EXHIBIT 10.22
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY [***]. THE
CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION.
BOMBARDIER REGIONAL AIRCRAFT DIVISION
PURCHASE AGREEMENT
PA-0393
BETWEEN
BOMBARDIER INC.
AND
MIDWAY AIRLINES CORPORATION
Relating to the Purchase of
Ten (10) Canadair Regional Jet aircraft
Including related Customer Support Services
1
TABLE OF CONTENTS
ARTICLE
1 INTERPRETATION
2 SUBJECT MATTER OF SALE
3 CUSTOMER SUPPORT SERVICES AND WARRANTY
4 PRICE
5 PAYMENT
6 DELIVERY PROGRAM
7 BUYER INFORMATION
8 CERTIFICATION FOR EXPORT
9 ACCEPTANCE PROCEDURE
10 TITLE AND RISK
11 CHANGES
12 BUYER'S REPRESENTATIVES AT MANUFACTURE SITE
13 EXCUSABLE DELAY
14 NON-EXCUSABLE DELAY
15 LOSS OR DAMAGE
16 TERMINATION
17 NOTICES
18 INDEMNITY AGAINST PATENT INFRINGEMENT
19 LIMITATION OF LIABILITY
20 ASSIGNMENT
21 SUCCESSORS
22 APPLICABLE LAWS
23 CONFIDENTIAL NATURE OF AGREEMENT
24 AGREEMENT
APPENDIX
I ECONOMIC ADJUSTMENT FORMULA
II DELIVERY SCHEDULE
III SPECIFICATION
IV BUYER SELECTED OPTIONAL FEATURES
EXHIBIT
I CERTIFICATE OF ACCEPTANCE
II XXXX OF SALE
III CERTIFICATE OF RECEIPT OF AIRCRAFT
IV CHANGE ORDER
ANNEX A CUSTOMER SUPPORT SERVICES
ANNEX B WARRANTY AND SERVICE LIFE POLICY
2
INDEX OF LETTER AGREEMENTS
B97-7701-RJTL-CRJ0393-001 Option Aircraft
B97-7701-RJTL-CRJ0393-002 Shadow Option Aircraft
B97-7701-RJTL-CRJ0393-003 Financing
B97-7701-RJTL-CRJ0393-004 Deposit
B97-7701-RJTL-CRJ0393-005 Customer Support
B97-7701-RJTL-CRJ0393-006 Spares
B97-7701-RJTL-CRJ0393-007 Airworthiness Directives
B97-7701-RJTL-CRJ0393-008 Airframe Direct Maintenance Cost
B97-7701-RJTL-CRJ0393-009 Dispatch Reliability
B97-7701-RJTL-CRJ0393-010 Performance
B97-7701-RJTL-CRJ0393-011 Configuration
3
This Agreement is made on the 17th day of September 1997.
BY AND BETWEEN: BOMBARDIER INC., a Canadian corporation represented by its
BOMBARDIER REGIONAL AIRCRAFT DIVISION ("XXXX") having an
office at 000 Xxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxx, Xxxxxx.
AND: MIDWAY AIRLINES CORPORATION, with offices at 000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx Xxxxxxxx, Xxxxxx Xxxxxx of
America ("Buyer")
WHEREAS Bombardier Inc. through its Canadair Manufacturing Division,
is engaged in the manufacture of the Canadair Regional Jet
aircraft products; and
XXXX has been created for the purpose of providing marketing,
sales and customer support services for the Canadair Regional
Jet aircraft and related products;
WHEREAS Buyer desires to purchase ten (10) Aircraft (as later defined)
and related data, documents, and services under this Agreement
(as later defined), and XXXX desires to arrange the sale of
such Aircraft, data, documents and services to Buyer,
NOW THEREFORE, in consideration of the mutual covenants herein contained, Buyer
and XXXX agree as follows:
4
ARTICLE 1. INTERPRETATION
1.1 The recitals above have been inserted for convenience only and do not form
part of the agreement.
1.2 The headings in this agreement are included for convenience only and shall
not be used in the construction and interpretation of this agreement.
1.3 In this agreement, unless otherwise expressly provided, the singular
includes the plural and vice-versa.
1.4 In this agreement the following expressions shall, unless otherwise
expressly provided, mean:
(a) "Acceptance Period" shall have the meaning attributed to it in
Article 9.3;
(b) "Acceptance Date" shall have the meaning attributed to it in Article
9.7.(a);
(c) "Agreement" means this Agreement, including its Exhibits, Annexes,
Appendices and Letter Agreements, if any, attached hereto (each of
which is incorporated in the Agreement by this reference), as they
may be amended pursuant to the provisions of the Agreement;
(d) "Aircraft" shall have the meaning attributed to it in Article 2.1
(e) "Aircraft Purchase Price" shall have the meaning attributed to it in
Article 4.2;
(f) "Base Price" shall have the meaning attributed to it in Article 4.1;
(g) "Xxxx of Sale" shall have the meaning attributed to it in Article
9.7 (c);
(h) "BFE" shall have the meaning attributed to it in Article 11.1;
(i) "Buyer Selected Optional Features" shall have the meaning attributed
to it in Article 2.1;
(j) "Delivery Date" shall have the meaning attributed to it in Article
9.7.(c);
5
(k) "Economic Adjustment Formula" shall have the meaning attributed to
it in Article 4.2;
(l) "Excusable Delay" shall have the meaning attributed to it in Article
13.1;
(m) "FAA" shall have the meaning attributed to it in Article 8.1;
(n) N/A
(o) "Non-Excusable Delay" shall have the meaning attributed to it in
Article 14.1;
(p) "Notice" shall have the meaning attributed to it in Article 17.1;
(q) "Other Patents" shall have the meaning attributed to it in Article
18.1;
(r) "Permitted Change" shall have the meaning attributed to it in
Article 11.2;
(s) "Readiness Date" shall have the meaning attributed to it in Article
9.1;
(t) "Regulatory Change" shall have the meaning attributed to it in
Article 8.4;
(u) "Scheduled Delivery Dates" shall have the meaning attributed to it
in Article 6;
(v) "Specification" shall have the meaning attributed to it in Article
2.1;
(w) "Taxes" shall have the meaning attributed to it in Article 4.3: and
(x) "TC" shall have the meaning attributed to it in Article 8.1.
1.5 All dollar amounts in this Agreement are in United States Dollars.
6
ARTICLE 2 - SUBJECT MATTER OF SALE
2.1 Subject to the provisions of this Agreement, XXXX will sell and Buyer will
purchase ten (10) Canadair Regional Jet aircraft model CL600-2B19 Version
200ER manufactured pursuant to specification no. RAD-601R-153 issue NC
dated September, 1997, attached hereto as Appendix III, as that
specification may be modified from time to time in accordance with this
Agreement (the "Specification"), as supplemented to reflect the
incorporation of the Buyer selected optional features ("Buyer Selected
Optional Features") set forth in Appendix IV hereto (collectively the
"Aircraft").
7
ARTICLE 3 - CUSTOMER SUPPORT SERVICES AND WARRANTY
3.1 XXXX shall provide to Buyer the customer support services pursuant to the
provisions of Annex A attached hereto.
3.2 XXXX shall provide to Buyer the warranty and the service life policy
described in Annex B attached hereto which except as otherwise expressly
set forth in this Agreement, including without limitation the letter
agreements that supplement this Agreement, shall be the exclusive warranty
applicable to the Aircraft.
3.3 Unless expressly stated otherwise, the services referred to in 3.1 and 3.2
above are incidental to the sale of the Aircraft and are included in the
Aircraft Purchase Price.
8
ARTICLE 4 - PRICE
4.1 The base price for each of the Aircraft (including the Buyer Selected
Optional Features listed in Appendix IV but excluding any other available
optional features) Ex Works (Incoterms 1990) BRAD's facilities in
Montreal, Quebec, (the "Base Price") is [***] expressed in
November 1997 dollars.
4.2 The price of the Aircraft shall be the Base Price adjusted for changes
made pursuant to Article 11 and any Regulatory Changes pursuant to Article
8.4, and further adjusted to the Delivery Date to reflect economic
fluctuations during the period from November 1, 1997 to the Delivery Date
of each Aircraft ("Aircraft Purchase Price"). Such adjustments shall be
based on the economic adjustment formula attached as Appendix I ("Economic
Adjustment Formula").
4.3 The Aircraft Purchase Price does not include any taxes, fees or duties
including, but not limited to, sales, use, value added (including the
Canadian Goods and Services Tax), personal property, gross receipts,
franchise, excise taxes, assessments or duties ("Taxes") which are or may
be imposed by law upon XXXX, any affiliate of XXXX, Buyer or the Aircraft
whether or not there is an obligation for XXXX to collect same from Buyer,
by any taxing authority or jurisdiction occasioned by, relating to or as a
result of the execution of this Agreement or the sale, lease, delivery,
storage, use or other consumption of any Aircraft, BFE or any other
matter, good or service provided under or in connection with this
Agreement. According to current legislation, Canadian taxes, duties and
Goods and Services Tax are not applicable to aircraft sold and immediately
exported from Canada. If changes to Canadian tax legislation result in
taxes being imposed on Buyer, XXXX will cooperate with Buyer to mitigate
the effect of such taxes on Buyer, at Buyer's expense
4.4 Notwithstanding any of the above, if any Taxes (other than Canadian income
taxes charged on the income of XXXX) are imposed upon Buyer or become due
or are to be collected from XXXX by any taxing authority, XXXX shall
notify Buyer and Buyer shall promptly, but no later than ten (10) working
days after receiving such notice, pay such Taxes directly to the taxing
authority, or reimburse XXXX for such Taxes, as the case may be, including
interest and penalties, so long as such interest or penalties are not
attributable to the gross negligence or willful misconduct of XXXX. Buyer
retains the right to contest, at Buyer's expense and by appropriate lawful
proceedings, the imposition of such Taxes.
4.5 Upon BRAD's request, Buyer shall execute and deliver to XXXX any documents
that XXXX reasonably deems necessary or desirable in connection with any
exemption from or reduction of or the contestation of or the defense
against any imposition of Taxes.
9
ARTICLE 5 - PAYMENT
5.1 XXXX acknowledges having previously received from Buyer
[***] per Aircraft, totaling [***]. Such amount shall be
applied against the balance of the Aircraft Purchase Price in accordance
with the provisions of Article 5.2.
5.2 Buyer shall make payment or cause payment to be made for each Aircraft
(expressed below as a percentage of the Base Price adjusted for changes
made pursuant to Article 11 and any Regulatory Changes pursuant to
Article 8.4 escalated at an assumed escalation factor of [***] per year
(the "Estimated Purchase Price")) as follows:
(a) [***] of the Estimated Purchase Price, less the amounts previously
received referred to in Article 5.1, [***] months prior
to its Scheduled Delivery Date;
(b) [***] of the Estimated Purchase Price [***] months prior to
its Scheduled Delivery Date; and
(c) [***] of the Estimated Purchase Price [***] months prior to its
Scheduled Delivery Date;
(d) the Aircraft Purchase Price less the payments referred to in Article
5.1 and subparagraphs (a), (b) and (c) above, on or before the
Delivery Date of such Aircraft to Buyer.
Receipt of payment in full of all amounts referred to in Articles 5.1 and
5.2 shall constitute payment in full of the Aircraft Purchase Price for
the relevant Aircraft.
All payments referred to in paragraphs (a) to (c) above are to be made on
the first day of the applicable month.
Any payments for which, upon execution of the Agreement, the time of
payment has already passed, will be made within ten (10) business days of
execution of the Agreement.
10
5.3 Subject to the provisions of Article 9.9 hereof, should Buyer fail to make
any of the aforementioned payments on or before the stipulated date (XXXX
will use reasonable efforts to provide timely notice of Buyer's failure to
make payments, for information purposes only) and Buyer does not correct
the failure within a period of thirty (30) days after such stipulated
date, Buyer shall be in default of the Agreement and this Agreement shall
automatically terminate and XXXX shall have no further obligation to Buyer
under this Agreement, including the obligation to proceed further with the
manufacture of the Aircraft on behalf of Buyer or the sale and/or delivery
of the Aircraft to Buyer. Notwithstanding the preceding sentence XXXX
shall have the option (but not the obligation) of waiving such termination
should Buyer make arrangements satisfactory to XXXX for such payment and
all future payments within ten (10) calendar days of Buyer's default.
5.4 Buyer shall pay XXXX daily interest on late payments, from the date that
any payment becomes due up to and including the day prior to receipt of
payment, at a rate of two per cent (2%) per annum over the prime rate
charged by the Chase Manhattan Bank, New York Branch, or its successor,
from time to time, calculated and compounded monthly.
5.5 Buyer shall make all payments due under this Agreement in immediately
available funds by deposit on or before the due date to BRAD's account in
the following manner:
(a) Transfer to: [***]
(b) For credit to: [***]
(c) For further credit to: [***]
5.6 All other amounts due from Buyer with respect to each Aircraft shall be
paid on or prior to the Delivery Date of the respective Aircraft.
11
5.7 All payments provided for under this Agreement shall be made so as to be
received in immediately available funds on or before the dates stipulated
herein.
5.8 XXXX shall remain the exclusive owner of each Aircraft, free and clear of
all rights, liens, charges or encumbrances created by or through Buyer,
until such time as all payments referred to in this Article 5, with
respect to that Aircraft, have been made.
12
ARTICLE 6 - DELIVERY PROGRAM
6.1 The Aircraft shall be offered for inspection and acceptance to Buyer at
BRAD's facility in Montreal, Quebec during the months set forth in
Appendix 11 attached hereto (the "Scheduled Delivery Dates").
13
ARTICLE 7 - BUYER INFORMATION
7.1 During the manufacture of the Aircraft, Buyer shall provide to XXXX on or
before the date required by XXXX, all information as XXXX xxx reasonably
request to manufacture the Aircraft including, without limitation, the
selection of furnishings, internal and external colour schemes.
Within seven (7) calendar days following the signing this Agreement, Buyer
will:
(a) provide XXXX with an external paint scheme agreed on by the parties;
and
(b) select interior colours (from BRAD's standard colours).
Failure of Buyer to comply with these requirements may result in an
increase in price, a delay in delivery of the Aircraft, or both.
7.2 On or before execution of this Agreement Buyer shall notify XXXX in
writing of the BFE (if any) that Buyer wishes to have incorporated into
each Aircraft. Buyer shall also provide details of:
a. weights and dimensions of the BFE;
b. test equipment or special tools required to incorporate the BFE; and
c. any other information XXXX xxx reasonably require.
Within one hundred and twenty (120) calendar days thereafter, XXXX shall
advise Buyer of its acceptance or rejection of the BFE and of the dates by
which each item of BFE is required by XXXX. If required the parties hereto
shall execute a Change Order in accordance with Article 11.1 to cover
those BFE accepted by XXXX.
14
7.3 The BFE accepted by XXXX pursuant to this Article shall be incorporated in
the manufacturing process of the Aircraft subject to the following
conditions:
a. Title to the BFE shall remain at all times with Buyer and risk of
loss of the BFE shall remain at all times with Buyer except for
damages caused by BRAD's gross negligence.
b. The BFE must be received Carriage Paid To (Incoterms 1990) BRAD's
plant or such other place as XXXX xxx designate, no later than the
date notified pursuant to Article 7.2, free and clear of any taxes,
duties, licenses, charges, liens or other similar claims;
c. The BFE shall meet:
1) customary industry standards of quality (with the exception of
any paint to be supplied by Buyer, which must meet BRAD's
requirements and specifications), and
2) the requirements of the applicable airworthiness certification
agency;
d. The BFE shall be delivered to XXXX in good condition and ready for
immediate incorporation into the Aircraft. XXXX shall, upon receipt,
inspect the BFE as to quantity and apparent defects and inform Buyer
of any discrepancies and the required corrective actions to be
taken;
e. XXXX shall only be responsible for the fitment and testing of the
BFE in the Aircraft using reasonable care and good manufacturing
practices, in accordance with Buyer's written detailed description
of the dimensions and weight of such BFE. Buyer shall also furnish
information necessary for its proper storage, fitment, servicing,
maintenance and operation and availability of test equipment or
special tools;
15
f. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH, XXXX SHALL HAVE NO
LIABILITY OR OTHER OBLIGATIONS AND IS HEREBY RELIEVED OF ANY
LIABILITY, WARRANTY OR OTHER OBLIGATION WITH RESPECT TO THE BFE AND
BUYER HEREBY WAIVES ALL EXPRESS OR IMPLIED WARRANTIES OR CONDITIONS
INCLUDING THOSE OF MERCHANTABILITY OR FITNESS OR OTHERWISE AND ALL
OTHER LIABILITY (STRICT OR OTHERWISE) ON THE PART OF XXXX, BE IT IN
FACT, IN LAW, IN CONTRACT, OR IN TORT (INCLUDING WITHOUT LIMITATION
THE ACTIVE, PASSIVE OR IMPUTED NEGLIGENCE OR STRICT PRODUCTS
LIABILITY OF XXXX OR ITS AFFILIATES), OR OTHERWISE, IN CONNECTION
WITH THE BFE OR ITS DESIGN, SUITABILITY, USE OR OPERATION.
7.4 If at any time between receipt of the BFE by XXXX and the Delivery Date,
it is determined by XXXX that an item of BFE supplied does not meet the
standards and requirements described above or its fitment, integration and
testing in the Aircraft or Aircraft systems create delays in the
manufacturing or certification process, then such BFE may be removed and
replaced by other BFE or by BRAD's equipment. Any costs associated with
the removal, refitment, replacement, testing, certification and/or delays
in the Delivery Date of the Aircraft shall be borne by Buyer.
7.5 In the event that the delivery of an Aircraft is delayed due to any delay
caused by Buyer's failure to:
a. deliver or have BFE delivered by the date required;
b. ensure satisfactory design, suitability, use or operation of the
BFE;
c. furnish or obtain applicable BFE data;
d. perform any adjusting, calibrating, retesting or updating of BFE;
e. furnish or obtain any approvals in compliance with the provisions of
this Article; or
f. comply with the conditions of this Article.
XXXX agrees to discuss with Buyer the steps to be taken to minimize, cure,
eliminate or work around the delay, but any delay incurred shall be the
responsibility of Buyer and Buyer shall pay to XXXX any costs and expenses
reasonably incurred by XXXX due to such delay.
16
7.6 Should there be a delay in delivery caused either by a failure of Buyer
described in Article 7.5, or by an event to which reference is made in
Article 13.0 in connection with the BFE, and if such delay cannot
reasonably be minimized, cured, eliminated or worked around by agreement
of the parties, Buyer agrees that XXXX xxx deliver the Aircraft without
installing the unapproved, delayed or nonconforming BFE, and Buyer agrees
to take delivery of and pay for the Aircraft.
7.7 If this Agreement is terminated in whole or in part in accordance with the
provisions hereof XXXX xxx elect to, by written notice to Buyer, either:
a. purchase the BFE ordered by Buyer and/or received by XXXX at the
invoice price paid by Buyer; or
b. return the BFE to Buyer Free Carrier (Incoterms 1990) BRAD's plant,
or such other place that XXXX xxx designate.
17
ARTICLE 8 - CERTIFICATION FOR EXPORT
8.1 XXXX has obtained from Transport Canada ("TC"), a TC Type Approval
(Transport Category) and from the Federal Aviation Administration of the
United States ("FAA") an FAA Type Certificate for the type of aircraft
purchased under this Agreement.
8.2 For each Aircraft, XXXX shall provide to Buyer a TC Certificate of
Airworthiness (Transport Category) for export, on or before the Delivery
Date of such Aircraft.
8.3 XXXX shall not be obligated to obtain any other certificates or approvals
as part of this Agreement. The obtaining of any import license or
authority required to import or operate the Aircraft into any country
outside of Canada shall be the responsibility of Buyer. XXXX will, to the
extent permitted by law, and with Buyer's assistance, seek the issuance of
a Canadian export license to enable Buyer to export the Aircraft from
Canada subject to prevailing export control regulations in effect on the
Delivery Date.
8.4 If any addition or change to, or modification or testing of the Aircraft
is required by any law or governmental regulation or requirement or
interpretation thereof by any governmental agency having jurisdiction in
order to meet the requirements of Article 8.2 (a "Regulatory Change"),
such Regulatory Change shall be made to the Aircraft prior to Delivery
Date, or at such other time after the Delivery Date as the parties may
agree upon.
8.5 [***]
8.6 If delivery of the Aircraft is delayed by the incorporation of any
Regulatory Change, such delay shall be an Excusable Delay within the
meaning of Article 13.
8.7 XXXX shall issue a Change Order, reflecting any Regulatory Change required
to be made under this Article 8, which shall set forth in detail the
particular changes to be made and the effect, if any, of such changes on
design, performance, weight, balance, time of delivery, Base Price and
Aircraft Purchase Price. Any Change Orders issued pursuant to this Article
shall be effective and binding upon the date of BRAD's transmittal of such
Change Order.
18
8.8 If the use of any of the certificates identified in this Article 8 are
discontinued during the performance of this Agreement, reference to such
discontinued certificate shall be deemed a reference to any other
certificate or instrument which corresponds to such certificate or, if
there should not be any such other certificate or instrument, then XXXX
shall be deemed to have obtained such discontinued certificate(s) upon
demonstrating that the Aircraft complies substantially with the
Specification.
8.9 Reference to a regulatory authority shall include any succeeding
department or agency then responsible for the duties of said regulatory
authority.
19
ARTICLE 9 - ACCEPTANCE PROCEDURE
9.1 No earlier than [***] prior to the first day of the Scheduled
Delivery Date, Buyer may request from XXXX, by facsimile or telegraphic
communication or other expeditious means, [***]
No later than [***] prior to the first day of the Scheduled
Delivery Date, XXXX shall inform Buyer by facsimile or telegraphic
communication or other expeditious means, [***].
XXXX shall give Buyer at least thirty (30) days advance notice, by
facsimile or telegraphic communication or other expeditious means, of the
projected date of readiness of each Aircraft for inspection and delivery.
XXXX shall give Buyer at least ten (10) working days advance notice, by
facsimile or telegraphic communication or other expeditious means, of the
date on which an Aircraft will be ready for Buyer's inspection, flight
test and acceptance (the "Readiness Date").
9.2 Within two (2) days following receipt by Buyer of the notice of Readiness
Date Buyer shall:
(a) provide notice to XXXX as to the source and method of payment of the
balance of the Aircraft Purchase Price;
(b) identify to XXXX the names of Buyer's representatives who will
participate in the inspection, flight test and acceptance; and
(c) provide evidence of the authority of the designated persons to
execute the Certificate of Acceptance and other delivery documents
on behalf of Buyer.
9.3 Buyer shall have three (3) consecutive working days commencing on the
Readiness Date in which to complete the inspection and flight test (such
three (3) working day period being the "Acceptance Period").
20
9.4 Up to four (4) representatives of Buyer may participate in Buyer's ground
inspection of the Aircraft and two (2) representatives of Buyer may
participate in the flight test. XXXX shall, if requested by Buyer, perform
an acceptance flight of not less than one (1) and not more than three (3)
hours duration. Ground inspection and flight test shall be conducted in
accordance with BRAD's acceptance procedures (a copy of which shall be
provided to Buyer at least 30 days prior to the Scheduled Delivery Date of
the First Aircraft hereunder) and at BRAD's expense. At all times during
ground inspection and flight test, XXXX shall retain control over the
Aircraft.
9.5 If no Aircraft defect or discrepancy is revealed during the ground
inspection or flight test, Buyer shall accept the Aircraft on or before
the last day of the Acceptance Period in accordance with the provisions of
Article 9.7.
9.6 If any material defect or discrepancy in the Aircraft is revealed by
Buyer's ground inspection or flight test, the defect or discrepancy will
promptly be corrected by XXXX, at no cost to Buyer, which correction may
occur during the Acceptance Period (in which case the Acceptance Period
will be extended accordingly) or after the Acceptance Period depending on
the nature of the defect or discrepancy and of the time required for
correction. To the extent necessary to verify such correction, XXXX shall
perform one (1) or more further acceptance flights
9.7 Upon completion of the ground inspection and acceptance flight of the
Aircraft and correction of any defects or discrepancies:
(a) Buyer will sign a Certificate of Acceptance (in the form of Exhibit
I hereto) for the Aircraft. Execution of the Certificate of
Acceptance by or on behalf of Buyer shall be evidence of Buyer
having examined the Aircraft and found it in accordance with the
provisions of this Agreement. The date of signature of the
Certificate of Acceptance shall be the "Acceptance Date";
(b) XXXX will supply a TC Certificate of Airworthiness for Export; and
(c) Buyer shall pay XXXX the balance of the Aircraft Purchase Price and
any other amounts due, at which time XXXX shall issue a xxxx of sale
(in the form of Exhibit 11 hereto) passing to Buyer good title to
the Aircraft free and clear of all liens, claims, charges and
encumbrances except for those liens, charges or encumbrances created
by or claimed through Buyer (the "Xxxx of Sale"). The date on which
XXXX delivers the Xxxx of Sale and Buyer takes delivery of the
Aircraft shall be the "Delivery Date".
21
Delivery of the Aircraft shall be evidenced by the execution and delivery
of the Xxxx of Sale and of the Certificate of Receipt of Aircraft (in the
form of Exhibit III hereto).
9.8 Provided that XXXX has met all of its obligations under this Article 9,
should Buyer not accept, pay for and take delivery of any of the Aircraft
within ten (10) calendar days after the end of the Acceptance Period of
such Aircraft, Buyer shall be deemed to be in default of the terms of this
Agreement.
9.9 Buyer shall promptly, upon demand, reimburse XXXX for all costs and
expenses reasonably incurred by XXXX as a result of Buyer's failure to
accept or take delivery of the Aircraft, including but not limited to
reasonable amounts for storage, insurance, taxes, preservation or
protection of the Aircraft. Provided that XXXX has met all of its
obligations under this Article 9, should Buyer not accept, pay for and/or
take delivery of any one of the Aircraft within thirty (30) calendar days
following the end of the Acceptance Period, the present Agreement shall
automatically terminate. XXXX shall however, have the option (but not the
obligation) of waiving such termination should Buyer, within ten (10)
calendar days following such termination, make arrangements satisfactory
to XXXX to accept delivery and provide payment for all amounts owing or to
become due pursuant to this Agreement.
22
ARTICLE 10 - TITLE AND RISK
10.1 Title to the Aircraft and risk of loss of or damage to the Aircraft passes
to Buyer when XXXX presents the Xxxx of Sale to Buyer on the Delivery
Date.
10.2 If, after transfer of title on the Delivery Date, the Aircraft remains in
or is returned to the care, custody or control of XXXX, Buyer shall retain
risk of loss of; or damage to the Aircraft and for itself and on behalf of
its insurer(s) hereby waives and renounces to, and releases XXXX and any
of BRAD's affiliates from any claim, whether direct, indirect or by way of
subrogation, for damages to or loss of the Aircraft arising out of, or
related to, or by reason of such care, custody or control, except in the
case of BRAD's willful misconduct or gross negligence.
23
ARTICLE 11 - CHANGES
11.1 Other than a Permitted Change as described in Article 11.2, or a
Regulatory Change as described in Article 8.4, any change to this
Agreement (including without limitation the Specification) or any features
or Buyer Furnished Equipment ("BFE"), if any, changing the Aircraft from
that described in the Specification attached hereto, requested by Buyer,
and as may be mutually agreed upon by the parties hereto, shall be made
using a change order ("Change Order") substantially in the format of
Exhibit IV hereto. Should Buyer request a change, XXXX shall advise Buyer,
to the extent reasonably practical, of the effect, if any, of such change
request on:
(a) the Scheduled Delivery Date;
(b) the price and payment terms applicable to the Change Order; and
(c) any other material provisions of this Agreement which will be
affected by the Change Order.
Such Change Order shall become effective and binding on the parties hereto
when signed by a duly authorized representative of each party.
11.2 XXXX, prior to the Delivery Date and without a Change Order or Buyer's
consent, may:
(a) substitute the kind, type or source of any material, part, accessory
or equipment with any other material, part, accessory or equipment
of like, equivalent or better kind or type; or
(b) make such change or modification to the Specification as it deems
appropriate to:
1) improve the Aircraft, its maintainability or appearance, or
2) to prevent delays in manufacture or delivery, or
3) to meet the requirements of Articles 2 and 8, other than for a
Regulatory Change to which the provisions of Articles 8.4 and
8.5 shall apply,
provided that such substitution, change or modification shall not affect
the Aircraft Purchase Price or materially affect the Scheduled Delivery
Date, interchangeability or replaceability of spare parts or performance
characteristics of the Aircraft. Any change made in accordance with the
provisions of this Article 11.2 shall be deemed to be a "Permitted Change"
and the cost thereof shall be borne by XXXX.
24
ARTICLE 12 - BUYER'S REPRESENTATIVES AT MANUFACTURE SITE
12.1 From time to time, commencing with the date of this Agreement and ending
with the Delivery Date of the last Aircraft purchased hereunder, XXXX
shall furnish, without charge, office space at BRAD's facility for one (1)
representative of Buyer. Buyer shall be responsible for all expenses of
its representative and shall notify XXXX at least thirty (30) calendar
days prior to the first scheduled visit of such representative and three
(3) days for each subsequent visit.
12.2 BRAD's and BRAD's affiliates' facilities shall be accessible to Buyer's
representative during normal working hours. Buyer's representative shall
have the right to periodically observe the work at BRAD's or BRAD's
affiliates' facilities where the work is being carried out provided there
shall be no disruption in the performance of the work.
12.3 XXXX shall advise Buyer's representative of BRAD's or BRAD's affiliates'
rules and regulations applicable at the facilities being visited and
Buyer's representative shall conform to such rules and regulations.
12.4 At any time prior to delivery of the Aircraft, Buyer's representative may
request, in writing, correction of parts or materials which they
reasonably believe are not in accordance with the Specification. XXXX
shall provide a written response to any such request. Communication
between Buyer's representative and XXXX shall be solely through BRAD's
Contract Department or its designate.
12.5 BUYER HEREBY RELEASES AND AGREES TO DEFEND, INDEMNIFY AND HOLD HARMLESS
XXXX, ITS ASSIGNEES AND AFFILIATES AND THEIR OFFICERS, DIRECTORS, AGENTS,
EMPLOYEES AND CONTRACTORS FROM AND AGAINST ALL LIABILITIES, DAMAGES,
LOSSES, COSTS AND EXPENSES RESULTING FROM INJURIES TO OR DEATH OF OR LOSS
OF OR DAMAGE TO PROPERTY OF BUYER OR BUYER'S REPRESENTATIVES WHILE AT
BRAD'S OR BRAD'S AFFILIATES OR SUBCONTRACTOR'S FACILITIES AND/OR DURING
INSPECTION, FLIGHT TEST OR ACCEPTANCE OF THE AIRCRAFT, WHETHER OR NOT
CAUSED BY THE ACTIVE, PASSIVE OR IMPUTED NEGLIGENCE OR STRICT PRODUCTS
LIABILITY OF XXXX, ITS ASSIGNEES, AFFILIATES OR THEIR OFFICERS, DIRECTORS,
AGENTS, EMPLOYEES OR CONTRACTORS.
25
12.6 XXXX HEREBY RELEASES AND AGREES TO DEFEND, INDEMNIFY AND HOLD HARMLESS
BUYER, ITS ASSIGNEES AND AFFILIATES AND THEIR OFFICERS, DIRECTORS, AGENTS,
EMPLOYEES AND CONTRACTORS FROM AND AGAINST ALL LIABILITIES, DAMAGES,
LOSSES, COSTS AND EXPENSES RESULTING FROM INJURIES TO OR DEATH OF OR LOSS
OF OR DAMAGE TO PROPERTY OF XXXX OR BRAD'S REPRESENTATIVES WHILE AT
BUYER'S OR BUYER'S AFFILIATES OR SUBCONTRACTOR'S FACILITIES AND/OR DURING
INSPECTION, FLIGHT TEST OR ACCEPTANCE OF THE AIRCRAFT, WHETHER OR NOT
CAUSED BY THE ACTIVE, PASSIVE OR IMPUTED NEGLIGENCE OR STRICT PRODUCTS
LIABILITY OF BUYER, ITS ASSIGNEES, AFFILIATES OR THEIR OFFICERS,
DIRECTORS, AGENTS, EMPLOYEES OR CONTRACTORS.
26
ARTICLE 13 - EXCUSABLE DELAY
13.1 In the event of a delay on the part of XXXX in the performance of its
obligations or responsibilities under the provisions of this Agreement due
directly or indirectly to a cause which is beyond the reasonable control
or without the fault or negligence of XXXX (an "Excusable Delay"), XXXX
shall not be liable for, nor be deemed to be in default under this
Agreement on account of such delay in delivery of the Aircraft or other
performance hereunder and the time fixed or required for the performance
of any obligation or responsibility in this Agreement shall be extended
for a period equal to the period during which any such cause or the effect
thereof persist. Excusable Delay shall be deemed to include, without
limitation, delays occasioned by the following causes:
(a) force majeure or acts of God;
(b) war, warlike operations, act of the enemy, armed aggression, civil
commotion, insurrection, riot or embargo;
(c) fire, explosion, earthquake, lightning, flood, draught, windstorm or
other action of the elements or other catastrophic or serious
accidents;
(d) epidemic or quarantine restrictions;
(e) any legislation, act, order, directive or regulation of any
governmental or other duly constituted authority;
(f) strikes, lock-out, walk-out, and/or other labour troubles causing
cessation, slowdown or interruption of work;
(g) delay or inability to procure supplies, materials, components,
accessories, equipment, tools or parts after due and timely
diligence by XXXX;
(h) delay or failure of common carriers; or
(i) delay in obtaining any airworthiness approval or certificate, or any
equivalent approval or certification, by reason of any law or
governmental order, directive or regulation or any change thereto,
or interpretation thereof, by a governmental agency, the effective
date of which is subsequent to the date of this Agreement, or by
reason of any change or addition made by XXXX or its affiliates or
requested by a governmental agency to the compliance program of XXXX
or of its affiliate, or any part thereof, as same may have been
approved by TC, or change to the interpretation thereof to obtain
any such airworthiness approval or certificate.
27
13.2 (a) If XXXX concludes, based on its appraisal of the facts and normal
scheduling procedures, that due to Excusable Delay delivery of the
Aircraft will be delayed for more than twelve (12) months after the
originally Scheduled Delivery Date or any revised date agreed to in
writing by the parties, XXXX shall promptly notify Buyer in writing
and either party may then terminate this Agreement with respect to
the Aircraft by giving written notice to the other within fifteen
(15) days after receipt by Buyer of BRAD's notice.
(b) If, due to Excusable Delay, delivery of any Aircraft is delayed for
more than twelve (12) months after the Scheduled Delivery Date,
either party may terminate this Agreement with respect to such
Aircraft by giving written notice to the other within fifteen (15)
days after the expiration of such twelve (12) month period.
13.3 Termination under Article 13.2 shall discharge all obligations and
liabilities of Buyer and XXXX hereunder with respect to such delayed
Aircraft and all related undelivered items and services, except that XXXX
shall promptly repay to Buyer, and BRAD's sole liability and
responsibility shall be limited to the repayment to Buyer, of all advance
payments for such Aircraft received by XXXX less any amount due by Buyer
to XXXX.
13.4 The termination rights set forth in Article 13.2 are in substitution for
any and all other rights of termination or contract lapse arising by
operation of law in connection with Excusable Delays.
28
ARTICLE 14 - NON-EXCUSABLE DELAY
14.1 If delivery of the Aircraft is delayed beyond the end of the Scheduled
Delivery Date, by causes not excused under Article 13.1, this shall
constitute a non-excusable delay (a "Non-Excusable Delay").
29
ARTICLE 15 - LOSS OR DAMAGE
15.1 In the event that prior to the Delivery Date of any Aircraft, the Aircraft
is lost, destroyed or damaged beyond repair due to any cause, XXXX shall
promptly notify Buyer in writing. Such notice shall specify the earliest
date reasonably possible, consistent with BRAD's other contractual
commitments and production schedule, by which XXXX estimates it would be
able to deliver a replacement for the lost, destroyed or damaged Aircraft.
This Agreement shall automatically terminate as to such Aircraft unless
Buyer gives XXXX written notice, within thirty (30) days of BRAD's notice,
that Buyer desires a replacement for such Aircraft. If Buyer gives such
notice to XXXX, the parties shall execute an amendment to this Agreement
which shall set forth the Delivery Date for such replacement aircraft and
corresponding new replacement Aircraft Purchase Price; provided, however,
that nothing herein shall obligate XXXX to manufacture and deliver such
replacement aircraft if it would require the reactivation or acceleration
of its production line for the model of aircraft purchased hereunder. The
terms and conditions of this Agreement applicable to the replaced Aircraft
shall apply to the replacement aircraft.
30
ARTICLE 16 - TERMINATION
16.1 This Agreement may be terminated, in whole or in part, with respect to any
or all of the Aircraft before the Delivery Date by XXXX or Buyer by notice
of termination to the other party upon the occurrence of any of the
following events:
(a) a party makes an assignment for the benefit of creditors or admits
in writing its inability to pay its debts or the other party has
reasonable evidence that it generally does not pay its debts as they
become due; or
(b) a receiver or trustee is appointed for a party or for substantially
all of such party's assets and, if appointed without such party's
consent, such appointment is not discharged or stayed within thirty
(30) calendar days thereafter; or
(c) proceedings or action under any law relating to bankruptcy,
insolvency or the reorganization or relief of debtors are instituted
by or against a party, and, if contested by such party, are not
dismissed or stayed within thirty (30) calendar days thereafter; or
(d) any writ of attachment or execution or any similar process, that has
the effect of materially affecting the business or operations of a
party, is issued or levied against a parry or any significant part
of its property and is not released, stayed, bonded or vacated
within forty-five (45) calendar days after its issue or levy.
(e) Buyer shall fail to hold an effective air carrier operating
certificate issued by the Secretary of Transportation pursuant to
Chapter 447 of the Federal Aviation Act (or successor provision of
law) for aircraft capable of carrying ten (10) or more individuals
or 6000 pounds or more of cargo.
16.2 In addition, this Agreement may be terminated, in whole or in part, before
the Delivery Date with respect to any or all undelivered Aircraft:
(a) as otherwise provided in this Agreement; or
(b) by XXXX, if Buyer is in default or breach of any material term or
condition of this Agreement and Buyer does not cure such default or
breach within forty-five (45) calendar days after receipt of notice
from XXXX specifying such default or breach; or
31
(c) by Buyer, if XXXX is in default or breach of any material term or
condition of this Agreement and such breach remains uncured for a
period of forty-five (45) calendar days following receipt of a
notice from Buyer specifying the nature of default or breach; or
(d) [***]
16.3 In case of termination of this Agreement under Articles 5.3 or 9.9, or
by XXXX pursuant to Articles 16.1 or 16.2 [***]:
(a) all rights (including property rights), if any, which Buyer or its
assignee may have or may have had in or to any or all of the
undelivered Aircraft and any rights of Buyer hereunder (including
property rights) with respect to any or all undelivered Aircraft
shall become null and void with immediate effect;
(b) XXXX xxx sell, lease or otherwise dispose of such Aircraft to
another party free of any claim by Buyer; and
(c) all amounts paid by Buyer with respect to the applicable undelivered
Aircraft shall be retained by XXXX and shall be applied against the
costs, expenses, losses and damages incurred by XXXX as a result of
Buyer's default and/or termination of this Agreement. To the extent
that the amount so retained by XXXX exceeds such damages, such
excess shall be returned to Buyer. if such amount so retained by
XXXX is insufficient to cover such damages XXXX shall have all
rights permitted by law to recover from Buyer the full amount of
such damages.
In the event of termination of this Agreement by Buyer or XXXX pursuant to
Article 16.2(d) hereof, Buyer's sole rights, remedies and recourses
against XXXX and BRAD's obligations to Buyer shall be limited to only the
return by XXXX of those amounts paid by Buyer to XXXX hereunder on account
of the undelivered Aircraft.
32
ARTICLE 17 - NOTICES
17.1 Any notice, request, approval, permission, consent or other communication
("Notice"), to be given or required under this Agreement shall be provided
in writing, by registered mail, facsimile, courier, telegraphic or other
electronic communication providing reasonable proof of transmission,
except that no notice shall be sent by mail if disruption of postal
service exists or is threatened either in the country of origin or of
destination, by the party giving the Notice and shall be addressed as
follows:
(a) Notice to XXXX shall be addressed to:
Bombardier Inc.
Bombardier Regional Aircraft Division
000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxx
Xxxxxx
X0X 0X0
Attention: Director of Contracts
Facsimile: (000) 000-0000
(b) Notice to Buyer shall be addressed to:
Midway Airlines Corporation
000 X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Chief Financial Officer Attention: General Counsel
Facsimile: 000-000-0000 Facsimile: 000-000-0000
17.2 Notice given in accordance with Article 17.1 shall be deemed sufficiently
given to and received by the addressees:
(a) if delivered by hand, on the day when the same shall have been so
delivered; or
(b) if mailed or sent by courier on the day indicated on the
corresponding acknowledgment of receipt; or
(c) if sent by telex or facsimile on the day indicated by the
acknowledgment or the answer back of the receiver in provable form.
33
ARTICLE 18 - INDEMNITY AGAINST PATENT INFRINGEMENT
18.1 In the case of any actual or alleged infringement of any Canadian or
United States patent or, subject to the conditions and exceptions set
forth below, any patent issued a under the laws of any other country in
which Buyer from time to time may lawfully operate the Aircraft ("Other
Patents"), by the Aircraft, or by any system, accessory, equipment or part
installed in such Aircraft at the time title to such Aircraft passes to
Buyer, XXXX shall indemnify, protect and hold harmless Buyer from and
against all claims, suits, actions, liabilities, damages and costs
resulting from the infringement, excluding any incidental or consequential
damages (which include without limitation loss of revenue or loss of
profit) and XXXX shall, at its option and expense:
(a) procure for Buyer the right under such patent to use such system,
accessory, equipment or part; or
(b) replace such system, accessory, equipment or part with one of the
similar nature and quality that is non-infringing; or
(c) modify such system, accessory, equipment or part to make same non-
infringing in a manner such as to keep it otherwise in compliance
with the requirements of this Agreement.
BRAD's obligation hereunder shall extend to Other Patents only if from the
time of design of the Aircraft, system, accessory, equipment or part until
the alleged infringement claims are resolved:
[6~
(d) such other country and the country in which the Aircraft is
permanently registered have ratified and adhered to and are at the
time of the actual or alleged infringement contracting parties to
the Chicago Convention on International Civil Aviation of December
7, 1944 and are Rally entitled to all benefits of Article 27
thereof; and
(e) such other country and the country of registration shall each have
been a party to the International Convention for the Protection of
Industrial Property (Paris Convention) or have enacted patent laws
which recognize and give adequate protection to inventions made by
the nationals or other countries which have ratified, adhered to and
are contracting parties to both of the forgoing conventions.
34
18.2 The foregoing indemnity does not apply to BFE, or to avionics, engines or
any system, accessory, equipment or part that was not manufactured to
BRAD's detailed design or to any system, accessory, equipment or part
manufactured by a third party to BRAD's detailed design without BRAD's
authorization. [***]
18.3 Buyer's remedy and BRAD's obligation and liability under this Article are
conditional upon (i) Buyer giving XXXX written notice within ten (10) days
after Buyer receives notice of a suit or action against Buyer alleging
infringement or within twenty (20) days after Buyer receives any other
written claim of infringement (ii) Buyer uses reasonable efforts in full
cooperation with XXXX to reduce or mitigate any such expenses, damages,
costs or royalties involved, and (iii) Buyer furnishes promptly to XXXX
all data, papers and records in its possession or control necessary or
useful to resist and defend against such claim or suit. XXXX xxx at its
option conduct negotiations with any party claiming infringement and may
intervene in any suit or action. Whether or not XXXX intervenes, XXXX
shall be entitled at any stage of the proceedings to assume or control the
defense. Buyer's remedy and BRAD's obligation and liability are further
conditional upon BRAD's prior approval of Buyer's payment or assumption of
any liabilities, expenses, damages, royalties or costs for which XXXX xxx
be held liable or responsible.
18.4 THE INDEMNITY, OBLIGATIONS AND LIABILITIES OF XXXX AND REMEDIES OF BUYER
SET OUT IN THIS ARTICLE ARE EXCLUSIVE AND ACCEPTED BY BUYER TO BE IN LIEU
OF AND IN SUBSTITUTION FOR, AND BUYER HEREBY WAIVES, RELEASES AND
RENOUNCES, ALL OTHER INDEMNITIES, OBLIGATIONS AND LIABILITIES OF XXXX AND
OF ITS AFFILIATES AND ALL OTHER RIGHTS, REMEDIES AND CLAIMS, INCLUDING
CLAIMS FOR DAMAGES, DIRECT, INCIDENTAL OR CONSEQUENTIAL, OF BUYER AGAINST
XXXX AND ITS AFFILIATES EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE,
WITH RESPECT TO ANY ACTUAL OR ALLEGED PATENT INFRINGEMENT BY THE AIRCRAFT
OR ANY INSTALLED SYSTEM, ACCESSORY, EQUIPMENT OR PART.
35
ARTICLE 19 - LIMITATION OF LIABILITY AND INDEMNIFICATION
19.1 XXXX SHALL HAVE NO OBLIGATION OR LIABILITY (AT LAW OR IN EQUITY), WHETHER
ARISING IN CONTRACT (INCLUDING WITHOUT LIMITATION, WARRANTY), IN TORT
(INCLUDING THE ACTIVE, PASSIVE OR IMPUTED NEGLIGENCE OR STRICT PRODUCTS
LIABILITY OF XXXX OR ITS AFFILIATES), OR OTHERWISE, FOR LOSS OF USE,
REVENUE OR PROFIT OR FOR ANY OTHER INDIRECT, INCIDENTAL, CONSEQUENTIAL OR
PUNITIVE DAMAGES OF ANY KIND OR NATURE, FOR ANY LOSSES OR DAMAGES FOR OR
ARISING OUT (I) OF ANY NON-CONFORMANCE OR DEFECT IN OR DESIGN OR CONDITION
OF ANY AIRCRAFT, EQUIPMENT, XXXX PARTS, VENDOR PARTS, SPARE PART, GROUND
SUPPORT EQUIPMENT, TECHNICAL PUBLICATION OR DATA OR ANY SERVICES TO BE
PROVIDED HEREUNDER, OR (II) ANY OTHER FAILURE BY XXXX TO PERFORM ANY
OBLIGATION HEREUNDER.
19.2 ANNEX B HERETO EXCLUSIVELY SETS FORTH BRAD'S OBLIGATIONS WITH RESPECT TO
ANY NON-CONFORMANCE OF THE AIRCRAFT WITH THE SPECIFICATION OR ANY DEFECT
IN THE AIRCRAFT.
EXCEPT AS SET FORTH IN ANNEX B THERE ARE NO UNDERSTANDINGS,
REPRESENTATIONS, CONDITIONS OR WARRANTIES, EXPRESS OR IMPLIED, BETWEEN THE
PARTIES WITH RESPECT TO ANY NON-CONFORMANCE OF THE AIRCRAFT WITH THE
SPECIFICATION OR ANY DEFECT IN THE AIRCRAFT OR ANY OTHER THING DELIVERED
UNDER THIS AGREEMENT.
19.3 THE WARRANTY AND SERVICE LIFE POLICY PROVIDED IN ANNEX B, ARTICLE 18 OF
THE AGREEMENT, AND THE GUARANTEES CONTAINED IN LETTER AGREEMENTS NO. 007,
008, 009 AND 010 TO THIS AGREEMENT AND THE OBLIGATIONS AND LIABILITIES OF
XXXX UNDER THE AFORESAID WARRANTY, SERVICE LIFE POLICY, ARTICLE 18, AND
GUARANTEES ARE ACCEPTED BY BUYER TO BE EXCLUSIVE AND IN LIEU OF, AND BUYER
HEREBY WAIVES, RELEASES AND RENOUNCES ALL OTHER REMEDIES, WARRANTIES,
GUARANTEES, OBLIGATIONS, REPRESENTATIONS OR LIABILITIES, EXPRESS OR
IMPLIED, OF XXXX AND ITS AFFILIATES WITH RESPECT TO DEFECTS IN EACH
AIRCRAFT OR PART THEREOF, PRODUCT, DOCUMENT OR SERVICE DELIVERED OR
PROVIDED UNDER THIS AGREEMENT, ARISING IN FACT, IN LAW, IN CONTRACT, IN
TORT, OR OTHERWISE, INCLUDING, WITHOUT LIMITATION,
36
A. ANY IMPLIED WARRANTY OR CONDITION OF MERCHANTABILITY OR FITNESS;
B. ANY IMPLIED WARRANTY OR CONDITION ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE;
C. ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, WHETHER
OR NOT ARISING FROM THE ACTIVE, PASSIVE OR IMPUTED NEGLIGENCE OR
STRICT PRODUCTS LIABILITY OF XXXX OR ITS AFFILIATES, BY REASON OF
THE DESIGN, MANUFACTURE, SALE, REPAIR, LEASE OR USE OF THE AIRCRAFT
OR PRODUCT AND SERVICES DELIVERED HEREUNDER; AND
D. ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF OR
DAMAGE TO ANY AIRCRAFT OR PART THEREOF, ANY XXXX PARTS, ANY POWER
PLANT PARTS, ANY VENDOR PARTS, ANY SPARE PARTS OR ANY TECHNICAL
DATA.
19.4 BUYER HEREBY RELEASES AND AGREES TO DEFEND, INDEMNIFY AND HOLD HARMLESS
XXXX, ITS SUBSIDIARIES, AFFILIATES, SUBCONTRACTORS AND LESSORS, AND THEIR
RESPECTIVE EMPLOYEES, DIRECTORS, OFFICERS AND AGENTS, AND EACH OF THEM,
FROM AND AGAINST ALL LIABILITIES, CLAIMS, DAMAGES, LOSSES, COSTS AND
EXPENSES FOR LOSS OF OR DAMAGE TO PROPERTY INCLUDING ANY AIRCRAFT, AND
LOSS OF USE THEREOF, OR INJURIES TO OR DEATH OF ANY AND ALL PERSONS
(INCLUDING
BUYER'S DIRECTORS, OFFICERS, AGENTS AND EMPLOYEES BUT EXCLUDING BRAD'S
DIRECTORS, OFFICERS, AGENTS AND EMPLOYEES), ARISING DIRECTLY OR INDIRECTLY
OUT OF OR IN CONNECTION WITH ANY SERVICE PROVIDED UNDER ANNEX A WHETHER OR
NOT CAUSED BY THE ACTIVE, PASSIVE OR IMPUTED NEGLIGENCE OR STRICT PRODUCTS
LIABILITY OF XXXX, ITS SUBSIDIARIES, AFFILIATES, SUBCONTRACTORS AND
LESSORS, OR THE EMPLOYEES, DIRECTORS, OFFICERS AND AGENTS OF ANY OF THEM.
37
ARTICLE 20 - ASSIGNMENT
20.1 Either party may assign, sell, transfer or dispose of(in whole or in part)
any of its rights and obligations hereunder to a wholly owned subsidiary
or affiliate provided that there is no increase to the liability and/or
responsibility of the non-assigning party and that the assigning party
remains jointly and severally liable with any assignee for the performance
of its obligation under this Agreement.
20.2 Except as provided in Article 20.1, Buyer shall not assign, sell, transfer
or dispose of (in whole or in part) any of its rights or obligations
hereunder without BRAD's prior written consent. In the event of such
assignment, sale, transfer or disposition Buyer shall remain jointly and
severally liable with any assignee for the performance of all and any of
Buyer's obligations under this Agreement and XXXX reserves the right as a
condition of its consent to amend one or more of the terms and conditions
of this Agreement.
20.3 Notwithstanding Article 20.2 above, Buyer may assign, after transfer of
title of the Aircraft, its rights under the Agreement to a third-party
purchaser of any one of the Aircraft, provided said third party
acknowledges in writing to be bound by the applicable terms and conditions
of this Agreement, including but not limited to the provisions and
limitations as detailed Annex A, Customer Support Services, Annex B,
Warranty and Service Life Policy and of the provisions and limitations in
Limitation of Liability as defined in Article 19 hereof and Indemnity
Against Patent Infringement as defined in Article 18 hereof and any other
on-going obligations of Buyer, which shall apply to it to the same extent
as if said third party was Buyer hereunder and provided that there is no
increase to the liability and/or responsibility of XXXX.
20.4 XXXX xxx assign any of its rights to receive money hereunder without the
prior consent of Buyer.
20.5 Notwithstanding the other provisions of this Article 20, XXXX shall, at
Buyer's cost and expense, if so requested in writing by Buyer, take any
action reasonably required for the purpose of causing any of the Aircraft
to be subjected (i) to, after the Delivery Date, an equipment trust,
conditional sale or lien, or (ii) to another arrangement whether before,
on or after the Delivery Date, for the financing (including lease
financing) of the Aircraft by Buyer, providing, however, there shall be no
increase to the liability and/or responsibility of XXXX arising through
such financing.
38
ARTICLE 21 - SUCCESSORS
This Agreement shall inure to the benefit of and be binding upon each of
XXXX and Buyer and their respective successors and permitted assignees.
39
ARTICLE 22 - APPLICABLE LAWS
22.1 THIS AGREEMENT SHALL BE SUBJECT TO AND CONSTRUED IN ACCORDANCE WITH AND
THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY THE DOMESTIC LAWS OF THE
STATE OF NEW YORK, AND THE PARTIES HAVE AGREED THAT THE APPLICATION OF THE
UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS
IS HEREBY EXCLUDED.
22.2 Each party's obligations under this Agreement shall be subject to and
apply only to the extent permitted by applicable laws, regulations,
directives and/or orders regarding export controls.
40
ARTICLE 23 - CONFIDENTIAL NATURE OF AGREEMENT
23.1 This Agreement and all information furnished or obtained pursuant to this
Agreement is confidential. Each party hereto agrees to keep confidential
this Agreement and all information so furnished to or so obtained by it
pursuant to this Agreement and not to disclose the same, in whole or in
part, to third parties; provided, however, that a party (the "Disclosing
Party") may disclose this Agreement, its contents and any such
information:
(a) as has become public (other than as a result of disclosure by or on
behalf of the Disclosing Party) or has become known to such
Disclosing Party other than pursuant to this Agreement and without
any breach of any confidentiality obligation being known to such
Disclosing Party; and
(b) to the independent auditors and attorneys of the Disclosing Party
(who shall be advised of the confidential nature of this Agreement
and such information); and
(c) with respect to technical data or similar information received by
Buyer, as such may be used by Buyer for the normal operation,
maintenance, overhaul and repair of the Aircraft; and
(d) in response to any summons or subpoena or in connection with any
litigation, provided that, if practicable and not in violation of
any applicable law, rule, regulation or order, notice of such
disclosure shall be given to the other party hereto, and (if
applicable and not so in violation) in advance of such disclosure,
and such other party shall be permitted to resist such disclosure by
the appropriate legal proceedings, provided such resistance does not
materially adversely affect the Disclosing Party; and
(e) to the extent that such Disclosing Party reasonably believes it is
required in order to comply with any law, rule, regulation or order
applicable to such party, provided that, if practicable and not in
violation of any such applicable law, rule, regulation or order,
notice of such disclosure shall be given to the other party, and (if
practicable and not so in violation) in advance of such disclosure,
and such other party shall be permitted (if practicable and not so
in violation) to resist or seek confidential treatment of such
disclosure and the Disclosing Party shall use all reasonable efforts
to cooperate with and assist the other party in resisting or seeking
confidential treatment of such disclosure, including undertaking the
appropriate proceedings or making the appropriate applications or
requests (at the cost of the other party) for such purpose where
such other party is not entitled to do so on its own behalf; and
41
(f) as may be reasonably necessary for either party to carry out its
obligations or enforce or protect its rights under this Agreement or
other agreements related to this Agreement to which it is a party
and provided that to the extent practicable such disclosure shall be
made under a confidentiality undertaking; and
(g) as may be required by financial institutions or arrangers involved
with the financing of the Aircraft, which financial institutions or
arrangers shall be advised of the confidential nature of this
Agreement and such information and shall undertake to keep same
confidentially; and
(h) as may be reasonably required by XXXX for purposes of analytical or
technical product support or improvement or enhancement of customer
support services or otherwise in the ordinary course of its aircraft
manufacturing, marketing or service business and operations; and
(i) as may be required by financial institutions or arrangers engaged in
extending or considering extension of credit or other financing to
Buyer, which institutions or arrangers shall be advised of the
confidential nature of this Agreement and such information, and such
disclosure being made under a confidentiality undertaking; and
(j) as Buyer may be advised by its counsel is necessary or advisable to
be filed with the Securities & Exchange Commission (the
"Commission") in connection with any offering of securities by Buyer
or as to which the Commission shall have denied a request by Buyer
for confidential treatment. Provided that XXXX shall have five (5)
business days after receipt of Buyer's proposed redacted version of
this Agreement to be submitted to the Commission to submit its
comments and recommendations to Buyer, provided that Buyer or its
counsel shall notify XXXX prior to filing with the Commission of any
decision made on the advice of Buyer's counsel to file any portion
of the Agreement which XXXX has proposed to be redacted without
seeking confidential treatment from the Commission for such portion
which advice and decision shall take into consideration BRAD's
request for confidential treatment.
42
23.2 Without limiting the provisions of Article 23.1(j) with respect to a
securities offering by Buyer, in connection with any other filing as part
of a reporting requirement of the Commission, the provisions of this
Article 23.2 shall apply.
Promptly following the execution and delivery hereof, XXXX and Buyer will
consult and cooperate reasonably with each other in order to prepare and
file a request for confidential treatment pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934 covering this Agreement in any filing with
the Commission in which this Agreement would be a "material contract" of
Buyer required to be filed pursuant to Item 601 of Commission Regulation
S-K. In particular, XXXX shall have ten (10) business days after the
receipt from Buyer of its proposed redacted version of this Agreement to
be submitted to the Commission to provide its comments and recommendation
thereon. Buyer shall use commercially reasonable efforts to work with XXXX
to agree on a final form of confidentiality request and redacted form of
this Agreement and to file and appropriately pursue the same with the
Commission as part of any filing in which this Agreement would otherwise
be required to be filed with the Commission. XXXX acknowledges that Buyer
shall not be in breach of any confidentiality obligation hereunder should
all or any portion of such request for confidential treatment not be
granted by the Commission.
23.3 Either party may announce the signing of this Agreement by means of a
notice to the press provided that the content and date of the notice has
been agreed to by the other party.
43
ARTICLE 24 - AGREEMENT
24.1 This Agreement and the matters referred to herein constitute the entire
Agreement between XXXX and Buyer and supersede and cancel all prior
representations, brochures, alleged warranties, statements, negotiations,
undertakings, letters, memoranda of agreement, proposal, acceptances,
agreements, understandings (including the Memorandum of Understanding
between XXXX and Buyer dated August 29, 1997), contracts and
communications, whether oral or written, between XXXX and Buyer or their
respective agents, with respect to or in connection with the subject
matter of this Agreement and no agreement or understanding varying the
terms and conditions hereof shall be binding on either XXXX or Buyer
hereto unless an amendment to this Agreement is issued and duly signed by
their respective authorized representatives pursuant to the provisions of
this Article hereof. In the event of any inconsistencies between this
Agreement and any of the Appendices, Exhibits and Annexes or other
documents referred to herein, the provisions of this Agreement shall
prevail.
24.2 If any of the provisions of this Agreement are for any reason declared by
judgment of a court of competent jurisdiction to be unenforceable or
ineffective, those provisions shall be deemed severable from the other
provisions of this Agreement and the remainder of this Agreement shall
remain in hill force and effect.
24.3 THE BENEFIT OF THE WAIVER, RELEASE, RENUNCIATION AND EXCLUSION OF
LIABILITY IN EACH OF ARTICLES 7.3(f), 12.5, 18.4, 19, ANNEX A ARTICLE
2.9.4.5 AND ANNEX B ARTICLE 5.1 EXTENDS ALSO TO THE OTHER DIVISIONS, OTHER
SUBSIDIARIES, AND OTHER AFFILIATES OF BOMBARDIER INC., INCLUDING DE
HAVILLAND INC. (COLLECTIVELY THE "BOMBARDIER GROUP") AND TO THE OFFICERS,
DIRECTORS, EMPLOYEES AND REPRESENTATIVES OF THE BOMBARDIER GROUP, ON WHOSE
BEHALF AND FOR WHOSE BENEFIT XXXX IS, FOR PURPOSES OF THIS ARTICLE 24.3,
ACTING AS AGENT AND TRUSTEE.
24.4 XXXX and Buyer confirm to each other they have each obtained the required
authorizations and fulfilled any conditions applicable to enable each of
them to enter into this Agreement.
24.5 Buyer and XXXX agree that this Agreement has been the subject of
discussion and negotiation and is fully understood by the parties hereto
and that the price of the Aircraft and the other mutual agreements of the
parties set forth herein were arrived at in consideration of the
provisions contained in Article 19.
44
In witness whereof this Agreement was signed on the date written hereof
For and on behalf of For and on behalf of
MIDWAY AIRLINES CORPORATION: BOMBARDIER, INC.:
Per: /s/[SIGNATURE ILLEGIBLE] Per: /s/[SIGNATURE ILLEGIBLE]
---------------------------- ----------------------------
Title: CEO Title: MANAGER, CONTRACTS
---------------------------- ----------------------------
45
APPENDIX I
REGIONAL JET AIRCRAFT
ECONOMIC ADJUSTMENT FORMULA
Pursuant to the provision of Article 4 of the Agreement, economic adjustment
will be calculated using the following Economic Adjustment Formula:
Pp = PO[(0.28 LD) + (0.35 ED) + (0.20 CD + (0.15 MD) + (0.02 FD)]
-- -- -- -- --
LO EO CO MO FO
where:
Pp = Aircraft Purchase Price;
PO = Basic Price expressed in November 1, 1997 US dollars;
LD = the Canadian labour index based upon the indices for the last full
month preceding the month of delivery of the relevant Aircraft;
LO = the Canadian labour index which, as at November 1, 1997 is TBD;
ED = the U.S. labour index based upon the indices for the last full month
preceding the month of delivery of the relevant Aircraft;
EO = the U.S. labor index which, as at November 1, 1997 is TBD;
CD = the Industrial Commodities index based upon the indices for the last
full month preceding the month of delivery of the relevant Aircraft;
CO = the Industrial Commodities index which, as at November 1, 1997 is
TBD;
MD = the material index based upon the indices for the last full month
preceding the month of delivery of the relevant Aircraft;
MO = the material index which, as at November 1, 1997 is TBD;
FD = the fuel index based on the indices for the last full month
preceding the month of delivery of the relevant Aircraft; and
FO = the fuel index which, as at November 1, 1997 is TBD.
46
For the purpose of the Economic Adjustment Formula and the calculation of the
economic adjustment:
(a) the Canadian labour index shall be the index provided in the
Standard Industrial Classification (S.I.C.) Code 321 for Average
Hourly Earnings for the Aircraft and Parts Industry (Canada)
published by Statistics Canada in "Employment Earnings and Hours"
Table 3.1.
(b) the U.S. labour index shall be the index provided in the Bureau of
Labor Statistics (B.L.S.) Code 372 Gross Hourly Earnings of
production and non-supervisory workers in the Aircraft and Aircraft
Parts Industry as published by the U.S. Department of Labor, Bureau
of Labor Statistics in "Employment and Earnings" Table C-2.
(c) the Industrial Commodities index shall be the index provided in the
Producer Price Index as Industrial Commodities as published by the
U.S. Department of Labor, Bureau of Labor Statistics in "Producer
Prices and Price Indexes" Table 6.
(d) the material index shall be the index provided in the Producer Price
Index for Code 10 Metals and Metals Products as published by the
U.S. Department of Labor, Bureau of Labor Statistics in "Producer
Prices and Price Indexes" Table 6.
(e) the fuel index shall be the index provided in the Bureau of Labor
Statistics (B.L.S.) Code 5 "Fuel and Related Products and Power"
Table 6 as published by the U.S. Department of Labor.
(f) in the event that XXXX shall be prevented from calculating the
Aircraft Purchase Price of each Aircraft due to any delay in the
publication of the required indices, XXXX shall use the last
provisionally published indices, and in the event that provisional
indices are not available, XXXX shall extrapolate from the last
three (3) months of published indices and where the balance of the
Aircraft Purchase Price payable is calculated on the provisionally
published indices, and/or extrapolation, XXXX will amend such
installment on publication of the final indices and will submit
supplementary claims or provide credit notes in respect of any
adjustment so caused.
(g) the indices used in the Economic Adjustment Formula and the
weighting assigned to them represent the projection by XXXX of the
manner in which XXXX will incur cost in the production of the
Aircraft. In the event there is a change in circumstances which
materially affects the indices chosen or the weighting assigned to
them, the indices and/or the weighting shall be amended accordingly.
The change in circumstances referred to above shall include but not
be limited to:
47
1) Any change in the basis upon which the chosen indices have been
calculated or if any of said indices are discontinued or withdrawn
from publication,
2) Any change in manufacturing plan involving the letting of a new sub-
contract or the termination of an existing sub-contract, and
3) Any change in the escalation or Economic Adjustment Formula used in
a Vendor or sub-contractor contract with XXXX, so long as this does
not represent any duplication with other indeces; and
In the calculation of the Aircraft Purchase Price the following guidelines in
respect of decimal places shall apply:
(a) All indices in the Economic Adjustment Formula shall be used to the
second decimal place,
(b) The Economic Adjustment Formula shall be calculated to four decimal
places, and
(c) The Aircraft Purchase Price resulting from the Economic Adjustment
Formula shall be corrected to the nearest dollar.
48
APPENDIX II
DELIVERY SCHEDULE
Aircraft Scheduled Delivery Date
First Aircraft [***]
Second Aircraft [***]
Third Aircraft [***]
Fourth Aircraft [***]
Fifth Aircraft [***]
Sixth Aircraft [***]
Seventh Aircraft [***]
Eighth Aircraft [***]
Ninth Aircraft [***]
Tenth Aircraft [***]
** This Aircraft shall have a grace period of 15 days
49
APPENDIX III
SPECIFICATION
TYPE SPECIFICATION
Number RAD-601R-153 Issue NC
September 1997
50
APPENDIX IV
BUYER SELECTED OPTIONAL FEATURES
Price
(in July 1,
1995
CR No. Description US $)
00-008 Extended Range Version (51,000 lb MTOW) - ER [***]
00-009 Centre Wing Fuel Tank [***]
00-012 Take-off Flap Setting (8 deg) [***]
00-013 FAA Xxxxxxx Strapping [***]
21-009 Ground Air Conditioning Connection [***]
23-005 Single SELCAL System [***]
23-012 Third VHF Comm. Radio - Full Provisions [***]
25-093 Customized Cabin Interior - Midway Airlines [***]
- 50 pax with FAA Type III exit
- GI Galley - Cold Snack, Hot beverage, two (2)
Coffeemakers and two (2) Carafes, provisions for two
half size carts and five (5) standard containers
- life vest pouches under seat
25-083 Exterior Paint - Midway Airlines [***]
25-099 Reclining Seats [***]
25-108 Leather Seat Covers [***]
25-350 Structure for Universal provisions [***]
25-351 Second Flight Attendant position [***]
30-001 Red anti ice warning light (FAA) [***]
51
33-002 Logo Lights [***]
33-003 Red Strobe Lights [***]
33-004 Cargo Door Light [***]
34-013 Xxxxxxx FMS - provisions only [***]
34-019 On Board Data Loader [***]
34-026 Ground Proximity Warning System audio Call-out [***]
34-027 Altimeter Reset Auto Flash [***]
34-035 Single Xxxxxxx FMS 4200 [***]
34-037a Single Xxxxxxx GPS 4000 - not certified until 3Q 1997 [***]
35-004 EROS Magic Mask - installation only [***]
35-XXX Additional oxygen mask on LHS [***]
72-001 General Electric CF34-3B1 Engine Series 200 [***]
Total Technical Features [***]
All prices listed above are expressed in July 1,1995 US dollars, and are subject
to economic adjustment to the date of aircraft delivery. This list and all
prices are subject to change without notice
52
EXHIBIT I
CERTIFICATE OF ACCEPTANCE
The undersigned hereby acknowledges on behalf of Buyer acceptance of the
Aircraft bearing manufacturer's serial number ______________________ fitted with
two (2) General Electric CF-34-3B1 turbofan engines bearing serial numbers
_______________________ and ____________________ as being in accordance with the
terms and conditions of this Agreement signed on the ____ day of ________, 19___
between Bombardier Regional Aircraft Division and Midway Airlines Corporation.
Place:_____________________________ Date:_____________________________
Signed for and on behalf of
Midway Airlines Corporation
Per: _______________________
Title: _______________________
53
EXHIBIT II
WARRANTY XXXX OF SALE
1. For valuable consideration, Bombardier Inc., represented by its Bombardier
Regional Aircraft Division, owner of the full and beneficial title of the
aircraft described as follows:
One (1) Canadair Regional Jet Model CL-600-2B19 aircraft bearing:
Manufacturer's serial number: XXXX
with:
Two (2) CF34-3B1 engine serial numbers: XXXXXX AND XXXXXX
together with all avionics, appliances, instruments, appurtenances,
accessories, furnishings and/or other equipment or property incorporated
in or installed on or attached to said aircraft and engines (hereinafter
referred to as the 'Aircraft').
does this ____ day of ________ 199___ hereby convey, sell, grant, transfer,
bargain and deliver and send over to _________________ (hereinafter referred to
as 'Buyer'), and unto its successors and assigns forever all of Bombardier
Inc.'s rights, title and interest in and to the Aircraft.
2. Bombardier Inc. represents and warrants to Buyer:
(i) that Bombardier Inc. has good and marketable title to the Aircraft
and the good and lawful right to the Aircraft and the good and
lawful right to sell the same; and
(ii) the good and marketable title to the Aircraft is hereby duly vested
in Buyer free and clear of all claims, liens, encumbrances and
rights of others of any nature. Bombardier Inc. hereby covenants and
agrees to defend such title forever against all claims and demands
whatsoever.
This full Warranty Xxxx of Sale is governed by the laws of the state of New
York, United States of America.
IN WITNESS WHEREOF, Bombardier Inc. has caused this instrument to be executed
and delivered by its duly authorized personnel.
BOMBARDIER INC.
-------------------------
Name:
-------------------------
Title
54
EXHIBIT III
CERTIFICATE OF RECEIPT OF AIRCRAFT
THE UNDERSIGNED HEREBY ACKNOWLEDGES TO HAVE RECEIVED FROM BOMBARDIER INC., AT
THE DORVAL AIRPORT, ADJACENT TO BRAD'S PLANT IN MONTREAL, PROVINCE OF QUEBEC,
CANADA, ON THE _________ DAY OF __________, AT THE HOUR OF _________ O'CLOCK,
ONE (1) CANADAIR REGIONAL JET AIRCRAFT MODEL CL-600-2B19, BEARING SERIAL NUMBER
__________, INCLUDING WITH THE AIRCRAFT TWO (2) CF34-3B1 TURBOFAN ENGINES
BEARING MANUFACTURER'S SERIAL NUMBERS _________ & _____________ AND OTHER MAJOR
REPLACEABLE ACCESSORIES ATTACHED TO THE AIRCRAFT AND ENGINES.
Signed for and on behalf of
Midway Airlines Corporation:
Per:______________________________________
Title:____________________________________
55
EXHIBIT IV
CHANGE ORDER
(PRO FORMA)
56
--------------------------------------------------------------------------------
CONTRACT CHANGE ORDER
================================================================================
PURCHASER:
PURCHASE AGREEMENT NO.: AIRCRAFT TYPE:
C.C.O. NO.: DATED:
PAGE __ of __
REASON FOR CHANGE:
--------------------------------------------------------------------------------
DESCRIPTION OF CHANGE:
ALL OTHER TERMS AND CONDITIONS OF THE AGREEMENT WILL REMAIN
UNCHANGED
For administrative purposes only, a consolidation of the amendments contained in
this CCO is attached. In the event of inconsistencies between the consolidation
and this CCO, this CCO shall prevail.
--------------------------------------------------------------------------------
FOR AND ON BEHALF OF: FOR AND ON BEHALF OF:
Bombardier Regional Aircraft Division Midway Airlines Corporation
Signed:________________________ Signed:___________________________
Date:__________________________ Date:_____________________________
--------------------------------------------------------------------------------
57
CUSTOMER SUPPORT SERVICES
ANNEX A - TECHNICAL SUPPORT, SPARE PARTS, TRAINING AND TECHNICAL DATA
The following Customer Support Services are those services to which reference is
made in Article 3 of the Agreement.
ARTICLE 1 - TECHNICAL SUPPORT
1.1 Factory Service
XXXX agrees to maintain or cause to be maintained the capability to
respond to Buyer's technical inquiries, to conduct investigations
concerning repetitive maintenance problems and to issue findings and
recommend action thereon. This service shall be provided for as long as
ten (10) CL-600-2B19 aircraft remain in commercial air transport service.
1.2 Field Service Representative
1.2.1 Services
XXXX shall assign one (1) Field Service Representative ("FSR") to
Buyer's main base of operation or other location as may be mutually
agreed.
1.2.2 Term
Such assignment shall be commence approximately one (1) month prior
to the Delivery Date of the first Aircraft and continue until
October 1999. The FSR assignment may be extended on terms and
conditions to be mutually agreed.
1.2.3 Responsibility
The FSR's responsibility shall be to provide technical advice to
Buyer for the line maintenance and operation of the Aircraft systems
and troubleshooting during scheduled and unscheduled maintenance by
Buyer's designated personnel ("FSR Services").
C-1
1.2.4 Travel
If requested by Buyer, the FSR may, at Buyer's expense, travel to
another location to provide technical advice to Buyer.
1.2.5 Office Facilities
Buyer shall furnish the FSR, at no charge to XXXX, suitable and
private office facilities and related equipment including desk, file
cabinet, access to two telephone lines, facsimile and photocopy
equipment conveniently located at Buyer's main base of operation or
other location as may be mutually agreed.
1.2.6 Additional Expenses
Buyer shall reimburse XXXX (net of any additional taxes on such
reimbursement) the amount of any and all taxes (except Canadian
taxes on the income of the FSR) and fees of whatever nature,
including any customs duties, withholding taxes or fees together
with any penalties or interest thereon, paid or incurred by XXXX or
the FSR or other XXXX employee as a result of or in connection with
the rendering of the services.
1.2.7 Right to Stop Work
XXXX shall not be required to commence or continue the FSR Services
when:
a.) there is a labour dispute or work stoppage in progress at
Buyer's facilities;
b.) there exist war, risk of war or warlike operations, riots or
insurrections;
c.) there exist conditions that are dangerous to the safety or
health of the FSR or other XXXX employee; or
d.) the Government of the country where Buyer's facilities are
located or where Buyer desires the FSR to travel refuses the
XXXX employee permission to enter said country or Buyer's base
of operations.
C-2
1.2.8 Work Permits and Clearances
Buyer shall arrange for all necessary work permits and airport
security clearances required for the FSR or other XXXX employee to
permit timely accomplishment of the FSR services.
1.3 Maintenance Planning Support
1.3.1 Scheduled Maintenance Task Cards
As described in Annex A Attachment A, XXXX shall provide Buyer
BRAD's standard format scheduled maintenance task cards that shall
conform to the Aircraft at the Delivery Date. At Buyer's request
XXXX shall provide a proposal for task cards produced to Buyer's
format.
1.3.2 In-Service Maintenance Data
Buyer agrees to provide to XXXX in-service maintenance data in order
to provide updates to BRAD's recommended maintenance program. Buyer
and XXXX shall agree on standards and frequency for communication of
such data.
1.4 Additional Services
At Buyer's request XXXX shall provide a proposal to provide such
additional support services as the parties may agree upon, which may
include special investigations, maintenance and repair of the Aircraft.
C-3
ARTICLE 2- SPARE PARTS, GSE, TOOLS AND TEST EQUIPMENT
2.1.1 Definitions
a. "XXXX Parts":
any spare parts, ground support equipment, tools and test
equipment which bear an inhouse Cage Code number in the XXXX
Provisioning Files (as that expression is defined in ATA
Specification 2000).
b. "Power Plant Parts":
any power plant or power plant part or assembly carrying the
power plant manufacturer's part number or any part furnished
by the power plant manufacturer for incorporation on the
Aircraft.
c. "Vendor Parts":
any spare parts, ground support equipment, tools and test
equipment for the Aircraft which are not XXXX Parts or Power
Plant Parts.
d. "Spare Parts":
all materials, spare parts, assemblies, special tools and
items of equipment, including ground support equipment,
ordered for the Aircraft by Buyer from XXXX. The term Spare
Parts includes XXXX Parts, Power Plant Part and Vendor Parts.
e. "Order":
any order for Spare Parts issued by Buyer to XXXX; and
f. "Technical Data":
shall have the meaning attributed to it in Annex A Article
4.1.
C-4
2.1 Term and Applicability
The term of this Annex A Article 2 shall become effective on the date
hereof and shall remain in full force and effect with respect to the
purchase and sale of Spare Parts for each Aircraft so long as at least ten
(10) of the CL-600-2B19 aircraft remain in commercial air transport
service. The provisions of Annex A Articles 2.2, 2.6.5, 2.24 and Annex B
Article 5.0 shall survive expiration or termination of this Agreement.
2.2 Order Terms
Terms and conditions hereof shall apply to all Orders placed by Buyer with
XXXX in lieu of any terms and conditions in Buyer's purchase orders.
2.3 Purchase and Sale of Spare Parts
2.3.1 Agreement to Manufacture and Sell
XXXX shall manufacture, or procure, and make available for sale to
Buyer suitable Spare Parts in quantities sufficient to meet the
reasonably anticipated needs of Buyer for normal maintenance and
normal spares inventory replacement for each Aircraft. During the
term specified in Annex A Article 2.1 above, XXXX shall also
maintain a shelf stock of certain XXXX Parts selected by XXXX to
ensure reasonable re-order lead times and emergency support. XXXX
shall maintain a reasonable quantity of XXXX insurance parts.
Insurance parts as used herein shall include, but not be limited to,
dispatch-essential parts such as major flight control surfaces.
2.4 Agreement to Purchase XXXX Parts
2.4.1 Purchase of XXXX Parts
In consideration of BRAD's obligation under Annex A Article 2.3.1,
during the term stated in Annex A Article 2.1., Buyer agrees to
purchase XXXX Parts only from XXXX or from airlines operating the
same type aircraft purchased herein, or from any source provided
that such source is approved by XXXX and/or the FAA. Where Buyer
selects another source, XXXX shall have no liability or obligation
whatsoever of any kind with respect to or arising from any parts
purchased from such other sources. Buyer may however purchase XXXX
Parts from any source whatsoever, redesign XXXX Parts, or have them
redesigned, manufacture XXXX Parts, or have them manufactured, under
the following conditions:
C-5
a) when less than ten (10) aircraft of the type purchased
hereunder are operated in scheduled commercial air transport
service;
b) Any time XXXX Parts are needed to effect emergency repairs on
the Aircraft, provided that such purchase, redesign or
manufacture by or from sources other than XXXX allows Buyer to
obtain XXXX Parts in less time than XXXX requires to furnish
them; or
c) if Buyer has notified XXXX in writing that any XXXX Parts are
defective or unsatisfactory in use and if within a reasonable
period thereafter XXXX has not provided a satisfactory
resolution or made redesigned XXXX Parts available.
2.4.2 Buyer's Right to Purchase, Redesign or Manufacture
Buyer's right to purchase, redesign or to have redesigned or
manufacture or to have manufactured XXXX Parts under the preceding
Article shall not be construed as a granting of a license by XXXX
and shall not obligate XXXX to disclose to anyone Technical Data or
other information nor to the payment of any license fee or royalty
or create any obligation whatsoever to XXXX and XXXX shall be
relieved of any obligation or liability with respect to patent
infringement in connection with any such redesigned part. Buyer
shall be responsible for obtaining all regulatory authority
approvals required by Buyer to repair the Aircraft using redesigned
or manufactured XXXX Parts as described in the preceding Article.
Any such redesigned part shall be identified with Buyer's part
number only.
2.4.3 Notice to XXXX of Redesigned Parts
XXXX reserves the right to negotiate with Buyer the access to
redesigned parts, drawings and the exclusive manufacturing rights of
the redesigned part, if Buyer redesigns or has had any XXXX parts
redesigned.
C-6
2.5 Purchase of Vendor Parts & Power Plant Parts
XXXX shall not be obligated to maintain a stock of Vendor Parts or Power
Plant Parts. XXXX xxx elect to maintain a spares stock of selected Vendor
Parts at its own discretion to support provisioning and replenishment
sales. XXXX agrees to use reasonable efforts to require its vendors to
comply with the terms and conditions of this Annex A Article 2 as they
apply to Vendor Parts. Vendor Parts shall be delivered in accordance with
the vendor's quoted lead time plus BRAD's internal processing time.
2.6 Spare Parts Pricing
2.6.1 Spare Parts Price Catalogue
Prices for commonly used XXXX Parts stocked by XXXX shall be
published in the spare parts price catalogue ("Spare Parts Price
Catalogue"). XXXX shall hold the published prices firm for catalogue
stock class items for a period of twelve (12) months and shall
provide at least ninety (90) calendar days notice prior to changing
the published price.
2.6.2 XXXX prices for Vendor Parts
If Buyer orders Vendor Parts from XXXX, the price shall be as
published in the Spare Parts Price Catalogue.
2.6.3 Quotations
Price and delivery quotations for items not included in the Spare
Parts Price Catalogue shall be provided at Buyer's request by XXXX.
Price quotations will be held firm for a period of ninety (90)
calendar days or as otherwise specified by XXXX. Responses to
quotation requests will be provided within ten (10) calendar days.
C-7
2.6.4 Price Applicability
The purchase price of XXXX Parts shall be the applicable price set
forth in the Spare Parts Price Catalogue at time of receipt by XXXX
of Buyer's Order or as quoted by XXXX to Buyer upon request. If
Buyer requests accelerated delivery or special handling for XXXX
Parts not included in the Spare Parts Price Catalogue, XXXX xxx
increase the price from the original quotation to cover any
additional costs to XXXX.
2.6.5 Currency and Taxes
All Spare Parts Price Catalogue and quotation prices shall be in
U.S. dollars and exclusive of transportation, taxes, duties and
licenses.
Buyer shall pay to XXXX upon demand the amount of any sales, use,
value-added, excise or similar taxes imposed by any federal,
provincial or local taxing authority within Canada, and the amount
of all taxes imposed by any taxing authority outside Canada,
required to be paid by XXXX as a result of any sale, use, delivery,
storage or transfer of any Spare Parts. If XXXX has reason to
believe that any such tax is applicable, XXXX shall separately state
the amount of such tax in its invoice. if a claim is made against
XXXX for any such tax, XXXX shall promptly notify Buyer.
In addition, Buyer shall pay to XXXX on demand the amount of any
customs duties required to be paid by XXXX with respect to the
importation by Buyer of any Spare Parts.
2.6.6 Vendor Pricing
XXXX shall use reasonable efforts to require its major vendors to
maintain any published price for their parts for a period of at
least twelve (12) months with a ninety (90) calendar day notice
period prior to changing a published price.
C-8
2.7 Provisioning
2.7.1 Pre-provisioning/Provisioning Conference
Pre-provisioning and provisioning conferences shall be convened on
dates to be mutually agreed between Buyer and XXXX in order to:
(i) discuss the operational parameters to be provided by Buyer to
XXXX which XXXX considers necessary for preparing its quantity
recommendations for initial provisioning of Spare Parts to be
purchased from XXXX or vendors ("Provisioning Items");
(ii) review Buyer's ground support equipment and special tool
requirements for the Aircraft;
(iii) discuss the format of the provisioning documentation to be
provided to Buyer from XXXX for the selection of Provisioning
Items; and
(iv) arrive at a schedule of events for the initial provisioning
process, including the establishment of a date for the initial
provisioning conference ("Initial Provisioning Conference")
which shall be scheduled on or before September 21, 1997.
The time and location of the pre-provisioning conference shall be
mutually agreed upon between the parties; however, XXXX and Buyer
shall use their best efforts to convene such meeting within thirty
(30) days after execution of the Agreement.
2.8 Initial Provisioning Documentation
Initial provisioning documentation for XXXX Parts and Vendor Parts shall
be provided by XXXX as follows:
a) XXXX shall provide, as applicable to Buyer, no later than eighteen
(18) months prior to the Scheduled Delivery Date of the first
Aircraft, or as may be mutually agreed, the initial issue of
provisioning files as required by ATA Specification 2000, Chapter 1
(as may be amended by XXXX);
C-9
Revisions to this provisioning data shall be issued by XXXX every
ninety (90) calendar days until ninety (90) calendar days following
the Delivery Date of the last Aircraft or as may be mutually agreed;
b) XXXX shall provide, as required by Buyer, all data files defined in
Chapter 1 of ATA Specification 2000; and
c) the Illustrated Parts Catalogue designed to support provisioning
shall be issued concurrently with provisioning data files and
revised at ninety (90) calendar day intervals.
2.8.1 Obligation to Substitute Obsolete Spare Parts
In the event that, prior to delivery of the first Aircraft, any
Spare Part purchased by Buyer from XXXX is rendered obsolete or
unusable due to the redesign of the Aircraft or of any accessory,
equipment or part thereto (other than a redesign at Buyer's
request), XXXX shall deliver to Buyer new and usable Spare Parts in
substitution for such obsolete or unusable Spare Parts upon return
of such Spare Parts to XXXX by Buyer. XXXX shall credit Buyer's
account with XXXX with the price paid by Buyer for any such obsolete
or unusable Spare Part and shall invoice Buyer for the purchase
price of any such substitute Spare Part delivered to Buyer.
2.8.2 Delivery of Obsolete Spare Parts and Substitutes
Obsolete or unusable Spare Parts returned by Buyer pursuant to Annex
A Article 2.8.1. shall be delivered to XXXX at its plant in Ontario
or Quebec, or such other destination as XXXX xxx reasonably
designate. Spare Parts substituted for such returned obsolete or
unusable Spare Parts shall be delivered to Buyer from BRAD's plant
in Ontario or Quebec, or such other XXXX shipping point as XXXX xxx
reasonably designate. XXXX shall pay the freight charges for the
shipment from Buyer to XXXX of any such obsolete or unusable Spare
Part and for the shipment from XXXX to Buyer of any such substitute
Spare Part.
C-10
2.8.3 Obligation to Repurchase Surplus Provisioning Items
During a period commencing one (1) year after the Delivery Date of
the first Aircraft, and ending five (5) years after such Delivery
Date, XXXX shall, upon receipt of Buyer's written request and
subject to the exceptions in Annex A Article 2.8.4, repurchase
unused and undamaged Provisioning Items which: (i) were recommended
by XXXX as initial provisioning for the Aircraft, (ii) were
purchased by Buyer from XXXX, and (iii) are surplus to Buyer's
needs.
2.8.4 Exceptions
XXXX shall not be obligated under Annex A Article 2.8.3 to
repurchase any of the following: (i) quantities of Provisioning
Items in excess of those quantities recommended by XXXX in its
Recommended Spare Parts List ("RSPL") for the Aircraft, (ii) Power
Plant Parts, QEC Kits, standard hardware, bulk and raw materials,
ground support equipment and special tools, (iii) Provisioning Items
which have become obsolete or have been replaced by other
Provisioning Items as a result of (a) Buyer's modification of the
Aircraft or (b) design improvement by the Aircraft manufacturer or
the vendor (other than Provisioning Items which have become obsolete
because of a defect in design if such defect has not been remedied
by an offer by XXXX or the vendor to provide no charge retrofit kits
or replacement parts which correct such defect), and (iv)
Provisioning Items which become surplus as a result of a change in
Buyer's operating parameters provided to XXXX pursuant to Annex A
Article 2.7, which were the basis of BRAD's initial provisioning
recommendations for the Aircraft.
2.8.5 Notification and Format
Buyer shall notify XXXX, in writing, when Buyer desires to return
Provisioning Items which Buyer's review indicates are eligible for
repurchase by XXXX under the provisions of Annex A Article 2.8.3.
Buyer's notification shall include a detailed summary, in part
number sequence, of the Provisioning Items Buyer desires to return.
Such summary shall be in the form of listings as may be mutually
agreed between XXXX and Buyer, and shall include part number,
nomenclature, purchase order number, purchase order date and
quantity to be returned.
Within five (5) business days after receipt of Buyer's notification
XXXX shall advise Buyer, in writing, when BRAD's review of such
summary from Buyer will be completed.
C-11
2.8.6 Review and Acceptance by XXXX
Upon completion of BRAD's review of any detailed summary submitted
by Buyer pursuant to Annex A Article 2.8.5., XXXX shall issue to
Buyer a Material Return Authorization notice ("MRA") for those
Provisioning Items XXXX agrees are eligible for repurchase in
accordance with Annex A Article 2.8.3. XXXX will advise Buyer of the
reason that any Provisioning Items included in Buyer's detailed
summary are not eligible for return. The MRA notice shall state the
date by which Provisioning Items listed in the MRA notice must be
redelivered to XXXX and Buyer shall arrange for shipment of such
Provisioning Items accordingly.
2.8.7 Price and Payment
The price of each Provisioning Item repurchased by XXXX pursuant to
Annex A Article 2.8.6 will be the original invoice price thereof
XXXX shall pay the repurchase price by issuing a credit memorandum
in favour of Buyer which may be applied against amounts due XXXX for
the purchase of Spare Parts and services.
2.8.8 Return of Surplus Provisioning Items
Provisioning Items repurchased by XXXX pursuant to Annex A Article
2.8.6 shall be delivered to XXXX Xxxx Carrier (Incoterms), at its
plant in Ontario or Quebec, or other such destination as XXXX xxx
reasonably designate.
2.8.9 Obsolete Spare Parts and Surplus Provisioning Items - Title and Risk
of Loss
Title to and risk of loss of any obsolete or unusable Spare Parts
returned to XXXX pursuant to Annex A Article 2.8.8 shall pass to
XXXX upon delivery thereof to XXXX. Title to and risk of loss of any
Spare Parts substituted for an obsolete or unusable Spare Part
pursuant to Annex A Article 2.8.1 shall pass to Buyer upon delivery
thereof to Buyer. Title to and risk of loss of any Provisioning
Items repurchased by XXXX pursuant to Annex A Article 2.8.3 shall
pass to XXXX upon delivery thereof to XXXX.
C-12
With respect to the obsolete or unusable Spare Parts which may be
returned to XXXX and the Spare Parts substituted therefor, pursuant
to Annex A Article 2.8.1, and the Provisioning Items which may be
repurchased by XXXX, pursuant to Annex A Article 2.8.3, the party
which has the risk of loss of any such Spare Part or Provisioning
Item shall have the responsibility of providing any insurance
coverage thereon desired by such party.
2.9 Procedure for Ordering Spare Parts
Orders for Spare Parts may be placed by Buyer to XXXX by any method of
order placement (including but not limited to SITA, ARINC, telecopier,
letter, telex, facsimile, telephone or hard copy purchase order).
2.9.1 Requirements
Orders shall include at a minimum order number, part number,
nomenclature, quantity, delivery schedule requested, shipping
instructions and BRAD's price, if available. Buyer agrees that
orders placed with XXXX shall conform to the requirements and
procedures contained in ATA Specification 2000, as applicable to
Buyer.
2.9.2 Processing of Orders
Upon acceptance of any Order, unless otherwise directed by Buyer,
XXXX shall, if the Spare Parts are in stock, proceed immediately to
prepare the Spare Parts for shipment to Buyer. If XXXX does not have
the Spare Parts in stock, XXXX shall proceed immediately to acquire
or manufacture the Spare Parts. Purchase order status and actions
related to the shipment of Spare Parts shall be generally consistent
with the provisions of the World Airline Suppliers Guide and the
applicable portions of ATA Specification 2000, as applicable to
Buyer.
C-13
2.9.3 Changes
XXXX reserves the right, without Buyer's consent, to make any
necessary corrections or changes in the design, part number and
nomenclature of Spare Parts covered by an Order, to substitute Spare
Parts and to adjust prices accordingly, provided that
interchangeability is not affected and the unit price is not
increased by more than 10% or $50.00, whichever is less. XXXX shall
promptly give Buyer written notice of corrections, changes,
substitutions and consequent price adjustments. Corrections,
changes, substitutions and price adjustments which affect
interchangeability or exceed the price limitations set forth above
may be made only with Buyer's consent, which consent shall
conclusively be deemed to have been given unless Buyer gives XXXX
written notice of objection within fifteen (15) business days after
receipt of BRAD's notice. In case of any objection, the affected
Spare Part will be deemed to be deleted from Buyer's Order.
2.9.4 Electronic Data Interchange
2.9.4.1 Use of Electronic Data Interchange (EDI)
The SPEC 2000 Protocol shall be used for any EDI
transaction. Buyer and XXXX shall implement security
procedures to ensure proper use of this communication. A
message will be considered received only at the point where
it is in a format which can be accepted by the receiving
computer according to ATA SPEC 2000 rules on transmissions.
If garbled transmissions are received, the receiver shall
promptly notify the sender through use of the S1REJECT
command.
2.9.4.2 Acceptance of EDI Transactions
The SIBOOKED transaction creates an obligation on the part
of Buyer to purchase the material and quantities as
specified in the transmission. XXXX is obliged to sell the
material and quantities as specified except as may be
identified in a subsequent SIORDEXC message. With respect to
a S1QUOTES transaction, Buyer and XXXX are bound to respect
the prices quoted in the transmission in any resultant
S1BOOKED order transaction based upon that S1QUOTES message
within the validity period of the S1QUOTES message. An
S1NVOICE message will be considered as the official
commercial invoice for the goods shipped. An S1STOCKS,
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S1SHIPPD, S1POSTAT or S1PNSTAT message creates no
obligations on either the Buyer or XXXX.
If an S1BOOKED acknowledgment is not sent within 24 hours by
XXXX then Buyer shall resend the original message.
Any document which has been properly received shall not give
rise to any obligation unless and until the party receiving
such document has properly transmitted in return an
acknowledgment document according to SPEC 2000 Protocol.
2.9.4.3 Systems Operations
Buyer and XXXX, at their own expense, shall provide and
maintain the equipment, software, services and testing
necessary to effectively and reliably transmit and receive
documents.
2.9.4.4 Validity of Documents
Annex A Article 2.9.4 has been agreed to by Buyer and XXXX
to evidence their mutual intent to create binding purchase
and sale obligations pursuant to the electronic transmission
and receipt of documents as described herein.
Such documents properly transmitted pursuant to this Annex A
Article 2.9.4 shall be considered, in connection with any
transaction or any other agreement, to be a "writing" or "in
writing" and shall be deemed for all purposes (a) to have
been "signed" and (b) to constitute an "original" when
printed from electronic files or records established and
maintained in the normal course of business.
[6~ Buyer and XXXX agree not to contest the validity or
enforceability of signed documents under the provisions of
any applicable law relating to whether certain agreements
are to be in writing or signed by either party to be bound
thereby. Signed documents, if introduced as evidence on
paper in any judicial, arbitration, mediation or
administrative proceedings, will be admissible as between
Buyer and XXXX to the same extent and under the same
conditions as other business records originated and
maintained in documentary form. Neither Buyer nor XXXX shall
contest the admissibility of copies of signed documents
under either the business records exception to the
C-15
hearsay rule or the best evidence rule on the basis that the
signed documents were not originated or maintained in
documentary form.
2.9.4.5 Limitation of Liability
NEITHER BUYER NOR XXXX SHALL BE LIABLE TO THE OTHER FOR ANY
INDIRECT, SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES ARISING FROM OR AS A RESULT OF ANY
DELAY, OMISSION OR ERROR IN THE ELECTRONIC TRANSMISSION OR
RECEIPT OF ANY DOCUMENTS PURSUANT TO THIS ANNEX A ARTICLE
2.9.4, EVEN IF EITHER PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
2.10 Packing
All Spare Parts ordered shall receive standard commercial packing suitable
for export shipment via air freight. Such standard packing will generally
be to ATA 300 standards as amended from time to time. All AOG orders will
be handled, processed, packed and shipped separately.
2.11 Packing List
XXXX shall insert in each shipment a packing list/release note itemized to
show:
(i) the contents of the shipment,
(ii) the approved signature of BRAD's TC authority attesting to the
airworthiness of the Spare Parts.
(iii) value of the shipment for customs clearance if required.
2.12 Container Marks
Upon Buyer's request each container shall be marked with shipping marks as
specified on the Order. In addition XXXX shall, upon request, include in
the markings: gross weight and cubic measurements.
C-16
2.13 Delivery, Title and Risk of Loss
2.13.1 Delivery Point
Spare Parts shall be delivered to Buyer in one of the
following manners at BRAD's sole option:
(i) Free Carrier (Incoterms 1990) BRAD's plant in either Ontario
or Quebec, Canada; or
(ii) Free Carrier (Incoterms 1990) other XXXX depots or shipping
points; or
(iii) Free Carrier (Incoterms 1990) vendor's or subcontractor's
plant.
2.13.2 Delivery Time
XXXX shall use reasonable efforts so that shipment of XXXX Parts to
Buyer be as follows:
a) AOG Orders
Ship AOG Orders within four (4) hours of receipt of Order.
Buyer's affected Aircraft factory production number shall be
required on AOG Orders;
b) Critical Orders (A1)
Ship critical Orders within twenty-four (24) hours of order
receipt;
c) Expedite Orders (A2)
Ship expedite Orders within seven (7) calendar days of order
receipt;
d) Initial Provisioning Orders
Prior to the Delivery Date of the first Aircraft or as may be
mutually agreed; and
C-17
e) Other Orders
Shipment of stock items shall be approximately thirty (30)
calendar days after BRAD's receipt of Buyer's Order. Shipment
of non-stock items shall be in accordance with quoted lead
times or lead times published in the current Spare Parts
Price Catalogue, procurement data, or provisioning data.
2.14 Collect Shipments
Where collect shipments are not deemed practicable by XXXX, charges for
shipment, insurance, prepaid freight charges and all other costs paid by
XXXX shall be paid by Buyer promptly upon presentation to Buyer of
invoices covering the same.
2.15 Freight Forwarder
If Buyer elects to use the services of a freight forwarder for the onward
movement of Spare Parts, Buyer agrees to release XXXX from and indemnify
it for any liability for any fines or seizures of Spare Parts imposed
under any governmental Goods in Transit regulations. Any such fines levied
against XXXX will be invoiced to Buyer and any Spare Parts seized under
such regulations will be deemed to be received, inspected, and accepted by
Buyer at the time of seizure.
2.16 Reimbursement of Expenses
If XXXX gives Buyer written notice that an Order is ready for shipment and
shipment is delayed more than thirty (30) days at Buyer's request or
without BRAD's fault or responsibility, Buyer shall promptly reimburse
XXXX upon demand for all costs and expenses, including but not limited to
reasonable amounts for storage, handling, insurance and taxes, incurred by
XXXX as a result of such delay.
2.17 Title and Risk of Loss
Property and title to the Spare Parts will pass to Buyer upon payment for
the Spare Parts in full. Until payment in full for Spare Parts, (a) title
to them will not pass to Buyer, and (b) XXXX maintains a purchase money
security interest in them. Risk of loss of the Spare Parts will pass to
the Buyer upon delivery by XXXX. With respect to Spare Parts rejected by
Buyer pursuant to Annex A Article 2.19, risk of loss shall remain with
Buyer until such Spare Parts are re-delivered to XXXX.
XXXX agrees to notify Buyer when material is shipped and shall provide
carrier's reference information (i.e., waybill number)
C-18
2.18 Inspection and Acceptance
All Spare Parts shall be subject to inspection by Buyer at destination.
Use of Spare Parts or failure of Buyer to give notice of rejection within
thirty (30) days after receipt shall constitute acceptance. Acceptance
shall be final and Buyer waives the right to revoke acceptance for any
reason, whether or not known to Buyer at the time of acceptance. Buyer's
remedies for defects discovered before acceptance are exclusively provided
for in Annex A Article 2.19 herein.
2.19 Rejection
Any notice of rejection referred to in Annex A Article 2.18 shall specify
the reasons for rejection. If XXXX concurs with a rejection, XXXX shall,
at its option, correct, repair or replace the rejected Spare Parts. Buyer
shall, upon receipt of BRAD's written instructions and Material Return
Authorization ("MRA") number, return the rejected Spare Parts to XXXX at
its specified plant, or other destination as may be mutually agreeable.
The return of the rejected Spare Parts to XXXX and the return or delivery
of a corrected or repaired rejected Spare Part or any replacement for any
such Spare Part to Buyer shall be at BRAD's expense. Any corrected,
repaired or replacement Spare Parts shall be subject to the provisions of
this Agreement.
2.20 Payment
Except as provided in Annex A Article 2.22 below, payment terms shall be
net thirty (30) calendar days of invoice date for established open
accounts. Any overdue amount shall bear interest from the due date until
actual payment is received by XXXX at an annual rate of interest equal to
the U.S. prime interest rate as established from time to time by the Chase
Manhattan Bank, New York Branch, or its successor, plus two percent (2%)
calculated and compounded monthly.
2.21 Payment for Provisioning Items
Payment for Provisioning Items shall be made by Buyer as follows:
a) a deposit of [***] of the total price of the Provisioning Items as
selected by Buyer, upon signature of the spares provisioning
document; and
b) the balance of the total price of Provisioning Items upon their
delivery.
C-19
2.22 Modified Terms of Payment
XXXX reserves the right to alter the terms of payment:
(i) at any time by giving Buyer thirty (30) days' prior written notice
of the new terms, provided Buyer is not adversely discriminated
against with respect to other customers of XXXX currently operating
the Canadair Regional Jet aircraft, and
(ii) without prior notice if Buyer fails to pay when due an amount Buyer
owes under any agreement with XXXX.
2.23 Regulations
Buyer shall comply with all applicable monetary and exchange control
regulations and shall obtain any necessary authority from the governmental
agencies administering such regulations to enable Buyer to make payments
at the time and place and in the manner specified herein.
2.24 Warranty
ANNEX B HERETO EXCLUSIVELY SETS FORTH BRAD'S WARRANTY OBLIGATIONS WITH
RESPECT TO SPARE PARTS. EXCEPT AS EXPRESSLY SET OUT IN ANNEX B, THERE ARE
NO UNDERSTANDINGS, REPRESENTATIONS, CONDITIONS OR WARRANTIES, EXPRESS OR
IMPLIED, BETWEEN THE PARTIES WITH RESPECT TO ANY DEFECT IN THE SPARE PARTS
2.25 Cancellation of Orders
Except as otherwise may apply to initial provisioning, if Buyer cancels an
Order, XXXX, at its option, shall be entitled to recover actual damages,
but not less than the following cancellation charges or more than the
purchase price of the Spare Parts covered by the Order:
a) if work accomplished on the Order has been limited to XXXX Spares
Department, or the part has been identified as "shelf stock" in the
Spare Parts Price Catalogue, no cancellation charges shall be made;
C-20
b) if production planning has been completed on the Order and shop
orders have been written, but no shop time or material charges have
been made against the Order, the cancellation charge shall be 10% of
the price but not to exceed $100 per unit;
c) if shop time or material charges have been made against the Order,
the cancellation charge shall be based on the cost of such time and
materials, plus overhead; and
d) if the Spare Parts covered by the Order can be absorbed into BRAD's
inventory without increasing BRAD's normal maximum stock level, no
cancellation charges shall be made.
2.26 Lease
XXXX shall select and make available certain parts for lease, subject to
availability. Buyer has the option to negotiate a lease agreement with
XXXX separate from this Agreement.
2.27 Additional Terms and Conditions
BRAD's conditions of sale are deemed to incorporate the terms and
conditions stated herein. Additional terms and conditions applicable at
time of receipt of each order from Buyer may be added providing (i) such
terms and conditions do not conflict with the terms and conditions
provided herein, and (ii) Buyer is not adversely discriminated against
with respect to other customers of XXXX currently operating the Canadair
Regional Jet aircraft. Such additional terms and conditions shall be
provided to Buyer at least ninety (90) calendar days prior to their
effective date.
C-21
ARTICLE 3 - TRAINING
3.1 General Terms
3.1.1 The objective of the training programs (the "Programs"), as
described herein, shall be to familiarize and assist Buyer's
personnel in the introduction, operation, and maintenance of the
Aircraft.
XXXX shall offer to the Buyer the Programs in the English language
at a XXXX designated facility; the Programs shall be completed prior
to the Delivery Date of the last Aircraft purchased herein.
3.1.2 Buyer shall be responsible for all travel and living expenses,
including local transportation, of Buyer's personnel incurred in
connection with the Programs.
3.1.3 The Programs shall be designed to reflect the model and/or
configuration of the Aircraft and may include differences training
to identify such configuration or model. Manuals which are provided
during the Programs exclude revision service.
3.1.4 A training conference shall be held where possible no later than
twelve (12) months prior to the Scheduled Delivery Date of the first
Aircraft to the Buyer, or as may be otherwise agreed, to establish
the Programs' content and schedule.
3.2 Flight Crew Training
3.2.1 Flight Crew Ground Training
At no additional charge, XXXX will provide with each delivered
Aircraft, a TC or FAA approved transition training for [***] of
Buyer's crews ([***] pilots) who meet the minimum entry
requirement provided in the applicable training manual. Each course
shall consist of up to [***] hours of classroom instruction
which may include part task trainer, Computer Based Training (CBT),
and/or Flight Training Device (FTD). XXXX shall furnish each of
Buyer's licensed pilots attending the course one copy of the Flight
Crew Operating Manual.
C-22
3.2.2 Pilot Simulator Training
XXXX shall provide access to a TC or FAA approved flight simulator
for the crew trained under Annex A Article 3.2.1. XXXX shall provide
a simulator instructor for [***] missions for the crew trained
on BRAD's designated simulator in Montreal; each mission shall
consist of [***] hours in the simulator and required
briefing/debriefing sessions.
3.2.3 In-Flight Training
Should Buyer require aircraft flight training, such training shall
be conducted in Buyer's Aircraft after the Delivery Date for up to a
maximum of [***] of Buyer's pilots. XXXX shall provide an
instructor pilot at no additional charge; Buyer shall be responsible
for the cost of fuel, oil, landing fees, taxes, insurance,
maintenance, and other associated operating expenses required for
the Aircraft during such training.
3.2.4 Flight Attendant Course
A familiarization course for up to [***] of Buyer's flight
attendant personnel shall be conducted. Each course shall be for a
maximum of [***] working days duration. This course shall present
general information on the Aircraft and detailed information on the
operation of the passenger safety equipment and emergency equipment.
XXXX shall furnish for each participant in this course one (1) copy
of the Flight Attendant Training Guide which shall not be revised.
Buyer shall assist XXXX in the development of the Flight Attendant
Training Guide to incorporate Buyer's specific equipment and
procedures.
3.2.5 Flight Dispatcher Course
A course for up to [***] of Buyer's flight dispatch personnel
shall be conducted. Each course shall be for a maximum of [***]
working days duration. The course shall consist of classroom
instruction covering general Aircraft familiarization, coverage of
performance, flight planning, weight and balance and the Minimum
Equipment List. XXXX shall furnish for each participant in this
course [***] copy of the Flight Crew Operating Manual which shall
not be revised.
C-23
3.2.6 Recurrent Pilot Training
XXXX shall, upon Buyer's request, provide a proposal for a TC or FAA
approved course for type rated pilots, customized in content to meet
the recurrent training of Buyer's pilots.
3.2.7 Course Training Material
XXXX shall, upon Buyer's request, present a proposal to provide one
(1) set of the materials (without revision service) used to conduct
the Flight Crew Ground Training course, as follows:
i) 35 mm slides;
ii) Instructional Narrative and/or Instruction Guides;
iii) Overhead Projection Transparencies;
iv) Motion picture and/or Video tapes; and
v) Audio cassettes tapes.
3.3 Maintenance Training
3.3.1 Customized Maintenance Course
[***]
3.3.2 Engine Run-up Course
[***]
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3.3.3 Specialist Courses
At Buyer's request, XXXX shall make a proposal for specialist
courses which will be derived from BRAD's standard courses detailed
herein.
3.3.4 Recurrent Training
At Buyer's request, XXXX shall make a proposal for a Regulatory
Authority approved training plan for maintenance recurrent training.
3.3.5 Vendor Training
At Buyer's request, XXXX shall assist Buyer to obtain vendor
maintenance training.
3.3.6 Course Training Material
XXXX, upon Buyer's request, shall present a proposal to provide one
(1) set of the training materials (without revision service) used to
conduct BRAD's standard training as detailed herein:
i) 35 mm slides;
ii) Lesson Guides;
iii) Overhead Projection Transparencies;
iv) Motion picture and/or Video tapes; and
v) Audio cassettes tapes.
3.4 Insurance
3.4.1 Buyer shall at all times during flight training in Buyer's Aircraft
secure and maintain in effect, at its own expense, insurance
policies covering the Aircraft including without limitation:
a) liability insurance covering public liability, passenger,
crew, property and cargo damage in amounts not less than three
hundred million U.S. dollars ($300,000,000) for any single
occurrence;
b) all risk aircraft hull and engine insurance for an amount
which is not less than its then fair market value.
C-25
3.4.2 The liability policy shall name XXXX (and its affiliates) as
additional insured. The hull policy shall contain a waiver of
subrogation in favour of XXXX (and its affiliates). All insurance
policies shall provide for payments despite any misrepresentations
or breach of warranty by any person (other than the assured
receiving payments) and shall not be subject to any offset by any
other insurance carried by XXXX except that Buyer shall not be
required to provide insurance with respect to the manufacturing,
repair and maintenance activities of XXXX (and of its affiliates)
and the related potential liability (product or otherwise) arising
therefrom.
C-26
ARTICLE 4 - TECHNICAL DATA
4.1 Technical Data Provided
XXXX shall furnish to Buyer the Technical Data described in Attachment A
hereto (the "Technical Data"). The Technical Data shall be in the English
language and shall provide information on items manufactured according to
BRAD's detailed design and in those units of measures used in the
Specification or as may otherwise be required to reflect Aircraft
instrumentation as may be mutually agreed. XXXX will provide all of its
technical publications in a medium designated by Buyer (e.g., CD-ROM
(applicable to the IPC, AMM and WM only), hardcopy, or microfilm), if XXXX
makes such medium available to the market.
[***]
4.2 Shipment
All Technical Data provided hereunder shall be delivered to Buyer Free
Carrier (Incoterms) BRAD's designated facilities and at the time indicated
in Attachment A.
4.3 Proprietary Information
It is understood and Buyer acknowledges that the Technical Data
provided herein [***] (the "Proprietary Information") is proprietary to
XXXX and all rights to copyright belong to XXXX and the Proprietary
Information shall be kept confidential by Buyer. Buyer agrees to use
the Proprietary Information solely to maintain, operate, overhaul or
repair the Aircraft or to make installation or alteration thereto
allowed by XXXX.
Proprietary Information shall not be disclosed to third parties without
BRAD's prior written consent, which shall not be unreasonably withheld, or
used by Buyer or furnished by Buyer for the design or manufacture of any
aircraft or Spare Parts including XXXX Parts or items of equipment, except
when manufacture or redesign is permitted under the provisions of Annex A
Article 2.4 hereof and then only to the
C-27
extent and for the purposes expressly permitted therein, and provided
further the recipient shall provide a non-disclosure undertaking
acceptable to XXXX. Notwithstanding the foregoing, Buyer may disclose
Proprietary Information to any government authority, provided that (i)
Buyer will notify XXXX of any government request for Proprietary
Information, (ii) Buyer will xxxx such Proprietary Information as being
confidential, and (iii) Buyer will not give permission to such receiving
government authority to release such Proprietary Information.
C-28
ATTACHMENT A
LIST OF TECHNICAL DATA
COLUMN HEADING AND EXPLANATION OF CODES
ITEM
1 DOC DOCUMENT
Title of Technical Data provided.
2 CONFIG CONFIGURATION
G = Contains data common to all aircraft of the same type
(Generic).
C = Contains data unique to Buyer's Aircraft (Customized).
3 MEDIUM Buyer selects one of the following media specified in the table:
1 = Print two sides
2 = Microfilm
3 = Print one side
4 = Laminated Cardboard
4 REVISION Y = Periodic revision service applies
N = Revision service not applicable
S = Revised as required by XXXX
5 QUANTITY
(Number) = Quantity per the Agreement
(Number) PER = Quantity per Aircraft
6 DELIVERY
ATD = At time of the Delivery Date of the first Aircraft.
PTD = Prior to the Delivery Date of each or the first
Aircraft (as applicable).
7 ATA Y = Document is per ATA Specification 100, Revision
26.
N = Document is to BRAD's existing commercial
practices.
With the delivery of the first Aircraft, XXXX will provide to Buyer at no
additional charge one set of the technical manuals listed below
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TECHNICAL DATA
REGIONAL JET
----------------------------------------------------------------------------------------------------------
ITEM DOC CONF MEDIUM QTY REV DEL ATA REMARKS
----------------------------------------------------------------------------------------------------------
1. AIRCRAFT MAINTENANCE MANUAL (AMM) G 1 [***] Y PTD Y
----------------------------------------------------------------------------------------------------------
2. ILLUSTRATED PARTS MANUAL/CATALOG (IPC) G 1 [***] Y PTD Y
----------------------------------------------------------------------------------------------------------
3. STRUCTURAL REPAIR MANUAL (SRM) G 1 [***] Y PTD Y
----------------------------------------------------------------------------------------------------------
4. COMPONENT MAINTENANCE MANUAL (CMM) G 1 [***] Y PTD Y
----------------------------------------------------------------------------------------------------------
5. POWER PLANT BUILD-UP MANUAL G 1 [***] Y PTD Y
----------------------------------------------------------------------------------------------------------
6. WIRING DIAGRAM MANUAL C 1 [***] Y PTD Y
----------------------------------------------------------------------------------------------------------
7. ILLUSTRATED TOOL & EQUIPMENT MANUAL G 1 [***] Y PTD Y
(ITEM)
----------------------------------------------------------------------------------------------------------
8. SERVICE BULLETINS G 1 [***] S PTD Y SEE NOTE 2
----------------------------------------------------------------------------------------------------------
9. NON DESTRUCTIVE TEST MANUAL (NDT) G 1 [***] Y PTD Y
----------------------------------------------------------------------------------------------------------
10. MAINTENANCE PROGRAM DOCUMENT (MPD) G 1 [***] S PTD Y SEE NOTE 3
----------------------------------------------------------------------------------------------------------
11. FAA OR DOT AIRPLANE FLIGHT MANUAL C 1 [***] S ATD N
(AFM)
----------------------------------------------------------------------------------------------------------
12. WEIGHT & BALANCE MANUAL G 1 [***] Y ATD Y
----------------------------------------------------------------------------------------------------------
13. MASTER MINIMUM EQUIPMENT LIST (MMEL) G 1 [***] S ASAP N
----------------------------------------------------------------------------------------------------------
14. QUICK REFERENCE HANDBOOK C 1 [***] S ATD N
----------------------------------------------------------------------------------------------------------
15. FLIGHT CREW OPERATING MANUAL (FCOM) C 1 [***] S ATD N SEE NOTE 1
----------------------------------------------------------------------------------------------------------
16. MAINTENANCE TASK CARDS C 3 [***] S PTD N
----------------------------------------------------------------------------------------------------------
17. FLIGHT PLANNING & CRUISE CONTROL G 1 [***] S ASAP N
MANUAL
----------------------------------------------------------------------------------------------------------
18. AIRCRAFT CHARACTERISTICS FOR AIRPORT G 1 [***] N ASAP N SEE NOTE 4
PLANNING
----------------------------------------------------------------------------------------------------------
19. MAINTENANCE FACILITIES & EQUIPMENT G 1 [***] S ASAP N
PLANNING MANUAL
----------------------------------------------------------------------------------------------------------
20. SYSTEM SCHEMATIC MANUAL (SSM) G 1 [***] Y ATD Y SEE NOTE 1
----------------------------------------------------------------------------------------------------------
21. PASSENGER INFORMATION SHEET G 3 [***] S ATD N SEE NOTE 6
----------------------------------------------------------------------------------------------------------
22. PILOT CHECKLIST C 4 [***] S ATD N
----------------------------------------------------------------------------------------------------------
23. CRASH CREW CHART G 4 [***] S ATD N
----------------------------------------------------------------------------------------------------------
24. DISPATCH DEVIATION GUIDE G 1 [***] S PTD N
----------------------------------------------------------------------------------------------------------
25. POWERPLANT GROUND RUN MANUAL G 1 [***] N ATD N
----------------------------------------------------------------------------------------------------------
26. FAULT ISOLATION MANUAL G 1 [***] N ATD N
----------------------------------------------------------------------------------------------------------
27. COMPUTER SELFTEST/BITE/RESET USER G 1 [***] N PTD N
GUIDE
----------------------------------------------------------------------------------------------------------
28. REFUEL/DEFUEL HANDBOOK G 1 [***] N PTD N
----------------------------------------------------------------------------------------------------------
NOTE 1: REVISION SERVICE
A. Revision services shall only be available for [***]
following the Delivery Date of Buyer's last Aircraft.
Subsequent revision service shall be provided dependent upon
incorporation of XXXX issued Service Bulletins.
B. Revisions to the Technical Data to reflect the Aircraft at
Delivery Date shall be provided to Buyer within six (6) months
following the Delivery Date of each of the Aircraft,
respectively.
C. Provided the revision service is being supplied under the
terms of this Agreement or by subsequent purchase order, XXXX
shall incorporate in the applicable documents all applicable
XXXX originated Service Bulletins in a regular revision
following formal notification by Buyer that such Service
Bulletins shall be accomplished on the Buyer's Aircraft. The
manuals shall then contain both original and revised
configuration until Buyer advises XXXX in writing that one
configuration is no longer required.
C-30
NOTE 2: SERVICE BULLETINS
Aperture cards of the service drawing(s) will be provided in lieu of
drawings when practical.
NOTE 3: MAINTENANCE PROGRAM DOCUMENT
This manual provides the basis for Buyer's initial maintenance
program.
NOTE 4: AIRCRAFT CHARACTERISTICS FOR AIRPORT PLANNING
This manual contains data on Aircraft ground maneuver and handling.
NOTE 5: ON-BOARD WIRING DIAGRAM BOOK
This book contains wiring diagrams for interim reference until the
Wiring Diagram Manual is revised to reflect the Aircraft at the
Delivery Date.
NOTE 6: PASSENGER INFORMATION CARDS
XXXX will provide one (1) reproducible master for the preparation of
passenger information cards. For an additional cost, subject to
negotiation, XXXX will provide full colour laminated passenger
information cards in quantities required.
X-00
XXXXX X - XXXXXXXX AND SERVICE LIFE POLICY
ARTICLE 1 - WARRANTY
The following warranty is that to which reference is made in Article 3 of the
Agreement.
1.1 Warranty
1.1.1 Subject to Annex B Articles 1.9, 1.10, and 2.0, XXXX warrants that,
at the date of delivery of the Aircraft or XXXX Part, as applicable:
a) the Aircraft shall conform to the Specification, except that
any matter stated in the Specification as type
characteristics, estimates or approximations is excluded from
this Warranty;
b) the Aircraft shall be free from defects caused by the failure
of XXXX to install a Vendor Part or Powerplant Part in
accordance with reasonable instructions of the vendor;
c) the XXXX Parts shall be free from defects in material or
workmanship; and
d.) the XXXX Parts shall be free from defects in design, having
regard to the state of the art as of the date of such design.
1.1.2 The Warranty set forth in Annex B Article 1.1.1(c) and (d) above
shall also be applicable to XXXX Parts purchased as Spare Parts.
1.1.3 XXXX further warrants that, at the time of delivery, the Technical
Data shall be free from error.
1.2 Warranty Period
1.2.1 The Warranty set forth in Annex B Article 1.1 shall remain in effect
for any defect covered by the Warranty (a "Defect") becoming
apparent during the following periods (individually, the "Warranty
Period"):
a) for failure to conform to the Specification and in the
installation referred to in Annex B Article 1.1.1(a) and 1.1.1
(b), thirty-six (36) months from the Delivery Date;
C-32
b) for those Defects in material or workmanship in XXXX Parts
referred to in Annex B Article 1.1.1(c) and 1.1.2, [***]
from the date of delivery of such parts;
c) for those Defects in design referred to in Annex B Article
1.1.1 (d), [***] from the date of delivery of such parts; and
d) for errors in the Technical Data referred to in Annex B
Article 1.1.3, [***] from the date of delivery of the
applicable Technical Data.
1.3 Repair, Replacement or Rework
As to each matter covered by this Warranty BRAD's sole obligation and
liability under this Warranty is expressly limited to, at BRAD's election,
correction by the repair, replacement or rework of the defective part or
item of Technical Data. The repaired, replaced or reworked part or item of
Technical Data which is the subject of the Warranty claim shall then be
warranted under the same terms and conditions for the then unexpired
portion of the Warranty Period.
In the case of a Defect relating to non-conformance with the
Specification, XXXX shall correct that Defect in the equipment item or
part in which the Defect appears, except that XXXX will not be obligated
to correct any Defect which has no material adverse effect on the
maintenance, use or operation of the Aircraft.
1.4 Claims Information
BRAD's obligations hereunder are subject to a Warranty claim to be
submitted in writing to BRAD's warranty administrator, which claim shall
include but not be limited to the following information:
a) the identity of the part or item involved, including the Part
number, serial number if applicable nomenclature and the quantity
claimed to be defective;
b) the manufacturer's serial number of the Aircraft from which the part
was removed;
c) the date the claimed Defect became apparent to Buyer;
d) the total flight hours (and cycles if applicable) accrued on the
part at the time the claimed Defect became apparent to Buyer; and
C-33
e) a description of the claimed Defect and the circumstances pertaining
thereto.
1.5 BRAD's Approval
Within ten (10) working days following receipt of Buyer's Warranty claim
for a Defect accompanied by Buyer's request for permission as applicable
to correct a Defect, XXXX shall notify Buyer of its decision on the
request. Approval under this Article shall not constitute a determination
as to the existence of a Defect as described in Annex B Article 1.1 above.
1.6 Timely Corrections
XXXX shall make the repair, replacement or rework, following receipt of
the defective part or item, with reasonable care and dispatch.
1.7 Labour Reimbursement
For correction of Defects XXXX shall establish a reasonable estimate for
the labour hours required for the repair, replacement or rework of the
defective XXXX Part and, if the repair, replacement or rework is performed
by Buyer, XXXX shall reimburse Buyer for XXXX estimated hours or for
Buyer's actual labour hours, whichever is less, for the repair,
replacement or rework of the defective XXXX Part excluding any work
necessary to gain access to said XXXX Part. Such reimbursement shall be
based upon Buyer's direct labour rate per man-hour plus burden rate of
[***] subject to annual review and adjustment of such labour
rate as mutually agreed; provided, however, that this amount shall not
exceed [***] of the XXXX published selling labour rate.
C-34
1.8 Approval, Audit, Transportation and Waiver
All Warranty claims shall be subject to audit and approval by XXXX. XXXX
will use reasonable efforts to advise in writing the disposition of
Buyer's Warranty claim within thirty (30) days following the receipt of
the claim and (if requested) return of the defective XXXX Part to BRAD's
designated facility. XXXX shall notify Buyer of BRAD's disposition of each
claim.
Buyer shall pay all costs of transportation of the defective part from
Buyer to XXXX, and XXXX shall pay all costs of transportation of the
repaired, corrected or replacement parts back to Buyer.
1.9 Limitations
1.9.1 XXXX shall be relieved of and shall have no obligation or liability
under this Warranty if:
a) the Aircraft was operated with any products or parts not
specifically approved by XXXX, unless Buyer furnishes
reasonable evidence acceptable to XXXX that such products or
parts were not a cause of the Defect; or
b) the Aircraft was not operated or maintained in accordance with
the Technical Data listed in Attachment A of Annex A and the
manufacturer's documentation furnished to Buyer (including
Service Bulletins and airworthiness directives) unless Buyer
furnishes reasonable evidence acceptable to XXXX that such
operation or maintenance was not a cause of the Defect; or
c) the Aircraft was not operated under normal airline use, unless
Buyer furnishes reasonable evidence acceptable to XXXX that
such operation was not a cause of the Defect; or
d) Buyer does not
1) report the Defect in writing to BRAD's Warranty
administrator within thirty (30) calendar days following
such Defect becoming apparent, and
C-35
2) retain the XXXX Part claimed to be defective until
advised by XXXX to return such XXXX Part to BRAD's
designated facility in order for XXXX to finalize its
evaluation of the Warranty claim or to otherwise dispose
of such XXXX Part; or
e) Buyer does not submit reasonable proof to XXXX within thirty
(30) calendar days after the Defect becomes apparent that the
Defect is due to a matter covered within this Warranty; or
f) Buyer does not allow XXXX reasonable opportunity to be present
during the disassembly and inspection of the XXXX Part claimed
to be defective.
1.9.2 The above warranties do not apply to Buyer Furnished Equipment.
1.10 Normal Usage
Normal wear and tear and the need for regular maintenance and overhaul
shall not constitute a Defect or failure under this Warranty.
1.11 Overhaul of Warranty Parts
BRAD's liability for a XXXX Part which has a Defect and is overhauled by
Buyer within the Warranty Period shall be limited only to that portion of
the labour and material replacement related to the Defect.
1.12 No Fault Found
In the event that a XXXX Part returned under a Warranty claim is
subsequently established to be serviceable then XXXX shall be entitled to
charge and recover from Buyer any reasonable costs incurred by XXXX in
connection with such Warranty claim. Providing, however, in the event that
repetitive in-service failure occurs on the particular XXXX Part which is
subsequently identified by XXXX on a repeated basis to be "no fault
found," then XXXX and Buyer shall discuss and mutually agree a course of
further action to help identity the problem. In the event the fault is
ultimately confirmed to be a legitimate Warranty claim then the above
mentioned costs incurred by XXXX and charged to Buyer shall be waived.
X-00
XXXXXXX 0 - XXXXXX XXXXXXXXXX
2.1 Warranties from Vendors
The Warranty provisions of this Annex B apply to XXXX Parts only. However,
XXXX has made or shall make reasonable efforts to obtain favourable
warranties from vendors, with respect to Vendor Parts and Power Plant
Parts. Except as specifically provided under this Annex B Article 2, XXXX
shall have no liability or responsibility for any such Vendor Parts and
Power Plant Parts and the warranties for those Vendor Parts and Power
Plant Parts shall be the responsibility of the vendor and a matter as
between Buyer and vendor.
2.2 Vendor Warranty Backstop
For those Vendor Parts installed on the Aircraft at the Delivery Date or
subsequently purchased through XXXX, excluding the Powerplant or the Power
Plant Parts, in the event the parties agree that a vendor is in default in
the performance of any material obligation under any applicable warranty
obtained by XXXX from such vendor pursuant to Annex B Article 2.1 above,
the warranties and all other terms and conditions of Annex B Article 1
shall become applicable as if the Vendor Parts had been a XXXX Part,
except that the warranty period shall be the Warranty Period as set forth
herein or by the vendor's warranty, whichever is shorter and all
transportation costs associated with the Vendor Parts shall be borne by
Buyer.
2.3 BRAD's Interface Commitment
In the event of a dispute in the application of a Vendor Part warranty, at
Buyer's request addressed to BRAD's warranty administrator, XXXX shall,
without charge, conduct an investigation and analysis of any such dispute
resulting from a technical interface problem to determine, if possible,
the cause of the interface problem and then recommend feasible corrective
action. Buyer shall furnish to XXXX all data and information in Buyer's
possession relevant to the interface problem and shall cooperate with XXXX
in the conduct of its investigation and such tests as may be required.
XXXX, at the conclusion of its investigation, shall advise Buyer in
writing of BRAD's opinion as to the cause of the problem and BRAD's
recommended corrective action.
C-37
ARTICLE 3- SERVICE LIFE POLICY
3.1 Applicability
The Service Life Policy ("SLP") described in this Annex B Article 3 shall
apply if fleetwide and repetitive failures occur in any Covered Component
which is defined in Annex B Article 3.7 below.
3.2 Term
3.2.1 Should such failures occur in any Covered Component within [***]
following delivery of the Aircraft containing such Covered
Component, XXXX shall, as promptly as practicable and at its option;
a) design and/or furnish a correction for such failed Covered
Component; or
b) furnish a replacement Covered Component (exclusive of standard
parts such as bearings, bushings, nuts, bolts, consumables and
similar low value items).
3.3 Price
Any Covered Component which XXXX is required to furnish under this SLP
shall be provided for at a price calculated in accordance with the
following formula:
P = CxT
---
144
Where:
P = Price of Covered Component to Buyer;
C = BRAD's then current price for the Covered Component;
T = The total time to the nearest month since the Aircraft containing the
Covered Component was delivered by XXXX
C-38
3.4 Conditions and Limitations
3.4.1 The following general conditions and limitations shall apply to the
SLP:
a) the transportation cost for the return to BRAD's designated
facility, if practicable, of any failed Covered Component
necessary for failure investigation or redesigning studies
shall be borne by Buyer;
b) BRAD's obligations under this SLP are Conditional upon the
submission of reasonable proof acceptable to XXXX that the
failure is Covered hereby;
c) Buyer shall report any failure of a Covered Component in
writing to BRAD's Warranty administrator within two (2) months
after such failure becomes evident. Failure to give this
required notice shall excuse XXXX from all obligations with
respect to such failure;
d) the provisions of Annex B Article 1.9 of the Warranty (except
for subparagraphs (d) and (e) thereof) are incorporated by
this reference and shall condition BRAD's obligations under
this SLP with respect to any Covered Component;
e) BRAD's obligations under this SLP shall not apply to any
Aircraft which has not been correctly modified in accordance
with the specifications or instructions contained in the
relevant Service Bulletins which are furnished to Buyer prior
to receipt by XXXX from Buyer of any notice of an occurrence
which constitutes a failure in a Covered Component. The
provisions of this subparagraph shall not apply in the event
that Buyer furnishes reasonable evidence acceptable to XXXX
that such failure was not caused by Buyer's failure to so
modify the Aircraft;
f) this SLP shall not apply to a failure of a Covered Component
if XXXX determines that such failure may not reasonably be
expected to occur on a fleetwide and repetitive basis; and
C-39
g) this SLP shall not apply to a Covered Component where the
failure results from an accident, abuse, misuse, degradation,
negligence or wrongful act or omission, unauthorized repair or
modification adversely affecting a Covered Component, impact
or foreign object damage, to any Covered Component.
3.5 Coverage
This SLP is neither a warranty, performance guarantee nor an agreement to
modify the Aircraft to conform to new developments in design and
manufacturing art. BRAD's obligation is only to provide correction
instructions to correct a Covered Component or furnish replacement at a
reduced price as provided in this SLP.
3.6 Assignment
Buyer's rights under this SLP shall not be assigned, sold, leased,
transferred or otherwise alienated by contract, operation of law or
otherwise, without BRAD's prior written consent. Any unauthorized
assignment, sale, lease, transfer, or other alienation of Buyer's rights
under the SLP shall immediately void all of BRAD's obligations under the
SLP.
3.7 Covered Component
Only those items or part thereof listed in Attachment A to this Annex B
shall be deemed to be a Covered Component, and subject to the provisions
of this SLP.
ARTICLE 4 - GENERAL
4.1 It is agreed that XXXX shall not be obligated to provide to Buyer any
remedy which is a duplicate of any other remedy which has been provided to
Buyer under any other part of this Annex B.
X-00
Xxxxx X - Xxxxxxxxxx A
COVERED COMPONENTS
1. WING
a. Upper and lower integral xxxxxxxx machined wing planks.
b. Machined spar, including auxiliary spars.
c. Caps, webs and stiffeners on fabricated spars.
d. Front spar to rear spar wing box ribs.
e. Main landing gear (MLG) machined trunnion rib.
f. MLG side stay machined attachment fittings.
g. Wing/fuselage machined attachment fittings.
2. FUSELAGE
a. Window and windshield frame structure, but excluding the windows and
windshield. Exterior skins, doublers, circumferential frames but
excluding all Systems, fairings, insulation, lining and decorative
clips and brackets.
b. Engine mount support box structure and machined pylon attachment
fittings. Primary structure frames around body openings for
passenger door, baggage door, avionics door, flying control access
door, APU access door and emergency exits.
c. Nose landing gear well structure, including wheel well walls,
ceiling, pressure bulkheads and pressure floor structural components
at fuselage wing cutout.
C-41
3. VERTICAL STABILIZER
a. All spars.
b. Horizontal to vertical stabilizer machined attachment fillings.
c. Front spar to fuselage frame machined attachment fittings.
d. Exterior skins, ribs, stringers between front and rear spars and
machined closing rib.
4. HORIZONTAL STABILIZER
Front and rear spars and exterior skins, rib and stringers between front
and rear spars.
C-42
[6~
[LOGO] Bombardier Inc.
Bombardier Regional Aircraft Division
000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Telephone (000) 000-0000
Contracts Facsimile (000) 000-0000
September 17th, 1997
Our Ref: X00-0000-XXXX-XXX0000-000
Xxxxxx Airlines Corporation
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
XXX
Attention: Mr. Xxxxxx Xxxxxxxx, Chairman, President & CEO
Gentlemen,
Re: Letter Agreement No. 001 (Re: Option Aircraft)
Reference is made to Purchase Agreement No. PA-0393 (the "Agreement") between
Bombardier Inc., represented by its Bombardier Regional Aircraft Division
("XXXX") and Midway Airlines Corporation ("Buyer") for the sale of ten (10)
Canadair Regional Jet Aircraft (the "Aircraft").
This letter, when accepted and agreed to by Buyer contemporaneously with
execution of the Agreement, will become part of the Agreement and will evidence
our further agreement with respect to the matters set forth below.
All terms used herein and in the Agreement not defined herein, shall have the
same meaning as in the Agreement.
Subject: Option Aircraft
1.0 [***]
1
1.1 The Option Aircraft will be as described in Article 2 of the Agreement.
1.2 The base price (the "Base Price") for each of the Option Aircraft
including the Buyer Selected Optional Features listed in Appendix IV to
the Agreement, Ex Works (Incoterms 1990) BRAD's facilities in Montreal,
Quebec shall be [***] expressed in November 1, 1997 dollars.
This Base Price does not include any Taxes, fee or duties and is subject
to escalation in accordance with the Economic Adjustment Formula attached
as Appendix I to the Agreement for the period from November 1, 1997 to the
date of delivery of each Option Aircraft ("Option Aircraft Purchase Price.
1.3 Buyer shall exercise its right to purchase the Option Aircraft by
providing written notice to XXXX of its intention to do so in accordance
with the following schedule: (i) the first Option Block may be exercised
[***] months prior to the first day of the Scheduled Delivery Date of
the first Option Aircraft in the first Option Block, (ii) the second
Option Block may be exercised [***] months prior to the first day of
the Scheduled Delivery Date of the first Option Aircraft in the second
Option Block, and (iii) the third Option Block may be exercised
[***] prior to the first day of the Scheduled Delivery Date of the
first Option Aircraft in the third Option Block.
[***]
2
1.4 The Scheduled Delivery Dates of the Option Aircraft are as follows:
Block 1 [***]
[***]
[***]
Block 2 [***]
[***]
[***]
Block 3 [***]
[***]
[***]
[***]
1.5 As consideration for this option, Buyer shall make or cause to make
payment to XXXX a non-refundable deposit of [***] per Option Aircraft
(the "Option Deposit") in each block totaling [***] upon execution of
the Agreement.
1.6 Upon exercise of an Option Block, Buyer will make or cause to make the
progress payments specified in Articles of the Agreement within [***]
business days of the exercise of the option.
2.0 [***]
2.1 [***]
3
2.2 Unless expressly provided for in this Agreement, the terms and conditions
of the Agreement shall apply mutatis mutandis to the Option Aircraft, with
the exception Annex A Technical Support as specified in Article 1.2 (Field
Service Representative, except as noted in Article 2.0 of this Letter
Agreement), Annex A training courses as specified in Article 3.2.4 (flight
attendant), Article 3.2.5 (flight dispatch), Article 3.3.1 (customized
maintenance course), Article 3.3.2 (engine run-up)); the Technical Data
identified in Article 4 Attachment A (except for Aircraft specific manuals
only), and the courses specified in the following Articles of Letter
Agreement No. 005: Article 1.1.2 (flight attendant), Article 1.3 (training
materials), Article 1.4 (dispatcher training) and Article 2.0 (start up
support).
Furthermore, the following Letter Agreements are also not applicable to
the Option Aircraft and are hereby excluded:
[***]
[***]
[***]
[***]
[***]
3.0 In the event of the termination of the Agreement, this Letter Agreement
shall become automatically null and void.
4.0 Upon exercise of Buyer's rights to purchase in accordance with this Letter
Agreement, the parties shall amend the Agreement or enter into an
additional purchase agreement in order to give effect to the purchase of
Option Aircraft in accordance with the terms and conditions thereof.
5.0 The provisions of this Letter Agreement are personal to Buyer and shall
not be assigned or otherwise disposed of by Buyer without the prior
written consent of XXXX.
4
Should there be any inconsistency between this Letter Agreement and the
Agreement with respect to the subject matter covered by the terms hereof, then
this Letter Agreement shall prevail.
Yours truly
BOMBARDIER NC.
By: /s/[SIGNATURE ILLEGIBLE]
---------------------------------
Title: Manager, Contracts
---------------------------------
ACCEPTED AND AGREED TO:
this 17th day of September, 0000
Xxxxxx Airlines Corporation
By: /s/[SIGNATURE ILLEGIBLE]
---------------------------------
Title: CEO
---------------------------------
5
[LOGO] Bombardier Inc.
Bombardier Regional Aircraft Division
000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Telephone (000) 000-0000
Contracts Facsimile (000) 000-0000
September 17th, 1997
Our Ref: X00-0000-XXXX-XXX0000-000
Xxxxxx Airlines Corporation
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
XXX
Attention: Mr. Xxxxxx Xxxxxxxx, Chairman, President & CEO
Gentlemen,
Re: Letter Agreement No. 002 [***]
Reference is made to Purchase Agreement No. PA-0393 (the "Agreement") between
Bombardier Inc., represented by its Bombardier Regional Aircraft Division
("XXXX") and Midway Airlines Corporation ("Buyer") for the sale of ten (10)
Canadair Regional Jet Aircraft (the "Aircraft").
This letter, when accepted and agreed to by Buyer contemporaneously with
execution of the Agreement, will become part of the Agreement and will evidence
our further agreement with respect to the matters set forth below.
All terms used herein and in the Agreement not defined herein, shall have the
same meaning as in the Agreement.
Subject: [***]
1.0 [***]
1
[***]
1.1 [***] will be as described in Article 2 of the Agreement.
1.2 [***] This Base Price does not include any Taxes, and is subject to
escalation in accordance with the Economic Adjustment Formula attached
as Appendix I to the Agreement for the period from November 1, 1997 to
the date of delivery of each [***].
1.3 [***] Should Buyer choose to exercise the right to purchase to
purchase a [***], Buyer and XXXX agree to make all reasonable efforts
to execute a definitive agreement within twenty-one (21) days of notice
having been given.
2
1.4 [***]
1.5 As consideration for this [***], Buyer shall make or cause to make
payment to XXXX a refundable deposit of [***] upon execution of the
Agreement. Upon receipt of the [***], XXXX agrees to [***] set forth in
paragraph 1.4 pending receipt of Buyers conditional notice of intention
to exercise fifteen (15) months prior to [***] in the applicable [***],
as set forth in paragraph 1.3.
1.6 Upon exercise of a [***], Buyer will make or cause to make the [***]
specified in Article 5 of the Agreement within ten (10) business days
of the [***].
2.0 [***], and provided Buyer continues to operate a minimum of ten (10)
Canadair Regional Jet aircraft, XXXX will [***].
3
2.1 With the exercise of a [***], XXXX will also provide airframe,
powerplant, avionics and electrical training for a total of [***]
of Buyer's personnel per Shadow Option Aircraft exercised, which could
be a combination of maintenance technicians and avionic technicians.
2.2 Unless expressly provided for in this Agreement, the terms and conditions
of the Agreement shall apply mutatis mutandis to the [***],
with the exception Annex A Technical Support as specified in
Article 1.2 (Field Service Representative, except as noted in Article 2.0
of this Letter Agreement), Annex A training courses as specified in
Article 3.2.4 (flight attendant), Article 3.2.5 (flight dispatch), Article
3.3.1 (customized maintenance course), Article 3.3.2 (engine run-up); the
Technical Data identified in Article 4 Attachment A (except for Aircraft
specific manuals only) and the courses specified in the following Articles
of Letter Agreement No. 005: Article 1.1.2 (flight attendant), Article 1.3
(training materials), Article 1.4 (dispatcher training) and Article 2.0
(start up support).
Furthermore, the following Letter Agreements are also not applicable to
the [***] and are hereby excluded:
[***]
[***]
[***]
[***]
[***]
3.0 In the event of the termination of the Agreement, this Letter Agreement
shall become automatically null and void.
4.0 Upon exercise of Buyer's rights to purchase in accordance with this Letter
Agreement, the parties shall amend the Agreement or enter into an
additional purchase agreement in order to give effect to the purchase of
[***] in accordance with the terms and conditions thereof.
4
5.0 The provisions of this Letter Agreement are personal to Buyer and shall
not be assigned or otherwise disposed of by Buyer without the prior
written consent of XXXX.
Should there be any inconsistency between this Letter Agreement and the
Agreement with respect to the subject matter covered by the terms hereof, then
this Letter Agreement shall prevail.
Yours truly
BOMBARDIER INC.
By: /s/[SIGNATURE ILLEGIBLE]
---------------------------------
Title: Manager, Contracts
---------------------------------
ACCEPTED AND AGREED TO:
this 17th day of September, 0000
Xxxxxx Airlines Corporation
By:
---------------------------------
Title:
---------------------------------
5
5.0 The provisions of this Letter Agreement are personal to Buyer and shall
not be assigned or otherwise disposed of by Buyer without the prior
written consent of XXXX.
Should there be any inconsistency between this Letter Agreement and the
Agreement with respect to the subject matter covered by the terms hereof, then
this Letter Agreement shall prevail.
Yours truly
BOMBARDIER INC.
By:
---------------------------------
Title:
ACCEPTED AND AGREED TO:
this 17th day of September, 0000
Xxxxxx Airlines Corporation
By: /s/[SIGNATURE ILLEGIBLE]
---------------------------------
Title: CEO
5
[LOGO] Bombardier Inc.
Bombardier Regional Aircraft Division
000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Telephone (000) 000-0000
Contracts Facsimile (000) 000-0000
September 17th, 1997
Our Ref: X00-0000-XXXX-XXX0000-000
Xxxxxx Airlines Corporation
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
XXX
Attention: Mr. Xxxxxx Xxxxxxxx, Chairman, President & CEO
Gentlemen,
Re: Letter Agreement No. 003 [***]
Reference is made to Purchase Agreement No. PA-0393 (the "Agreement") between
Bombardier Inc., represented by its Bombardier Regional Aircraft Division
("XXXX") and Midway Airlines Corporation ("Buyer") for the sale of ten (10)
Canadair Regional Jet Aircraft (the "Aircraft").
This letter, when accepted and agreed to by Buyer contemporaneously with
execution of the Agreement, will become part of the Agreement and will evidence
our further agreement with respect to the matters set forth below.
All terms used herein and in the Agreement not defined herein, shall have the
same meaning as in the Agreement.
Subject: [***]
1
1.0 FINANCING ASSISTANCE
1.1 [***]
1.2 [***]
1.3 [***]
1.4 [***]
2
[***]
1.5 [***]
3
1.6 BRAD's obligation to provide [***] in accordance with
this Letter Agreement will be contingent upon the satisfaction of the
following conditions:
(a) [***]
(b) [***]
(c) [***]
(d) [***]
(e) [***]
Terms of BRAD's [***]
(a) [***]
(b) [***]
(c) [***]
4
1.7 [***]
1.8 [***]
1.9 [***]
5
2.0 [***]
2.1 [***]
2.2 [***]
(a) [***]
(b) [***]
(c) [***]
(d) [***]
(e) [***]
6
2.3 [***]
2.4 [***]
2.5 [***]
3.0 [***]
4.0 [***]
7
5.0 The provisions of this Letter Agreement are personal to Buyer and shall
not be assigned or otherwise disposed of by Buyer without the prior
written consent of XXXX.
Should there be any inconsistency between this Letter Agreement and the
Agreement with respect to the subject matter covered by the terms hereof, then
this Letter Agreement shall prevail.
Yours truly
BOMBARDIER INC.
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------
Title: Manager, Contracts
---------------------------------
ACCEPTED AND AGREED TO:
this 17th day of September, 0000
Xxxxxx Airlines Corporation
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------
Title: CEO
---------------------------------
[LOGO] Bombardier Inc.
Bombardier Regional Aircraft Division
000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Telephone (000) 000-0000
Contracts Facsimile (000) 000-0000
September 17th, 1997
Our Ref: X00-0000-XXXX-XXX0000-000
Xxxxxx Airlines Corporation
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
XXX
Attention: Mr. Xxxxxx Xxxxxxxx, Chairman, President & CEO
Gentlemen,
Re: Letter Agreement No. 004 (Re: Deposit)
Reference is made to Purchase Agreement No. PA-0393 (the "Agreement") between
Bombardier Inc., represented by its Bombardier Regional Aircraft Division
("XXXX") and Midway Airlines Corporation ("Buyer") for the sale of ten (10)
Canadair Regional Jet Aircraft (the "Aircraft").
This letter, when accepted and agreed to by Buyer contemporaneously with
execution of the Agreement, will become part of the Agreement and will evidence
our further agreement with respect to the matters set forth below.
All terms used herein and in the Agreement not defined herein, shall have the
same meaning as in the Agreement.
1
Subject: Deposit
1.0 [***]
2.0 [***]
3.0 In the event of the termination of the Agreement, this Letter Agreement
shall become automatically null and void.
4.0 The provisions of this Letter Agreement are personal to Buyer and shall
not be assigned or otherwise disposed of by Buyer without the prior
written consent of XXXX.
2
Should there be any inconsistency between this Letter Agreement and the
Agreement with respect to the subject matter covered by the terms hereof, then
this Letter Agreement shall prevail.
Yours truly
BOMBARDIER INC.
By: /s/[SIGNATURE ILLEGIBLE]
---------------------------------
Title: Manager, Contracts
---------------------------------
ACCEPTED AND AGREED TO:
this 17th day of September, 0000
Xxxxxx Airlines Corporation
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------
Title: CEO
---------------------------------
3
[LOGO] Bombardier Inc.
Bombardier Regional Aircraft Division
000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Telephone (000) 000-0000
Contracts Facsimile (000) 000-0000
September 17th, 1997
Our Ref: X00-0000-XXXX-XXX0000-000
Xxxxxx Airlines Corporation
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
XXX
Attention: Mr. Xxxxxx Xxxxxxxx, Chairman, President & CEO
Gentlemen,
Re: Letter Agreement No. 005 (Re: Customer Support)
Reference is made to Purchase Agreement No. PA-0393 (the "Agreement") between
Bombardier Inc., represented by its Bombardier Regional Aircraft Division
("XXXX") and Midway Airlines Corporation ("Buyer") for the sale of ten (10)
Canadair Regional Jet Aircraft (the "Aircraft").
This letter, when accepted and agreed to by Buyer contemporaneously with
execution of the Agreement, will become part of the Agreement and will evidence
our further agreement with respect to the matters set forth below.
All terms used herein and in the Agreement not defined herein, shall have the
same meaning as in the Agreement.
1
Subject: Customer Support
1.0 [***]
1.1 [***]
1.1.1 [***]
[***]
1.1.2 [***]
[***]
1.3 Training Materials
For Buyer's in-house Flight Attendant and dispatcher courses, XXXX shall
provide one set of the training materials (without revision service) used
to conduct BRAD's standard training.
1.4 Dispatcher Training
The course referred to in Annex A Article 3.2.5 will be formatted as a
"Train the trainer" course, and XXXX will assist these two dispatchers (as
part of the Start Up Support outlined in paragraph 2.0) in the formulation
of an in-house course for the balance of Buyer's dispatchers.
2
1.3 [***]
[***]
2.0 [***]
2.1 [***]
3.0 [***]
3.1 [***]
4.0 In the event of the termination of the Agreement, this Letter Agreement
shall become automatically null and void except that the provisions of
this Letter Agreement shall survive with respect to delivered Aircraft.
5.0 The provisions of this Letter Agreement are personal to Buyer and shall
not be assigned or otherwise disposed of by Buyer without the prior
written consent of XXXX.
3
Should there be any inconsistency between this Letter Agreement and the
Agreement with respect to the subject matter covered by the terms hereof, then
this Letter Agreement shall prevail.
Yours truly
BOMBARDIER INC.
By: /s/[SIGNATURE ILLEGIBLE]
---------------------------------
Title: Manager, Contracts
---------------------------------
ACCEPTED AND AGREED TO:
this 17th day of September, 0000
Xxxxxx Airlines Corporation
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------
Title: CEO
---------------------------------
4
[LOGO] Bombardier Inc.
Bombardier Regional Aircraft Division
000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Telephone (000) 000-0000
Contracts Facsimile (000) 000-0000
September 17th, 1997
Our Ref: X00-0000-XXXX-XXX0000-000
Xxxxxx Airlines Corporation
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
XXX
Attention: Mr. Xxxxxx Xxxxxxxx, Chairman, President & CEO
Gentlemen,
Re: Letter Agreement No. 006 (Re: Spares)
Reference is made to Purchase Agreement No. PA-0393 (the "Agreement") between
Bombardier Inc., represented by its Bombardier Regional Aircraft Division
("XXXX") and Midway Airlines Corporation ("Buyer") for the sale of ten (10)
Canadair Regional Jet Aircraft (the "Aircraft").
This letter, when accepted and agreed to by Buyer contemporaneously with
execution of the Agreement, will become part of the Agreement and will evidence
our further agreement with respect to the matters set forth below.
All terms used herein and in the Agreement not defined herein, shall have the
same meaning as in the Agreement.
Subject: Spares
1.0 In consideration of Buyer having entered into the above referenced
Agreement, XXXX shall issue to Buyer, at the time of delivery of each of
1
[***]
2.0 [***]
(i) [***]
a.) [***]
b.) [***]
c.) [***]
d.) [***]
e.) [***]
f.) [***]
g.) [***]
2
(ii) [***]
3.0 In the event of the termination of the Agreement, this Letter Agreement
shall become automatically null and void.
4.0 The provisions of this Letter Agreement are personal to Buyer and shall
not be assigned or otherwise disposed of by Buyer without the prior
written consent of XXXX.
3
Should there be any inconsistency between this Letter Agreement and the
Agreement with respect to the subject matter covered by the terms hereof, then
this Letter Agreement shall prevail.
Yours truly
BOMBARDIER INC.
By: /s/[SIGNATURE ILLEGIBLE]
---------------------------------
Title: Manager, Contracts
---------------------------------
ACCEPTED AND AGREED TO:
this 17th day of September, 0000
Xxxxxx Airlines Corporation
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------
Title:
---------------------------------
4
[LOGO] Bombardier Inc.
Bombardier Regional Aircraft Division
000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Telephone (000) 000-0000
Contracts Facsimile (000) 000-0000
September 17th, 1997
Our Ref: X00-0000-XXXX-XXX0000-000
Xxxxxx Airlines Corporation
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
XXX
Attention: Mr. Xxxxxx Xxxxxxxx, Chairman, President & CEO
Gentlemen,
Re: Letter Agreement No. 007 (Re: Airworthiness Directives)
Reference is made to Purchase Agreement No. PA-0393 (the "Agreement") between
Bombardier Inc., represented by its Bombardier Regional Aircraft Division
("XXXX") and Midway Airlines Corporation ("Buyer") for the sale of ten (10)
Canadair Regional Jet Aircraft (the "Aircraft").
This letter, when accepted and agreed to by Buyer contemporaneously with
execution of the Agreement, will become part of the Agreement and will evidence
our further agreement with respect to the matters set forth below.
All terms used herein and in the Agreement not defined herein, shall have the
same meaning as in the Agreement.
1
Subject: Airworthiness Directives
1.0 [***]
2.0 In the event of the termination of the Agreement, this Letter Agreement
shall become automatically null and void except that the provisions of
this Letter Agreement shall survive with respect to delivered Aircraft.
3.0 The provisions of this Letter Agreement are personal to Buyer and shall
not be assigned or otherwise disposed of by Buyer without the prior
written consent of XXXX.
2
Should there be any inconsistency between this Letter Agreement and the
Agreement with respect to the subject matter covered by the terms hereof, then
this Letter Agreement shall prevail.
Yours truly
BOMBARDIER INC.
By: /s/[SIGNATURE ILLEGIBLE]
---------------------------------
Title: Manager, Contracts
---------------------------------
ACCEPTED AND AGREED TO:
this 17th day of September, 0000
Xxxxxx Airlines Corporation
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------
Title: CEO
---------------------------------
3
[LOGO] Bombardier Inc.
Bombardier Regional Aircraft Division
000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Telephone (000) 000-0000
Contracts Facsimile (000) 000-0000
September 17th, 1997
Our Ref: X00-0000-XXXX-XXX0000-000
Xxxxxx Airlines Corporation
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
XXX
Attention: Mr. Xxxxxx Xxxxxxxx, Chairman, President & CEO
Gentlemen,
Re: Letter Agreement No. 008 (Re: Airframe Direct Maintenance Cost)
Reference is made to Purchase Agreement No. PA-0393 (the "Agreement") between
Bombardier Inc., represented by its Bombardier Regional Aircraft Division
("XXXX") and Midway Airlines Corporation ("Buyer") for the sale of ten (10)
Canadair Regional Jet Aircraft (the "Aircraft").
This letter, when accepted and agreed to by Buyer contemporaneously with
execution of the Agreement, will become part of the Agreement and will evidence
our further agreement with respect to the matters set forth below.
All terms used herein and in the Agreement not defined herein, shall have the
same meaning as in the Agreement.
Subject: Airframe Direct Maintenance Cost
1.0 Intent
1.1 The intent of the Airframe direct maintenance cost guarantee is to achieve
the full potential of the maintainability of the Aircraft through the
joint
1
efforts of XXXX and Buyer. To that end, XXXX agrees to provide credits
under the terms and conditions hereof and Buyer agrees to provide data
defined below.
1.2 The "Airframe" shall mean the Aircraft excluding Power Plant Parts and
related maintenance activities (such as overhaul, hot section inspection,
basic unscheduled repairs, LCF components, scheduled and unscheduled line
replaceable unit repair and overhaul), Auxiliary Power Unit (APU), Buyer
Furnished Equipment (BFE) and Ground Support Equipment (GSE).
2.0 [***]
2.1 [***]
2.1.1 [***]
2.1.2 Appropriate reductions shall be made in labour man-hours per flight
hour and material costs per flight hour for the following:
a) Labour and material costs resulting from maintenance not
performed in accordance with approved written procedures or
from configuration changes made by Buyer without BRAD's
written agreement, or because recommended Service Bulletins
which cause a reduction in direct maintenance cost have not
been incorporated, provided Buyer has had sufficient time to
incorporate said Service Bulletins consistent with Buyer's
maintenance program. XXXX shall not make reductions when Buyer
has demonstrated that such change is not cost effective for
Buyer. In the event of a disagreement between XXXX and Buyer
as to the cost-effectiveness of a recommended Service
Bulletin change proposed by XXXX, Buyer will explain its
financial analysis used to evaluate the implementation of such
Service Bulletin change;
2
b) Labour and material costs incurred to repair damages resulting
from accidents, foreign object damage (FOD) or negligence in
maintaining the Aircraft, or for modification of the Aircraft,
which may be capitalized by Buyer (except for actions on
Airworthiness Directives);
c) Credits, warranty payments, guarantee payments or other
payments such as parts or services at reduced cost that XXXX
or vendors have made that compensate Buyer for or reduce
Buyer's direct maintenance cost;
d) Aircraft that have not been maintained in accordance with
Buyer's regulatory agency approved initial maintenance program
unless mutually agreed to by Buyer and XXXX; and
e) Scheduled maintenance checks which are not accomplished
consistent with Buyer's standard maintenance practices.
f) Labour and material costs incurred due to shipping,
transportation and handling delays.
3.0 Calculation of Cost
3.1 Airframe Direct Maintenance Labour Cost ("ADML")
The ADML man-hours shall be defined as the annual man-hours in Buyer
cost allocation system assigned to collect direct labour charges,
without burden, expended in direct maintenance of the Aircraft.
Notwithstanding Buyer's internal cost allocation system all elements
of indirect labour such as shop cleaning, workplace maintenance,
material handling, overtime premium, idle time and inventory control
or labour resulting from damage, misdiagnosis (no fault found) or
misuse shall be excluded from the calculation of Airframe direct
maintenance man-hours; and
3
3.2 Airframe Direct Maintenance Material Cost ("ADMMC")
The ADMMC is defined as the annual cost of material consumed, which
excludes initial provisioning purchases, for the direct airframe
maintenance of the aircraft, less any transportation, duties, taxes
or license fees. Notwithstanding Buyer's internal cost allocation
system all elements of indirect material such as cleaning supplies,
consumable tools, hydraulic fluids, oils and greases, welding
supplies, sealant, paints, protective coatings, adhesives or
material resulting from damage, misdiagnosis (no fault found) or
misuse are excluded from the calculation of ADMMC.
3.3 Airframe Direct Outside Service Cost ("ADOSC")
The ADOSC is defined as the annual cost expended in outside services
for direct airframe maintenance of the aircraft. The ADOSC shall
include the total outside service charges of both labour and
material costs, but excluding transportation and taxes.
3.4 Hourly Airframe Direct Maintenance Cost ("ADMC")
The following formula shall be used to calculate the annual hourly
ADMC:
ADMC = (ADML)(LC) + ADMMC + ADOSC
--------------------------
T
where:
ADML = Airframe Direct Maintenance Labour
expressed in man-hours,
LC = Labour cost from Appendix A, item 4,
ADMMC = Airframe Direct Maintenance Material
Service Cost,
ADOSC = Airframe Direct Outside Service Cost,
T = Total flight hours for the Aircraft
recorded for the applicable year.
4
4.0 Credit Calculation
4.1 The actual hourly Airframe Direct Maintenance Cost (ADMC) shall be
compared by XXXX against the ADMCG on an annual basis.
4.2 If the ADMC exceeds the ADMCG by more than ten percent (10%) Buyer's
balance account will be credited with a compensation credit
calculated in accordance with the formula in Article 4.3.
Qb = 0.6 (ADMC-ADMCG) T
where:
Qb = Buyer's compensation credit in dollars when Qb is positive,
ADMC = The average of the ADMC values on an annual basis,
G = Airframe Direct Maintenance Cost Guarantee,
T = As per 3.4
4.3 If the ADMC is less than the ADMCG, XXXX shall accrue an incentive
credit which shall be used as an offset against any potential
liabilities of XXXX during the term of this ADMCG in accordance with
the following formula:
Qs = 0.4 (ADMCG - ADMC) T
where:
Qs = BRAD's incentive credit in dollars when Qs is positive.
ADMC, ADMCG and T shall have the same meaning as used in Article 4.2
above.
5
5.0 Credit Payment
5.1 At the end of the term of this Letter Agreement, Buyer's total
compensation credit calculated under Article 4.2 above, and BRAD's
total incentive credit calculated in Article 4.3 above, shall be
compared by the following formula to determine if a credit is due to
Buyer.
Credit due Buyer = Qb - Qs
Qb and Qs shall have the same meaning as used in Article 4.2 and
Article 4.3 above.
5.2 If the credit due to Buyer is positive, XXXX shall issue to Buyer a
credit memorandum for the purchase of XXXX goods and services for an
amount up to a maximum of [***] per Aircraft, and up to a
maximum credit equal to the product of the following:
[***]
the Agreement
for the term of this Letter Agreement.
5.3 If the credit due to Buyer is negative, Buyer will be under no
obligation to compensate XXXX, nor shall XXXX owe any compensation
to Buyer.
6.0 Audit
Upon five (5) business days prior written notification by XXXX to Buyer
and at BRAD's expense, XXXX shall have the right during normal business
hours to audit all charges reported under this Letter Agreement, Buyer's
applicable maintenance practices and procedures, and applicable Aircraft
records, where normally and customarily maintained, relative to
maintenance, Service Bulletin incorporation and modification of the
Aircraft. Such audit shall not interfere with the conduct of business by
Buyer nor shall Buyer be required to undertake or incur additional
liability or obligations with respect to the audit.
6
7.0 Reporting
7.1 XXXX shall provide a quarterly report to Buyer on the status of the
Airframe direct maintenance cost based on data submitted by Buyer
and approved by XXXX. Failure of Buyer to provide the required data,
in spite of BRAD'S notice and within thirty (30) days thereof, shall
void this Airframe direct maintenance cost guarantee.
7.2 The ADMCG was based upon the assumption outline in Appendix 2 to
this Letter Agreement. Any deviation from the assumptions outlined
in Appendix 2 shall cause a modification in the ADMCG by XXXX.
8.0 Limitation of Liability
THE AIRFRAME DIRECT MAINTENANCE COST GUARANTEE PROVIDED IN THIS LETTER
AGREEMENT AND THE OBLIGATIONS AND LIABILITIES ON THE PART OF XXXX UNDER
THE AFORESAID GUARANTEE ARE ACCEPTED BY BUYER AND ARE EXCLUSIVE AND IN
LIEU OF, AND BUYER HEREBY WAIVES, RELEASES AND RENOUNCES ALL OTHER
REMEDIES, WARRANTIES, GUARANTEES OR LIABILITIES, EXPRESSED OR IMPLIED,
WITH RESPECT TO THE MATTERS COVERED BY THIS GUARANTEE CONCERNING EACH
AIRCRAFT DELIVERED UNDER THE AGREEMENT, ARISING IN FACT, CONTRACT, LAW,
TORT, STRICT PRODUCTS LIABILITY OR OTHERWISE INCLUDING, WITHOUT
LIMITATION, ANY OBLIGATION, LIABILITY, CLAIM OR REMEDY WHETHER OR NOT
ARISING FROM NEGLIGENCE (WHETHER ACTIVE, PASSIVE OR IMPUTED) OF XXXX, ITS
OFFICERS, EMPLOYEES, AGENTS OR ASSIGNEES, OR WITH RESPECT TO ANY IMPLIED
WARRANTY OF FITNESS OR MERCHANTABILITY, ANY IMPLIED CONDITION, ANY IMPLIED
WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF
TRADE, LOSS OF USE, REVENUE OR PROFIT.
9.0 The provisions of this Letter Agreement are personal to Buyer and shall
not be assigned or otherwise disposed of by Buyer without the prior
written consent of XXXX.
7
8.0 In the event of the termination of the Agreement, this Letter Agreement
shall become automatically null and void except that the provisions of
this Letter Agreement shall survive with respect to delivered Aircraft and
the guarantee value and assumptions will be revised to reflect the actual
number of Aircraft delivered under the Agreement.
10.0 This Letter Agreement constitutes an integral part of the Agreement and
subject to the terms and conditions contained therein.
Should there be any inconsistency between this Letter Agreement and the
Agreement with respect to the subject matter covered by the terms hereof, then
this Letter Agreement shall prevail.
Yours truly
BOMBARDIER INC.
By: /s/[SIGNATURE ILLEGIBLE]
---------------------------------
Title: Manager, Contracts
ACCEPTED AND AGREED TO:
this 17th day of September, 0000
Xxxxxx Airlines Corporation
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------
Title: CEO
8
Appendix 1
ADMCG Economic Adjustment Formula
The Airframe Direct Maintenance Cost Guarantee (ADMCG) Adjustment will be
calculated using the following Guarantee Adjustment (GA) Formula. The ADMCG term
is specified in Section 2.1.1 of the Letter Agreement.
GA = G1 - G0
where G1 = G0 [0.60 (L1/L0) + 0.40 (M1/M0)]
GA = ADMCG Value Adjustment
G0 = ADMCG Value
G1 = ADMCG Value adjusted to the final year
L1 = the final year index for labour obtained by calculating the
arithmetic average of the labour indexes published by the United
States Department of Labour Statistics - Employer and Earnings Index
for the fourth, fifth and sixth months prior to the month in the
final year which completes the ADMCG term.
L0 = the delivery year index for labour obtained by calculating the
arithmetic average of the labour indexes published by the United
States Department of Labour Statistics - Employer and Earnings Index
for the fourth, fifth and sixth months prior to the month of the
delivery of the Aircraft which begins the ADMCG term.
M1 = the final year index for material obtained by calculating the
arithmetic average of the material indexes published by the United
States Department of Labour - Material Industrial Commodities,
Producer Price Index, for the fourth, fifth and sixth months prior
to the month in the final year which completes the ADMCG term.
M0 = the delivery year index for material obtained by calculating the
arithmetic average of the material indexes published by the United
States Department of Labour - Material Industrial Commodities,
Producer Price Index, for the fourth, fifth and sixth months prior
to the month of the delivery of the Aircraft which begins the ADMCG
term.
In the event that either or both indices decline during the term of
the guarantee, negative indices will be assumed to equal delivery
year indices.
9
Appendix 2
Airframe Direct Maintenance Cost Guarantee
Guarantee Value Assumptions
The following is a listing of all assumptions used to determine the ADMCG per
flight hour. It Is understood by the parties that these assumptions may change
in which case the parties, with mutual agreement, will adjust the ADMCG.
1. M1 costs are based upon Specification.
2. All costs are based on the maintenance inspection intervals in the Buyer's
regulatory agency approved initial maintenance program.
3. All costs expressed in July 1, 0000 Xxxxxx Xxxxxx Dollars and are rounded
to the nearest whole dollar subject to escalation in accordance with
Appendix 1.
4. Buyer's in-house airframe labour rate per man-hour is Thirty United States
Dollars ($30.00 U.S.).
5. Buyer's subcontract airframe labour rate per man-hour is Sixty United
States Dollars ($60.00 U.S.).
6. All component repair and overhaul is subcontracted.
7. Annual average Aircraft utilization is not less than three thousand
(3,000) flight hours per year.
8. Buyer's average annual flight duration for the Aircraft will be seventy
eight (78) minutes per departure.
10
Annex A
Yearly Airframe Direct Maintenance Costs
For information purposes only, the following [***]
comprise the final guaranteed value for the guarantee term:
YEARLY FLEET
AVERAGE
YEAR ($/hr)
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
Note that these [***].
11
Annex B
Average flight time adjustment formula
Should Buyer's average annual flight duration change throughout the ten year
term of this guarantee, a new Airframe Direct Maintenance Cost Guarantee value
will be generated as per the following formula:
ADMCG (new) = [***]
---------------------
T
where:
ADMCG (new) = Revised Airframe Direct Maintenance Cost
Guarantee (US Dollars/FH) for years one (1)
through [***]
T = Average flight time (in hours) at new
average stage length
12
[LOGO] Bombardier Inc.
Bombardier Regional Aircraft Division
000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Telephone (000) 000-0000
Contracts Facsimile (000) 000-0000
September 17th, 1997
Our Ref: X00-0000-XXXX-XXX0000-000
Xxxxxx Airlines Corporation
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
XXX
Attention: Mr. Xxxxxx Xxxxxxxx, Chairman, President & CEO
Gentlemen,
Re: Letter Agreement No. 009 (Re: Dispatch Reliability)
Reference is made to Purchase Agreement No. PA-0393 (the "Agreement") between
Bombardier Inc., represented by its Bombardier Regional Aircraft Division
("XXXX") and Midway Airlines Corporation ("Buyer") for the sale of ten (10)
Canadair Regional Jet Aircraft (the "Aircraft").
This letter, when accepted and agreed to by Buyer contemporaneously with
execution of the Agreement, will become part of the Agreement and will evidence
our further agreement with respect to the matters set forth below.
All terms used herein and in the Agreement not defined herein, shall have the
same meaning as in the Agreement.
Subject: Dispatch Reliability
1
1.0 Intent
The intent of the Dispatch Reliability Guarantee ("DRG") is to achieve the
full potential of the inherent technical reliability of the Aircraft
through the joint efforts of XXXX and Buyer. To that end, XXXX agrees to
take action as specified below and Buyer agrees to set its Aircraft fleet
dispatch reliability target equal to or greater than the sum of the
Guarantee Value plus four tenths of a point so that both Buyer and BRAD's
technical staff can pursue attainment of the Guarantee Value.
2.0 Definition
As defined in World Airlines Technical Operations Glossary (W.A.T.O.G.), a
chargeable technical delay shall be any delay greater than fifteen (15)
minutes beyond scheduled revenue departure time caused by malfunction of
equipment affecting any of the Aircraft ("Chargeable Technical Delay") and
a cancellation shall be the deletion of the flight from Buyer's operating
schedule, provided that no more than one (1) delay or cancellation shall
be charged to a specific malfunction ("Cancellation").
3.0 Guarantee Value
XXXX guarantees that the Aircraft dispatch reliability with respect to
avoidance of Chargeable Technical Delays or Cancellations shall, at the
end of the period indicated below, meet the guarantee value percentages
specified below ("Guarantee Value"):
Period Guarantee Value (%)
------ -------------------
First six months N/A
[***] [***]
[***] [***]
[***] [***]
4.0 Term of Guarantee
The term of this guarantee shall commence on the date of start of revenue
service of Buyer's first delivered Aircraft and shall expire [***]
years thereafter or whenever the six month rolling average is equal to or
exceeds [***] dispatch reliability for [***], whichever comes first.
2
5.0 Formula
As the term is used herein, "dispatch reliability" shall be a six (6)
month moving average numerical value (expressed as a percentage) which
shall be calculated by application of the following formula:
DR = 100(1 - CD/SD)
Where:
DR = Dispatch Reliability (expressed as percentage)
CD = Total Chargeable Technical Delays and Cancellations.
SD = Total Scheduled Revenue Departures
6.0 Assumptions
[***]
7.0 Conditions and Limitations
7.1 Any delay or cancellation due to any one or more of the following
causes shall not be considered a Chargeable Technical Delay or
Cancellation in computing compliance with this DRG:
a) Delay or cancellation due to operation or maintenance of
equipment in the Aircraft not being in accordance with the
approved Technical Data;
b) Delay or cancellation due to acts or omissions of Buyer
including but not limited to unavailability of serviceable
spare parts, ground support equipment or personnel, and not
dispatching in accordance with the approved Minimum Equipment
List;
3
c) Delay or cancellation caused by problems that have had
relevant recommended Service Bulletins or Airworthiness
Directives issued against them, if Buyer has not incorporated
the bulletin on the Aircraft in question, provided that Buyer
has had reasonable time to incorporate said bulletin or
directive consistent with Buyer's maintenance program;
d) Delay or cancellation caused by BFE of Buyer or Buyer
designated equipment (equipment designated by Buyer and
purchased by XXXX on behalf of Buyer);
e) Delay or cancellation caused by Power Plant Parts;
f) Delay or cancellation due to any modifications to the Aircraft
made by Buyer without BRAD's written approval unless Buyer
furnishes reasonable evidence that such modification was not a
prime cause of the delay; or
g) Any delay or cancellation due to acts of God or acts of third
parties or force majeure.
7.2 Reporting
Buyer shall provide to XXXX not later than thirty (30) days after
the last day of each month all reports as required by Buyer's
regulatory authority. Buyer shall also provide a report to XXXX of
the corrective action for such Chargeable Technical Delays or
Cancellations, and the information on modifications or Service
Bulletins relevant to such Chargeable Technical Delays or
Cancellations accomplished during each month. Buyer shall also
provide XXXX such other information and data as XXXX xxx reasonably
request for the purpose of analyzing Chargeable Technical Delays or
Cancellations. XXXX shall respond to the data in a timely manner and
shall provide Buyer with a summary of fleetwide reliability reports
on a monthly basis.
4
7.3 Master Record
The master record of dispatch reliability will be maintained by XXXX
based upon information provided by Buyer's maintenance control
program as requested herein.
XXXX shall format the data into BRAD's format.
8.0 Corrective Action
8.1 In the event the achieved dispatch reliability, as reported to Buyer
by XXXX, fails to equal the Guarantee Value for the applicable
period, XXXX and Buyer will jointly review the performance for that
period to identify improvement changes required. XXXX shall also
provide, at no charge, if requested by Buyer:
a) Technical service support to analyze Buyer's operating
procedures, maintenance practices, training programs, manuals
and publications and related procedures, practices, policies
and programs that can have an adverse effect on dispatch
reliability and recommend any changes in such procedures,
practices, policies and programs reasonably indicated to
improve the dispatch reliability;
b) Review of data related to parts, material, components,
accessories and equipment incorporated in, and used in
connection with, the Aircraft and furnish technical advice and
information to Buyer for the purpose of improving the dispatch
reliability of the Aircraft;
c) Corrective XXXX engineering design changes and modification
kits of XXXX Parts and material for the Aircraft which will,
in the joint opinion of Buyer and XXXX, cause the performance
of the Aircraft upon Buyer's installation, to meet or exceed
the dispatch reliability guarantee. The modification kits and
design changes supplied by XXXX which provide added value to
Buyer beyond that required to reach the specified guarantee
value will be negotiated by XXXX and Buyer to define the cost
allocation of the "Added Value". XXXX will pay for direct
labour hours incurred based on BRAD's estimated labour hours
or Buyer's actual labour hours, whichever is less, for the
percentage as determined above of the installation cost
necessary to meet the Guarantee Value. Buyer and XXXX agree
that Buyer's obligations to install such modification kits
shall be
5
consistent with Buyer's maintenance program. Thereafter,
failure by Buyer to install a XXXX change shall result in the
exclusion of the associated malfunction from the dispatch
reliability computation, unless Buyer can demonstrate to
BRAD's reasonable satisfaction that the change would not have
eliminated the malfunction; and
d) XXXX shall use its reasonable efforts to require its suppliers
to provide corrective action at no charge to Buyer to the
extent required when Chargeable Technical Delays or
Cancellations exceed the guaranteed dispatch reliability as a
direct result of failure of equipment designed by such
suppliers.
8.2 BRAD's liability to investigate and provide corrective action under
the terms of this DRG shall be dependent upon the quality, extent
and regularity of information and data reported to XXXX by Buyer.
9.0 Implementation of Changes
Buyer may, at its option, decline to implement any change proposed by XXXX
under Article 8.0 above. If Buyer so declines, XXXX xxx adjust the number
of Chargeable Technical Delays or Cancellations by an amount consistent
with the expected reduction in Chargeable Technical Delays or
Cancellations based on reasonable substantiation to Buyer and on other
operator experience, if any, as if such change has been incorporated. XXXX
shall not make adjustments when Buyer has demonstrated to BRAD's
reasonable satisfaction that such change is not cost effective to Buyer.
10.0 Duplicate Remedies
It is agreed that XXXX shall not be obligated to provide to Buyer any
remedy which is a duplicate of any other remedy which has been provided to
Buyer elsewhere under the Agreement, by the Power Plant manufacturer or by
any vendor.
6
11.0 Limitation of Liability
THE DISPATCH RELIABILITY GUARANTEE PROVIDED IN THIS LETTER AGREEMENT AND
THE OBLIGATIONS AND LIABILITIES ON THE PART OF XXXX UNDER THE AFORESAID
GUARANTEE ARE ACCEPTED BY BUYER AND ARE EXCLUSIVE AND IN LIEU OF, AND
BUYER HEREBY WAIVES, RELEASES AND RENOUNCES ALL OTHER REMEDIES,
WARRANTIES, GUARANTEES OR LIABILITIES, EXPRESS OR IMPLIED, WITH RESPECT TO
THE MATTERS COVERED BY THIS GUARANTEE CONCERNING EACH AIRCRAFT DELIVERED
UNDER THE AGREEMENT, ARISING IN FACT, CONTRACT, LAW, TORT, STRICT PRODUCTS
LIABILITY OR OTHERWISE INCLUDING, WITHOUT LIMITATION, ANY OBLIGATION,
LIABILITY, CLAIM OR REMEDY WHETHER OR NOT ARISING FROM NEGLIGENCE (WHETHER
ACTIVE, PASSIVE OR IMPUTED) OF XXXX, ITS OFFICERS, EMPLOYEES, AGENTS OR
ASSIGNEES, OR WITH RESPECT TO ANY IMPLIED WARRANTY OF FITNESS OR
MERCHANTABILITY, ANY IMPLIED CONDITION, ANY IMPLIED WARRANTY ARISING FROM
COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OR TRADE, LOSS OF USE,
REVENUE OR PROFIT.
12.0 The provisions of this Letter Agreement are personal to Buyer and shall
not be assigned or otherwise disposed of by Buyer without the prior
written consent of XXXX.
13.0 This Letter Agreement constitutes an integral part of the Agreement and
subject to the terms and conditions contained therein.
14.0 In the event of the termination of the Agreement, this Letter Agreement
shall become automatically null and void except that the provisions of
this Letter Agreement shall survive with respect to delivered Aircraft and
the guarantee value and assumptions will be revised to reflect the actual
number of Aircraft delivered under the Agreement.
7
Should there be any inconsistency between this Letter Agreement and the
Agreement with respect to the subject matter covered by the terms hereof then
this Letter Agreement shall prevail.
Yours truly
BOMBARDIER INC.
By: /s/[SIGNATURE ILLEGIBLE]
---------------------------------
Title: Manager, Contracts
ACCEPTED AND AGREED TO:
this 17th day of September, 0000
Xxxxxx Airlines Corporation
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------
Title: CEO
8
[LOGO] Bombardier Inc.
Bombardier Regional Aircraft Division
000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Telephone (000) 000-0000
Contracts Facsimile (000) 000-0000
September 17th, 1997
Our Ref: X00-0000-XXXX-XXX0000-000
Xxxxxx Airlines Corporation
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
XXX
Attention: Mr. Xxxxxx Xxxxxxxx, Chairman, President & CEO
Gentlemen,
Re: Letter Agreement No. 010 (Re: Performance)
Reference is made to Purchase Agreement No. PA-0393 (the "Agreement") between
Bombardier Inc., represented by its Bombardier Regional Aircraft Division
("XXXX") and Midway Airlines Corporation ("Buyer") for the sale of ten (10)
Canadair Regional Jet Aircraft (the "Aircraft").
This letter, when accepted and agreed to by Buyer contemporaneously with
execution of the Agreement, will become part of the Agreement and will evidence
our further agreement with respect to the matters set forth below.
All terms used herein and in the Agreement not defined herein, shall have the
same meaning as in the Agreement.
Subject: Performance
1
1.0 AIRCRAFT CONFIGURATION
The [***] listed below are based on the CRJ-200-ER Aircraft
configuration as defined in Canadair Customized Specification
RAD-601R-153, issue NC, and equipped with GE GF34-3B1 engines as defined
in GE Engines Specification E1271A. The weight data corresponds to the
51000 lb (23133 kg) MTOW design weight option and includes the weight
changes associated with the centre-wing fuel tank. Appropriate adjustments
shall be made for changes in configuration approved by the Buyer and XXXX
or otherwise allowed by the Purchase Agreement which cause changes to the
performance of the Aircraft.
2.0 AIRPORT CONDITIONS
2.1 RDU - Raleigh/Durham
Runway: 05L
Elevation: 436 ft
Ambient temperature: ISA+15 degrees C
Runway available-take-off: 10000 ft (3048 m)
Clearway: 0 ft (0 m)
Stopway: 0 ft (0 m)
Line-up allowance: 82 ft (25 m)
Runway available-landing: 8114 ft (2473 m)
Wind: none
Slope: 0.4% (uphill)
Obstacles (relative to brake release point)
dist(ft/m) height(ft)
11474/3497 48
12556/3827 81
12848/3916 94
2.2 [***]
Page 2
[***]
(15 pages omitted)
Page 3
10.0 The provisions of this Letter Agreement are personal to Buyer and shall
not be assigned or otherwise disposed of by Buyer without the prior
written consent of XXXX.
11.0 This Letter Agreement constitutes an integral part of the Agreement and
subject to the terms and conditions contained therein.
12.0 In the event of the termination of the Agreement, this Letter Agreement
shall become automatically null and void except that the provisions of
this Letter Agreement shall survive with respect to delivered Aircraft.
Should there be any inconsistency between this Letter Agreement and the
Agreement with respect to the subject matter covered by the terms hereof, then
this Letter Agreement shall prevail.
Yours truly
BOMBARDIER INC.
By: /s/[SIGNATURE ILLEGIBLE]
---------------------------------
Title: Manager, Contracts
ACCEPTED AND AGREED TO:
this 17th day of September, 0000
Xxxxxx Airlines Corporation
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------
Title: CEO
18
[LOGO] Bombardier Inc.
Bombardier Regional Aircraft Division
000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Telephone (000) 000-0000
Contracts Facsimile (000) 000-0000
September 17th, 1997
Our Ref: X00-0000-XXXX-XXX0000-000
Xxxxxx Airlines Corporation
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
XXX
Attention: Mr. Xxxxxx Xxxxxxxx, Chairman, President & CEO
Gentlemen,
Re: Letter Agreement No. 011 (Re: Configuration)
Reference is made to Purchase Agreement No. PA-0393 (the "Agreement") between
Bombardier Inc., represented by its Bombardier Regional Aircraft Division
("XXXX") and Midway Airlines Corporation ("Buyer") for the sale of ten (10)
Canadair Regional Jet Aircraft (the "Aircraft").
This letter, when accepted and agreed to by Buyer contemporaneously with
execution of the Agreement, will become part of the Agreement and will evidence
our further agreement with respect to the matters set forth below.
All terms used herein and in the Agreement not defined herein, shall have the
same meaning as in the Agreement.
1
Subject: Configuration
1.0 [***]
2.0 [***]
3.0 The provisions of this Letter Agreement are personal to Buyer and shall
not be assigned or otherwise disposed of by Buyer without the prior
written consent of XXXX.
4.0 This Letter Agreement constitutes an integral part of the Agreement and
subject to the terms and conditions contained therein.
5.0 In the event of the termination of the Agreement, this Letter Agreement
shall become automatically null and void except that the provisions of
this Letter Agreement shall survive with respect to delivered Aircraft.
2
Should there be any inconsistency between this Letter Agreement and the
Agreement with respect to the subject matter covered by the terms hereof, then
this Letter Agreement shall prevail.
Yours truly
BOMBARDIER INC.
By: /s/[SIGNATURE ILLEGIBLE]
---------------------------------
Title: Manager, Contracts
ACCEPTED AND AGREED TO:
this 17th day of September, 0000
Xxxxxx Airlines Corporation
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------
Title: CEO
3
ANNEX A
CONFIGURATION DIFFERENCES FOR FIRST FOUR AIRCRAFT
Option No. Description Comments
25-108 [***] [***]
25-093 [***] [***]
25-351 [***] [***]
25-TBD [***] [***]
34-019 [***] [***]
34-350 [***] [***]
35-TBD [***] [***]
4
