranty will apply to Parts repaired under the terms of such warranty.
G. Airline will cooperate with GE in the development of Engine operating
practices, repair procedures, and the like with the objective of improving
Engine operating costs.
H. Except as provided in the Warranty Pass-On provisions in Paragraph E. of
Section II hereof, this Product Support Plan applies only to the original
purchaser of the CF6-80E1 Engine except that installed Engines supplied to
Airline through the aircraft manufacturer or aircraft lessor shall be
considered as original Airline purchases covered by this Product Support
Plan.
I. Airline will provide GE a report identifying serialized rotating parts
which have been scrapped by Airline. Format and frequency of reporting will
be mutually agreed to by Airline and GE.
X-00
XX XXXXXXXXXXX XXXXXXXXXXX
XXXXX 0
XX0-00X0 XXXXXXXX PARTS LIST
*
X-00
XX XXXXXXXXXXX XXXXXXXXXXX
XXXXX 0
XX0-00X0 XXXXXXXX PARTS LIST
CONTINUED
*
B-18
GE PROPRIETARY INFORMATION
FADEC ENGINE
TABLE 1
CF6-80E1 WARRANTY PARTS LIST
CONTINUED
*
B-19
GE PROPRIETARY INFORMATION
ATTACHMENT A
BASIS AND CONDITIONS FOR SPECIAL GUARANTEES
A. General Conditions
The Special Guarantees offered herein have been developed specifically for
Airline's five (5) leased Aircraft equipped with CF6-80E1A3 engines and
two(2) CF6-80E1A3 spare engines (hereinafter referred to as the
"Engine(s)") as identified in Letter Agreement No. 1 to this Agreement.
They are offered to Airline contingent upon:
1. Airline accepting delivery of the five (5) leased CF6-80E1A3 powered
A330 aircraft in the time period described in Letter Agreement No. 1
(hereinafter referred to as the "Aircraft");
2. Airline procuring (through lease from GE Capital Aviation Services or
purchase from GE) two (2) CF6-60E1A3 spare engines and the GE
recommended number of Engine Modules;
3. Airline's Engines being identified and maintained separately from
other operators' engines at the repair agency;
4. Agreement between Airline and GE regarding administration of the
guarantees;
5. Airline operating Aircraft (i) an average aircraft flight leg of 6.0
hours or greater, (ii) an average engine takeoff thrust derate of 15
percent or greater and (iii) an average annual Aircraft utilization of
4,700 hours per year maximum. A change in Aircraft or Engine quantity,
Aircraft or Engine model, Aircraft delivery schedule from that
described in the proposal, or flight operations resulting in more
severe operating conditions than described above will require
adjustment of the guaranteed values to reflect such different
conditions, using GE's operational severity criteria;
6. Airline and GE agreement upon the Engine restoration workscope
necessary during each shop visit;
7. Available on-wing maintenance and performance restoration procedures
being used to avoid unnecessary shop visits; and
8. Service bulletins agreed to between Airline and GE being incorporated
in a timely manner.
B. Exclusions
The guarantees shall not apply (i) to repairs that are due to negligence,
accidents, improper operation and/or improper maintenance or (ii) if the
Engines are employed in power-back Aircraft operation.
Except for the Shop Visit Rate Guarantee, events and costs resulting from
FOD are excluded from the guarantees.
C. Term and Administration
1. The guarantees commence with delivery of Airline's first Aircraft and
end 10 years thereafter. The guarantees are not assignable without the
written consent of GE.
2. GE will, with Airline's assistance, conduct an accounting at least
annually to determine the status of each guarantee. If compensation
becomes available to Airline under more than one specific guarantee,
warranty or other engine program consideration, Airline will not
receive duplicate compensation but will
B-20
GE PROPRIETARY INFORMATION
receive the compensation most beneficial to Airline under a single
guarantee, warranty or other program consideration. Unless otherwise
stated, the guarantee compensation will be in the form of credits to
be used by Airline against the purchase from GE of Spare Engines,
Spare Parts, and/or Engine services.
3. The guarantees identified in Paragraphs J.6-J.10 of Section II of
Exhibit B will be settled on an annual basis. If an annual settlement
determines that a particular guarantee rate has been exceeded, Airline
shall be entitled to the applicable credit identified in Paragraphs
J.6-J.10 of Section II of Exhibit B. However if a subsequent annual
settlement determines that a guarantee under which the Airline has
previously been granted a credit does not exceeded the guarantee rate,
Airline shall reimburse GE the full amount of the credit with 30 days
of such annual settlement.
D. Miscellaneous
The General Conditions described in Exhibit B (Product Support Plan) of the
General Terms Agreement between GE and Airline apply to the guarantees.
B-21
GE PROPRIETARY INFORMATION
ATTACHMENT B
DELAY AND CANCELLATION DEFINITIONS FOR GUARANTEE
Delay
Technical delays occur when the malfunctioning of an item, the checking of
same, or necessary corrective action causes the final departure to be
delayed more than a specified time (fifteen minutes) after the programmed
departure time in any of the following instances:
1. An originating flight departs later than the scheduled departure time.
2. A through service or turnaround flight remains on the ground longer
than the allowable ground time.
3. The aircraft is released late from maintenance.
NOTE:
A cancellation supersedes a delay (i.e., a flight which is canceled after
having been delayed is considered to be a cancellation only - not a delay
and a cancellation).
Cancellation
Elimination of a scheduled trip because of a known or reasonably suspected
malfunction and/or defect.
NOTE:
Cancellation of any or all of the flight legs of multi-leg trip constitutes
only one cancellation.
B-22
GE PROPRIETARY INFORMATION
ATTACHMENT C
SHOP VISIT RATE GUARANTEE - QUALIFYING SHOP VISITS
Engine shop visits will qualify under the Shop Visit Rate Guarantee if the shop
visit meets any of the following criteria:
1. The shop visit was necessary to correct an Engine-caused Failure. Shop
visits for work that could have been performed on-wing, but was
performed in the shop for convenience, do not qualify.
2. The shop visit was necessary to comply with an Airworthiness Directive
issued by FAA or recommendations contained in GE's mandatory
compliance service bulletins requiring compliance within a specified
number of Flight Hours or Cycles.
3. The shop visit was necessary to comply with a GE written
recommendation to perform scheduled maintenance.
4. Shop visits to correct Failures caused by normal Foreign Object Damage
("FOD") will qualify under the guarantee provided the FOD was the
result of birds weighing less than 2.5 pounds or hail and correction
of the Failure could not be performed on-wing. Qualifying shop visits
due to FOD are limited to a maximum of 10% of the guaranteed shop
visits.
B-23
GE PROPRIETARY INFORMATION
ATTACHMENT D
PERFORMANCE RETENTION GUARANTEE CALCULATION
1. Fleet average base point for the Engine fuel consumption guarantee
shall be an average of the first 20 revenue flight cruise points of
all Engines covered by the guarantee. For a valid base, the standard
deviation of the calculated fuel flow deltas must not exceed 1.0%.
2. The period covered by the guarantee starts from the first revenue
flight of the first Aircraft.
3. The minimum data required after the base point is established is
twenty revenue flight cruise points every 90 days for each installed
Engine. GE also requests copies of any form of performance trending
chosen by Airline to be submitted on a monthly basis.
4. Cruise data reported quarterly must include the following:
Aircraft Number; Engine Serial Number (ESN); Date; Flight Number;
Engine Position; Altitude; Mach Number; Total Air Temperature (TAT);
and the following at Cruise Point: N(1) (Fan Speed); EGT; N2 (Core
Speed); Fuel Flow; and Bleed Configuration.
5. Increase of fleet average cruise fuel consumption or trends suggesting
that the fuel consumption guarantee level is approaching may lead to
the following:
a. GE Flight Audits.
b. Test cell confirmation runs on specific Engines. The altitude
guarantee will be translated to sea level conditions plus nominal
installation loss for comparison purposes.
6. If, as a result of incorporation of service bulletins or other Engine
modifications, the initially established relationship of Engine fuel
flow, thrust and fan speed (N(1)) is altered, the measured, calibrated
fuel consumption shall be suitably corrected to give effect to this
change.
7. Airline is to maintain records of total fuel purchased and monthly
cost thereof (price per gallon) during the period of this guarantee in
substantiation of any claim hereunder.
B-24
GE PROPRIETARY INFORMATION
ATTACHMENT E
MAINTENANCE COST GUARANTEE ADJUSTMENT FOR ESCALATION
For purposes of determining the Maintenance Cost Guarantee adjusted for
escalation, the following formula will apply:
*
where:
On = Adjusted Maintenance Cost Guarantee for any annual period.
Ob = Base Maintenance Cost Guarantee.
CPI = Weighted Average Composite Price Index for annual period for which
On is being calculated, i.e.
65% Labor (L)
35% Industrial Commodities (IC)
The Weighted Average Composite Price Index shall be the 12-month
arithmetic average of the composite index calculated for each month
of the period using the final value for each index as published by
the Bureau of Labor Statistics for each such month. The individual
indices are the same indices as defined in detail in Attachment J
except for the Labor Index (L) which shall be the "Hourly Earnings
of Aircraft Engine and Engine Parts Production Workers" SIC 3724
(Base year 1982 = 100).
BI = Base Composite Price Index quoted for the Base Maintenance Cost
Guarantee. This base index is calculated using the same percentages
of the same indices listed under CPI above, and using the final
published values of each index for the quoted base month.
B-25
GE PROPRIETARY INFORMATION
EXHIBIT C
ESCALATION
I. The base price for Products purchased hereunder shall be adjusted pursuant
to the provisions of this Exhibit.
II. For the purpose of this adjustment:
*
C-1
GE PROPRIETARY INFORMATION
EXHIBIT C
ESCALATION
(CONTINUED)
*
C-2
GE PROPRIETARY INFORMATION
EXHIBIT C
ESCALATION
(CONTINUED)
*
C-3
GE PROPRIETARY INFORMATION
EXHIBIT D
GE PAYMENT TERMS
A. Airline shall pay GE with respect to each purchase order hereunder, the
following amounts in United States Dollars and in immediately available
funds. Payment will be effective upon receipt hereof.
1. For all GE Products other than special tools and test equipment:
*
2. For special tools and test equipment, payment of the selling price
shall be made *
B. All invoicing and payments (including payment details) hereunder shall be
transmitted electronically to GE's bank account as notified by GE on its
invoices.
C. If delivery hereunder is delayed by Airline, payment shall be made based on
the delivery schedule set forth in the purchase order as accepted by GE.
D. Other terms of payment may be required from time to time based upon such
matters as the value of the order, delivery requirements, availability of
foreign exchange, and the existing financial situation. In such event, GE
will establish payment terms to meet these requirements.
E. If Airline fails to make any of the foregoing payments when due, Airline
will also pay to GE, without prejudice to any other rights available to GE
under this Agreement, interest on any late payment, calculated from the
payment due date to the date of actual remittance. Interest will be
computed * over the prime floating interest rate per annum as announced
from time to time by Chase Manhattan Bank, N.A., New York, New York, USA
(or its successor) for twelve month U.S. Dollar deposits, but in no event
will the rate of interest be greater than the highest interest rate then
permitted under applicable law.
D-1
GE PROPRIETARY INFORMATION
EXHIBIT D-1
GE-LLC PAYMENT TERMS
A. Airline shall pay GE-LLC fee selling price of each GE-LLC Product at time
of delivery thereof.
B. All invoicing and payments (including payment details) hereunder shall be
transmitted electronically to GE-LLC's bank account as notified by GE-LLC
on its invoices.
C. If delivery hereunder delayed by Airline, payment shall be made based on
the delivery schedule set forth in the purchase order as accepted by
GE-LLC.
D. Other terms of payment may be required from time to time based upon such
matters as the value of the order, delivery requirements, availability of
foreign exchange, and the existing financial situation. In such event,
GE-LLC will establish payment terms to meet these requirements.
E. If Airline fails to make any of the payments when due, Airline will also
pay to GE-LLC, without prejudice to any other rights available to GE-LLC
under this Agreement, interest on any late payment, calculated from the
payment due date to the date of actual remittance. Interest will be
computed * over the prime floating interest rate per annum as announced
from time to time by Chase Manhattan Bank, N A., New York, New York, U.S.A.
(or its successor) for twelve month U.S. Dollar deposits, but in no event
will the rate of interest be greater than the highest interest rate then
permitted under applicable law.
D-2
GE PROPRIETARY INFORMATION
EXHIBIT E
TECHNICAL DATA
ITEM NAME FORMAT
---- ---- ------
1 Engine Illustrated Parts Catalog Printed 2 sides
OR
One Side Copy
Microfilm (16mm)
OR
Microfilm (Silver Halide)
2 Engine Shop Manual Printed 2 sides *
OR
One Side Copy
Microfilm (16 mm)
OR
Microfilm (Silver Halide)
3 Component Maintenance Manuals Printed 2 sides
Microfilm (16 mm)
4 Illustrated Tool and Printed 2 sides
Equipment Manual Microfilm (16 mm)
5 Ground Support Equipment Printed 2 sides
6 Non-Destructive Testing Manuals Printed 2 sides
Microfilm (16 mm)
7 Specific Operating Instruction Printed 2 sides
Microfilm (16 mm)
8 Service Bulletins Printed 2 sides
Microfilm (16 mm) Initial Dot.
& yearly revision only
9 Service Bulletins Index Printed 2 sides
Microfilm (16 mm) Initial Dot.
& yearly revision only
10 Standard Practices Manual Printed 2 sides
Microfilm (16 mm)
11 Consumable Products Manual Printed 2 sides
Microfilm (16 mm)
12 Technical Manual Index Printed 2 sides
13 I.P.C, E.S.M., I.T.E.M., N.D.T.M, CD-ROM
S.B., C.P.M.
E-1
GE PROPRIETARY INFORMATION
(G ENGINES LOGO) GE AIRCRAFT
Xxx Xxxxxxx Xxx
Xxxxxxxxxx, XX 00000-0000
LETTER AGREEMENT NO. 1
TAM Linhas Aereas, S.A.
Gentlemen:
General Electric Company ("GE") and TAM Linhas Aereas, SA, ("Airline") have
entered into General Terms Agreement No. GE-00-0059 dated ________, 2001. (the
"Agreement"). This Agreement contains applicable terms and conditions governing
the sale by GE and the purchase by Airline from GE of CF6 series engines and
associated equipment in support of Airline's acquisition of new aircraft.
In consideration of Airline's agreement to take delivery of five (5) new firm
CF6-80E1A3 powered A330-200 aircraft ("Aircraft") and two CF6-80E1A3 spare
engines ("Spares") leased directly from GE Capital Aviation Services ("GECAS")
according to the delivery schedule set forth in Attachment A hereto (hereinafter
referred to as "Delivery Schedule"), the parties agree as follows:
I. Prices
Base prices for CF6-80E1A3 spare engines and associated equipment delivered
through December 31, 2003 in support of the current firm Aircraft, are set
forth in Attachment B hereto.
II. Special Introductory Allowances
To facilitate the introduction of a new A330 fleet powered by CF6-80E1
Engines, GE will provide Airline with the following special introductory
allowances. These allowances are subject to the conditions set forth in
Attachment C hereto
*
LA NO 1 PAGE - 1
GE PROPRIETARY INFORMATION
*
The obligations set forth in the Letter Agreement No. 1 are in addition to the
obligations set forth in General Terms Agreement No. GE-00-0059.
Please indicate your agreement with the forgoing by signing the original and one
(1) copy in the space provided below.
Very truly yours,
TAM UNHAS AEREAS, S.A. GENERAL ELECTRIC COMPANY
BY: /s/ BY: /s/ ROGOR N. SEAGOR
--------------------------------- ------------------------------------
Printed Name: Printed Name: ROGOR N. SEAGOR
Title: Contracts Director Title:
Date: May 3, 2001 Date: May 11, 2001
LA NO 1 PAGE - 2
GE PROPRIETARY INFORMATION
ATTACHMENT A
AIRCRAFT/SPARE DELIVERY SCHEDULE
AIRCRAFT ENGINE MODEL MONTH/YEAR QUANTITY OF AIRCRAFT
-------- ------------ ------------ --------------------
A330-200 CF6-80E1A3 April/2002 2 Firm
A330-200 CF6-80E1A3 Sept./2002 1 Firm
A330-200 CF6-80E1A3 Nov./2002 1 Firm
A330-200 CF6-80E1A3 June/2003 1 Firm
Two (2) CF6-80E1A3 spare engines to be delivered to Airline no later than June
2003.
LA NO 1 PAGE - 3
GE PROPRIETARY INFORMATION
ATTACHMENT B
BASE PRICES FOR
SPARE ENGINES AND ASSOCIATED EQUIPMENT
Prices Applicable to Deliveries through December 31, 2003
A33O-2O0 Aircraft
Base Price
July 1999 US Dollars
Item CPI=153.75
---------------------------------------- --------------------
1. Basic Engine inc. FAOEC- CF6-80E1A3 *
A. Base prices are effective for firm orders received by GE within quoted lead
time for basic spare Engines (including associated equipment and maximum
climb thrust increase) for delivery to TAM Linhas Aereas, SA by GE on or
before December 31. 2003. The base prices are
*
B. The selling price of CF6-80E1A3 basic scare Engines ordered for delivery
after the period set forth in Paragraph A above shall be the * as set
forth in each purchase order as accepted by GE, which base price shall be
subject to adjustment for escalation in accordance with GE's then-current
escalation provisions.
LA No 1 Page 4
GE PROPERIETARY INFORMATION
ATTACHMENT C
CONDITIONS FOR SPECIAL ALLOWANCE
1. ALLOWANCE FOR INITIAL AIRCRAFT ONLY
Any allowance described in this Letter Agreement No. 1 applies only to the
five (5) new A330-200 aircraft (together or individually the "Aircraft")
equipped with new CF6-80E1A3 engines (together or individually the
"Engines") leased by the Airline directly from GE Capital Aviation
Services ("GECAS") in accordance with the delivery schedule set forth in
Attachment A.
2. ALLOWANCE NOT PAID
Allowances described in this Letter Agreement No. 1 will become unearned
and will not be paid if for any reason, Airline's lease agreement with
GECAS is terminated, canceled or revoked, or if due to a delivery
rescheduling request by Airline or due to a default by Airline
(collectively "Airline Fault") delivery of the Aircraft will be prevented
or delayed for more than * beyond the delivery period described in
Attachment A (such period, after giving effect to such additional * being
referred to herein as the "Delivery Period").
3. ADJUSTMENT OF ALLOWANCES
The total allowances, of any nature, described in this Letter Agreement
No. 1 are contingent upon Airline accepting delivery of all five (5)
leased CF6-80E1A3 powered A330 Aircraft identified in this Letter
Agreement No. 1 ("Minimum Number of Aircraft") for delivery during the
Delivery Period. Pro-rata Adjustment of special allowances may be made by
GE prospectively to take into account Aircraft delays and/or
cancellations.
*
4. ASSIGNABILITY OF ALLOWANCE
Any allowance described herein is exclusively for the benefit of Airline
and is not assignable and is considered a proprietary arrangement between
GE and Airline and as such shall not be disclosed to a third party without
prior written agreement of Airline and GE written consent.
5. SET OFF FOR OUTSTANDING BALANCE
GE shall be entitled, at all times, to set off any outstanding obligation
and amounts that are due and owing from Airline to GE for GE or GE
Aircraft Engines goods or services (whether or not in connection with
this Letter Agreement No. 1 and/or Agreement), against any amount payable
by GE to Airline in connection with this Letter Agreement No. 1 and/or
Agreement.
6. CANCELLATION OF AIRCRAFT
CANCELLATION CHARGE
Airline recognizes that harm or damage will be sustained by GE if Airline
places a purchase order for Aircraft equipped with installed Engines and
subsequently cancels or fails to accept delivery of the Aircraft and such
failure is caused by acts, or failure to act, of Airline. Within * of any
such cancellation or failure to accept delivery occurs, Airline shall
remit to GE a minimum cancellation charge to * of the Engine price,
determined as of the date of scheduled Aircraft delivery to Airline.
The parties acknowledge such minimum cancellation charge to be a
reasonable estimate of the minimum harm or damage to GE in such
circumstances. If written notice of any such cancellation or failure to
accept delivery is given by Airline at least * prior to scheduled
delivery, such minimum cancellation charge shall be deemed liquidated
damages in full satisfaction of such harm or damage. If any such
cancellation or failure
LA No. 1 Page - 5
GE PROPRIETARY INFORMATION
occurs with less than such * prior written notice, GE shall also retain all
remedies in law and equity available to GE for damages in excess of such
minimum cancellation charge.
7. Delay Charge for Installed or Spare Engines
In the event Airline delays or causes the delay of the scheduled delivery
date of an Aircraft, for which GE has received a purchase order from the
aircraft manufacturer or GECAS, as appropriate, for a period, or cumulative
period, of more that *, such delay shall be considered a cancellation and
the applicable provisions hereof regarding the effect of cancellation shall
apply.
8. Aircraft Substitution Rights
Airline shall have no aircraft "substitution rights" unless such rights are
granted in writing by GE. GE agrees not to unreasonably deny any request by
Airline for such rights or to unreasonably condition the grant of any such
rights. If attempts to replace any of the Aircraft which are the subject of
this Agreement with another aircraft type, and the replacement aircraft is
not equipped with Engines of the type that are the subject of this
Agreement, and as a result such substitution the net profit to GE from the
transaction is materially reduced, such event shall also be considered a
cancellation and the cancellation provisions described in subparagraph 6
above shall apply.
*
LA No 1 Page 6
GE PROPERIETARY INFORMATION
