EX 10.23
SERVICES AGREEMENT
THIS SERVICES AGREEMENT ("Agreement") is made as of this 6 day of August, 1996
by and between TRAMCO, INC., a Washington corporation ("Tramco"), and FRONTIER
AIRLINES, INC., a Colorado corporation ("Customer").
RECITALS
A. Customer desires that Tramco provide Customer with certain modification,
maintenance, repair, overhaul and other services with respect to the
maintenance, repair, overhaul and modification of certain Aircraft (as defined
herein).
X. Xxxxxx desires to provide such services on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereby agree as follows:
AGREEMENTS
1. Definitions. Capitalized terms used but not defined herein shall have
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the meanings given in Exhibit 1 hereto.
2. Airframe Services. Tramco shall provide to Customer the following
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services (collectively, the "Airframe Services"):
2.1 Heavy Maintenance. Tramco shall provide to Customer Heavy
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Maintenance, and Customer shall purchase the same from Tramco, subject to and in
accordance with the charges, terms and conditions set forth herein. Scheduling
of the Heavy Maintenance shall be advised by Customer in consultation with
Tramco.
2.2 Modification Work. In addition to the Heavy Maintenance Work,
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Tramco shall provide to Customer the Modification Work and Customer shall
purchase the same from Tramco, subject to and in accordance with the charges,
terms and conditions set forth herein. Scheduling of the Modification Work
shall be advised by Customer in consultation with Tramco.
3. Workscope, Parts Identification.
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3.1 Workscope. For each Aircraft for which Customer desires that
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Tramco perform Airframe Services hereunder, Customer shall be responsible for
developing and delivering to Tramco an initial statement of work at least
fourteen (14) days in advance or such Aircraft's anticipated date for arrival at
the Tramco Airframe facility for Airframe Services which describes work tasks
Tramco is to provide. Tramco will review the initial statement of work and will
advise
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Customer of any necessary revisions or otherwise clarify details of the
statement of work prior to and, if determined by Tramco to be necessary, during
aircraft inspection. After such review and agreement between Customer and
Tramco as to the statement of work, Customer and Tramco will execute a
definitive, written Workscope prior to Tramco's commencement of any Airframe
Services on the Aircraft, which Workscope will be attached to the applicable
Airframe Services Order.
3.2. Parts Identification. As part of the Workscope, Customer shall
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identify those certain parts and components (other than Expendable and
Consumable parts typically used or consumed in connection with Airframe
Services) that will need to be procured to accomplish the Workscope. Such parts
and components will include, but are not limited to, the following: hardtime
change components, systems modifications, interior material changes, and other
potential lead-time sensitive items.
3.3. Engineering Services. In the event that Customer will require
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that Tramco perform any engineering services or technical support as part of or
in connection with any Airframe Services, then Customer will provide to Tramco,
not less than sixty (60) days prior to the delivery of the Aircraft for which
such services are to be provided, a description of the desired engineering
services. Upon agreement by Tramco, the description of such engineering
services shall be included in the Workscope for the Airframe Services.
4. Orders for Airframe Services. Upon finalization of the Workscope
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pursuant to Section 3 above and in all events prior to the commencement of
performance of the Airframe Services, Customer and Tramco shall execute a
written services order, substantially in the form of the "Airframe Services
Order" form attached as Exhibit 4 hereto (each, an "Airframe Services Order").
Each Airframe Services Order shall set forth the information required by the
form of Airframe Services Order (including pricing information pursuant to the
terms of Section 5) and shall be attached to a copy of the Workscope relating to
such Airframe Services Order. Upon the mutual agreement of Customer and Tramco
to the terms set forth in an Airframe Services Order, Customer and Tramco each
shall have a copy of such Airframe Services Order signed by a duly authorized
representative. Terms and conditions set forth in any Airframe Services Order
shall apply only to the performance of the Airframe Services on the Aircraft
identified in such Airframe Services Order and, unless expressly referenced in
any additional subsequent Airframe Services Order, shall not apply to any
subsequent Airframe Services Order under this Agreement.
5. Airframe Services Terms and Conditions. Unless otherwise expressly set
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forth in an Airframe Services Order (and in such case only with respect to the
Airframe Services and Aircraft identified in such Order), charges for Airframe
Services provided to Customer in connection with this Agreement shall be as
follows:
5.1. Estimated Labor Hours. For each Workscope contained in an
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Airframe Services Order, Customer and Tramco shall mutually agree on the number
of labor hours estimated to be required to complete the Airframe Services set
forth in the Workscope (the "Estimated Labor Hours"). The agreed upon Estimated
Labor Hours shall be set forth in the Airframe Services Order for such
Workscope. Such Estimated Labor Hours shall include, without additional labor
charge, all labor as may be required to complete the Airframe Services in
accordance with the Workscope, but shall not include Additional Work, any
Customer Request Items, Non-Routines, or any changes
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to the content of the Workscope, any deviation from or failure of the
assumptions and conditions set forth in the Workscope, or similar changes that
would increase the time required to perform the Workscope. Regardless of the
actual number of labor hours expended by Tramco, Tramco shall perform the
Workscope at a charge equal to (i) the number of Estimated Labor Hours
multiplied by the Labor Rate, plus (ii) the number of actual labor hours
expended by Tramco in performance of Additional Work, Customer Request Items,
Non-Routines, or other items outside of the Workscope multiplied by the Labor
Rate, plus (iii) charges for materials and third party services pursuant to
Section 5.2.
5.2. Material Charges. (a) Expendables and Consumables. Tramco
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shall xxxx Customer for the cost of Expendables and Consumables used by Tramco
in connection with the Airframe Services at the fixed rate specified in the
Airframe Services Order relating to such item of Labor Work. Charges for
Expendables and Consumables will be included in the Invoices.
(b) Other Materials. Parts, materials and third party services
used or consumed in connection with Airframe Services (other than Expendables
and Consumables) shall be charged to Customer at their actual cost plus a xxxx-
up of twenty percent (20%), provided that no single part, material item or
outside service shall be marked-up in excess of two hundred and fifty dollars
($250.00). Notwithstanding the foregoing, any single part, material item or
outside service with an actual cost to Tramco of $5,000 or greater shall be
billed to Customer at their actual cost plus a xxxx-up of twenty percent (20%)
with no maximum xxxx-up amount. For purposes of this Section 5.2, divisions or
business units of The X.X.Xxxxxxxx Company other than Tramco shall be considered
third parties and parts or services obtained from such divisions or business
units shall be charged to Customer in accordance with this Section 5.2. Outside
services include, without limitation, non-destructive testing, plating,
machining, fueling/defueling, parts fabrication and oxygen bottle servicing. As
an exception to the foregoing, (i) parts, components and material purchased from
Boeing and charged directly to Customer through a Customer purchase order or
Customer open account; and (ii) parts, components and material furnished by
Customer; shall not be charged to Customer or marked-up by Tramco.
5.3. Labor. The "Labor Rate" shall be the rate per hour specified in
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the applicable Airframe Services Order. Except as otherwise provided on the
applicable Airframe Services Order, the Labor Rate shall apply to all categories
of Tramco labor in connection with the Airframe Services, including without
limitation labor incident to expediting services, labor time otherwise
chargeable at applicable overtime rates, engineering services, inspection
services, NDT/NDI, parts research services, AOG services, development
engineering services, direct lead labor time, and direct quality control labor
time.
5.4. Estimates of Delivery. Notwithstanding anything to the contrary
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contained in this Agreement, any Airframe Services Order or any other
communications between Tramco and Customer, delivery dates or turn-times quoted
or communicated to Customer, whether orally or in writing, from time to time
with respect to Airframe Services shall in all cases be estimates of the time
for completion of performance of such services and in no event shall such
estimates be construed as binding delivery commitments.
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5.5. Other Terms.
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5.5.1. Scheduling and Capacity. Customer's Designated
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Maintenance Representative(s) shall be responsible for scheduling Airframe
Services with Tramco. Aircraft shall be delivered by Customer to Tramco Airframe
on the date(s) specified in the Airframe Services Order, or as may otherwise be
agreed in writing between Customer and Tramco. Customer shall provide Tramco
with not less than fourteen (14) days advance notice of the delivery of any
Aircraft and shall use all reasonable efforts to provide Tramco with at least
sixty (60) days advance notice of the anticipated delivery of Aircraft for
Airframe Services. In all events, Customer shall provide Tramco with written
schedule confirmation not less than fourteen (14) days in advance of the
delivery of any Aircraft for Airframe Services. Performance of Airframe Services
is in all cases subject to availability of space and sufficient capacity at
Tramco.
5.5.2. Ferry and Flight Tests. Customer shall provide its own
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crew for; pay all expenses related to; and have sole responsibility for the
transportation of all Aircraft to and from the Tramco Airframe facilities,
including any flight test of an Aircraft receiving Airframe Services hereunder.
Tramco will provide technicians to assist in flight test and redelivery.
Customer shall take all action necessary to extend its insurance coverages
required hereunder to such Aircraft and any flight tests thereof.
5.5.3. Technical Data. Customer shall be solely responsible
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for, and shall bear any costs associated with, obtaining any licenses or other
rights from third parties necessary to enable Tramco's use of the Technical Data
in connection with Airframe Services, and such obligation shall be a condition
precedent to any such services hereunder. Not less than seven (7) days prior to
the commencement of any Airframe Services hereunder, Customer shall have
delivered copies to Tramco of all necessary maintenance, repair or overhaul
manuals or instructions, including, without limitation, wiring diagrams,
structural repair manuals, and any approved maintenance program for a particular
Aircraft, which maintenance program will include a manual describing the
relevant maintenance and inspection program, and corresponding maintenance work
cards and forms, together with any other published technical data required to
accomplish the services requested (the "Technical Data"). Without limiting the
generality of the foregoing, Technical Data includes any necessary manuals or
instructions from manufacturers or suppliers of the airframe or components
thereon.
5.5.4. Designated Maintenance Representatives. Customer shall
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designate in writing one or more representatives of Customer each of whom shall
have authority to authorize and approve for and on behalf of Customer any
Airframe Services or changes thereto, including but not limited to Non-Routine
Maintenance and any Buyer Request Items. One Designated Maintenance
Representative shall be available at the Tramco Airframe repair facility during
normal business hours while the Airframe Services are being provided. Tramco
shall provide at its expense appropriate office accommodations for one
Designated Maintenance Representative at the Tramco Airframe facilities, with
shared secretarial support and access to computers, fax machines and telephones.
Customer shall reimburse Tramco for all out-of-pocket expenses, long-distance
telephone and fax expenses incurred by Tramco on account of the Designated
Maintenance Representatives. Customer shall be responsible for all travel,
lodging and related expenses incurred by the Designated Maintenance
Representatives. Subject to reasonable
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restrictions imposed by Tramco to safeguard proprietary information and to
maintain the security and safety of the Tramco facility, Tramco will allow the
Designated Maintenance Representatives reasonable access at all reasonable times
(i) to the Tramco records contemplated by Section 6.2.2 of this Agreement, (ii)
to observe the performance of all Airframe Services being performed by Tramco
for Customer, and (iii) to observe and inspect all materials and parts obtained
by Tramco for use or installation on the Aircraft. The Designated Maintenance
Representatives, and all other employees, agents and representatives of
Customer, shall abide by Tramco's security and safety procedures and
restrictions. Customer shall be completely responsible for sickness or injury to
its Designated Maintenance Representatives and other employees, including
without limitation with respect to death or injuries occurring at the Tramco
facility or as a result of actions or inactions (negligent or otherwise) of
Tramco employees, agents or representatives.
5.5.5. Warranty. Tramco shall warrant the Airframe Services
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exclusively as set forth in Exhibit 5.5.5 to this Agreement.
6. Customer Payments.
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6.1. Charges/Invoices. Customer shall compensate Tramco at the rates
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and terms as provided in this Agreement and the applicable Airframe Services
Order for the various services rendered hereunder by Tramco. Charges for costs
or expenses which this Agreement specifically provides are to be incurred by
Tramco for the account of Customer shall be charged to Customer as provided
herein. Such costs and expenses shall be included in the Invoices, but
identified separately.
6.2. Time and Method of Payments.
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6.2.1. Invoicing. Upon completion of Airframe Services with
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respect to an Aircraft, Tramco will prepare and submit to Customer an invoice or
invoices with respect to such Aircraft listing charges for the Airframe Services
and related parts and materials (the "Invoices"). Prior to redelivery of any
Aircraft to Customer, Customer shall pay to Tramco an amount equal to eighty
percent (80%) of the Estimated Labor Hours, eighty percent (80%) of the
estimated additional labor charges with respect to Airframe Services on such
Aircraft performed by Tramco on a Time and Materials basis, and one hundred
percent (100%) of the estimated charges for materials and third party services
on such Aircraft pursuant to Section 5.2. All such estimates shall not be
construed as a fixed determination of Invoice amounts, and as soon as
practicable following Aircraft redelivery Tramco will submit supplemental or
additional Invoices to reflect actual labor, material and other charges payable
by Customer pursuant to this Agreement. Additional amounts owing by Customer
pursuant to such additional Invoices shall be due and payable in United States
Dollars 30 days from the Invoice date. All Customer payments shall be made by
check or wire transfer to a Tramco account designated by Tramco in writing to
Customer. Any payments made by check shall be sent via overnight air courier
services (e.g. FedEx, UPS) to the Tramco address designated from time to time by
Tramco in writing. Notwithstanding the foregoing and in addition to any other
remedy to which Tramco may be entitled, Tramco may in its sole discretion demand
complete payment for 100% of all labor charges for Airframe Services with
respect to any Aircraft prior to the departure of such Aircraft from
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Tramco Airframe. In the event Tramco elects to require such payment, Customer
will be notified not less than five (5) days prior to the scheduled departure of
such Aircraft.
6.2.2. Right of Customer to Review Records. On the written
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request of Customer from time to time during the Term of this Agreement (but not
more frequently than once in any twelve month period) and in addition to the
rights set forth in Section 5.5.4 with respect to Designated Maintenance
Representatives, Customer shall be permitted during normal business hours to
review Tramco's records related exclusively to (a) the manner and quality of
performance of Airframe Services on the Aircraft by Tramco, and (b) the accuracy
of any fees or charges invoiced by Tramco to Customer with respect to Airframe
Services provided by Tramco. The right of Customer to review Tramco records
shall extend to any agent, consultant or advisor of Customer reasonably
acceptable to Tramco which agrees to execute a confidentiality agreement in form
and substance satisfactory to Tramco, and which agrees to abide by applicable
Tramco safety and security restrictions. Notwithstanding the foregoing, neither
Customer nor its agents, consultants or advisors shall have any right to review
any other books and records of Tramco, including without limitation any books
and records relating to Tramco's fees or charges to any other customer or
Tramco's general accounts or financial information.
6.2.3. Disputed Amounts. Any Invoice submitted by Tramco
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shall be final as to Customer unless Customer shall have notified Tramco in
writing (a "Notice of Disagreement") within ninety (90) days of the Invoice date
of a disagreement with respect to all or a portion of any Invoice. Such Notice
of Disagreement shall specify the dollar amount of the disagreement (the
"Disputed Amount") and identify in reasonable detail the basis of Customer's
good faith determination that the invoice amount is incorrect. Customer shall
pay when due all amounts other than Disputed Amounts. Following receipt by
Tramco of a Notice of Disagreement, Tramco and Customer shall use good faith
efforts to resolve such Disputed Amounts. If Tramco and Customer are unable to
satisfactorily resolve such Disputed Amounts within thirty (30) days of receipt
of the Notice of Disagreement, then the Disputed Amount shall be promptly
submitted (by either party) to an independent public accounting firm of national
reputation which shall not have provided professional services to either Tramco
or Customer during the three year period prior to the date of the Notice of
Disagreement (the "Accounting Firm"). Customer and Tramco agree that the
Seattle, Washington office of Price Waterhouse LLP shall serve as the Accounting
Firm, provided that if such firm is unable or unwilling to provide such service
in any instance (including by reason of disqualification under the terms of this
Agreement), then the Seattle, Washington office of Deloitte & Touche LLP shall
serve as the Accounting Firm. If both Price Waterhouse LLP and Deloitte & Touche
LLP are unable or unwilling to serve as the Accounting Firm, then Tramco and
Customer shall mutually agree on the Accounting Firm. The Accounting Firm shall
be instructed to review the Disputed Amounts and to notify Customer and Tramco
as soon as practicable, and in any event not later than sixty (60) days
following the date of submission of the Disputed Amount to the Accounting Firm,
of its determination of the correct amount of the invoice payable by Customer.
Customer and Tramco agree to make available to the Accounting Firm such
information, books and records relating to the Disputed Amounts as may be
reasonably determined by the Accounting Firm to be necessary to complete its
review. The determination of the Accounting Firm shall be final and binding and
Customer shall pay to Tramco within five (5) days following receipt of the
report of the Accounting Firm such amount as the Accounting Firm has determined
is properly payable. The fees and expenses of the Accounting Firm shall be
allocated ratably between the parties in
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proportion to the dollar amount of adjustment to the Tramco invoice determined
by the Accounting Firm to be appropriate compared to the dollar amount of the
Disputed Amount.
6.2.4. Late Payment Charges. If any Customer payment
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obligation hereunder is not paid when due, (i) Customer shall pay interest on
such amount calculated from the date such amount is due until the date of
payment in full at the lower of one and one-half percent per month or the
maximum rate allowable under applicable law, and (ii) Tramco shall have the
right upon notice to Customer to suspend performance of Airframe Services and to
terminate this Agreement. No forbearance or course of dealing shall affect these
rights of Tramco.
6.3. Customer as Responsible Party. Customer represents that it has
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all necessary authority to authorize the Airframe Services on the Aircraft.
Notwithstanding any understandings or agreements that Customer may have from
time to time with third parties and without limiting Tramco's rights or remedies
upon Customer's default, Tramco shall look solely to Customer for payment of all
amounts owing under this Agreement and the performance of all obligations of
Customer under this Agreement. Customer shall hold harmless and defend Tramco
from and against any claims or charges asserted by any third parties claiming an
interest in the Aircraft, or questioning the purchase of the Airframe Services
by Customer from Tramco.
7. Material Supply.
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7.1. Material Procurement. Tramco will provide all Expendables and
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Consumables which are required to perform the Airframe Services. Parts and
components (other than Expendables and Consumables) identified pursuant to
Section 3.2 of this Agreement as required to complete the Workscope or otherwise
necessary for the performance of any Airframe Services will be provided by
Customer or, upon mutual agreement, by Tramco at the charges specified in
Section 5. Customer and Tramco agree to cooperate in order to facilitate timely
procurement of parts and components. All parts and components to be furnished
by Customer in connection with the Airframe Services shall be provided at Tramco
Airframe no later than seven days prior to commencement of the Airframe Services
on the Aircraft for which such part or component is required. In no event shall
Tramco be liable for any delayed or untimely performance hereunder as a result
of (i) failure by Customer to deliver to Tramco any parts or components (other
than Expendables and Consumables) in a timely manner, or (ii) failure by Tramco
to obtain any parts which Customer has requested Tramco to obtain on its behalf.
7.2. Customer Parts and Equipment. Any parts and material delivered
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to Tramco Airframe by or on behalf of Customer in connection with the Airframe
Services shall be handled by Tramco through its normal incoming material
receiving inspection routine. A Customer Designated Maintenance Representative
shall be notified by Tramco of the inspection findings, and shall direct Tramco
as to the disposition of inspected items. Tramco will hold any parts and
material determined by Customer to be scrapped, returned to the vendor or
otherwise disposed of, including any parts or materials removed from Customer
Aircraft (collectively, "Excess Material") at Tramco's facilities for a maximum
period of thirty (30) days, after which time Customer shall be responsible for
the removal, shipping and disposition of such Excess Material. With Tramco's
consent and agreement, Excess Material may remain at Tramco's facilities beyond
such thirty (30) day period upon Customer's payment to Tramco of storage fees in
an
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amount which in Tramco's judgment is sufficient to compensate Tramco for all
costs and expenses related to the storage of such Excess Material. Tramco shall
maintain any parts and materials supplied to Tramco by Customer for use in
connection with the Airframe Services (and any Excess Material for the period
specified above) in a physically separated area within the Tramco facilities,
with appropriate identification of such parts and materials as the property of
Customer. Tramco acknowledges and agrees that title to such parts and materials
supplied by Customer (and any Excess Material) shall at all times remain with
Customer. Risk of loss with respect to the Customer supplied parts and
materials and Excess Materials shall remain with Tramco while such items are
located in the Tramco facility, and shall transfer to Customer at the time
physical possession of such parts or materials are delivered to Customer, or
such parts or materials are physically placed on an Aircraft.
8. Taxes. Tramco shall pay any federal, state or local taxes based upon
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Tramco's income or profits in connection with payments received under this
Agreement, including any gross receipts or business and occupation taxes.
Customer shall be responsible for the amount of any Washington State sales or
use taxes that result from the delivery of the Airframe Services provided by
Tramco hereunder or the purchase, sale, lease, exchange, transfer, replenishment
or maintenance of parts and supplies and other personal property for use in
connection with the Airframe Services as contemplated hereby, except for
transactions for which an appropriate tax exemption certificate is furnished to
Tramco by Customer. The amount of any such taxes for which Customer is
responsible, if paid by Tramco, shall be billed to Customer from time to time
during the term hereof.
9. Proprietary Rights. Except as otherwise agreed in writing or as
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specifically provided herein, each of Tramco and Customer shall retain all of
their own proprietary rights of any kind in and to their respective patents,
trademarks, names, information, documents, procedures, methods or know-how that
may be used or disclosed in connection with the performance of the Airframe
Services. Any such items disclosed to the other (including without limitation
the terms of this Agreement and any Airframe Service Orders) shall be held in
confidence and shall not be disclosed or provided to any third-party without the
specific prior written approval of the disclosing party, and neither party shall
reproduce any documents reflecting the same except for copies necessary for its
own internal usage. The foregoing obligations shall not apply to any such
information, documents, procedures, methods or know-how which: (i) at the time
of disclosure or thereafter is or becomes generally available to the public
through no fault or action by the receiving party or by its agents,
representatives or employees, (ii) is or becomes available to the receiving
party on a nonconfidential basis from a source other than the disclosing party
or the disclosing party's employees, agents or representatives, which is not
prohibited from disclosing such portions by a contractual, legal or fiduciary
obligation, or (iii) was within the receiving party's possession prior to its
being furnished to the receiving party by or on behalf of the disclosing party,
provided that the source of such information was not bound by a confidentiality
agreement with the disclosing party in respect thereof, or was not subject to
any duty, contractual or otherwise, prohibiting transmission of information to
the disclosing party.
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10. Certain Record Keeping and FAR Responsibilities.
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10.1 Tramco. Except as otherwise provided herein, in connection with
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the Airframe Services provided by Tramco hereunder, Tramco shall comply with all
provisions of the FARs applicable thereto, including, but not limited to, Part
145, and shall maintain all required records and documents pursuant thereto.
Such records and documents shall be available for inspection at all times during
Tramco's normal business hours. In no event shall Tramco be deemed to be an
airline for any purpose whatsoever.
10.2 Customer. Notwithstanding anything to the contrary contained
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herein, Customer shall have responsibility for and shall maintain all records,
manuals and otherwise comply with all provisions of the FARs applicable to its
operations, including, but not limited to, Part 121, and shall maintain all
required records and documents pursuant thereto. Without limiting the
generality of the foregoing, Customer shall have sole responsibility for
Customer's compliance with records relating to airworthiness directives, ground
and crew qualifications, maintenance of training records and records relating to
parts histories, and creation and maintenance of FAA required manuals, policies
and procedures. During the Term of this Agreement, Tramco will provide
reasonable storage at Tramco Airframe for records of Customer relating to the
Airframe Services.
11. Independent Contractor. In performing its obligations hereunder,
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Tramco shall in all respects be an independent contractor and shall not be
deemed an employee, agent, partner or franchisee of Customer. No partnership,
corporation, or other entity or relationship is created by this Agreement.
12. Insurance; Liabilities.
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12.1 Customer Policies and Limits. Customer shall provide and
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maintain in effect during the Term and until the expiration of the final
Warranty Period extended for the Airframe Services the insurance coverages
described on Exhibit 12.1 hereto, with limits no less than those indicated on
Exhibit 12.1.
12.2 Tramco Policies and Limits. Tramco shall provide and maintain
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in effect during the Term and until the expiration of the final Warranty Period
extended for the Airframe Services the insurance coverages described on Exhibit
12.2 hereto, with limits no less than those indicated on Exhibit 12.2.
12.3 Requirements/Certificates. Insurance coverages required herein
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of either party (other than any self-insured portion) shall be provided through
insurance companies rated A or better by Best's, or insurers of comparable
recognized responsibility. The reference to insurance limits in Exhibits 12.1
and 12.2 shall not in any event limit either party's liability to the other.
Within 10 days of the date of this Agreement, and thereafter at the request of
either party, the other party shall furnish one or more certificates of
insurance indicating:
(a) that insurance of the types described above is provided in
at least the limits set forth above;
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(b) the name of the insurance company or companies carrying
such coverage;
(c) the effective date and expiration dates of such coverage or
policies; and
(d) that thirty (30) days advance written notice will be given
to the parties of any material change or alteration of the policies or coverage.
12.4 Limitations on Liability. In any action brought by either party
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seeking to obtain damages for breach of this Agreement or for failure to perform
the requirements of this Agreement, no damages or other relief shall be awarded
or permitted based upon expectations of continued performance or future
performance by the defaulting party for the then remaining Term of this
Agreement, and for purposes of such action this Agreement shall be deemed to
have expired effective as of the date of the claimed breach or failure to
perform, regardless of whether this Agreement has in fact been terminated as of
such date or any subsequent date. NOTWITHSTANDING ANY OTHER PROVISION OF THIS
AGREEMENT, NEITHER TRAMCO NOR CUSTOMER SHALL BE LIABLE FOR ANY INDIRECT,
INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO,
LOSS OF USE, COVER OR LOST PROFITS SUSTAINED OR INCURRED AS A RESULT OF THE
AIRFRAME SERVICES OR THE WARRANTY PROVIDED FOR IN EXHIBIT 3.5.6 TO THIS
AGREEMENT, REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT, STRICT
LIABILITY, OR OTHERWISE, AND REGARDLESS OF WHETHER SUCH DAMAGES WERE
FORESEEABLE.
13. Excused Performance. Neither party will be liable for, or be
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considered to be in breach of or default under this Agreement on account of any
delay or failure to perform as required by this Agreement (other than with
respect to the obligation to make payments pursuant to Section 6 hereof) as a
result of any cause or condition beyond such party's reasonable control,
including, but not limited to: fire, explosions, earthquakes, storms, flood,
wind, drought and acts of God or the elements; court orders; acts, delays and
failures to act by civil, military or other governmental authority; strikes,
lockouts, labor interruptions or slowdowns, riots, insurrections, sabotage and
war; breakdown or destruction of, or damage or casualty to, any equipment,
facilities or other property; interruption, suspension, curtailment or other
disruption of utilities; unavailability of materials, supplies, parts,
equipment, personnel or other necessary items; and, acts or omissions of persons
or entities other than such party (each such event being herein sometimes
referred to as an event of "Force Majeure"). Upon the occurrence of an event or
condition of Force Majeure, Tramco shall have reasonable opportunity to make
alternative satisfactory arrangements to perform its obligations under this
Agreement.
14. Term; Termination.
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14.1. Term. The term of this Agreement shall commence effective as
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of the date first specified above and shall continue in effect for an initial
period ending one year after the date of this Agreement (the "Term"). The Term
shall be extended for additional one year terms unless, not less than thirty
(30) days prior to the expiration of the Term then in effect, either party shall
give
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written notice to the other of its desire to terminate the Agreement as of the
expiration of the Term.
14.2. Termination. Notwithstanding the provisions of Section 14.1,
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either party may terminate this Agreement as follows:
a. At any time with or without cause prior to the expiration
of the Term by giving at least thirty (30) days prior written notice.
b. To the extent permitted by applicable law, immediately upon
written notice in the event that the other party (i) files a voluntary petition
in bankruptcy; (ii) is declared insolvent or bankrupt or makes a general
assignment or other similar arrangement for the benefit of its creditors; (iii)
proceedings in bankruptcy or insolvency are instituted against the other party
and are not dismissed within 60 days thereafter; (iv) a court takes and retains
for at least 60 days jurisdiction of the other party or its assets under any
reorganization or insolvency act; or (v) a receiver of the other party or a
substantial portion of its assets is appointed by a court and is not discharged
or opposed within 60 days.
c. Immediately upon written notice in the event the other
party dissolves or liquidates.
14.3. Completion of Airframe Services. Notwithstanding the
-------------------------------
expiration or termination of this Agreement, Tramco and Customer agree that,
unless otherwise agreed by Tramco and Customer, Tramco shall continue to perform
and complete any Airframe Services required to be performed under any existing
Airframe Services Orders which have not yet been completed as of the date of
termination.
15. Miscellaneous.
-------------
15.1 Notices. All notices (including by facsimile) or other
-------
communications required or permitted by this Agreement shall be in writing and
shall be deemed to have been duly given upon receipt if delivered in person by
Tramco to a Designated Maintenance Representative or otherwise if delivered by
United States mail, postage prepaid, overnight delivery service, or facsimile,
in each case addressed as follows:
(a) if to Customer:
Frontier Airlines, Inc.
00000 Xxxx 00xx Xxxxxx
Xxxxxx, XX 00000-0000
Attention: Xxx Xxxxxxx
Fax: (000) 000-0000
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and
(b) if to Tramco:
c/o Tramco, Inc.
00000 00xx Xxx. X., Xxxxx Field
Xxxxxxx, Xxxxxxxxxx 00000
Attention: General Manager, Airframe Services
Fax: 206/000-0000
with copy to:
BFGoodrich Aerospace
000 X. Xxxxxxxxx-Xxxxxxxxx Xxxx
Xxxxx, Xxxx 00000
Attention: Vice President, Legal
Fax: 330/000-0000
or to such other addresses as may be specified by either party hereto pursuant
to notice given by such party in accordance with the provisions of this Section
15.1.
15.2 Benefit of the Agreement. This Agreement shall be binding upon
------------------------
and inure to the benefit of the parties hereto and their respective successors
and their permitted assigns.
15.4 Names, Advertising. Each of the parties agrees that they will
------------------
not, without the prior written consent of the other, make any use whatsoever of,
or cause others to make or assist others in making any use whatsoever, of the
respective corporate or trade names of the other (including the corporate or
trade names of their respective subsidiaries and affiliates) or any portion
thereof, or any of their respective trademarks, or any portion thereof, in
connection with any advertising, promotion, publicity or for any other business
purpose that is not directly related to the performance of their respective
obligations hereunder.
15.5 Headings. The headings used in this Agreement are for
--------
convenience only, shall not be deemed to constitute a part hereof, and shall not
be deemed to limit, characterize or in any way affect the provisions of this
Agreement.
15.6 Entire Agreement. This Agreement contains the entire agreement
----------------
and understanding of the parties with respect to the subject matter hereof, and
no other representations, promises, agreements or understandings regarding the
subject matter hereof shall be of any force or effect unless in writing,
executed by the parties hereto subsequent to the date hereof.
15.7 Amendments. This Agreement shall not be modified or amended
----------
except by written instrument specifically referencing this Agreement which is
signed by the parties hereto. The terms and conditions of this Agreement shall
not be altered or changed by, and Tramco hereby objects to, any different or
additional terms contained in any other document (other than an
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amendment as provided above), including, without limitation, any invoices,
purchase orders or acknowledgment forms submitted by Customer to Tramco.
15.8 Waiver. No waiver of any provision of this Agreement shall be
------
valid or binding unless it is in writing dated subsequent to the date hereof and
signed by the parties hereto. No waiver of any breach, term or condition of
this Agreement by either party shall constitute a subsequent waiver of the same
or any other breach, term or condition. No failure or delay of either party in
exercising any right under this Agreement shall operate as a waiver thereof, nor
shall any partial exercise by either party of any right under this Agreement
preclude any other or further exercise thereof or the exercise of any other
right.
15.9 Assignment. This Agreement may not be assigned by either party
----------
in whole or in part (including for purposes of this Section 15.9 any transfer by
merger, reorganization, sale of a majority of the voting capital stock, or other
transfer by operation of law) without the prior written consent of the other
party. Consent to such assignment in one instance shall not constitute consent
to any other assignment. No assignment shall relieve the assignee from its
obligations under this Agreement. Any assignment or attempted assignment in
violation of the terms of this Section 15.9 shall be void. Notwithstanding the
provisions of this Section 15.9, Tramco may assign this Agreement to The
X.X.Xxxxxxxx Company, or to any direct or indirect subsidiary or other affiliate
of Tramco or The X.X.Xxxxxxxx Company without the consent of Customer.
15.10 Separable Provisions. If any provision of this Agreement shall
--------------------
be held invalid or unenforceable, the remainder nevertheless shall remain in
full force and effect. If any provision is held invalid or unenforceable with
respect to particular circumstances, it nevertheless shall remain in full force
and effect in all other circumstances.
15.11 Mandatory Disclosure; Securities Laws Compliance. (a) Customer
agrees that without the prior written consent of Tramco, Customer will not
disclose or provide copies of this Agreement or any Airframe Services Orders to
any third party or entity, including any court or other governmental agency or
body. In the event that Customer receives notification of a legal requirement to
disclose, or becomes legally compelled to disclose, a copy of or the terms of
this Agreement or any Airframe Services Orders or any proprietary information
subject to the provisions of Section 9 of this Agreement (collectively, the
"Information"), whether by deposition, interrogatory, request for documents by a
court or any governmental agency or body, subpoena, or other process or
requirement, whether legal, administrative or otherwise, Customer will provide
Tramco with prompt advance written notice (which shall not be less than five
business days in advance of the time for any such mandatory disclosure) so that
Tramco may seek a protective order, confidential treatment, waiver or other
appropriate protective relief with respect to all or part of such request or
requirement, or waive compliance with the provisions of this Agreement with
respect to all or part of such request or requirement. In the event that such
protective order, confidential treatment, waiver or other remedy is not obtained
prior to the deadline for complying with such request or requirement, and upon
advice of counsel Customer reasonably believes that it is legally compelled to
disclose Information, then Customer may disclose only that portion of the
Information which it is advised in writing by counsel that it is legally
compelled to disclose. Customer will use its best efforts to assist Tramco and
in no event will oppose any action by
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Tramco to obtain appropriate confidential treatment or protective relief as
contemplated by this Section 15.11
(b) Tramco acknowledges and agrees that Customer may be
required by applicable securities laws to issue a press release and to file this
Agreement with the Securities and Exchange Commission ("SEC"). Customer agrees
that it will provide Tramco with an advance copy of any press release and that
release of such press release or other public communication concerning the
arrangements contemplated hereby will be subject to the reasonable advance
consent of Tramco and will not, in any event disclose any specific pricing,
labor rates or other detailed business terms in such press release. Customer
acknowledges that the public disclosure of the commercial terms of this
Agreement is likely to cause substantial competitive harm to Tramco. Therefore,
Customer agrees to cooperate with Tramco to use all reasonable efforts to obtain
confidential treatment by the SEC of any portions of this Agreement and any
Airframe Services Orders which may be commercially sensitive.
15.12 Counterparts. This Agreement may be executed simultaneously in
-------------
two or more counterparts, including signature by facsimile, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
15.13 Interpretation. This Agreement shall be governed by and
---------------
construed in accordance with the laws of the State of Washington, without
reference to any conflict of laws principles. The language of this Agreement is
and will be deemed to be the language chosen by the parties jointly to express
their mutual understanding. No rule of construction based on which party
drafted the agreement or certain of its provisions will be applied against
either party.
15.14 Authorization. Each of the parties hereby represents and
-------------
warrants to the other that the execution, delivery and performance of this
Agreement and the transactions contemplated hereby have been duly authorized by
all necessary corporate action, and this Agreement, when duly authorized,
executed and delivered by the other party, will be a valid and binding
obligation of each party, respectively.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
TRAMCO, INC. FRONTIER AIRLINES, INC.
By: By: /s/ Xxx Xxxxxxx
-------------------------------- ---------------------------------
Its Its Vice President-Maintenance
-------------------------------- ---------------------------------
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LIST OF EXHIBITS AND SCHEDULES
Exhibit 1 DEFINITIONS
Exhibit 4 FORM OF AIRFRAME SERVICES ORDER
Exhibit 5.5.5 WARRANTY
Exhibit 12.1 CUSTOMER--REQUIRED INSURANCE COVERAGES AND LIMITS
Exhibit 12.2 TRAMCO--REQUIRED INSURANCE COVERAGES AND LIMITS
-15-
Exhibit 1
DEFINITIONS
"Additional Work" means any modification work or airframe maintenance services
---------------
not included in the Workscope. Additional Work shall include Buyer Request
Items and Non-Routine Maintenance.
"Aircraft" means Customer's aircraft on which the Airframe Services are to be
--------
performed by Tramco, as further identified in the Airframe Services Order.
"Airframe Services" means Modification Work and Heavy Maintenance.
-----------------
"Airframe Services Order" means the order for Airframe Services entered into
-----------------------
between Tramco and Customer pursuant to Section 4.
"Base Maintenance" means minor maintenance, repair, and inspection activities,
----------------
and record keeping related thereto, on Aircraft at Customer base locations,
including but not limited to "A" checks, "B" checks, service checks, and routine
and non-routine overnight maintenance requirements, including log-book
discrepancies.
"Buyer Request Items" shall mean changes or additions to engineering orders,
-------------------
specifications, or other items of work requested in writing or orally by a
Designated Maintenance Representative, although not specifically required by the
terms of the Workscope.
"Designated Maintenance Representative(s)" shall mean any one or more
----------------------------------------
representatives of Customer designated pursuant to Section 5.5.4 of this
Agreement.
"Discrepancy" shall mean a determination by Tramco of the existence of any
-----------
condition with respect to an Aircraft, or the Airframe Services which varies
from the applicable requirements or standards set forth in the maintenance
program, FAA requirements, or the Technical Data, whether or not this condition
could eventually result in failure of the component or of the Aircraft.
"Estimated Labor Hours" means the number of labor hours estimated pursuant to
---------------------
Section 5.1 with respect to any Airframe Services.
"Expendables and Consumables" means those parts and supplies which are used,
---------------------------
consumed or expended in connection with Airframe Services performed by Tramco
hereunder and which have a unit acquisition cost to Tramco per item less than
$1.00, but excluding any paint and any parts or items special ordered by Tramco
for use on the Aircraft.
"FAA" means the U.S. Federal Aviation Administration or any federal agency or
---
administrative body that assumes its functions or is the successor thereto.
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"FAR" or "FARs" means any of those certain regulations promulgated by the FAA,
--- ----
including, without limitation, those set forth in Title 14 of the Code of
Federal Regulations, as from time to time in effect.
"Force Majeure" shall mean an event or condition contemplated by Section 11.
-------------
"Heavy Maintenance" means the airframe heavy maintenance to Aircraft as
-----------------
specified in the applicable Airframe Services Order, but excluding Line
---------
Maintenance, Base Maintenance, or any overhaul services with respect to aircraft
engines or any services not permitted by Tramco's FAA Section 145 certificate.
"Labor Rate" shall have the meaning set forth in Section 5.3.
----------
"Line Maintenance" means minor maintenance, repair, and inspection activities,
----------------
and record keeping related thereto, on Aircraft at all remote stations that
Customer services, including, but not limited to, checking fluid levels,
interface with flight crew, visual airframe and systems inspections, and
replacement of minor components.
"Modification Work" means modifications of the interior of Aircraft as specified
-----------------
in the applicable Airframe Services Order.
"Non-Routine Maintenance" means identified corrective work discovered during the
-----------------------
performance of Routine Maintenance or Buyer Request Items or resulting from
findings by Tramco of Discrepancies during the performance of Routine
Maintenance or Buyer Request Items.
"Routine Maintenance" shall mean those items of inspection or work specifically
-------------------
called out in the Workscope.
"Term" means the term of this Agreement as provided in Section 14.
----
"Time and Materials Basis" means: (i) with respect to labor, Tramco will charge
------------------------
the Labor Rate multiplied by the actual number of labor hours performed in
connection with the identified services or statement of work; and (ii) except as
otherwise provided herein, with respect to parts and materials and other direct
charges, Tramco will charge the amounts specified in Section 5.2.
"Tramco Airframe" means the facility of Tramco located in Everett, Washington,
---------------
which performs the Airframe Services and presently operated by Tramco.
"Workscope" means the workscope identifying the services to be performed by
---------
Tramco as part of any Modification Work or Heavy Maintenance, as attached to the
applicable Airframe Services Order.
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Exhibit 4
Airframe Services Order
under Tramco-Vanguard Agreement dated
, 1996
-----------
Aircraft No.
-------------
Workscope: Attached as Exhibit A hereto. The Workscope shall
control over any conflict or inconsistency between the
general descriptions of the Airframe Services
included in this Exhibit 4.
Labor Pricing
Modification Work Fixed Price
(Fixed charge for all labor for
Modification Work identified in the Workscope) $
------------------
Heavy Maintenance Fixed Price
(Fixed charge for all labor for
Heavy Maintenance identified in the Workscope) $
------------------
Labor Rate (applicable to any
Additional Work)
------------------
Material Charges Expendables and Consumables shall be charged at a
fixed rate equal to % of the labor charges
--------
invoiced to Customer as part of all Airframe Services
Estimated date of Aircraft delivery to Tramco
------------------
Estimated duration of Workscope days
------------
Other
------------------
------------------
This Airframe Services Order is issued and agreed pursuant to that certain
Services Agreement between Tramco, Inc. and Vanguard dated , 1996.
----------
The terms of this Airframe Services Order shall apply only to the Aircraft
described in this Airframe Services Order and the terms of this Airframe
Services Order shall control in the event they conflict with any terms contained
in the Services Agreement. Capitalized terms used herein shall have the same
meanings given in the Services Agreement. The terms of this Airframe Services
Order shall not affect any other Airframe Services performed or to be performed
for Vanguard.
Executed this day of , 199 .
--- --------- --
TRAMCO, INC. VANGUARD AIRLINES, INC.
By By
-------------------------------- ---------------------------------
Name Name
------------------------------ -------------------------------
Title Title
----------------------------- -----------------------------
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Exhibit 5.5.5
AIRFRAME SERVICES WARRANTY
1 Warranty. Subject to the other provisions contained in this Warranty,
--------
Tramco warrants to Customer that the Airframe Services provided hereunder will
be free from defects in workmanship introduced during Tramco's servicing
thereof. The foregoing warranty shall not apply to any parts, material or third
party services incorporated in such Airframe Services and Tramco makes no
warranty, express or implied, with respect to such parts, material or services.
Tramco workmanship shall not be deemed defective if such workmanship was in
compliance with applicable manufacturer's operating and maintenance instructions
or procedures or applicable governmental regulations for such service in effect
at the time of such service.
2 Warranty Period and Notice.
--------------------------
a. Warranty Period. The warranty set forth in paragraph 1 of this
---------------
Warranty extends for a period of (i) 12 months from the date the serviced
Aircraft is delivered to Customer, or (ii) 1200 flying hours subsequent to the
date the serviced Aircraft is delivered to Customer, whichever is the first to
occur (the "Warranty Period"). In the event that Tramco repairs or re-services
an item under this Warranty, the warranty provided hereunder shall extend to
such repair or re-serviced item for the remainder of the original Warranty
Period applicable to the item and no new Warranty Period shall be established
therefor.
b. Notice. Customer's remedy and Tramco's obligation and liability
------
under this Warranty with respect to each defect, are conditioned upon Customer
providing written notice to Tramco of its warranty claim at the earlier of (i)
-------
the date which is thirty days after the defect is discovered by Customer; or
(ii) the expiration of the Warranty Period.
3 Return and Statement. Customer's remedy and Tramco's obligation and
--------------------
liability under this Warranty with respect to each defect, are also subject to
the following conditions.
a. Return. Customer returns the serviced Aircraft or any part,
------
accessory or component thereof which is subject to a warranty claim hereunder at
its cost, transportation charges prepaid, as soon as reasonably practical to the
Tramco servicing facility or another location as may be mutually agreed between
the parties. In the event that a Warranty Claim is accepted by Tramco in
accordance with the terms hereof, Tramco will reimburse Customer for aircraft
ferry costs at a rate of $3,000 per flight hour, but not to exceed the maximum
total amount of $6,000. The foregoing reimbursement shall only apply if
warranty service requires that the Aircraft be returned to the Tramco servicing
facility and only if the return for warranty service causes an unscheduled
routing of the Aircraft.
b. Statement. Customer provides a written statement to Tramco
---------
describing the nature of the claimed defect.
4. Parts and Material. To the extent assignable, Tramco shall assign to
------------------
Customer any warranties received by Tramco with respect to parts and material
transferred to Customer by Tramco or incorporated by Tramco into the Airframe
Services. Customer shall have sole responsibility for processing and pursuing
any applicable warranty claims against manufacturers and vendors of any such
parts or material.
5 Disclaimer. THE WARRANTY SET FORTH IN THIS WARRANTY AND THE OBLIGATIONS
----------
AND LIABILITIES OF TRAMCO HEREUNDER, ARE IN LIEU OF, AND CUSTOMER HEREBY WAIVES
AND RELEASES ALL OTHER WARRANTIES OR
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GUARANTEES, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE SERVICES PROVIDED.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, TRAMCO SHALL NOT BE LIABLE FOR
AND CUSTOMER HEREBY WAIVES AND RELEASES ANY AND ALL CLAIMS WITH RESPECT TO ANY
(A) IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE; (B)
IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE
OF TRADE; (C) CLAIM IN TORT, WHETHER OR NOT ARISING IN WHOLE OR IN PART FROM
TRAMCO'S FAULT, NEGLIGENCE, STRICT LIABILITY OR PRODUCT LIABILITY; OR (D) CLAIM
FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, CONSEQUENTIAL DAMAGES, COVER OR
ANY LOSS OF PROFIT, REVENUE OR USE.
TRAMCO'S LIABILITY AND CUSTOMER'S SOLE REMEDY HEREUNDER WITH RESPECT TO SERVICES
PROVIDED HEREUNDER, INCLUDING BREACH OF THE WARRANTY SET FORTH HEREIN, WHETHER
IN TORT, CONTRACT OR OTHERWISE, SHALL BE LIMITED TO, AT TRAMCO'S OPTION,
TRAMCO'S REPAIR OR RE-SERVICE OF THE ITEM OR TASK AND IN NO EVENT SHALL TRAMCO'S
LIABILITY HEREUNDER EXCEED THE COMPENSATION PAID BY CUSTOMER TO TRAMCO FOR THE
SPECIFIC SERVICE PERFORMED. IN THE EVENT THAT THIS DISCLAIMER OR ANY PORTION
HEREOF SHALL BE HELD TO BE INVALID OR UNENFORCEABLE, THE REMAINING PROVISIONS
SHALL REMAIN IN FULL FORCE AND EFFECT.
-20-
Exhibit 12.1
Customer Insurance Coverages and Limits
---------------------------------------
Coverage Limits
-------- ------
Aircraft Operations/Aviation Liability $200 million (provided that no more than $20
million of such amount is self-insured)
Commercial General Liability $2 million per occurrence
Automobile Insurance $2 million per occurrence
Workers Compensation Statutory Requirement in each jurisdiction
where employees are located
-21-
Exhibit 12.2
Tramco Insurance Coverages and Limits
-------------------------------------
Coverage Limits
-------- ------
Aircraft Products Liability $200 million (provided that no more than $20
million of such amount is self-insured)
Hangarkeeper's Liability $200 million
Commercial General Liability $2 million per occurrence
Automobile Insurance $2 million per occurrence
Workers Compensation Statutory Requirement in each jurisdiction
where employees are located
-22-
