GENERAL TERMS AGREEMENT
BETWEEN
ROLLS-ROYCE CORPORATION
AND
ASTRAL AVIATION, INC.
CONTRACT REFERENCE MG755
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General Terms Agreement
TABLE OF CONTENTS
CLAUSE 1. Definitions........................................................4
CLAUSE 2. Scope of Agreement.................................................6
CLAUSE 3. Purchase Orders....................................................7
CLAUSE 4. Delivery...........................................................8
CLAUSE 5. Prices.............................................................9
CLAUSE 6. Payment...........................................................10
CLAUSE 7. Taxes and Other Charges...........................................11
CLAUSE 8. Delay.............................................................12
CLAUSE 9. Events of Default and Termination.................................14
CLAUSE 10. Non-disclosure....................................................15
CLAUSE 11. Patents...........................................................16
CLAUSE 12. Grant of Warranty and Limitation of Liability.....................17
CLAUSE 13. Indemnification...................................................18
CLAUSE 14. General...........................................................19
CLAUSE 15. Export/Import Shipment (Not Applicable)...........................22
Exhibit A - Aircraft Delivery Schedule........................................24
Exhibit B - Operating Assumptions.............................................25
Exhibit C - Warranties........................................................26
EXHIBIT D - OPERATOR SERVICES.................................................35
EXHIBIT E - FLEET PROVISIONING SUPPORT........................................38
EXHIBIT F - FLEET GUARANTEES..................................................45
Exhibit G - TOTAL SUPPORT PACKAGE.............................................57
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Rolls-Royce Corporation/Astral Aviation
General Terms Agreement
THIS AGREEMENT is made this 13th day of August 2001.
BETWEEN
Rolls-Royce Corporation Whose registered office is at 0000 X. Xxxxx Xxx.,
Xxxxxxxxxxxx, Xxxxxxx 00000, (hereinafter called
"Rolls-Royce") of the first part, and
Astral Aviation, Inc., a wholly owned subsidiary of
Midwest Express Airlines, Inc., operating under
the name of `Skyway Airlines - The Midwest
Airlines Connection'
Whose registered office is at 0000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxxx, Xxxxxxxxx, X.X.X. 00000
(hereinafter called "Operator"), of the second part
Operator or Rolls-Royce may hereinafter be referred to as a "Party" or
collectively as the "Parties".
WHEREAS:
A. Operator has entered into an Agreement for the purchase from Embraer of new
Rolls-Royce AE3007 powered ERJ aircraft.
B. Operator and Rolls-Royce desire to enter into this Agreement for the sale
and support by Rolls-Royce and the purchase by Operator from Rolls-Royce of
Products and Services.
NOW THEREFORE IT IS AGREED AS FOLLOWS:-
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CLAUSE 1. Definitions
The following words and phrases, when used in this Agreement, shall have the
meaning and definition set forth below. Should the definitions used in this
Agreement differ from the definitions contained in the Manuals, the definitions
used in this Agreement shall take precedence for the purpose of this Agreement.
Definitions specific to only one Exhibit to this Agreement are contained in the
relevant Exhibit.
"Agreement" shall mean this agreement, including all exhibits attached hereto.
"Aircraft" means the twenty (20) Firm ERJ aircraft and twenty (20) Option ERJ
aircraft (referred to separately as the "Firm Aircraft" or "Option Aircraft", or
collectively as the "Aircraft") powered by Engines which are being purchased by
Operator from Airframer for delivery in accordance with the schedule set out in
Exhibit A.
"Airframer" means Embraer - Empresa Brasileira De Aeronautica S. A.
"Airworthiness Authority" means the FAA.
"ATA Specifications" means then current revisions of ATA specifications No's
100, 101, 102, 103, 200, 300, 400 and spec 2000 or equivalent.
"CAA" means the United Kingdom Civil Aviation Authority (Airworthiness
Division).
"Commercial Price List(s)" means Rolls-Royce's published price catalogues of
Parts, Tooling and other Products and Services as may be published from time to
time.
"Covered Components" shall mean the Parts and components of Qualified Equipment
that are identified in Schedule F to Exhibit G of this Agreement.
"Designated Part" means any Part listed in Schedule 1 to Exhibit C.
"Effective Date" means the date on which this Agreement has been duly executed
by its authorized representatives.
"EMP" means the Rolls-Royce Engine Management Program to be proposed by
Rolls-Royce and accepted by Operator after meaningful review and an opportunity
to provide input (such acceptance not to be unreasonably withheld) which, among
other things, specifies the Engine configuration and shop management
requirements for the Rework of Engines, as it may be amended by mutual agreement
between Rolls-Royce and Operator from time to time. Rolls-Royce shall ensure
that the EMP conforms to the requirements of the FAA; Operator shall ensure that
the EMP is included in the Aircraft Maintenance Plan which is approved by the
FAA.
"Engine(s)" means the Rolls-Royce AE3007 A1/3 turbofan engines acquired by
Operator in support of the Aircraft, and delivered either to Operator on
Aircraft or as spare Engines pursuant to Exhibit D, E, F or G hereto.
"FAA" means the United States Federal Aviation Administration.
"Failure" means, subject to the applicable warranty periods identified in
Exhibit C, the mandatory removal of a Part or the breakdown or deterioration of
a Part which necessitates the removal of the Engine or Module or Part from the
Aircraft or is discovered during the Rework performed in connection with such a
removal.
"Flight Cycle" means the operation of an Engine from the time an Aircraft leaves
the ground until it touches the ground at the end of a flight. A touch and go
landing shall also be considered as a Flight Cycle.
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"Flight Hours" means the airborne hours in operation of each Engine computed
from the time an Aircraft leaves the ground until it touches the ground at the
end of a flight.
"FOD" means damage to an Engine resulting from the non-negligent ingestion of
material not resident within the Engine and where such damage requires removal
of the Engine, Module or Part from service.
"Information" means confidential or proprietary non-public information which is
disclosed by Rolls-Royce to Operator and confidential or proprietary non-public
information which is disclosed by Operator to Rolls-Royce, including but not
limited to all oral, electronic or written information, know how, data, reports,
drawings and specifications.
"Inspection" means an examination of an Engine or any Parts through disassembly
and/or other non-destructive means to determine its serviceability.
"JAA" means the Joint Airworthiness Authority.
"Lease Agreement" means Standard Terms of Business for Leasing reference MG773
dated 13 August between Rolls-Royce Rolls-Royce and Operator.
"Life Limited Parts" means Engine Parts for which either Rolls-Royce or the
Airworthiness Authority has established a maximum period of operational Flight
Cycles with periodic Rework and/or restoration.
"Manuals" means the Rolls-Royce Engine series manuals as produced by Rolls
Royce.
"Module(s)" means the Rolls-Royce Engine modules purchased by Operator from
Rolls-Royce, or installed in Engines delivered to Operator on Aircraft, or
embodied by an Authorized Facility.
"Part" means any part including a Designated Part manufactured or supplied by
Rolls-Royce.
"Product(s)" means Engines, Modules, Parts, Covered Components and Tooling.
"QEC Kit" means a quick engine change kit manufactured by the relevant nacelle
supplier, if applicable.
"Rework" means the repair, replacement, and/or refurbishment at an Authorized
Facility (including the provision of Parts) necessary to return Covered
Components, Engines, Modules or Parts to a serviceable condition in accordance
with the applicable Manuals and the EMP.
"Services" means the services to be provided pursuant to Exhibits D, G and H
hereto.
"Tooling" means tools, jigs, fixtures and other products which are not for
installation in the Engine.
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CLAUSE 2. Scope of Agreement
Rolls-Royce agrees to sell to Operator and Operator agrees to purchase Products
and Services from Rolls-Royce in accordance with the terms, conditions and
warranties contained in this Agreement in lieu of the general terms and
conditions on or attached to or otherwise forming part of any purchase order,
quotation, acknowledgment, invoice or other document issued by either Party
(provided that Operator's purchase orders shall contain quantities and the other
items described in Clause 3.1).
Clauses 1 to 15 of this Agreement set forth the general terms governing the
supply of Products and Services that are common across all such Products and
Services, while the Exhibits of this Agreement set forth the terms, conditions
and warranties that apply to specific Products and Services.
Subject to the provisions authorizing termination for cause in Clause 9 below,
Rolls-Royce hereby agrees that it will sell repair or replacement Parts,
Modules, Covered Components and Tooling to Operator on the terms set forth in
this Agreement from the Effective Date through and including the date that is
sixteen and one-half (16 1/2) years after the date on which the last Aircraft
purchased by Operator is delivered to Operator.
The Shop Maintenance Guarantee set out in Exhibit F and the Total Support
Program set out in Exhibit G are mutually exclusive options. Operator will
inform Rolls-Royce in writing 3 (three) months prior to entry-into-service of
the first Aircraft, which of the two options it wishes to select. Rolls-Royce
and Operator will then promptly execute an amendment to the Agreement that will
delete the option that Operator has chosen not to select.
Operator has certain rights with Airframer to convert ERJ 140 / 135 aircraft
into XXX 000 aircraft. Should Operator elect to convert certain Aircraft into
ERJ 145 aircraft, then Operator would operate either the AE3007 A1 or A1P engine
on the XXX 000. To the extent any of the terms and conditions of this Agreement
and / or the Side Letter Agreement Number One to this GTA, contract reference
MG757, and / or the STOBL, contract reference MG773 change, then Rolls-Royce
will advise in writing to Operator such changes and the Parties will amend the
agreements described above to reflect such changes. It is assumed by Rolls-Royce
that changes to the agreements due to the change to an AE3007 A1 / A1P rating
will include but is limited to the following sections: Total Support Package
charges, Shop Maintenance Guarantee rate, Warranties, Guarantees and Base Prices
set out in this Agreement and Charges set out in the STOBL.
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CLAUSE 3. Purchase Orders
3.1 Products and Services purchased under the terms of this Agreement shall be
ordered by means of purchase orders issued by Operator in an agreed format
consistent with the requirements of ATA Specifications. The terms,
conditions and warranties set forth in this Agreement shall apply to all
purchase orders. Any purchase order issued hereunder, unless otherwise
specified, shall contain at a minimum: description, quantity, delivery
dates and the unit and extended price of the Products and Services,
restatement of payment terms, container price and shipping instructions.
3.2 Rolls Royce shall provide written and/or electronic acknowledgment of its
acceptance of purchase orders. Should Rolls-Royce be unable to meet any
requirements under a purchase order, Rolls-Royce will so notify Operator
and propose an alternative delivery schedule in a timely manner.
Rolls-Royce undertakes that such alternative delivery schedule will not
unduly disadvantage Operator relative to other purchasers of the same
goods or services at such time.
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CLAUSE 4. Delivery
4.1 Rolls-Royce shall deliver Products and, where applicable, Services Ex
Works, Rolls-Royce Indianapolis (Incoterms 2000). Upon request by
Operator, Rolls-Royce will arrange for the transportation from
Indianapolis to the Operator's main base.
4.2 Shipping documents, invoices, packaging and marking of packaging for
Products and Services shall be in accordance with ATA Specifications.
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CLAUSE 5. Prices
5.1 Except for the spare Engines (the pricing of which is established in
Exhibit E-1 and Schedules 1 and 2 to Exhibit E) and TSP Charges (the
pricing of which is established in Exhibit G), all Products and Services
shall be as described in the applicable Commercial Price List, or for
those Products and Services not specified in such a listing, available
from Rolls-Royce on a quotation basis. The Rolls-Royce Spare Parts Price
Catalogue for the Engine, and such other Commercial Price Lists and any
revisions and updates thereof shall be published by Rolls-Royce to all
operators of the Engine, and shall not be specific to operators but shall
generally apply to the purchase of such goods or services from Rolls-Royce
during their respective period of validity.
5.2 All prices, and all amounts stated to be payable by Operator in this
Agreement exclude value added tax, sales tax, goods and services tax, tax
on turnover or tax on turnover or similar charges (but include any income
taxes incurred by or imposed upon Rolls-Royce; Rolls-Royce shall be solely
responsible for all such income taxes).
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CLAUSE 6. Payment
6.1 Immediately following or concurrent with supply of Products and Services,
Rolls-Royce shall submit an invoice to Operator stating amounts due.
Unless otherwise specified in this Agreement, payment shall be made by
Operator in United States Dollars within thirty days after the later of
(a) the delivery date of the Products or Services, or (b) the date of
invoice.
6.2 Without prejudice to Rolls-Royce's other rights and remedies, Rolls-Royce
shall be entitled to enforce a late payment amount calculated at a rate of
(i) 0.05% (five hundredths of one percent) per day; or (ii) the highest
interest rate permitted by applicable law, whichever is the lower, which
shall be applied to any amounts not paid when due.
6.3 Unless agreed otherwise, all payments required under this Agreement shall
be made in United States Dollars without any withholding for sales taxes
imposed by any State of the United States of America on the basis of the
purchase price of the Products or Services, by (in the case of payments
for spare Engines and Total Support Package charges, if applicable,
purchased hereunder) wire transfer to Rolls-Royce's account as follows:
Chase Manhattan Bank
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, X.X. 00000
ABA #000000000
Account of Rolls-Royce Corporation
Account #400-707764
or by (in the case of payments for other Products or Services) wire
transfer to Rolls-Royce's above-identified account or check sent to
Rolls-Royce's registered office clearly marked with the recipient
"Treasury Department". For the purpose of this Clause 6.3 "Payment" shall
only be deemed to have been made when cleared or good value funds are
received in the numbered Rolls-Royce bank account specified above or at
Rolls-Royce's registered office.
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CLAUSE 7. Taxes and Other Charges
Operator in addition to the price of Products and Services, agrees to pay
Rolls-Royce upon demand, or furnish to Rolls-Royce evidence of exemption
therefrom, any taxes (including without limitation, sales, use, excise,
turnover, value added taxes or goods and services taxes), duties, fees, charges,
fines, penalties or assessments of any nature (but excluding any taxes in the
nature of income taxes), legally assessed or levied by any Governmental
authority against Rolls-Royce or its employees, its divisions or subsidiaries or
their employees, as a result of any sale, delivery, transfer, use, export,
import or possession of such Product or Service to or by Operator, or otherwise
in connection with this Agreement. If claim is made against Rolls-Royce for any
such taxes, duties, fees, charges, fines, penalties or assessments, Rolls-Royce
shall immediately notify Operator. If requested by Operator, Rolls-Royce shall
not pay except under protest, and if payment be made, shall use all reasonable
effort to obtain a refund thereof. If all or any part of any such taxes, duties,
fees, charges, fines, penalties or assessments be refunded, Rolls-Royce shall
repay to Operator such part which Operator had paid to Rolls-Royce. Operator
shall pay to Rolls-Royce upon demand, all costs (including penalties and
interest) incurred by Rolls-Royce in protesting payment and in endeavoring to
obtain such refund at the request of Operator.
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CLAUSE 8. Delay
8.1 If and to the extent Rolls-Royce is prevented from manufacturing or
delivering any Product within the time for delivery specified in this
Agreement (as such time may be extended pursuant to the other provisions
of this Agreement) by reason of:-
war, insurrection, explosion, flood, fire, strike, act of government
occurring after the date of this Agreement (but only to the extent said
act becomes effective after the Effective Date) or act or omission of
Operator in breach of this Agreement, then
the time for scheduled delivery shall be extended by a period equal to the
period for which manufacture or delivery shall have been so prevented and
Rolls-Royce shall not be under any liability whatsoever in respect of such
delay; provided, however, that Rolls-Royce will not be entitled to rely
upon this provision unless it notifies Operator in writing of any such
event within ten (10) calendar days after its occurrence, including in
such notice details of the event and an estimate of its effects on the
timing of delivery. Rolls-Royce shall use its commercially reasonable
efforts to overcome the effects of any such event and resume performance
as promptly as possible.
8.2 If delivery of any Product or Service is delayed beyond the time for
delivery specified in this Agreement (as such time may be extended
pursuant to the provisions of this Agreement) for any reason not
contemplated in Clause 8.1 above, then the following shall appy:
Should Rolls-Xxxxx xxxxx any agreed date of delivery of any Product or
Service for reasons other than those set out in Clause 8.1 hereof then in
respect of the first month of such delay Rolls-Royce shall not be under
any liability. In respect of any further delay the damages recoverable by
Operator from Rolls-Royce as Operator sole remedy shall not exceed 0.5 %
(one half of one per cent) of the purchase price of the Product or Service
so delayed in respect of each month of such further delay (and pro rata
for any period of less than one month) subject to an overall maximum of
* of the purchase price of the Product or Service so delayed.
8.3 Should Rolls-Xxxxx xxxxx any agreed date of delivery for any spare Engine
for reasons other than those set out in Clause 8.1 hereof, and Operator
has an urgent operational requirement for a spare Engine to avoid an
"Aircraft on Ground" situation, then Operator may request that Rolls-Royce
shall provide to Operator a lease engine in accordance with the Standard
Terms of Business for Leasing, reference MG773.
Dependant under which maintenance support program the Operator operates
its Engines, Operator shall pay charges in respect of such lease engine as
follows:
o If Operator operates under the Total Support Package including Life
Limited Parts then the charges shall be the applicable daily rental
charge in accordance with the Standard Terms of Business for Leasing
subject to a maximum amount per month equal to a then applicable
monthly operating lease rate for a ten-year term at market rates, plus
the then applicable Total Support Package charge limited to the Shop
Visit Coverage and LLP elements and ; or
o If Operator operates under the Total Support Package excluding Life
Limited Parts then the charges shall be the applicable daily rental
charge in accordance with the Standard Terms of Business for Leasing
subject to a maximum amount per month equal to a then applicable
monthly operating lease rate for a ten-year term at market rates, plus
the then applicable Total Support Package charge limited to the Shop
Visit Coverage element , plus the then applicable cyclic charge in
accordance with the Standard Terms of Business for Leasing ; or
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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o If Operator does not operate under the Total Support Package then the
charges shall be the applicable daily rental charge in accordance with
the Standard Terms of Business for Leasing subject to a maximum amount
per month equal to a then applicable monthly operating lease rate for
a ten-year term at market rates, plus the then applicable cyclic and
hourly charge in accordance with the Standard Terms of Business for
Leasing ; or
o If upon such request by Operator Rolls-Royce fails to provide such
lease engine to Operator then in respect of the first day of the
non-excusable delay Rolls-Royce shall not be under any liability, and
in respect of any further non-excusable delay in excess of 1 (one) day
Rolls-Royce as its sole obligation shall provide to Operator a credit
note in the amount of the then current daily rental charge applicable
to Engines in accordance with the Standard Terms of Business for
Leasing in respect of each day of such delay beyond the first day of
such delay.
The total liability of Rolls-Royce under this Clause 8.3 in respect of
each spare Engine shall not exceed an amount equal to the then current
daily rental charge for a period of 180 (one hundred and eighty) days in
accordance with the Standard Terms of Business for Leasing.
The remedies available to Operator under this Clause 8.3 shall be in lieu
of the remedies set out in Clause 8.2 above.
8.4 Should Rolls-Xxxxx xxxxx delivery of any Products or Services for a period
of 12 (twelve) months then, in addition to the right of Operator under
Clause 8.2 above, Operator shall be entitled to refuse to take delivery of
such item on giving Rolls-Royce notice in writing within one month after
the expiration of such period of 12 (twelve) months. Upon receipt of such
notice Rolls-Royce shall be free from any further obligation in respect of
such item of Supplies except that Rolls-Royce shall refund to Operator any
deposits plus reasonable amount for interest made in respect of the
purchase price of such Products or Services, if applicable
The right of Operator to claim damages shall be conditional upon the
submission of a written claim therefor within thirty days from the date of
which Rolls-Royce notifies Operator that the Products or Services so
delayed is ready for delivery or from the date on which Operator exercises
the right of cancellation in respect of such item as set out below,
whichever date shall first occur.
8.5 Rolls-Royce and Operator acknowledge that the liquidated damages
calculated as set forth in Clause 8.2 and Clause 8.3 are reasonable
damages in light of the anticipated harm that will be caused by such
non-excused delay in delivery or failure to provide a warranty remedy (as
the case may be), the difficulties of proof of loss, and the inconvenience
or non-feasibility of Operator's otherwise obtaining an adequate remedy.
Liquidated damages due pursuant to Clause 8.2 or Clause 8.3 shall be
payable by Rolls-Royce to Operator on demand; provided, however, that
Operator may, at its option, apply the amount of said liquidated damages
as a credit against the purchase price of Products or Services obtained
hereunder.
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CLAUSE 9. Events of Default and Termination
9.1 If either party hereto makes any agreement with creditors generally
compounding debts, enters liquidation whether compulsory or voluntary
(except as a solvent company for the purpose of amalgamation or
reconstruction), becomes insolvent or suffers a receiver of the whole or
part of its assets to be appointed, then the other party shall have the
right, without prejudice to its other rights or remedies, to terminate
this Agreement. Such termination shall be effected by the party entitled
to terminate issuing notice of termination in writing to the other party
and such notice shall be effective twenty-four (24) hours after it is
issued.
9.2 If Rolls-Royce terminates this Agreement in accordance with the provisions
of Clause 9.1 above, Operator shall promptly pay to Rolls-Royce any
amounts then due or owed for all Products and Services ordered and
delivered at the time of the termination, and Rolls-Royce shall also be
entitled to retain all amounts paid to Rolls-Royce under this Agreement.
9.3 Operator shall be in full compliance with the payment terms set forth in
Clause 6 of this Agreement and all other material terms of this Agreement
and any related agreement with Rolls-Royce or its affiliate companies with
respect to the Aircraft, including spare Engine Lease agreements with
Rolls-Royce & Partners Finance, if applicable, and any Standard Terms of
Business for Leasing with Rolls-Royce., if applicable, and any Aircraft
financing support agreements with Rolls-Royce Capital, Inc., if applicable
(for the purpose of this Clause collectively the "Agreements"). If
Operator is in breach of any material obligation under these Agreements
and such breach continues for a period exceeding (a) in the event of a
payment breach, ten (10) days following receipt of Rolls-Royce's written
notification of such breach, or (b) in the event of any other breach,
thirty (30) days following receipt of Rolls-Royce's written notification
of such breach or such longer period as is necessary to remedy such
non-payment breach, then without prejudice to Rolls-Royce's other rights
or remedies, Rolls-Royce may, without being obliged to, terminate this
Agreement or exercise any one or more of the following rights:
9.3.1 stop all work under this Agreement and refuse to deliver (or
redeliver if applicable) any further Products and Services;
9.3.2 divert affected Products and Services to other Operators or for
its own purposes;
9.3.3 treat all amounts then owing hereunder by Operator to be
immediately due;
9.3.4 exercise a mechanic's lien upon any engine which may from time to
time be in the possession of Rolls-Royce or one of its authorized
Rework facilities to secure any monies due to Rolls-Royce under
this Agreement; and
9.3.5 If any monies due to Rolls-Royce under this Agreement remain due
and unpaid for more than three (3) months and Rolls-Royce has
exercised any of its rights under Clause 9 above, Rolls-Royce may
make a reasonable charge in respect of storage and insurance of
Products or any items held in connection with such Products and
transportation equipment held by Rolls-Royce and at any time
after such period of three (3) months sell any such Products and
apply the proceeds of such sale in satisfaction of such unpaid
monies and any attorneys' fees incurred in association with such
default.
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CLAUSE 10. Non-disclosure
10.1 Subject to Clause 10.2 below each Party agrees to hold in confidence any
Information which it acquires directly or indirectly from the other Party
or any of its subsidiaries and agrees not to disclose at any time the same
to any third person without the written approval of other Party. These
obligations shall continue for so long as this Agreement remains in
effect, and for one (1) year thereafter.
10.2 Each Party shall be responsible for the observance of the provisions of
Clause 10.1 above by its employees.
10.3 The provisions of Clause 10.1 above shall not apply to Information which
is or becomes generally known in the aero engine industry nor shall the
provisions of Clause 10.1 above prevent any necessary disclosure of
Information to enable Operator itself to use, operate, maintain or
overhaul Products and Services.
10.4 Notwithstanding Clause 10.1 above, each Party shall be entitled to
disclose the other's Information if required to do so by law or the
requirements of regulatory authorities (including without limitation the
U.S. Securities and Exchange Commission), or for purposes of enforcing
this Agreement or pursuant to or in the context of any dispute resolution
process (including but not limited to arbitration proceedings), or to such
Party's own lenders, financial advisors or attorneys (provided such
lenders, advisors or attorneys are subject to an appropriate
confidentiality agreement). Notwithstanding Clause 10.1 above, both
Parties shall be entitled to disclose financial information concerning
business between Rolls-Royce and Operator to appointed auditors, and
Rolls-Royce shall be entitled to disclose financial information concerning
business between Rolls-Royce and Operator to Rolls-Royce's risk and
revenue sharing partners and to Rolls-Royce affiliates for the purposes of
fulfilling obligations hereunder.
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CLAUSE 11. Intellectual Property
11.1 Rolls-Royce shall, subject to the conditions set out in this Clause and as
the sole liability of Rolls-Royce in respect of any claims for
infringement of intellectual or industrial property rights, defend and
indemnify Operator against any claim that the purchase or use of any of
the Products or Services by Operator within any country to which at the
date of such claim the benefits of Clause 27 of the Convention on
International Civil Aviation of 7th December 1944 (The Chicago Convention)
apply, infringes any patent, trademark, copyright, design, or model duly
granted or registered; provided, however, that Rolls-Royce shall not be
liable to Operator for any loss (whether direct or indirect):-
11.1.1 of profit, agreements, revenue or goodwill; or
11.1.2 of use of the Products and Services or of the Aircraft in which
the Products and Services may be incorporated arising as a result
directly or indirectly of any such claim.
11.2 Operator will give prompt notice in writing to Rolls-Royce of any such
claim whereupon Rolls-Royce shall elect to either assume the defense of or
dispose of or settle such claim, at its own expense and in its sole
discretion, and Operator will give Rolls-Royce all reasonable assistance
(at Rolls-Royce's expense) and will not by any act or omission do anything
which may directly or indirectly prejudice Rolls-Royce in this connection.
Rolls-Royce shall pay any settlement amounts or judgments arising out of
any such claims.
11.3 If any of the Products and Services become subject to any claim, suit or
proceeding for infringement, Rolls-Royce may (at its expense) substitute
any allegedly infringing Product or Service with non-infringing Products
and Services that are substantially equivalent to the items being replaced
in terms of performance, functionality, and cost and ease of use and
maintenance, or modify said Products and Services so as to be
non-infringing (so long as the modification does not adversely affect
their performance, functionality, or cost or ease of use or maintenance),
or seek to obtain for Operator the perpetual right to use the item
affected without charge to Operator. If in any claim, suit or proceeding
use of any of the Products or Services is enjoined or otherwise restrained
due to infringement, Rolls-Royce shall, at its expense, either (a) procure
for Operator the perpetual right to continue using the infringing items,
(b) modify the items (in such a way that does not adversely affect their
performance, functionality, or cost or ease of use or maintenance) to
render them non-infringing, or (c) replace the infringing items with
non-infringing items that are substantially equivalent to or better than
the items being replaced in terms of performance, functionality and cost
and ease of use and maintenance.
11.4 The indemnity contained in Clause 11.1 above shall not apply to claims for
infringement to the extent they are in respect of Products and Services
manufactured to the specified design instructions of Operator, or the
manner or method in which any of the Products and Services is installed in
the Aircraft or any combination of any of the Products and Services with
any item or items other than Products and Services.
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CLAUSE 12. Grant of Warranty and Limitation of Liability
Rolls-Royce grants to Operator the Warranties set out in Exhibit C and the
Guarantees set out in Exhibit F hereto and the Total Support Package set out in
Exhibit G hereto.
12.1 Operator ACCEPTS AND AGREES THAT THE WARRANTIES AND GUARANTEES AND SUPPORT
PACKAGE GRANTED TO OPERATOR UNDER THIS AGREEMENT ARE EXCLUSIVE AND ARE
EXPRESSLY IN LIEU OF AND OPERATOR HEREBY WAIVES, RELEASES AND DISCLAIMS
(I) ALL OTHER CONDITIONS AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS,
AND ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF
DEALING OR USAGE OF TRADE, (II) ALL OTHER OBLIGATIONS AND LIABILITIES
WHATSOEVER OF ROLLS-ROYCE WHETHER IN CONTRACT, WARRANTY OR TORT (INCLUDING
WITHOUT LIMITATION, NEGLIGENCE, ACTIVE, PASSIVE OR IMPUTED LIABILITY OR
STRICT LIABILITY) OR BY STATUTE OR OTHERWISE FOR ANY NONCONFORMANCE,
DEFECT, DEFICIENCY, FAILURE, MALFUNCTIONING, OR FAILURE TO FUNCTION OF ANY
ITEM OF THE PRODUCTS AND SERVICES REFERRED TO IN THIS AGREEMENT, (III)
STRICT LIABILITY OR PRODUCT LIABILITY, AND (IV) ALL DIRECT, INDIRECT,
SPECIAL, CONSEQUENTIAL AND INCIDENTAL DAMAGES OF ANY NATURE WHATSOEVER,
AND OPERATOR AGREES THAT ROLLS-ROYCE SHALL NOT BE LIABLE TO OPERATOR UPON
ANY CLAIM THEREFOR OR UPON ANY CLAIM HOWSOEVER ARISING OUT OF THE
MANUFACTURE OR SUPPLY OR INSPECTION BY ROLLS-ROYCE OR ANY OF ITS
AFFILIATES OF ANY ITEM OF THE PRODUCTS AND SERVICES OF THIS AGREEMENT
WHETHER IN CONTRACT, WARRANTY OR TORT (INCLUDING WITHOUT LIMITATION,
NEGLIGENCE, ACTIVE, PASSIVE OR IMPUTED LIABILITY OR STRICT LIABILITY) OR
BY STATUTE OR OTHERWISE EXCEPT AS EXPRESSLY PROVIDED IN THE WARRANTIES AND
GUARANTEES AND SUPPORT PACKAGE, AND OPERATOR ASSUMES ALL RISK AND
LIABILITY WHATSOEVER NOT EXPRESSLY ASSUMED BY ROLLS-ROYCE IN THE
WARRANTIES.
12.2 ROLLS-ROYCE AND OPERATOR AGREE THAT THIS CLAUSE 12 HAS BEEN THE SUBJECT OF
DISCUSSION AND NEGOTIATION, IS FULLY UNDERSTOOD BY THE PARTIES AND THE
PRICE OF THE PRODUCTS AND SERVICES AND OTHER MUTUAL AGREEMENTS OF THE
PARTIES SET FORTH IN THE AGREEMENT ARE ARRIVED AT HAVING DUE REGARD TO:
12.2.1 THE EXPRESS WARRANTIES AND GUARANTEES AND SUPPORT PACKAGE OF
ROLLS-ROYCE AND OPERATOR'S RIGHTS THEREUNDER; AND
12.2.2 THE EXCLUSIONS, WAIVERS AND LIMITATIONS SET FORTH IN CLAUSE 12.1
ABOVE.
12.3 IN CASE OF ANY CONFLICT BETWEEN THIS CLAUSE 12 AND ANY OTHER CLAUSE OF
THIS AGREEMENT, THE PROVISIONS OF THIS CLAUSE 12 SHALL PREVAIL.
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CLAUSE 13. Indemnification
In the event either employees or agents of Rolls-Royce or Operator enter upon
the property occupied by or under the control of the other Party in the
performance of this Agreement, the Party entering the other Party's premises
assumes responsibility for and agrees to pay for any loss, cost, damage to
property, or for personal injury or death of any persons arising out of, as a
result of, or in connection with the actions or omissions of the Party entering
the property occupied by or under the control of the other Party. If a claim or
demand is asserted against a Party by reason of the act or omission of the other
Party, then such other Party will be offered the opportunity to participate at
its own expense in the defense against such claim or demand. Each Party also
agrees that it will maintain public liability and property damage insurance in
reasonable limits consistent with industry standards covering the obligations
set forth above and will maintain proper Workers' Compensation Insurance (or
other comparable insurance) covering all of its employees performing this
Agreement.
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CLAUSE 14. General
14.1 Effective Date and Expiration
This Agreement shall become effective immediately following the date first
written here before (the "Effective Date") and shall remain in effect
until it expires or is terminated by either Party. Unless sooner
terminated, pursuant to other provisions hereof, or unless renewed and
extended by the Parties hereto, this Agreement shall expire without
further action or notice by either Party on the date that is sixteen and
one-half (16 1/2) years following the date the last Aircraft purchased by
Operator is delivered to Operator.
14.2 Survival
The provisions of Clauses 10 (Non-Disclosure), 11 (Patents), 12
(Limitation of Liability), 13 (Indemnification), 14.9 (Applicable Law and
Jurisdiction) and Exhibit C (Warranties) of this Agreement, and any other
provision of this Agreement that by its express terms or nature is meant
to survive termination or expiration hereof, shall survive and continue to
have effect should this Agreement expire or be terminated for any reason
or after this Agreement becomes impossible of performance or is otherwise
frustrated.
14.3 Notices
Any notice required to be given by either Party to the other under or in
connection with this Agreement shall be in writing and delivered
personally, by certified mail or by facsimile.
Notices to Operator shall be directed to:
Astral Aviation, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxx, X.X.X. 00000
Attn: President
Facsimile: (000) 000-0000
with a copy to the ATTN: General Counsel
Notices to Rolls-Royce shall be directed to:
Rolls-Royce Corporation
0000 X. Xxxxx Xxx.
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx , Director Commercial
or in each case to such other place of business as may be notified from
time to time by the receiving party.
14.4 Assignment
Neither Party may assign any of its rights or obligations hereunder
without the written consent of the other Party (except that (a) either
Party may assign its interest to any entity that results from any merger,
reorganization or acquisition of or involving such Party, or that acquires
all or substantially all of the assets of such Party; (b) as long as
Operator operates the Aircraft, then Operator may assign its rights or
obligations hereunder in connection with a sale and lease-back of one or
more Aircraft for financing purposes; and (c) Rolls-Royce may assign its
rights to receive money hereunder). Any assignment made in violation of
this Clause 14.4 shall be null and void.
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14.5 Amendment
14.5.1 This Agreement shall not be amended in any way other than by
agreement in writing, entered into by the Parties hereto on or
after the date of this Agreement, which is expressly stated to
amend this Agreement.
14.5.2 This Agreement shall not be amended or terminated orally.
14.6 Headings
The Clause headings and the Index do not form a part of this Agreement and
shall not govern or affect the interpretation of this Agreement.
14.7 Waiver
Failure by either party at any time to enforce any of the provisions of
this Agreement shall not be construed as a waiver by such party of such
provisions or in any way affect the validity of this Agreement or any part
thereof.
14.8 Severability
If any provision of this Agreement is or becomes or is declared invalid,
unenforceable or illegal by any court of competent jurisdiction or any
other Competent Authority such invalidity, unenforceability or illegality
shall not prejudice or affect the remaining provisions of this Agreement
which shall continue in full force and effect notwithstanding such
invalidity, unenforceability or illegality. 'Competent Authority' means
any agency, authority, department, inspectorate, minister, ministry,
official or public or statutory person (whether autonomous or not) of, or
of the government of the United Kingdom or of the European Union.
In addition, the parties shall in good faith endeavor to reach agreement
on a provision to replace the invalid provision which, as nearly as
possible, will reflect the intent of the original provision.
14.9 Applicable Law and Jurisdiction
THIS AGREEMENT SHALL BE SUBJECT TO AND INTERPRETED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK EXCLUDING ITS CONFLICT
OF LAW RULES AND EXCLUDING THE UNITED NATIONS CONVENTION FOR THE
INTERNATIONAL SALE OF GOODS (CISG, 1980, "VIENNA CONVENTION").
14.9.1 It is the intent of the Parties and the Airframer (collectively,
the "Contracting Parties") that any and all disputes arising out
of or relating to this Agreement, the Aircraft, the Engines, the
Products or the Services that cannot be resolved through
negotiation ("Disputes") and that involve one or more Contracting
Parties (whether or not a particular such Dispute also involves
disputants that are not Contracting Parties) be resolved to the
greatest extent possible in a single, comprehensive, definitive
litigation proceeding. Accordingly, the Parties hereby agree that
(a) any Contracting Party that files or responds to a complaint
or other initial pleading (in any form and however denominated)
in connection with a Dispute shall notify the other Contracting
Parties of the same and provide copies of said complaint or
response to each of them; (b) any Contracting Party which
thereafter wishes to assert a claim or grievance amounting to a
Dispute against any other Contracting Party shall do so by way of
a claim, counterclaim, cross-claim or third-party claim in the
first complying litigation that is the subject of a notification
provided for in sub-clause (a) above, unless the court refuses
for procedural reasons to entertain such claim as part of that
litigation; and (c) in the event that suits relating to Disputes
are initiated in more than one court, the parties to all such
suits shall promptly stipulate that all such suits may be
consolidated into a single case before the U.S. District Court
for the Eastern District of Wisconsin or, if such court lacks
subject matter jurisdiction, a state court of
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competent jurisdiction within the geographic area included in
that district (in either case, the "Forum Court"), and may be
heard and determined in a single and integrated proceeding. Each
Party hereby consents to the exercise of personal jurisdiction
over it by the Forum Court for the purpose of resolving any
Dispute.
14.9.2 Notwithstanding anything to the contrary herein, this Agreement
and each Party's respective rights and obligations are expressly
subject to all applicable laws and regulations.
14.9.3 The official text of this Agreement is the English language. If
this Agreement is translated into another language for the
convenience of Operator or its personnel, the English text shall
govern any question with respect to interpretation.
14.10 Sole Agreement of Parties
14.10.1 This Agreement contains the only provisions governing the sale
and purchase of Products and Services and shall apply to the
exclusion of any other provisions on or attached to or otherwise
forming part of any order form of Operator or any acknowledgement
or acceptance by Rolls-Royce or of any other document which may
be issued by either Party relating to the sale and purchase of
Products and Services.
14.10.2 The Parties agree that neither of them has placed any reliance
whatsoever on any representations, agreements, statements or
understandings made prior to the signature of this Agreement
whether orally or in writing relating to the Products and
Services other than those expressly incorporated in this
Agreement, which has been negotiated on the basis that its
provisions represent their entire agreement relating to the
Products and Services and shall supersede all such
representations, agreements, statements and understandings. The
Parties further agree that neither of them shall place any
reliance whatsoever on any and all future representations
whatsoever in respect of the performance of this Agreement unless
such representations are expressly agreed by the Parties hereto
in writing to form a term of this Agreement.
14.10.3 The foregoing exclusions, waivers and limitations, however, shall
not in any way limit Rolls-Royce's liability arising from its
willful breach of contract or its failure to comply with
applicable laws, regulations, codes or ordinances, or limit
Rolls-Royce's liability under Clause 11 or Clause 13 of this
Agreement.
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CLAUSE 15. Export/Import Shipment
Rolls-Royce shall be responsible for obtaining any required export license and
Operator shall be responsible for obtaining any other required authorization
such as import licenses, exchange permits or other required authorizations,
except as otherwise provided herein. Rolls-Royce and Operator shall assist each
other in every manner reasonably possible in securing and complying with such
authorizations as may be required.
Rolls-Royce shall restrict disclosure of all Information and data furnished to
Operator in accordance with Clause 10, and shall ship the direct product of such
Information and data to only those destinations, which are authorized by the
United States Government. At the request of Operator, Rolls-Royce will provide
Operator with a list of such authorized destinations. Rolls-Royce shall not be
liable if any authorization is delayed, denied, revoked, restricted or not
renewed.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be signed
on their behalf by the duly authorized representatives, the day and year first
written before.
Signed for and on behalf of: Signed for and on behalf of:
ROLLS-ROYCE CORPORATION ASTRAL AVIATION, INC.
By /s/ X.X. Xxxxxxxxxx By: /s/ Xxxxx X. Xxxxxx
----------------------------- --------------------------------
Printed X.X. Xxxxxxxxxx Printed Xxxxx X. Xxxxxx
Title: V.P. Finance Corp. & Regional Title: President & CEO
Airlines, N.A.
By /s/ Xxxxx X.X. Xxxxxx
--------------------------------
Printed Xxxxx X.X. Xxxxxx
Title: Commercial Director
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EXHIBIT A - AIRCRAFT DELIVERY SCHEDULE
Firm ERJ Aircraft:
1. Mar. 2002
2. May 2002
3. Jul. 2002
4. Sep. 2002
5. Nov. 2002
6. Jan. 2003
7. Mar. 2003
8. May 2003
9. Jul. 2003
10. Sep. 2003
11. Nov. 2003
12. Jan. 2004
13. Mar. 2004
14. May 2004
15. Jul. 2004
16. Sep. 2004
17. Nov. 2004
18. Jan. 2005
19. Mar. 2005
20. May 2005
Option ERJ Aircraft: delivery schedule to be defined
Midwest Express has certain rights under certain circumstances to convert, delay
or terminate all or part of the Aircraft deliveries under the Airframer
contract. As a consequence, the schedule reflected in this exhibit may change.
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EXHIBIT B - OPERATING ASSUMPTIONS
Use of normal take off rating (AT/O - 1) 85% of all take offs, and use of normal
climb and normal cruise ratings for all flights. To the extent operator's usage
differs from the above, the Charge will be adjusted in accordance with the table
set out in Schedule D of Exhibit G.
Aircraft will operate in a benign operational environment (not containing,
without limitation, abnormal levels of corrosive or abrasive pollutants),
Operator's current operation and route structure (2001) is deemed to be
considered as a `benign' operation;
A fleet average stage length (wheels off to wheels on) of 1.1 flight hours per
cycle;
A fleet average annual aircraft utilization of 3,000 flight hours per year;
Operator will purchase and take delivery of the Aircraft in accordance with the
delivery schedule contained in Exhibit A hereto and operate the Aircraft in
regular and frequent commercial airline service;
Subject to all of Operator's rights and remedies under its contract with the
Airframer for the purchase of Aircraft, Operator will purchase and take delivery
of the Firm Aircraft and, in the event and to the extent it exercises its option
to purchase, the Option Aircraft, in accordance with the delivery schedule
contained in Exhibit A hereto and operate the purchased Aircraft in regular and
frequent commercial airline service;
Operator will acquire and retain for its operation the spare Engines subject to
the terms of Exhibit E and in accordance with the delivery schedule contained in
Exhibit E hereto;
Operator will procure and maintain a mutually-agreed upon level of spare
Modules, LRU's and Parts (including but not limited to initial provisioning and
maintain a mutually-acceptable level of line maintenance provisioning across its
route network.
Engines will be operated by Operator in accordance with Rolls-Royce's Operating
Instructions and maintained in accordance with the Aircraft Maintenance manual
and the EMP.
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Exhibit C - Warranties
1 DEFINITIONS
In addition to those words and phrases defined in the main body of the
Agreement, the following words and phrases when used in this Exhibit C,
Warranties, shall have the meaning and definition set forth below.
"Engine Time" means the total number of hours flown by an Engine since new.
"Module Time" means the total number of hours flown by a Module since all Parts
of the Module were new.
"Parts Time" means the total number of hours flown by a Part since new.
"Price" means the net selling price of a Part to Operator, last published prior
to the time when the Failure is discovered against which Operator purchases
Parts from Rolls-Royce or an affiliate Company.
"Resultant Damage" means the damage suffered by a Part, necessitating the
scrapping of that Part because that Part is beyond economic repair in accordance
with Maintenance schemes issued by Rolls-Royce, providing such damage is caused
by the Failure of another Part.
"Ultimate Flight Cycle" means the maximum permitted Flight Cycles imposed by
Rolls-Royce or the Airworthiness Authority.
"Warranted Life" means the warranted life for a Designated Part as described in
Schedule 1 to Exhibit C hereto.
"Warranty Labor Rate" means the then average direct hourly wages multiplied by a
factor of 1.5 paid by Operator to those of its employees and contractors that
provide Line Maintenance or other maintenance labor with respect to Engines.
2 NEW ENGINE WARRANTY
Rolls-Royce warrants new Engines against defect in design, material or and
workmanship which result in Failure or Resultant Damage as follows:
2.1 Warranty Period
The period of this Clause 2 warranty shall be:
2.1.1 the first * hours or *, whichever is first completed
("First Engine Run"), and
2.1.2 the * through * hours or *, whichever is first completed
("Extended Engine Run").
2.2 Warranty Remedies
2.2.1 First Engine Run
If an Engine suffers Failure or Resultant Damage during its First
Engine Run warranty period as defined in Clause 2.1.1, then:
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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2.2.1.1 where such Failure or Resultant Damage necessitates
repair of the Engine, Rolls-Royce will arrange to have
such repair carried out promptly, correctly and at no
charge to Operator, or
2.2.1.2 where such Failure or Resultant Damage does not
necessitate repair of the Engine, Rolls-Royce will
provide a one hundred percent (100%) allowance on the
Price of the affected Engine Parts.
2.2.2 Extended Engine Run
If an Engine suffers Failure or Resultant Damage during its
Extended Engine Run warranty period as defined in Clause 2.1.2,
then
2.2.2.1 where such Failure or Resultant Damage necessitates
repair of the Engine, Rolls-Royce will arrange to have
such repair carried out promptly and correctly and will
accept repair charges for an amount equal to
(* - Engine Time) / * x invoiced repair
charges, or
2.2.2.2 where such Failure or Resultant Damage does not
necessitate repair of the Engine, Rolls-Royce will
provide an allowance in respect of the affected Engine
Parts for an amount equal to:
(* - Engine Time) / * x Price of such Engine
Parts
2.3 BFE Exclusion
The Airframer Furnished Equipment (hereinafter referred to as "MDFE")
shall not be warranted by Rolls-Royce and the benefits to Operator under
any of the warranties contained in this Exhibit C shall not apply to such
MDFE.
3 DESIGNATED PARTS WARRANTY
Rolls-Royce warrants Parts in accordance with Clause 3.1.1 below and Designated
Parts as listed in Schedule 1 hereto
(i) assembled into or attached to new Engines, or
(ii) acquired by Operator as spare Parts
against defect in design, material and workmanship in the manufacture of the
Designated Part which result in Failure or Resultant Damage as set out in
Clauses 3.1 and 3.2 below:
3.1 Warranty Period
The period of this Clause 3 warranty shall be:
3.1.1 the first 3,000 hours or cycles of Parts Time, whichever is first
completed ("First Parts Run"), and
3.1.2 the 3,001 through DPWL hours or cycles of Parts Time, whichever
is first completed ("Extended Parts Run"),
where DPWL ("Designated Part Warranted Life") shall mean the warranted
life of each Designated Part as set out in Schedule 1 hereto.
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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3.2 Warranty Remedies
3.2.1 First Parts Run
If, during its First Parts Run warranty period as defined in
Clause 3.1.1, a Designated Part suffers either (a) a Failure, or
(b) Resultant Damage due to the Failure of another Designated
Part within that other Part's warranty period, then Rolls-Royce
will, at its option, either:
3.2.1.1 give a 100 percent (100%) allowance on the Price of the
affected Designated Part, or
3.2.1.2 repair or exchange such Designated Part promptly,
correctly and at no charge to Operator.
3.2.2 Extended Parts Run
If, during its Extended Parts Run warranty period as defined in
Clause 3.1.2, a Designated Part suffers either (a) Failure, or
(b) Resultant Damage due to the Failure of another Designated
Part within that other Part's warranty period, then Rolls-Royce
will grant allowances on the Price of such Part as set out in
3.2.1.1, but factored as follows:
DPWL-PartsTime
Factor = --------------
DPWL-1,000
3.3 Other Engine spare Parts (NOT APPLICABLE)
3.4 Used Parts Warranty
Rolls-Royce warrants Used Parts against Failure as follows:
3.4.1 Warranty Period
The period of warranty shall be the first * Flight Hours of
Used Parts Time, commencing with the original incorporation of
the Used Part into an Engine.
3.4.2 Warranty Remedies
If, during its warranty period as defined in 3.4.1 above, such
Used Part suffers Failure then Rolls-Royce will, at its option,
either:
3.4.2.1 grant an allowance of one hundred percent 100% of the
Price of such Used Part, or
3.4.2.2 restore such Used Part to a serviceable condition at no
charge to Operator, or
3.4.2.3 replace such Used Part with another Used Part.
4 ULTIMATE LIFE WARRANTY
Ultimate Life Parts as listed in Schedule 2 to this Exhibit are warranted as
follows:
4.1 Warranty Period
The period of warranty shall be the first * cycles of Parts Time.
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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4.2 Warranty Remedies
Rolls-Royce will grant to Operator an allowance against the Price of
Ultimate Life Parts which are permanently removed from service because of
attaining a life limitation imposed by Rolls-Royce or the Airworthiness
Authorities. Such allowance shall be equal to:
*;
*.
5 VENDOR PARTS WARRANTY
5.1 Vendor Parts in New Engines
Vendor Parts installed in new Engines shall be warranted in accordance
with Clause 2 - New Engine Warranty hereof. Clause 11 of the Agreement
shall also apply to said Vendor Parts.
Rolls-Royce shall maintain a Vendor Parts support and control service, and
upon Operator request will assist in Vendor warranty issues arising and
resolve any such issues with the Vendor.
5.2 Vendor spare Parts
All Vendor spare Parts shall be warranted in accordance with Clause 3
hereof. Clause 11 of the Agreement shall also apply to said Vendor spare
Parts, whether or not such Vendor spare Parts are purchased from
Rolls-Royce or directly from such manufacturer.
Rolls-Royce shall maintain a Vendor spare Parts support and control
service, and upon Operator request will assist in Vendor warranty issues
arising and resolve any such issues with the Vendor.
6 TOOLING AND GROUND SUPPORT EQUIPMENT WARRANTY
6.1 Warranty Period
Any Tooling and Ground Support Equipment shall be warranted by Rolls-Royce
against any defect in material, design and workmanship for a period of
twelve (12) months from delivery to Operator.
6.2 Warranty Remedies
In case of such defect Rolls-Royce at its discretion shall repair or
replace the defective product promptly and correctly and free of charge to
Operator.
7 CAMPAIGN WARRANTY
7.1 Where Rolls-Royce stipulates in writing that campaign action is to be
taken in respect of a Designated Part such that Engines are to be removed
from service prior to the next planned shop visit, Rolls-Royce will, to
the exclusion of all other allowances, grant Operator an allowance of:
7.1.1 One hundred percent (100%) of the Price of all such Designated
Parts which are at the time of such stipulation installed or held
by Operator as new or used serviceable stock when the average
parts time of such Designated Parts is less than * EFH from
new
7.1.2 Pro-rated from one hundred percent (100%) of the Price of all
such Designated Parts which are at the time of such stipulation
installed or held by Operator as used serviceable
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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General Terms Agreement
stock when the average parts time of such Designated Parts is
* EFH from new to zero percent (0%) of the Price of all such
Designated Parts which are at the time of such stipulation
installed or held by Operator as used serviceable stock when the
average parts time of such Designated Parts is twice the
warranted life of the Parts as specified in Schedule 1.
7.2 The Campaign allowances granted under this Clause 7 are given on the basis
that Operator will incorporate Parts as specified by the campaign as soon
as practicable after receipt of the campaign Parts within the time period
as may be specified by Rolls-Royce. Such allowances do not apply when
parts are replaced on-wing, whereby under such circumstance the Warranty
set out in Clause 3 of this Exhibit shall apply.
8 TECHNICAL PUBLICATIONS AND TECHNICAL SERVICES WARRANTY
8.1 Rolls-Royce warrants that all Information provided under this agreement
are prepared in accordance with the state of the art at the date of their
conception.
8.2 If any Information provided under this Agreement is shown to Rolls-Royce's
reasonable satisfaction to be incorrect, Rolls-Royce will, in a timely
manner, as appropriate and at its own cost, correct such information.
8.3 No warranty is given in respect of third party data interpreted by
Rolls-Royce. Rolls-Royce assumes that all data supplied by Operator is
accurate, and accepts no responsibility for errors and unreliable
information contained in such data.
8.4 In respect of any work carried out by Rolls-Royce personnel under this
Agreement, Rolls-Royce warrants that such work shall be carried out using
due care and skill. Rolls-Royce's sole liability for Rolls-Royce's failure
to perform such work using due care and skill shall be to re-perform such
work using due care and skill, provided that such failure to perform has
been brought to Rolls-Royce's attention within 90 days of performance of
the work by Rolls-Royce.
8.5 Operator shall be responsible for making any modification to adapt for its
use any data furnished by Rolls-Royce pursuant to this Agreement and the
use to which the Information is put and the consequences thereof shall be
the responsibility solely of Operator.
9 WORKMANSHIP WARRANTY - ENGINE SHOP MAINTENANCE
Rolls-Royce warrants engine shop maintenance performed by or arranged by
Rolls-Royce against faulty workmanship as follows:
9.1 Warranty Period
The period of this Clause 9 warranty shall be the shorter of:
9.1.1 the first 1,000 Engine Flight Hours of the repaired Engine,
commencing with the date of installation of the engine in an
Aircraft; and
9.1.2 a period of twelve (12) months from installation but no later
than * months from redelivery
unless such period is less than the period remaining under the original
warranty, in which case the period of the Clause 9 warranty shall be the
period remaining under the original warranty.
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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9.2 Warranty Remedies
If, during its warranty period as defined in 9.1 above, it is shown to the
reasonable satisfaction of Rolls-Royce that, a defect, deficiency,
failure, malfunction, or failure to function shall have become apparent in
such Engine due to faulty workmanship in carrying out the shop
maintenance, then Rolls-Royce warrants that it will either exchange or
repair any such Engine suffering from such defect, deficiency, failure,
malfunction or failure to function.
10 GENERAL WARRANTY CONDITIONS
10.1 The Warranties set out in this Exhibit C shall be subject to the
provisions of Clause 12 of the Agreement and the following conditions:
10.2 Rolls-Royce shall have no obligation under this warranty if and to the
extent in the reasonable opinion of Rolls-Royce any Engine or Part:
10.2.1 has not been properly stored, installed, operated and maintained
in accordance with the recommendations of Rolls-Royce as
contained in its manuals, operating procedures or other written
instructions, including instructions on life limitations, or
10.2.2 has been repaired or altered in such a way as to impair its
safety, operation, efficiency or design features, or
10.2.3 has been subject to mis-use, negligence, accident or acts of God,
or
10.2.4 has suffered damage due to the ingestion of FOD, or =
10.2.5 has been subjected to acts of war, rebellion, seizure or any
other defect or cause not within the control of Rolls-Royce
10.3 In lieu of granting any Parts allowance under this Warranty Rolls-Royce
may at its discretion repair or exchange or have repaired or exchanged any
Part. Any Part so exchanged shall have no greater Parts Time than the Part
returned by Operator (unless agreed with Operator).
10.4 The warranty on any Part provided under the New Engine Warranty, New Parts
Warranty or Used Parts Warranty shall be the unexpired portion of the
applicable Warranty.
10.5 Except as otherwise provided in this Exhibit C or elsewhere in this
Agreement, Rolls-Royce shall not be liable for any expenses or liabilities
sustained in connection with the removal of an Engine, Module or Part from
an aircraft or the replacement thereof in an aircraft, or in connection
with the removal of any Module or Part from an Engine or the replacement
thereof in an Engine, or for any expenses, taxes, duties or liabilities
sustained in connection therewith or in connection with any shipment to or
from an Authorized Facility.
10.6 Where Rolls-Royce requests Operator to hold a Part pending the development
of a repair scheme, Operator shall hold such Part for a period of up to
thirty (30) days following such request by Rolls-Royce. If at the end of
such period a repair scheme has not been developed, or clearly will not be
developed within a reasonable time thereafter, Operator shall have the
right to raise a claim.
10.7 Operator shall present any claim under Warranties to Rolls-Royce within
180 days after the date upon which the Failure was discovered and shall
keep and disclose accurate records of Engine operation, including records
of maintenance adequate to support such claims.
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10.8 Operator shall keep accurate records of Engine, Module and Parts
operation, maintenance and storage, and engine condition monitoring data
and / or trend monitoring data (as applicable) adequate to support claims
hereunder, and shall permit Rolls-Royce to inspect such records during
normal business hours upon reasonable advance notice at a location
selected by Operator.
10.9 Operator shall make available all Engines, parts and spare parts for
inspection and for approval by Rolls-Royce of any claim by Operator
relating thereto during normal business hours upon reasonable advance
notice at a location selected by Operator.
10.10 Any Part for which any allowance other than for repair has been granted by
Rolls-Royce hereunder or which has been exchanged by Rolls-Royce shall
become the property of Rolls-Royce. Unless Rolls-Royce specifically
requests the return of such Parts Operator will consider such Part its
scrap.
10.11 Any allowance granted under this Warranty shall be made as a credit note
usable against Rolls-Royce goods and services.
10.12 Under the New Engine Warranty, Designated Parts Warranty and Ultimate Life
Warranty as of Clauses 2 to 4 above, only one allowance per Part shall be
paid per occurrence of a Failure or Resultant Damage. Operator may claim
under one only of the New Engine, Designated Part or Ultimate Life
Warranty, whichever results in the greatest allowance.
10.13 All credits granted to Midwest Express in this Exhibit C are personal to
Midwest Express, are (subject to Clause 14.4 of the Agreement)
non-assignable, and are not convertible to cash.
11 ADDITIONAL WARRANTIES
In addition to the other warranties set forth in this Exhibit C, Rolls-Royce
warrants as follows: (a) the Spare Engines and all Products and Services shall
be delivered free and clear of all liens and encumbrances, good and merchantable
title thereto being in Rolls-Royce; (b) the Spare Engines and all Products shall
have been manufactured solely from new and unused materials, parts and
components; (c) the Engines and all Products and Services shall comply and have
been produced, processed, labeled, delivered and sold in conformity with all
applicable federal, national, state and other laws, administrative regulations
and orders, including without limitation all applicable environmental laws and
regulations, the Occupational Safety and Health Act of 1971, as amended from
time to time, and without limiting the foregoing, Rolls-Royce specifically
certifies that all goods furnished under this Agreement shall have been produced
in compliance with all applicable requirements of Sections 6, 7 and 12 of the
Fair Labor Standards Act of 1938, as amended, and of regulations and orders of
the Secretary of Labor issued under Section 14 thereof; and (d) all Services
shall be performed in a good and workmanlike manner, in accordance with any
established professional standards for similar services.
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General Terms Agreement
SCHEDULE 1 TO EXHIBIT C - DESIGNATED PARTS
Designated Parts, together with their warranted lives are as set out below
(hours or cycles of Parts Time, whichever is first completed).
Designated Part Warranted Life (Hours)
--------------- ----------------------
Turbine Blade Tracks (seal segments) *
Blades / Vanes *
Combustors and Combustion Liners *
Frames/Casings/Supports *
Bearings *
Accessory Gearbox Gear (Non LLPs) *
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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SCHEDULE 2 TO EXHIBIT C - ULTIMATE WARRANTED LIFE PARTS
Rolls-Royce warrants an Ultimate Life limit on the following Parts:
Part Name
Fan Rotor
Fan Wheel
Forward Blade Retainer
Fan Drive Shaft
HPC Rotor
HPC-1 Wheel
HPC-2 Wheel
HPC-3 Wheel
HPC-4 Wheel
HPC-5 Wheel
HPC-6 Wheel
HPC-7 Wheel
HPC-8 Wheel
HPC-9 Wheel
HPC-10 Wheel
HPC-11 Wheel
HPC-12 Wheel
HPC-13 Wheel
HPC-14 Wheel
HPC Coneshaft
HP Turbine Rotor
HPT-1 Wheel
HPT-2 Wheel
HPT 1-2 Spacer
LPT Rotor
LPT-1 Wheel
LPT-2 Wheel
LPT-3 Wheel
LPT Spacer
LPT Forward Shaft
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General Terms Agreement
EXHIBIT D - OPERATOR SERVICES
1 Scope
This Exhibit sets out Operator support services available to all operators
of Rolls-Royce Products. Subject to the terms and conditions of this
Agreement, Rolls-Royce shall supply to Operator and Operator shall
purchase from Rolls-Royce certain Services as discussed in this Exhibit
and as specified in Rolls-Royce's Commercial Price List. Rolls-Royce
reserves the right to revise or update the Commercial Price List, any
prices therein and any Information at any time, upon notice to Operator.
The Rolls-Royce Spare Parts Price Catalogue for the Engine, and such other
Commercial Price Lists and any revisions and updates thereof shall be
published by Rolls-Royce to all operators of the Engine, and shall not be
specific to operators but shall generally apply to the purchase of such
goods or services from Rolls-Royce during their respective period of
validity.
General Policies and Procedures
Standardized procedures and policies will be followed to ensure that
requirements are performed in accordance with industry accepted standards.
These procedures and policies include but are not limited to ATA
specifications and Airworthiness Authority rules and or guidance.
All Services supplied to Operator will be in compliance with the then
current World Operators Supplier Guide (hereinafter "WASG") and the
current revision ATA Specifications.
2 Rolls-Royce Operator Services Package
2.1 Operator Support Manager
Rolls-Royce will designate an Operator support manager based in the United
States who will provide co-ordination and liaison between Operator and
Rolls-Royce in respect of the operation of the Engines by Operator. Such
services extend to issues including:
2.1.1 Managing emergency Operator requirements,
2.1.2 Managing plans to incorporate Products into Operators'
operations,
2.1.3 Agreeing shop visit forecasts with Operators,
2.1.4 Providing technical and operational direction to operators and
field support recommendations, and
2.1.5 Interpretation of the Manuals, and 2.1.6 Assist with the
resolution o warranty claims.
The services of Operator support manager are free of charge to all
operators of Rolls-Royce Products.
2.2 Visiting Service Support
Rolls-Royce will designate a field service representative and advise
Operator of the location of the field service representative. The field
service representative will make scheduled visits to Operator on a free of
charge basis for the purposes of liaison and to answer any general
operational and technical questions.
Should Operator require additional or specialist visits to Operator's
facilities to assist in the operation of Engines or training activities,
including but not limited to, boroscope inspections and other line
maintenance activities, Rolls-Royce may charge for such services in
accordance with pricing established in its Commercial Price List.
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2.3 On Site Service Representative
At one (1) month notice of request from Operator (but not earlier than
three (3) months prior to entry-of-service of the first Aircraft),
Rolls-Royce will make available the services of a field service
representative at Operator's facilities at Milwaukee. Such representative
will provide, in addition to those services as described above, the
following:
2.3.1 Local technical support to assist in the resolution of technical
problems,
2.3.2 Training in the operation and maintenance of Engines,
2.3.3 Advice regarding the borescoping and life management of installed
Engines, and
2.3.4 To effectively communicate to Rolls-Royce all aspects of
in-services issues affecting Operator's operation of the Engine,
and
2.3.5 Assist with the resolution o warranty claims.
Operator will make available to Rolls-Royce's representative on a free of
charge basis the following:
2.3.6 reasonable work space, services and facilities, including free
telephone calls in accordance with his/ her duties;
2.3.7 free emergent medical attention to the extent normally provided
to Operator's own employees;
2.3.8 cost of travel and a reasonable daily allowance for subsistence
and accommodation while the representative is required by
Operator to travel away from Operator's location at Milwaukee
with Operator;
2.3.9 holiday privileges in accordance with Operator's normal practice;
upon Operator's request, Rolls-Royce will send a
field-representative on a temporary basis to cover such holiday
period.
2.3.10 access to Operator's computer network for all non-sensitive data
and information pursuant to the representative's duties.
While working at Operator's facilities, Rolls-Royce's representative shall
comply with Operator's rules and regulations. If Operator is dissatisfied
with any representative, Rolls-Royce will upon request provide a
replacement representative.
2.4 Supply of Technical Publications
2.4.1 Rolls-Royce provides a full suite of technical publications
(defined as Manuals) to enable the operation and maintenance of
the Engine in accordance with Rolls-Royce operating instructions.
The full listing of technical publications available for
purchase, together with prices for ongoing revision services are
provided in Rolls-Royce's Commercial Price List.
2.4.2 Manuals will be supplied in simplified English and any
translation or interpretation that may be required by Operator is
the responsibility of Operator.
2.4.3 Operator acknowledges that although Rolls-Royce may provide
instruction, training and advice under this Agreement, Products
are only to be maintained, operated and otherwise handled in
accordance with the Manuals.
2.5 Operator Training
Rolls-Royce provides training courses in the operation and maintenance of
Engines at one of the following locations: the Rolls-Royce Corporation
Training Center in Indianapolis, Indiana, USA; Rolls-Royce plc training
facilities in Derby, England UK; or the Rolls-Royce/CASC training center
in Tianjin, China in accordance with a schedule published by Rolls-Royce.
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General Terms Agreement
Rolls-Royce's training for the Engine comprises the following courses:
o General Familiarization, Course Duration 2 Day, Training Level ATA 104
level I
o Line and Base Maintenance, Course Duration 8 Day, Training Xxxxx XXX
000 xxxxx XXX
o Boroscope Inspection, Course Duration 2 Day, Training Level ATA 104
level IV
The following general provisions apply to training:
2.5.1 One (1) copy of the training material per student will be
provided.
2.5.2 Preferred class size is fifteen (15) students.
2.5.3 Operator will be responsible for providing transportation,
subsistence, accommodations, salaries and all other related
expenses for its personnel attending class at a Rolls-Royce
training facility.
Charges for the training are specified in Rolls-Royce's Commercial Price
List.
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General Terms Agreement
EXHIBIT E - FLEET PROVISIONING SUPPORT
Exhibit E - 1 Spare Engine Purchase
1. Supply
Subject to the provisions of this Agreement Rolls-Royce agrees to sell and
deliver to Operator and Operator agrees to buy and take delivery of spare
Engines as set in Schedule 1 to this Exhibit. The schedule of spare
Engines has been predicated upon the purchase by Operator of the Firm
Aircraft; the schedule is subject to all of Operator's rights and remedies
under its contract with Airframer for the purchase of Aircraft. If and to
the extent Operator is entitled to terminate said contract with Airframer,
or is otherwise not required to purchase Aircraft from Airframer,
Operator's obligation to buy and take delivery of spare Engines from
Rolls-Royce shall be proportionately reduced, and Operator shall not be
liable to Rolls-Royce in connection with such reduction.
Rolls-Royce also agrees that in the event Operator exhausts its pool of
spare Engines, resulting in an Aircraft on ground situation, then
emergency spare Engine(s) may be leased by Operator in accordance with the
Lease Agreement. Subject to Clause 4.4.3 of Exhibit G, and notwithstanding
anything to the contrary in the Lease Agreement, the applicable emergency
lease rates shall be as follows:
To the extent Operator has purchased the recommended level of spare
Engines the following rates apply:
Daily Charge USD 1,760
Take-off Charge USD 30.33
Flying Hour Charge USD 74.73
Monthly Charge USD 35,210
The above charges shall also apply should Operator be in a zero spare
engine situation due to Failure (as defined in the Warranties), failure to
achieve generally acceptable turn-around times, late delivery of spare
engines (see Clause 8 above).
To the extent Operator has purchased less than the recommended level of
spare Engines the following rates apply:
Daily Charge USD 3,520
Take-off Charge USD 30.33
Flying Hour Charge USD 74.73
Monthly Charge USD 70,420
2. Type Approval/Changes
All Products shall at time of delivery conform to a type certificate
issued by the Airworthiness Authority and will be manufactured in
compliance with the official interpretations of the relevant Airworthiness
Authority.
If, after the date of signature of this Agreement, a change is required to
the Engines, either:
2.1 to conform to the requirements of the Airworthiness Authority that were
promulgated after the Effective Date and the official interpretations of
such requirements in force at the date of delivery of such Engines, or
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General Terms Agreement
2.2 to incorporate a modification or change which has been agreed between
Operator and Rolls-Royce,
then Rolls-Royce will issue a written change order, which shall constitute
an amendment to this Agreement. Unless otherwise agreed, any increase in
any price that is a result of any change order is to be borne by Operator,
except that if the change is required due to a flaw or defect in the
Engines, any increase in price resulting from the change order shall be
borne by Rolls-Royce.
3. Inspection and Acceptance
Conformance to the Specification of Products will be assured by
Rolls-Royce through the maintenance of procedures (including Engine
acceptance testing), systems and records approved by the
Luftfahrt-Bundesamt based on JAR 21-G by the JAA. An authorized Release
Certificate will be issued and signed by Rolls-Royce personnel authorized
for such purposes. Operator shall be given full access to review all such
procedures, systems, records and certificates at any reasonable time and
from time to time.
4. Price and Payment
The base price of Engines is set out in Schedule 1 to this Exhibit. The
deposits and price of Engines shall be calculated in accordance with the
formulae specified in Schedule 2 to this Exhibit.
Unless otherwise agreed by the Parties, Operator will make payments in
United States Dollars as follows:-
o Ten percent (10%) of the Engine base price upon signature of this
Agreement, plus;
o Ten percent (10%) of the Engine base price eighteen (18) months before
scheduled delivery, plus;
o Ten percent (10%) of the Engine base price twelve (12) months before
scheduled delivery, plus;
o Balance of the Purchase Price upon delivery of the Engine.
Rolls-Royce will issue invoices to cover each of the above payments.
Page 39 of 78
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General Terms Agreement
Exhibit E - 2 Spare Parts Supply
1. Intent and Term
Rolls-Royce shall sell spare Parts to Operator in quantities sufficient to
meet Operator's requirements.
Operator shall buy from Rolls-Royce all of its requirements for spare
Parts. In the following circumstances Operator may obtain from established
and approved sources other than Rolls-Royce or from other airline
operators spare Parts which are required to be purchased from Rolls-Royce:
o as a temporary expedient in the event of a failure by RR to supply
spare Parts as required herein which has an impact on Operator's
operations; or
o during any period when Rolls-Royce is hindered or prevented from
delivering spare Parts due to circumstances beyond its control
provided Operator is thereby able to obtain the spare Parts it
requires sooner than Rolls-Royce is able to supply them, and provided
further that Operator will not unreasonably thereby increase its stock
of the spare Parts; or
o industry standard parts as identified in the Rolls-Royce Illustrated
Parts Catalogue.
Where Operator has an urgent requirement for any Tooling which Rolls-Royce
has in stock or otherwise has reasonably available to it, Rolls-Royce
shall sell to the Operator such Tooling, at a reasonable price and
reasonable Lead Time.
Rolls-Royce and Operator shall comply with the ATA Specifications with
regard to supply of spare Parts except as specifically amended herein.
Operator is required to provide information required to become established
on the Rolls-Royce on line spares management system.
Rolls-Royce shall sell spare Parts to Operator on the terms set forth in
this Agreement from the Effective Date through and including the date that
is sixteen and one-half (16 1/2) years after the date on which the last
Aircraft purchased by Operator is delivered to Operator.
Upon, Operator's request, Rolls-Royce shall assist Operator in locating
and facilitating the sale of spare Parts held by consignment with other
operator or airframer, if any.
Nothing in this clause shall be deemed to extend the obligations of RR or
to diminish the limitations upon such obligations under the Warranties.
2. Provisioning
Operator shall purchase and maintain a mutually-agreed stock of spare
Parts and Tooling to support its operation.
Rolls-Royce and Operator shall agree upon the required stock of spare
Parts and Tooling within a timescale commensurate with Operator's
operational requirements.
Consistent with changes in Operator's operational requirements,
Rolls-Royce and Operator will regularly review and agree upon changes to
required stock levels of spare Parts and Tooling.
3. Forecasting
Operator shall, upon request, provide Rolls-Royce with forecasts
specifying projected requirements for spare Parts to cover a period of at
least 12 months. Operator shall give Rolls-Royce as much notice as
possible of any change in such estimated requirements. All such forecasts,
projections and estimates will be non-binding and will not obligate
Operator.
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General Terms Agreement
Operator shall, upon reasonable request, inform Rolls-Royce of the
intended use of the Products, including details of the end user of the
Products.
Operator shall provide Rolls-Royce with the following information and
thereafter shall give Rolls-Royce as much notice as possible of any change
in its operation likely to affect spare Parts requirements:
- a twenty-four (24) month non-binding shop visit forecast, detailing
Engine Serial Numbers, such forecast shall be updated on a monthly basis,
- a thirty-six (36) month shop-visit forecast, detailing Engine type and
xxxx, such forecast shall be updated on a quarterly basis.
4. Ordering Procedure
Operator shall issue an order for spare Parts in an agreed format in
accordance with the ATA Specifications.
Rolls-Royce shall promptly acknowledge receipt of each order for spare
Parts in accordance with the ATA Specifications. Unless qualified, such
acknowledgement shall constitute an acceptance of the order under the
terms of this Agreement.
5. Order Cancellation
Where Operator wishes to cancel an order placed in accordance with Clause
4, Operator shall inform Rolls-Royce immediately. Rolls-Royce shall use
all reasonable efforts to place the part elsewhere with the effect of
Operator not facing a cancellation fee. If Rolls-Royce is unable to sell
or use the ordered part elsewhere Rolls-Royce may make a reasonable
cancellation charge representing the actual costs incurred for such
cancellation.
6. Lead Times
Unless otherwise agreed by the Parties, spare Parts shall be delivered
within the lead time specified in the Commercial Price List current at the
receipt of Operator's order except for:
spare Parts required for provisioning in accordance with Clause 2, or
Orders significantly in excess of Operator's normal requirements, in
which case, the Parties shall mutually agree upon the applicable lead
time.
Where Operator has an urgent requirement for a spare Part Rolls-Royce
shall endeavor to deliver such spare Part within the time limits specified
by Operator. In the case of AOG orders, Rolls-Royce shall deliver the
required spare Part within four (4) hours after receipt of notice of the
AOG. It shall be Rolls-Royce's objective to advise Operator of
Rolls-Royce's proposed action in response to non-AOG urgent orders within
24 hours, and to fill non-urgent orders for items of which the Operator is
out of stock within 7 calendar days.
7 Modifications to spare Parts
Rolls-Royce shall be entitled to substitute modified spare Parts in place
of spare Parts ordered by the Operator hereunder, provided that the said
modification has received the approval of the Airworthiness Authority in
accordance with the relevant Rolls-Royce Service Bulletin, and shall
notify Operator of such substitution prior to delivery. Rolls-Royce shall
reimburse Operator for obsolete parts in stock current at the time of
delivery of the modified parts and up to the level that is normally
required to support Operator's operation, if any.
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General Terms Agreement
Modified spare Parts will be supplied unless the modifications stated in
the Service Bulletins are non-mandatory and Operator states in writing to
Rolls-Royce within 90 days of the issue of the relevant Service Bulletin
that the modification is not required, in which case Operator shall be
entitled to receive pre-modified spare Parts on terms to be agreed.
8 Conformance
All spare Parts, and where necessary Tooling will be assured by
Rolls-Royce through the maintenance of procedures, systems and records
approved by the Airworthiness Authority. An Authorized Release Certificate
will be issued and signed by Rolls-Royce authorized personnel for such
purpose.
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General Terms Agreement
Exhibit E Schedule 1 - Engine Delivery Schedule and Base Price
Base Price
each (January
Description Quantity Delivery Date US Dollars)
----------- -------- ------------- -------------
1. spare Engine (without FADEC) 1 March 2002 *
Transportation Stand incl. March 2002 *
MVP bag
2. spare Engine (without FADEC) 1 January 2003 *
Transportation Stand incl. January 2003 *
MVP bag
3. spare Engine (without FADEC) 1 November 2003 *
Transportation Stand incl. November 2003 *
MVP bag
4. spare Engine (without FADEC) 1 September 2004 *
Transportation Stand incl. September 2004 *
MVP bag
transportation stand * and Moisture & Vapour Protection (MVP) bag *.
**All delivery dates are subject to the delivery of Firm Aircraft by Airframer
to Operator, and to the exercise by Operator of all its rights and remedies
under its contract with Airframer for the purchase of Aircraft; the general
intent is for the first spare Engine to be delivered at approximately the same
time as the first Firm Aircraft, for the second spare Engine to be delivered at
approximately the same time as the tenth Firm Aircraft, for the third spare
Engine to be delivered at approximately the same time as the twentieth Firm
Aircraft, and for the fourth spare Engine to be delivered at approximately eight
(8) months from delivery of the last Firm Aircraft.
Rolls-Royce and Operator hereby agree that Operator shall have the option (but
not the obligation) to purchase one (1) additional spare Engine from Rolls-Royce
for every five (5) Option Aircraft that Operator (in its sole discretion)
purchases from Airframer. The Base Price for each such additional spare Engine
that Operator chooses to purchase shall be *, subject to escalation pursuant to
the formula set forth in Schedule 2 to Exhibit E; the delivery date shall be as
mutually agreed upon by the Parties; and any such purchases shall otherwise be
governed by the terms of this Agreement.
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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General Terms Agreement
Exhibit E Schedule 2 - Escalation
Engine Base Price Escalation Formula
The Price of each of the spare Engines and TSP charges shall be calculated as
follows:
PF = BP[0.7(I1/B1) + 0.3(I2/B2)] x 1.005
Where: PF = Purchase Price / TSP Charge for Calendar Year Y
BP = Engine Base Price / TSP Charge in 2001
I1 = Employment Cost Index SIC Code 3721W, Wages and Salaries for the Industry
group "Aircraft manufacturing" as published by the US Department of Labor,
Bureau of Labor Statistics (the "Bureau"), under series ID ecu28102i -
Averaged for the twelve (12) month period of July of Y-2 through June of
Y-1. As the index is published on a quarterly basis in March, June,
September and December, the ECI value for the month of March shall be used
for the months of January and February; the value for June used for April
and May, the value for September used for July and August; and the value
for December used for October and November.
B1 = Same index as above, but for the period of July of Y-3 through Y-2.
I2 = Material Index PPI 14, Transportation Equipment - Average index for the
twelve (12) month period of July of Y-2 through June of Y-1.
B2 = Same index as above, but for the period of July of Y-3 through Y-2.
N = The number of years from the year of the initial Engine pricing base
year.
Note: Average index is defined as the sum of the individual monthly values
divided by twelve.
The above indices are defined as the most recent firm indices available from the
BLS (Bureau of Labor Statistics) in October of year Y-1. In the event that any
of the above indices cease to be published or the BLS modifies the basis of
calculation, a replacement or alternative index or indices corresponding as
nearly as possible to those discontinued or modified shall be selected by
Rolls-Royce. In the event that the formula calculation results in a negative
value, the increase shall be assumed to be zero.
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General Terms Agreement
EXHIBIT F - FLEET GUARANTEES
PRODUCT ASSURANCE GUARANTEES
Rolls-Royce grants and Operator accepts the following product assurance
guarantees listed in this Exhibit F ("Guarantees") in respect of Engines first
installed in the Aircraft and Products delivered pursuant to this Agreement:
DEFINITIONS
In addition to those words and phrases defined in the main body of the
Agreement, the following words and phrases when used in the Product Assurance
Guarantees shall have the meaning and definition set forth below.
"Anniversary Date(s)" means any or all of the anniversary dates from the date of
delivery of the first Firm Aircraft to Operator through the Term of Guarantee.
"Period of Calculation" means the relevant period for which a calculation is
made under any of the Guarantees detailed in Exhibit F to this Agreement.
"Term of Guarantee" means that period of time commencing with the date of
delivery of the first Aircraft to Operator and ending after ten (10) years.
GOVERNING CONDITIONS AND ADMINISTRATION
1. The obligations of Rolls-Royce under the Guarantees are subject to the
following Governing Conditions:
o compliance by Operator with the material terms of the Warranties;
o Operator taking delivery of, retaining and maintaining for operational
use Products as mutually agreed upon by the Parties; and
o Subject to the exercise by Operator of its rights and remedies under
its contract with Airframer for the purchase of Aircraft, and to any
changes in the schedule of delivery of Aircraft under said contract,
Operator taking delivery of each Firm Aircraft in accordance with the
schedule set out in this Agreement and operating each Firm Aircraft in
regular and frequent airline operation;
2. In establishing the Guarantees Rolls-Royce has assumed the Operational
Assumptions set out in Exhibit B.
3 If during the term of the Guarantees the actual operation differs
significantly from the above assumptions set out in Exhibit B above or the
conditions set forth in Clause 1 above or if any other significant
operational change occurs including, without limitation, the introduction
of any mandatory modifications outside Rolls-Royce's control (other than
modifications necessitated by defects in Engines or their components) or
significantly inconsistent with Rolls-Royce's reasonable understanding at
the time the guarantee levels were established, the Parties may revise,
such revision not to be unreasonably withheld by either party, the
Guarantees to take into account the effect of such difference.
4 Any credit granted under any of the Guarantees shall be solely used by
Operator against 50% of the purchase price of any Rolls-Royce proprietary
AE3007 Parts purchased from Rolls-Royce.
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General Terms Agreement
5 If credits granted under any of the Guarantees are in excess of the amount
which would have accrued to Operator under such Product Assurance
Guarantee as determined by a single calculation over the entire Term of
Guarantee of such Product Assurance Guarantee, such excess shall first be
offset against any amounts due to Operator under any of the Guarantees.
Any remaining excess shall be promptly refunded to Rolls-Royce by
Operator.
6 If Operator is entitled to similar credit pursuant to the terms of more
than one Warranty or Product Assurance Guarantee as a result of the same
event then Operator shall not be entitled to receive credits pursuant to
each Warranty or Product Assurance Guarantee but shall elect to claim
credit under the particular Warranty or Product Assurance Guarantee which
Operator considers most beneficial.
7 All credits granted to Midwest Express in this Exhibit F are personal to
Midwest Express, are non-assignable (except as allowed under Clause 14.4
of the Agreement), and are not convertible to cash.
Operator operates and maintains the Engines in accordance with the Manuals and
the reasonable written recommendations of Rolls-Royce (which recommendations
shall be given only after consultation with Operator).
Page 46 of 78
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Exhibit F - 1 In-Flight Shutdown Guarantee
1 This guarantee provides cover against Qualified Shutdowns in excess of a
cumulative fleet average rate of * per 1,000 Engine Flying Hours
("EFH").
2 At the end of each calendar month during the Term of Guarantee, Operator
shall provide Rolls-Royce with (i) a list of all in-flight shutdowns
during such calendar month which Operator considers to be Qualified
Shutdowns and (ii) such information as Rolls-Royce may require to enable
Rolls-Royce to determine which of such in-flight shutdowns are Qualified
Shutdowns.
3 At the end of the Term of Guarantee, the Actual Shutdown Rate shall be
calculated.
4 If the Actual Shutdown Rate for a Period of Calculation exceeds * per
1,000 EFH, Rolls-Royce's sole obligation will be to grant to Operator a
credit note of 10,000 US Dollars for each cumulative excess Qualified
Shutdown as compensation less any credits already provided under the
In-Flight Shutdown Guarantee.
5 "Qualified Shutdown" means the in-flight shutdown of an Engine during the
course of a scheduled revenue flight of the Aircraft by Operator which is
determined to have been caused solely by an Engine-caused Failure.
Multiple in-flight shutdowns of the same Engine during the same flight leg
for the same problem will be counted as one in-flight shutdown. A
subsequent in-flight shutdown on a subsequent flight leg for the same
problem because corrective action has not been taken shall be excluded.
6 "Actual Shutdown Rate" means the total number of Qualified Shutdowns of
all Qualified Equipment during a Period of Calculation multiplied by one
thousand (1,000) and divided by the Flight Hours during such period.
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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General Terms Agreement
Exhibit F - 2 Fuel Consumption Retention Guarantee
1. This guarantee provides cover against Operator's Engine average cruise
fuel consumption increasing by more than * above an established baseline
for Qualified Equipment during the first * hours since new, whichever
occurs first. For the purposes of this Exhibit F-2 only, this period shall
be designated the Term of Guarantee.
2 Following each Engine's entry into service Operator will measure fuel
consumption and record the following data for each Qualified Equipment in
order to establish a performance baseline (hereinafter referred to as a
"Performance Baseline") :
Engine serial number
Aircraft Serial Number
Date
Time
Altitude
Mach Number
Total Air Temperature (TAT)
Calibrated Air Speed (CAS)
Engine Pressure Ratio (EPR)
Fuel Flow
Fuel Temperature
Low Pressure Compressor Rotor Speed (N1)
High Pressure Compressor Rotor Speed (N2)
Exhaust Gas Temperature (EGT)
Bleed Air Configuration
Anti-Ice Wing
Anti-Ice Nose
Vibration
Annually thereafter Operator will establish an annual performance level
(hereinafter referred to as an "Annual Performance Level"). Performance
Baseline and Annual Performance results are referred to collectively as
Data. Rolls-Royce may be represented on measurement flights. Performance
Baselines and Annual Performance Levels shall be expressed as percentage
deviations from the Model with performance better than the Model being
expressed as a negative percentage and performance worse than the Model as
a positive percentage.
3 Instrumentation used in the recording of Data will be within calibration.
If upon review of Data by both Parties and any necessary checking of
instrumentation, in the reasonable judgment of the Parties the calibration
of such instrumentation appears to be out of date or inadequate, Operator
will re-calibrate the instrumentation. Rolls-Royce may require the
correction of Data or re-establishment of Data hereunder.
4 The fleet average Performance Baseline shall be calculated at each
Anniversary Date as the average of the Performance Baselines established
pursuant to Clause 2 hereof and in existence at that Anniversary Date. If
the fleet average specific fuel consumption for Engines as demonstrated on
new production pass-off tests is better than the new engine test bed
specific fuel consumption acceptance limit stated in the Specification,
then for the purposes of this guarantee, the fleet average Performance
Baseline shall be changed in a positive direction by the same amount.
5 The fleet average Annual Performance Level at each Anniversary Date shall
be calculated as the average of the Annual Performance Levels at that
Anniversary Date as established pursuant to Clause 2 hereof.
6 If at the second or subsequent Anniversary Date during the Term of
Guarantee the Weighted Average Deterioration (as defined by the term "WDi"
in Clause 6 below) as a percentage exceeds
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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General Terms Agreement
3.00%, and to the extent that such fuel consumption deterioration is
attributable to an Engine deficiency, then Rolls-Royce's sole obligation
shall be to compensate Operator by credit note for such excess fuel
consumption deterioration for the period up to the Anniversary Date for
which the Weighted Average Deterioration is being calculated. In addition,
if Rolls-Royce elects to remove an engine exclusively for exceeding the
guaranteed fuel consumption level, then Rolls-Royce shall provide Operator
with a parts and labor credit for the restoration of the Engine's
performance equal to 100% up to * hours decreasing pro-rata to zero at
* flight hours.
Reimbursement due to Operator hereunder shall be calculated for a given
Anniversary Date (i) pursuant to the following formula:
S = R - R
n n n-1
(For the purposes of such formula, negative values of Rn-1 shall have a
value of zero.)
Where
Sn = the amount of reimbursement in US Dollars to be granted to Operator
for Anniversary Date n (for positive values of Sn only).
Rn-1 = the total value of credit paid to Operator under this guarantee in
respect of the period from the commencement of the Term of Guarantee up to
the Anniversary Date immediately prior to the said Anniversary Date (n).
Rn = the total value of credit due to Operator from the commencement of
the Term of Guarantee up to the said Anniversary Date (n), calculated in
accordance with the following formula:
(XX - XX)
n
R = ---------- x (G x H x WC )
n 100 n
Where:
WDn means the cumulative average fuel consumption deterioration of the
Qualified Equipment from the start of the Term of Guarantee up to the said
Anniversary Date (n), calculated in accordance with the following formula:
n
E (D x H )
i i
i=1
WD = -----------
n H
(FD + FD )
i-1 i
D = ----------- - F
i 2
Where:
F = the fleet average Annual Performance Baseline calculated pursuant to
Clause 4 of this Guarantee.
FDi= the Annual Performance Baseline calculated pursuant to Clause 4 of
this Guarantee at Anniversary Date (i).
FDi-1 = the Annual Performance Baseline calculated pursuant to Clause 4 of
this Guarantee at the Anniversary Date immediately preceding the
Anniversary Date (i-1).
Hi = the total of all Qualified Engine Flight Hours by Operator as logged
during the period between the Anniversary Dates relating to FDi-1 and FDi.
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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H = the total of all Engine Flight Hours by Operator as logged on all
Qualified Equipment from the start of the Term of Guarantee up to the said
Anniversary Date n.
GD = the guaranteed level allowable pursuant to Clause 5 hereof.
WCn = the weighted average cost of fuel in US dollars from the start of
the Term of Guarantee up to the said Anniversary Date (n), calculated in
accordance with the following formula:
n
E (C x H )
i i
i=1
WC = -----------
n H
Where:
Ci = the average cost to Operator of aviation fuel (after deduction of any
subsidies or Government or other allowances received by Operator, and
excluding, without limitation, pumping fees, taxes and fuel surcharges)
consumed by Operator's Qualified Equipment during the period specified in
the definition of Hi above in US dollars per US gallon and calculated by
dividing the total amount actually paid during such period Hi by the
number of US gallons of fuel so purchased.
G = the block mission fuel burn expressed in US gallons per engine flight
hour for the Typical Mission calculated using the Performance Document.
7. If at the third or subsequent Anniversary Date during the Term of
Guarantee the value of Sn is negative then Operator shall refund to
Rolls-Royce an amount equal to the value of Rn-1 - Rn. If the value of Rn
is zero or negative, Operator shall refund an amount equal to Rn-1. To
calculate Si at the following Anniversary Date the Value of Rn-1 is set to
zero.
8. Any liability under this guarantee will continue until such time as
Rolls-Royce may elect to make fuel improvement modifications available. If
such modifications have not been incorporated into the Engines at
delivery, then to the extent that any Rolls-Royce charge for such
modification parts is in excess of parts charges which Operator would
otherwise have incurred, such excess will be offset by credit notes issued
by Rolls-Royce.
9 Intentionally left blank.
10 "Model" means the Rolls-Royce datum Engine model as may be amended from
time to time.
11 "Typical Mission" means the standard aircraft mission agreed between the
parties from time to time on a block hour basis (including taxi time) to
be reasonably representative of Operator's average operation of the
Aircraft in terms of those flight parameters affecting fuel burn including
but not limited to range, payload, flight profile, climatic conditions and
take off derate. The parties shall change the Typical Mission if either
can reasonably demonstrate to the other that a material change has
occurred in any of such parameters.
12 "Performance Document" means the Embraer performance document for the
Engine powered ERJ aircraft.
13 If, after the date of signature of this Agreement, modifications are
required to be made to Engines as a result of Airworthiness Authority's
requirements and such modifications have the effect of increasing fuel
consumption, Rolls-Royce may (unless the modifications are necessitated by
a defect in the Engines) require that within 30 (thirty) days after
incorporation of any such modification the initial performance baseline
for each Qualified Engine in which any such modification is incorporated
shall be adjusted to take into account the effect of such modification.
The average of such new performance baselines for all such Qualified
Equipment shall thereafter constitute the fleet average Performance
Baseline and shall thereafter be used to determine any liability of
Rolls-Royce under this Guarantee. However, if further modifications are
introduced
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Rolls-Royce Corporation/Astral Aviation
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which alleviate the effect of the original modifications then Operator may
require that within 30 (thirty) days after incorporation of any such
modification a further revised performance baseline for each Qualified
Engine in which any such modification is incorporated shall be
established. The average of such new performance baselines for all such
Qualified Equipment shall thereafter constitute the fleet average
Performance Baseline and shall thereafter be used to determine any
liability of Rolls-Royce under this Guarantee.
Page 51 of 78
Rolls-Royce Corporation/Astral Aviation
General Terms Agreement
Exhibit F - 3 *
1. *
2. *
3. *
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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General Terms Agreement
Exhibit F - 4 Shop Visit Rate (SVR) Guarantee
(THIS GUARANTEE ONLY APPLIES IF TSP IS NOT SELECTED)
1 If Operator's Qualified Engine SVR exceeds * per 1000 Flight Hours on a
cumulative fleet average basis during the first ten years from delivery of
the first Aircraft Rolls-Royce shall provide a credit note of US$5,000 per
excess event. Such credit note shall be useable against 50% of the price
of Rolls-Royce invoiced goods and services.
2 Qualified Engine shop visits will be counted under the SVR Guarantee if
the shop visit meets any of the following criteria:
2.1 The shop visit was necessary to correct an Engine-caused Failure. Shop
visits for corrective action that could have been performed on-wing, but
was performed in the shop for convenience, do not qualify.
2.2 The shop visit was necessary to comply with an Airworthiness Directive
issued by FAA or recommendations contained in mandatory compliance Service
Bulletins requiring compliance within a specified number of Flight Hours
or Flight Cycles.
2.3 The shop visit was necessary to comply with the Manuals or Rolls-Royce's
written recommendation to perform scheduled maintenance which requires an
Engine shop visit at scheduled intervals.
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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General Terms Agreement
Exhibit F - 5 Shop Maintenance Cost Guarantee
(THIS GUARANTEE ONLY APPLIES IF TSP IS NOT SELECTED)
1 This guarantee provides cover against Workshop Maintenance Cost in excess
of a cumulative rate of * per EFH at 2001levels
2 Within ninety (90) days of each Anniversary Date, Operator shall submit to
Rolls-Royce a report, both written and, where possible, in machine
readable form, in respect of the preceding year, setting forth the
following data and information with respect to Engine shop visits:
o the serial number of Engines in the possession of Operator at the
Anniversary Date and a listing of all shop visits during such Period,
o for each shop visit, fully itemized details of the associated
Replacement Parts Cost, including Part number, price paid and all
warranty allowances whatsoever and whomsoever provided,
o the Labor Cost for the Period, including, where possible, for each
separate item of Labor Cost, the Engine event date and the number of
direct workshop labor hours, and all warranty allowances whatsoever
and whomsoever provided, and
o the total Flight Hours during the Period.
Failure to submit such report within the prescribed time and in a form and
context acceptable to Rolls-Royce shall give to Rolls-Royce the right
exercisable on giving written notice to Operator to terminate
Rolls-Royce's obligations under this Guarantee unless Operator rectifies
such failure within thirty (30) days of such notice.
3 Within 180 days of each Anniversary Date, and subject to receipt of the
data as specified in 2 above, Rolls-Royce shall verify the actual
Replacement Parts Cost and Labor Cost.
4 Rolls-Royce agrees that within 180 days after each Anniversary date to
credit Operator 75% of any excess cost as calculated as follows:
C = (Mn + Ln) - GCn x F x 0.75
where:
C = Credit Due
where:
Mn = The total of all items of Replacement Parts Cost, from the start of
the Term of Guarantee to the th Anniversary Date, netted in accordance
with Clause 2 above, and then adjusted to base year level by dividing by
factor F, calculated for such Period as described in Schedule 1 of this
Guarantee.
Ln = the total of all items of Labour Cost, from the start of the Term of
Guarantee to the th Anniversary Date, netted in accordance with Clause 2
above.
GCn = The Guaranteed Cost from the start of the Term of Guarantee to the
nth Anniversary Date.
F = The factor for maintenance cost adjustment for the Term of Guarantee
as follows:
(100 + P)
F = ---------
100
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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where P is the cumulative effect in percentage terms of the spare parts
price changes implemented by Rolls-Royce for the AE3007 spare parts as
announced from time to time from 2001 to the last month of the period for
which the costs are being adjusted.
5 "Guaranteed Cost" shall be the rate set out in Clause 1 above multiplied
by the Engine Flight Hours from the commencement of the Term of Guarantee.
5 "Part(s)" means any of Part excluding Life Limited Parts.
7. "Replacement Part" means any new Part incorporated into an Engine at a
shop visit during the Term of Guarantee to replace a scrapped Part which
shop visit and Part replacement is required solely:
o as a result of Engine-caused Failure or Resultant Damage; or
o as a result of normal fair wear and tear beyond Rolls-Royce Manual
limits; or
o as a result of the introduction of a mandatory service bulletin or an
Airworthiness Authorities directive; or
o as a result of Rolls-Royce's written recommendation to perform
scheduled maintenance which requires an Engine shop visit at scheduled
intervals, and
For the purpose of this guarantee, a part shall be deemed to be required
to be scrapped if the cost of Reworking such Part exceeds seventy five
percent (75%) of the then current price of such Part.
8 "Replacement Parts Cost" means the price actually paid or payable solely
for Replacement Parts to Rolls-Royce or to Rolls-Royce approved vendors
which shall not exceed the then applicable commercial list price for such
Part.
9 "Labor Cost" means the direct workshop labor hours expended by Operator or
Operator's maintenance provider in teardown, inspection, cleaning,
processing, Reworking (including any subcontracted Agreement), modifying
(such Rework and modification costs not to exceed 75% of the price of the
equivalent Replacement Part), rebuilding and/or testing Engines or Parts
in accordance with the Manuals as recorded in accordance with a man-hour
recording system acceptable to Rolls-Royce, which direct workshop labor
hours expended shall be subject to audit and verification by Rolls-Royce
and multiplied by Operator's or Operator's maintenance provider's Warranty
Labor Rate at 2001 level. Operator's direct man-hours shall not include
time logged for overhead costs including but not limited to time spent on
updating bulletins and manuals, training, technical investigations and
component movement.
10. Where Rolls-Royce recommends that Operator removes a part or Engine to
avert what is, in Rolls-Royce's view, a likely failure and Operator
declines to remove such item at its first convenient opportunity the
Replacement Parts Cost arising from any resulting failure including
Replacement Parts Costs incurred as a result of Resultant Damage shall not
be eligible under this Agreement.
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Exhibit F - 6 ITT Guarantee
1 Each new Engine shall maintain normal takeoff thrust without exceeding its
certified maximum indicated turbine temperature (ITT) limit during the
first * Flight Hours or * from each Engine's delivery,
whichever first occurs.
2 When an Engine is removed exclusively for exceeding the certified maximum
ITT limit during the Guarantee period, Rolls-Royce will provide the
following parts credit allowance and labor allowance for the restoration
of the Engine's performance:
2.1 100% from new to * Flight Hours, and
2.2 Decreasing pro rata from 100% at * Flight Hours to zero percent (0%) at
* Flight Hours.
3 As an alternative to the above allowances, Rolls-Royce may, at its option,
arrange to have the removed Engine restored as appropriate at an
Authorized Facility designated by Rolls-Royce:
3.1 At no charge for the first * Flight Hours, and
3.2 At a charge increasing pro rata from zero percent (0%) of Rolls-Royce's
reasonable costs at * Flight Hours to 100% of such Rolls-Royce's
repair costs at * Flight Hours.
4 Before rejecting the engine and sending it to Rolls-Royce, Operator shall
perform appropriate on-wing trouble-shooting. If necessary, Rolls-Royce
reserves the right to have an incoming performance test of the Engine
conducted at an Authorized Facility to be performed on the Engine in the
condition received without any additional procedures by Rolls-Royce or its
Authorized Facilities other than borescoping. If the Engine is found to be
within the Guarantee limits and can reasonably be expected to perform
within limits for the remaining term of the Guarantee, the cost of testing
and/or technical analyses of such claim shall be at Operator's expense.
5 If an Engine experiences a Module replacement before Engine removal, this
Guarantee will apply until the highest time Module reaches * Flight
Hours time since new. This Guarantee covers performance deterioration due
to Failure. All other shop repair work, which is not related to
performance restoration, is Operator's responsibility unless otherwise set
forth in this Agreement.
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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General Terms Agreement
Exhibit G - TOTAL SUPPORT PACKAGE
1. Definitions
In addition to those words and phrases contained in the main body of the
Agreement, the following words and phrases when in this Total Support
Package shall have the meaning and definition set forth below.
"Additional Services" means (i) the Rework of Non-Qualified Events in
accordance with the EMP or (ii) the incorporation of any optional
performance improvement modifications which Rolls-Royce may offer to
Operator from time to time.
"Authorized Facility" means a Rolls-Royce approved Rework station as may
be specified by Rolls-Royce to Operator from time to time and which is
certified by the Airworthiness Authorities for the Rework of Engines,
Modules and Parts.
"Covered Services" means the Rework at an Authorized Facility (including
the provision of Parts) necessary to return Qualified Equipment suffering
Qualified Events to a serviceable condition in accordance with the
applicable Manuals and the EMP and which cannot be accomplished by timely
Line Maintenance.
"Line Maintenance" means any work required to be carried out on an Engine
in accordance with the Manuals and which Operator may accomplish without
returning such Engine to an Authorized Facility. Line Maintenance
includes, without limitation, the provision, rework or replacement of
Parts and the provision of labor in the course of work as mentioned in the
preceding sentence.
"Line Replaceable Unit (LRU)" means those Parts listed in Schedule F of
Exhibit G hereto.
"Line Replaceable Part (LRP)" means all Rolls-Royce supplied line
replaceable external engine hardware (including LRU's) on the Engine
having suffered Qualifying Events with the following exceptions:
o Any line replaceable internal engine components damaged by FOD or
erosion (e.g. fan blades, spinner, fan bypass vanes, fan case, etc.)
o All life limited parts (LLP's), including those LLP's which are line
replaceable.
o All industry standard "common-consumable" external parts without
Rolls-Royce part number (e.g. nuts, bolts, o-rings, gaskets, etc.) RRC
"Non-Qualified Event" means the removal of any Engine, Module or Part
which requires a shop visit and which is not a Qualified Event, including
without limitation, such a removal caused by FOD or events which are found
by the Authorized Facility not to be Qualified Events or to be within the
applicable limits set forth in the Manual, including but not limited to,
"no fault found", accidents, improper maintenance, misuse or improper
transportation, storage or handling.
"Period of Cover" means the period of time commencing upon delivery of the
first Aircraft to Operator and ending either (i.) ten (10) years
thereafter; provided, however, that Operator may at its option, and with a
notice period of one year prior to the end of the ten-year period, extend
the Period of Cover to five (5) additional years, or (ii.) fifteen (15)
years thereafter. The Charges that apply to those options are described in
Clause 7 below.
"Qualified Equipment" means any installed or spare Engine (including all
Modules and Parts thereof or incorporated therein except OPTION LRU' s
and/or Life Limited Parts) which was
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Rolls-Royce Corporation/Astral Aviation
General Terms Agreement
acquired by Operator from Rolls-Royce or the Airframer or channels
specifically approved by Rolls-Royce.
"Qualified Event" means the removal of an item of Qualified Equipment
which is unserviceable as a result of any one or more of the following:
o Normal wear and tear or performance deterioration beyond appropriate
Manual limits which requires restoration following appropriate on-wing
troubleshooting and Line Maintenance; or
o Airworthiness Directives or Mandatory Service Bulletins; or at
Rolls-Royce's written recommendation; or
o Time expiry of a Life Limited Part (OPTION: only if LLP option is
selected); or
o Failure (as defined in Clause 1 of the Agreement) of a Part, and which
requires a shop visit at an Authorized Facility to return such item to
a serviceable condition.
"Replacement Parts" shall mean any serviceable Part incorporated in an
Engine in the course of Covered Services or Additional Services pursuant
to this Total Support Package.
2. Scope
This Exhibit records that Operator has agreed to participate in
Rolls-Royce's Total Care Program, whereby Rolls-Royce provides Rework and
maintenance support for Qualified Equipment used by Operator in the
operation of its Aircraft, and in accordance with the terms hereof.
3. Provision of Services and Exclusivity
During the Term of this Agreement, Rolls-Royce will provide Engine
off-wing Covered Services and Additional Services to Operator on the terms
and conditions contained herein.
In consideration of the mutual agreements contained herein, Operator
hereby grants to Rolls-Royce exclusivity in respect of the accomplishment
of any Rework of any item of Products which becomes unserviceable during
the Period of Cover.
4 Rolls-Royce's Undertakings
4.1 Provision of Services
Rolls-Royce shall arrange for the prompt provision of Covered Services and
Additional Services to be undertaken at an Authorized Facility during the
Period of Cover.
4.2 Records
Rolls-Royce will require the Authorized Facility to maintain records of
Covered Services and Additional Services undertaken in accordance with
Operator's Airworthiness Authority's requirements, and to provide Operator
with access to review such records at all reasonable times and from time
to time.
4.3 Re-delivery and Acceptance
4.3.1 Following Covered Services and any Additional Services
Rolls-Royce will redeliver Engines (in a Dressed Engine
configuration) to Operator ex-works (Incoterms 2000) the
Authorized Facility. Notwithstanding anything to the contrary
herein, however, Operator shall only be responsible for return
transportation costs in an amount equal to the transportation
expenses Operator would have incurred in shipping the Engine from
an Authorized Facility in the United States to Operator's
facilities in Milwaukee. Rolls-Royce
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shall be responsible for any return transportation expenses in
excess of this amount. To the extent necessary, Rolls-Royce shall
be responsible for clearing Engines through customs.
4.3.2 Rolls-Royce will require the Authorized Facility to maintain
records of Rework undertaken in accordance with Operator's
Airworthiness Authority's requirements and deliver such
documentation as is reasonably required by Operator.
4.3.3 Operator will be deemed to have accepted Rework undertaken on
Qualified Equipment upon the issuance of a properly authorized
JAA or FAA release note or other approval certificate by
Rolls-Royce or Authorized Facility (as applicable).
4.4 Spare Engine Support
When Operator has purchased and taken delivery of the Rolls-Royce's
recommended level of spare Engines, then
4.4.1 If Operator's total quantity of available serviceable spare
Engines falls to one (1) as a direct and sole result of Qualified
Events, then Rolls-Royce use all reasonable efforts to expedite
the Rework of an Engine by the Authorized Facility; and further
4.4.2 If Operator's total quantity of available serviceable spare
Engines is zero (0) as a direct and sole result of Qualified
Events, then in addition to expediting Rework of Engines,
Rolls-Royce will use all reasonable efforts to identify a
non-exclusive lease engine which could be made available to
Operator until such time as the level of spare Engine support
increases to one (1) or more.
4.4.3 If Operator and Rolls-Royce agree that Operator will imminently
declare an Aircraft on ground, as defined in World Airline
Glossary (WATOG), or Operator agree with Rolls-Royce that a
scheduled Engine removal in accordance with the requirements of
the EMP or predictive trending results is required, then a
non-exclusive lease engine shall, within 24 hours of such
agreement, be made available to Operator under the terms of the
Lease Agreement. The daily rental charges under the Lease
Agreement will be waived until the seventh (7th) calendar day
after the level of serviceable spare Engine support increases to
one (1) or more. Operator will remain responsible for the Flight
Hour and Flight Cycle charges under the Lease Agreement, except
that the Flight Hour charge will be reduced to the Flight Hour
charge as provided in Clause 7.1 of this Total Support Package,
and, to the extent Operator has selected the LLP coverage under
the Total Support Package, the Flight Cycle charge will be
reduced to the Flight Cycle charge as provided in Clause 7.1 of
this Total Support Package. Operator shall substitute the first
available Reworked Engine for the Rolls-Royce furnished
non-exclusive lease engine as soon as possible and return the
lease engine to Rolls-Royce (but in no event more than ten (10)
calendar days) after receipt of such Reworked Engine.
4.4.4 If Operator has requested Additional Services (which in the
reasonable opinion of Rolls-Royce will cause an AOG) or if
Rolls-Royce or its Authorized Facility is prevented from
undertaking Rework or redelivering any Qualified Equipment by
reason of failure by Operator to comply with its obligations
under this Total Support Package, Rolls-Royce's liability with
respect to Clause 4.4.3 shall be suspended for a period equal to
the period during which the Rework or redelivery, as the case may
be, shall have been so prevented, and Rolls-Royce shall be under
no liability whatsoever in respect of such delay. The Parties
shall promptly notify each other in writing of the reasons of any
such delay, part performance and the likely duration of the
delay.
4.4.5 If Rolls-Royce is unable to meet its obligations under Clause
4.4.3 above for reason other than as contemplated in Clause 4.4.4
above, Rolls-Royce's sole liability to Operator shall be to
reimburse Operator its reasonable and substantiated daily usage
costs paid to a
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third party by Operator or, should no other engine be available,
a liquidated damage of 120% of the then current Rolls-Royce daily
rental charge for and Engine as per the Leasing Agreement until
either Rolls-Royce makes a lease engine available to Operator or
redelivers a Reworked Engine to Operator. Rolls-Royce and
Operator acknowledge that the liquidated damages calculated as
set forth above are reasonable damages in light of the
anticipated harm that will be caused by Rolls-Royce's failure to
meet its obligations, the difficulties of proof of loss, and the
inconvenience or nonfeasibility of Operator's otherwise obtaining
an adequate remedy. Any such liquidated damages shall be payable
by Rolls-Royce to Operator upon demand; provided that Operator
may, at its option, apply the amount of said liquidated damages
as a credit against the purchase price of Products or Services,
and/or to the charges identified in Clause 7.1 below.
4.5 Loss or Damage
4.5.1 If any Qualified Equipment delivered to Rolls-Royce or Authorized
Facility is lost, destroyed or damaged during the time between
such delivery and return to Operator then Rolls-Royce will,
promptly and at its sole discretion, either:
4.5.1.1 Rework such damage free of charge, or
4.5.1.2 provide Operator a credit note to the value of the item
as mutually agreed upon, taking into account age, usage
and condition, not to exceed the original price of the
item; or
4.5.2.3 provide a replacement of equal value and use.
4.6 Suspended Warranty
4.6.1 In respect of all Replacement Parts incorporated by Rolls-Royce,
the Warranties granted by Rolls-Royce as set out in Exhibit C
shall apply subject to all the provisions contained therein.
4.6.2 During the Period of Cover Operator shall not be entitled to
receive any benefit whatsoever whether by way of Rework,
replacement parts cost allowance, labour charges or otherwise
under the Warranties as set out in Exhibit C in relation to any
rework of Qualified Equipment which are covered by this Exhibit;
but save as expressly provided herein the Warranties shall remain
in full force and effect.
5. Operator's Undertakings
5.1 Operation and Line Maintenance
5.1.1 Operator shall operate and maintain Qualified Equipment in
accordance with the Manuals including the water washing of
Engines (unless prohibited by EPA regulations) and the
performance of all reasonable Rolls-Royce recommended Engine
troubleshooting procedures that are conveyed in writing to
Operator to extend the on-Aircraft life of Engines.
5.1.2 Operator shall, at its own expense, perform all scheduled and
unscheduled Line Maintenance on Engines as may be required
pursuant to the Manuals and the requirements of the EMP, and any
mutually agreed recommendations of Rolls-Royce which may from
time to time be notified to Operator in writing.
5.1.3 Operator shall comply with the requirements and recommendations
of Rolls-Royce with respect to the introduction of mandatory
Service Bulletin's, Airworthiness Directives or Service Bulletins
at Rolls-Royce written recommendation, as stated in the EMP at
Rolls-Royce's expense, unless the purpose of such Service
Bulletins is improved fuel efficiency
Page 60 of 78
Rolls-Royce Corporation/Astral Aviation
General Terms Agreement
or other economic value to Operator. If the aircraft is in
service, Rolls-Royce shall either perform the Service Bulletin on
behalf of Operator or provide sufficient training for Operator to
perform the Service Bulletin itself.
5.1.4 Operator shall, in accordance with normal airline operating
procedures, provide an adequate level of training for line
station personnel and shall ensure that such line station
personnel receive initial and follow up training from time to
time on Engine maintenance troubleshooting techniques.
5.1.5 Operator shall, at its own expense, acquire and maintain during
the Period of Cover Engine stands and other support equipment
sufficient (as mutually agreed by the Parties) to support its
operation and maintenance of the Qualified Equipment.
5.2 Preparation, Transport and Shipment of Qualified Equipment
5.2.1 If any Qualified Equipment requires removal due to a Qualified
Event, Operator shall promptly deliver such Qualified Equipment
to the Authorized Facility in accordance with the provisions of
this Clause 5.2.
5.2.2 Operator shall be responsible at its expense for performing the
removal of all Qualified Equipment from Aircraft, the
configuration of Engines to a Engine standard (as defined in the
Specification in Exhibit H), the subsequent preparation of
redelivered Qualified Equipment for installation, the
installation of Qualified Equipment on Aircraft, the preparation
of Qualified Equipment for transport and for the provision of
appropriate transportation equipment.
5.2.3 Operator shall deliver Qualified Equipment DDP (Incoterms 2000)
accompanied, where appropriate, by an up to date Engine Log Book
to the Authorized Facility. Notwithstanding anything to the
contrary herein, however, Operator shall not be liable for any
transportation expenses related to the delivery of Qualified
Equipment to an Authorized Facility above the amount it would
have cost Operator to transport the Qualified Equipment to an
Authorized Facility in the North America. Rolls-Royce shall be
responsible for any transportation expenses in excess of this
amount, and (if applicable) for clearing Qualified Equipment
through Customs. Operator shall comply with the relevant
paragraphs of the Rolls-Royce maintenance manual in respect of
the shipping and storage of Qualified Equipment and/or Parts.
5.3 Records and Reporting
5.3.1 Operator shall maintain such airworthiness certificates,
licenses, log books, flight manuals, records and other data
pertaining to Engines including Engine accessories and the
operation and maintenance thereof as required by law, and shall
permit Rolls-Royce or its authorized representative to inspect
such records and data during normal business hours upon
reasonable advance notice.
5.3.2 Operator shall maintain full and up to date records of Engine
operation, Engine Flight Hours and cycles flown and shall permit
Rolls-Royce or its authorized representative to inspect such
records during normal business hours upon reasonable advance
notice.
5.3.3 Within seven (7) days after the end of each calendar month or
part calendar month during the Period of Cover Operator shall
submit to Rolls-Royce a certified statement including:
Engine cumulative Flight Hours (CFH) and Flight Cycles (CFC), and
Flight Hours and Flight Cycles operated for the monthly period
reporting (MFH and MFC respectively), using the Operating Report
form (Schedule C) to this Exhibit).
Page 61 of 78
Rolls-Royce Corporation/Astral Aviation
General Terms Agreement
5.3.4 Rolls-Royce will arrange for Data Systems and Solutions ("DS&S"),
a joint venture of Rolls-Royce and SAIC, to provide a
comprehensive Engine health monitoring service to Operator during
the Period of Cover. Such service will include, without
limitation, daily notification of significant alerts and weekly
reports of Engine condition to assist Operator in planning its
Engine maintenance activity and provide the data necessary to
manage Operator's fleet performance on-condition most
effectively.
DS&S require the following electronic data from Operator:
For every flight the following parameters to be accurately and
consistently recorded for both engines at stabilized cruise
conditions.
Date, Flight no, XXX, X0, X0, TGT, Fuel Flow Oil Pressure, Oil
Temperature, N1 Vibration, N2 Vibration, Altitude, Mach, IAS,
Total Air Temperature
This data needs to be sent to DS&S within three days of
recording, such that if an engine develops a problem, Rolls-Royce
has a chance to respond before it develops into an unplanned
event, or engine removal.
Oil Consumption
Operator is expected to monitor oil consumption (Oil uplift
versus flight hours) and report any exceedances or significant
deviations to Rolls-Royce.
Format of data received by DS&S.
Operator shall provide the data in COMPASS compliant electronic
format - ASCII text format. If the data entry method is manual,
then DS&S can provide a data-entry spreadsheet tool for this
purpose and this can be formatted to suit Operator.
6 Rework procedures
6.1 Replacement of Parts
Rolls-Royce reserves the right, at its sole discretion, to fit any new or
used serviceable Replacement Parts in the course of Covered Services and
Additional Services, providing such parts meet the requirements of the
EMP.
In the event that any Engine received by Rolls-Royce from Operator is not
complete, or has missing or non-OEM parts, then Rolls-Royce reserves the
right to replace such parts and will charge Operator as specified in
Clause 7.3 below.
6.2 Title
6.2.1 Title to and risk of loss of or damage to any Parts replaced
under this Exhibit, whether scrap or reworkable, shall pass to
Rolls-Royce upon removal from Qualified Equipment for
Rolls-Royce's disposal. A Part shall be considered to be scrap
when such Part in the opinion of Rolls-Royce is beyond economic
Rework, or when such part requires replacement in accordance with
rejection criteria as set out in the Manuals.
6.2.2 Any Replacement Parts incorporated in the course of Rework
pursuant to this Exhibit shall be deemed to have been sold to
Operator and title to and risk of loss of and damage to such
Replacement Parts shall pass to Operator upon redelivery of
Qualified Equipment to Operator pursuant to Clause 4.3.1 of this
Exhibit.
6.2.3 Operator and Rolls-Royce each represent and warrant to the other
that each will accomplish the transfer to the other of the full
legal title to any equipment exchanged
Page 62 of 78
Rolls-Royce Corporation/Astral Aviation
General Terms Agreement
under Clauses 6.2.1 and 6.2.2 above, free and clear of all
charges, liens and encumbrances. Operator warrants that it will
obtain the authorization of the owner of such equipment (if
Operator is not the owner), to effect such exchanges of title.
Operator shall not without the prior written consent of
Rolls-Royce enter into any arrangement or agreement which might
prejudice or impair its ability to perform its obligations under
this Clause 6.2. Operator and Rolls-Royce shall each take all
necessary steps to secure the release with respect to any
charges, liens and encumbrances with respect to any such
equipment exchanged. Each party shall indemnify the other party
for its failure to comply with this Clause 6.2.
7 Charges
7.1 Charges for Covered Services
During the Period of Cover, the charges payable by Operator to Rolls-Royce
in respect of Covered Services shall be calculated by multiplying the
Flight Hours for each Engine during each month by the following charges
(in United States Dollars).
7.1.1 Shop Visit Coverage
------------------------------------------
10-Year term, Firm Aircraft Annual Utilization (FH per Year)
-------------------------------------------------------------------------
Mission Length (FH/Cycle) 2,400 2,600 2,800 3,000 3,200
-------------------------------------------------------------------------
0.80 * * * * *
-------------------------------------------------------------------------
1.00 * * * * *
-------------------------------------------------------------------------
1.10 * * * * *
-------------------------------------------------------------------------
1.20 * * * * *
-------------------------------------------------------------------------
1.40 * * * * *
-------------------------------------------------------------------------
As an alternative payment plan, Rolls-Royce offers the following stepped
Charges. Operator shall inform Rolls-Royce no later than three (3) months
prior to entry-into-service of the first Aircraft which of the two options
Operator wishes to elect.
Based on an annual utilization of 3,000 EFH and a Stage Length of 1.1 EFH.
Years 1-2: *
Years 3-5: *
Years 6-10: *
Rolls-Royce offers to extend the term of the Total Support Package to 15
years. Based on an annual utilization of 3,000 EFH and a Stage Length of
1.1 EFH the Charge for years 11-15 would be *. Operator shall inform
Rolls-Royce no later than twelve (12) months prior to the end of the
ten-year term whether Operator wishes to extend the term of the Total
Support Package to 15 years.
Firm and Option Aircraft:
Should Operator take delivery of any Option Aircraft, then upon Operator's
request, Rolls-Royce will cover such Option Aircraft under the Total
Support Package. Based on an Option Aircraft delivery schedule of 1 (one)
aircraft every 2 (two) months starting in July 2005, the following charges
would apply:
15-Years Flat Charge, 30 Aircraft fleet: from EIS of the first Aircraft
*
15-Years Flat Charge, 40 Aircraft fleet: from EIS of the first Aircraft
*
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
Page 63 of 78
Rolls-Royce Corporation/Astral Aviation
General Terms Agreement
7.1.2 Life Limited Parts
This service is offered to Operator as an optional coverage and
additional to the Shop Visit Coverage above. Operator shall
inform Rolls-Royce no later than three (3) months prior to
entry-into-service of the first Aircraft whether Operator wishes
to select this option.
------------------------------------------
10-Year term, Firm Aircraft Annual Utilization (FH per Year)
-------------------------------------------------------------------------
Mission Length (FH/Cycle) 2,400 2,600 2,800 3,000 3,200
-------------------------------------------------------------------------
0.80 * * * * *
-------------------------------------------------------------------------
1.00 * * * * *
-------------------------------------------------------------------------
1.10 * * * * *
-------------------------------------------------------------------------
1.20 * * * * *
-------------------------------------------------------------------------
1.40 * * * * *
-------------------------------------------------------------------------
7.1.3 LRP Support
This service is offered to Operator as an optional coverage and
additional to the Shop Visit Coverage above. Operator shall
inform Rolls-Royce no later than three (3) months prior to
entry-into-service of the first Aircraft whether Operator wishes
to select this option.
------------------------------------------
10-Year term, Firm Aircraft Annual Utilization (FH per Year)
-------------------------------------------------------------------------
Mission Length (FH/Cycle) 2,400 2,600 2,800 3,000 3,200
-------------------------------------------------------------------------
0.80 * * * * *
-------------------------------------------------------------------------
1.00 * * * * *
-------------------------------------------------------------------------
1.10 * * * * *
-------------------------------------------------------------------------
1.20 * * * * *
-------------------------------------------------------------------------
1.40 * * * * *
-------------------------------------------------------------------------
7.1.4 Transportation
This service is offered to Operator as an optional coverage and
additional to the Shop Visit Coverage above and covers the
round-trip transportation of Engines for Rework to and from the
Authorized Facilities. Operator shall inform Rolls-Royce no later
than three (3) months prior to entry-into-service of the first
Aircraft whether Operator wishes to select this option.
------------------------------------------
10-Year term, Firm Aircraft Annual Utilization (FH per Year)
-------------------------------------------------------------------------
Mission Length (FH/Cycle) 2,400 2,600 2,800 3,000 3,200
-------------------------------------------------------------------------
0.80 * * * * *
-------------------------------------------------------------------------
1.00 * * * * *
-------------------------------------------------------------------------
1.10 * * * * *
-------------------------------------------------------------------------
1.20 * * * * *
-------------------------------------------------------------------------
1.40 * * * * *
-------------------------------------------------------------------------
(Assumption: Main Base Milwaukee)
7.1.5 Foreign Object Damage
This service is offered to Operator as an optional coverage and
additional to the Shop Visit Coverage and covers the removal of
Engines for Rework due to the non-negligent ingestion of ice,
birds, hailstones or runway gravel. Operator shall inform
Rolls-Royce no later than three (3) months prior to
entry-into-service of the first Aircraft whether Operator wishes
to select this option.
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
Page 64 of 78
Rolls-Royce Corporation/Astral Aviation
General Terms Agreement
------------------------------------------
10-Year term, Firm Aircraft Annual Utilization (FH per Year)
-------------------------------------------------------------------------
Mission Length (FH/Cycle) 2,400 2,600 2,800 3,000 3,200
-------------------------------------------------------------------------
0.80 * * * * *
-------------------------------------------------------------------------
1.00 * * * * *
-------------------------------------------------------------------------
1.10 * * * * *
-------------------------------------------------------------------------
1.20 * * * * *
-------------------------------------------------------------------------
1.40 * * * * *
-------------------------------------------------------------------------
7.1.6 Spare Engine Support
As an alternative to purchasing the recommended level of spare
Engines as detailed in Exhibit E above, Operator may elect to
obtain spare Engine support through Rolls-Royce's pool of spare
Engines.
When Operator and Rolls-Royce agree that there is a requirement
for a spare Engine, such as scheduling an engine off-wing due to
deterioration or Operator experiencing an AOG (provided it is as
a result of a Qualified Event), Rolls-Royce will provide Operator
with a lease engine within 24 hours.
This service covers the any applicable return conditions for
spare Engines. Operator shall inform Rolls-Royce no later than
three (3) months prior to entry-into-service of the first
Aircraft whether Operator wishes to select this option.
------------------------------------------
10-Year term, Firm Aircraft Annual Utilization (FH per Year)
-------------------------------------------------------------------------
Mission Length (FH/Cycle) 2,400 2,600 2,800 3,000 3,200
-------------------------------------------------------------------------
0.80 * * * * *
-------------------------------------------------------------------------
1.00 * * * * *
-------------------------------------------------------------------------
1.10 * * * * *
-------------------------------------------------------------------------
1.20 * * * * *
-------------------------------------------------------------------------
1.40 * * * * *
-------------------------------------------------------------------------
7.1.7 The charges referred to in Clauses 4.4 and 7.1.1 to 7.1.6 are in
January 2001 economic conditions, and are subject to escalation
in accordance with Exhibit E Schedule 2 of this Agreement.
7.2 Adjustment of Charges
The above pricing has been calculated based on certain understandings as
set out in Clause 5.1 above and the assumptions as specified in Exhibit B
to this Agreement. The Parties shall review the validity of these
assumptions no earlier than one year after the effective date of this
agreement. If Operator's operation of the Aircraft and Engines is at any
time during the Period of Cover materially different from these
understandings and assumptions, then the Parties by mutual agreement shall
make adjustments on a going-forward basis as set out below to the pricing
contained in Clause 7.1 to reasonably reflect the effect of such different
operation on the cost to Rolls-Royce of providing the services specified
herein. In connection with any agreement by the Parties to implement a new
hourly rate due to a change in the assumptions, the Parties shall also
agree to a date, corresponding to the date that the original assumption
became invalid, that the new rate shall be effective. To the extent that
the retroactive application of the new rate creates an overage or shortage
in payments due to Rolls-Royce, then the Parties shall mutually agree upon
a schedule to offset the overage or shortage commencing no later than
three months after the overage or shortage is identified. The overage or
shortage may be reimbursed in one lump sum or over time, but in no event
shall the duration for reimbursement exceed two years.
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
Page 65 of 78
Rolls-Royce Corporation/Astral Aviation
General Terms Agreement
7.3 Charges for Additional Services
Rolls-Royce shall invoice Operator, and Operator shall pay, for all
Additional Services and any and all Parts incorporated in accordance with,
and the then current applicable Authorized Facility's commercial rates for
labor, subcontract charges, handling fees and test facility, fuel and oil
fees.
8 Payment
8.1 During the Period of Cover, Rolls-Royce shall invoice Operator for charges
established under Clauses 7.1 on a monthly basis based upon information
for the previous month provided by Operator through the Operating Report
form (Schedule C to this Exhibit). Within five (5) business days of the
date of invoice (such invoice to be faxed to the fax number set out in
Clause 14.3 above), Operator will pay for such invoice. Should Operator
not provide an Operating Report within the schedule set out above, then
Rolls-Royce may send Operator a monthly invoice based on the hours and
cycles flown in the preceding month.
8.2 Payment by Operator of any amounts due in accordance with Clause 7.3 above
shall be made within thirty (30) calendar days after the later of (a)
Rolls-Royce's date of invoice, or (b) redelivery to Operator of any item
of Products following the Rework of such item of Products.
Page 66 of 78
Rolls-Royce Corporation/Astral Aviation
General Terms Agreement
Schedule A To Exhibit G (Total Support Package)
Engine Serial Numbers
To be amended
Page 67 of 78
Rolls-Royce Corporation/Astral Aviation
General Terms Agreement
Schedule B to Exhibit G (Total Support Package)
NOT APPLICABLE
Page 68 of 78
Rolls-Royce Corporation/Astral Aviation
General Terms Agreement
Schedule C to Exhibit G (Total Support Package)
Operating Report
Operating Report for the month of _____________, ______
Engine Serial Number TSN CSN MFH MFC
AE12345 10,000 8,000 200 50
______ ______
Monthly Total
% of Flight Cycles using of ATO/1 during month: XX%
OR
Average Derate achieved During Month: XX%
Page 69 of 78
Rolls-Royce Corporation/Astral Aviation
General Terms Agreement
Schedule D to Exhibit G (Total Support Package)
Adjustment of Charges
The rates contained in this agreement are predicated upon use of the AT/O-1 take
off rating for 85% of all take offs. To the extent Operator's usage of the
AT/O-1 power setting varies from this assumption, the rates contained in this
Agreement shall be revised, either up or down, in accordance with the following
table:
--------------------------------------------------------------------------------
Percent of Flights Percent of Flights Rate Adjustment for
Using AT/0-1 Power Using T/0-1 Power AE 3007 Engines
--------------------------------------------------------------------------------
100.0% 0.0% *
--------------------------------------------------------------------------------
95.0% 5.0% *
--------------------------------------------------------------------------------
90.0% 10.0% *
--------------------------------------------------------------------------------
85.0% 15.0% *
--------------------------------------------------------------------------------
80.0% 20.0% *
--------------------------------------------------------------------------------
75.0% 25.0% *
--------------------------------------------------------------------------------
70.0% 30.0% *
--------------------------------------------------------------------------------
65.0% 35.0% *
--------------------------------------------------------------------------------
60.0% 40.0% *
--------------------------------------------------------------------------------
55.0% 45.0% *
--------------------------------------------------------------------------------
50.0% 50.0% *
--------------------------------------------------------------------------------
45.0% 55.0% *
--------------------------------------------------------------------------------
40.0% 60.0% *
--------------------------------------------------------------------------------
35.0% 65.0% *
--------------------------------------------------------------------------------
30.0% 70.0% *
--------------------------------------------------------------------------------
25.0% 75.0% *
--------------------------------------------------------------------------------
20.0% 80.0% *
--------------------------------------------------------------------------------
15.0% 85.0% *
--------------------------------------------------------------------------------
10.0% 90.0% *
--------------------------------------------------------------------------------
5.0% 95.0% *
--------------------------------------------------------------------------------
0.0% 100.0% *
--------------------------------------------------------------------------------
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
Page 70 of 78
Rolls-Royce Corporation/Astral Aviation
General Terms Agreement
Schedule E to Exhibit G (Total Support Package) - NOT APPLICABLE
Page 71 of 78
Rolls-Royce Corporation/Astral Aviation
General Terms Agreement
Schedule F to Exhibit G (Total Support Package)
Line Replaceable Units:
--------------------------------------------------------------------------------
Part Description P/N Qty./Engine
--------------------------------------------------------------------------------
Accessory Drive Gearbox 23070680 1
--------------------------------------------------------------------------------
Alternator Stator (PMA) 23064340 1
--------------------------------------------------------------------------------
CVG Actuator 23058911 1
--------------------------------------------------------------------------------
External Engine Control Harness (A) 23066759 1
--------------------------------------------------------------------------------
External Engine Control Harness (B) 23062387 1
--------------------------------------------------------------------------------
External Engine Indicating Harness 23070216 1
--------------------------------------------------------------------------------
FADEC 23068670 2
--------------------------------------------------------------------------------
FPMU 23063131 1
--------------------------------------------------------------------------------
Fuel Filter Element 23061826 1
--------------------------------------------------------------------------------
Fuel Nozzles 23065950 16
--------------------------------------------------------------------------------
Igniter Leads 23054367/68 2
--------------------------------------------------------------------------------
Igniter Plugs 23062672 2
--------------------------------------------------------------------------------
Ignition Exciter Box 23057324 2
--------------------------------------------------------------------------------
Internal Engine Control Harness (A) 23061469 1
--------------------------------------------------------------------------------
Internal Engine Control Harness (B) 23061470 1
--------------------------------------------------------------------------------
Internal Engine Indicating Harness 23070210 1
--------------------------------------------------------------------------------
Lube & Scavenge Pump 23068052 1
--------------------------------------------------------------------------------
Oil Cooler, Air Cooled (ACOC) 23056822 1
--------------------------------------------------------------------------------
Oil Cooler, Fuel (FCOC) 23064999 1
--------------------------------------------------------------------------------
Oil Filter Element 23069424 1
--------------------------------------------------------------------------------
Oil Filter Unit Assembly 23064830 1
--------------------------------------------------------------------------------
Oil Level Warning Sensor 23063236 1
--------------------------------------------------------------------------------
Oil Pressure & Temp. Transducer 23062618 1
--------------------------------------------------------------------------------
Oil Tank 23070328 1
--------------------------------------------------------------------------------
Thermocouple 23039952 16
--------------------------------------------------------------------------------
Thermocouple Harness 23059920/21 2
--------------------------------------------------------------------------------
Page 72 of 78
Rolls-Royce Corporation/Astral Aviation
General Terms Agreement
Schedule G to Exhibit G (Total Support Package)
LRP SUPPORT PROGRAM
Rolls-Royce shall provide Operator with a Parts service which shall enable
Operator whenever a LRP suffers a Qualified Event to the repair or replacement
of such LRP in accordance with the procedures specified in Clause 3 Procedures
hereof, by way of either (i) withdrawal of an equivalent part from the On-Site
Stock, which stock shall be made available to Operator according to the
provisions of Clause 1 hereof or, (ii) in the event there is no equivalent part
available on the On-Site Stock, request Rolls-Royce to provide an equivalent
part from the Rolls-Royce Stock.
In addition to the definitions as set out at Clause 1 of the Agreement, in this
Schedule G to Exhibit G the following words and phrases shall have the meanings
and definitions as set forth:
"Documentation" means all airworthiness documentation for Parts as required by
the applicable European Civil Aviation Regulatory or United States Federal
Aviation Administration authorities, including but not limited to the JAA/FAA
form One serviceable tag, certificate of compliance, and tags for such Parts
indicating TSN, CSN, Cal. Time and the history relevant data or hard time
affected parts, including Aircraft effectivity, whatever is applicable.
"Rolls-Royce Stock" means a stock of Parts owned by and located with
Rolls-Royce.
"On-Site Stock" means the stock of the Parts identified in Attachment 1 to this
Schedule G owned by Rolls-Royce and which shall remain located at Operator's
facility under Operator's sole risk and responsibility, and from which Operator
may withdraw a replacement Part in exchange for an Unserviceable Part.
"Operator's Facility" means, collectively or individually, Operator's premises
at Milwaukee.
"Rolls-Royce's Facility" means its place of business in Derby, England or,
Louisville, KY, USA or in the case of certain supplier parts, the place of
business of Xxxxx Aerospace (Birmingham, England) for FPMU and FADEC and other
Xxxxx supplied Parts or in the case of Delavan supplied fuel nozzles, XX
Xxxxxxxx'x UK facility, or XX Xxxxxxxx'x Delavan facility at Des Moines, Iowa.
Rolls-Royce will advise from time-to-time those specific sites which are to be
utilized for spare Parts Support. Individually, they shall be referred to as
"Rolls-Royce's Facility" and collectively, "Rolls-Royce's Facilities".
"Unserviceable Part(s) means an LRP installed in an Engine, which has become
unserviceable according to the conditions set forth in this Agreement.
1 On-Site Stock
Rolls-Royce shall make available to Operator On-Site Stock as set forth in
Attachment 1 hereto.
1.1 Conditions Precedent
Prior to delivery of the On-Site Stock to Operator, Operator shall:
o present to Rolls-Royce an Irrevocable Standby Letter of Credit in the
total amount of On-Site Stock value to guarantee satisfaction of
Operator's obligations under this Agreement in respect to the On-Site
Stock. This Irrevocable Standby Letter of Credit shall be issued in
favor of Rolls-Royce, by a first line bank, internationally
recognized, in terms acceptable to Rolls-Royce at its sole discretion,
and shall be valid throughout the Term of this Agreement, and
o procure and maintain appropriate insurance policies to be approved by
Rolls-Royce, in its discretion, covering all of the On-Site Stock for
the full replacement value as indicated in Appendix H and shall
furnish Rolls-Royce with copies of such certificates and as an
additional named insured on any liability policies.
Page 73 of 78
Rolls-Royce Corporation/Astral Aviation
General Terms Agreement
1.2 Delivery
The On-Site Stock shall be delivered Ex-Works (Incoterms 2000),
Rolls-Royce's Facility, in accordance with timescales to be agreed by the
Parties. Rolls-Royce reserves the right, at its sole discretion, to
incorporate new or used serviceable Parts in the On-Site Stock, provided
such Parts have appropriate Documentation.
1.3 Location
During the Period of Cover, Operator shall:
1.3.1 keep the On-Site Stock together with its Documentation in closed,
locked and appropriate facilities, the use of which is reserved
solely for storing and protecting the parts owned by Rolls-Royce,
and shall be clearly marked with the inscription "Rolls-Royce
Property"; and
1.3.2 bear all possession costs and operation charges, including but
not limited to property taxes, sales taxes, use taxes, customs
duties, import permit(s), stamps and other rights and charges
that are likely to be applied by the national legislation of the
country where the Aircraft is/are operated.
1.4 Audit
Rolls-Royce shall have the right to inspect the On-Site Stock and to audit
any records relating thereto, at any reasonable time, upon giving prior
written notice to Operator. In the event any portion of the On-Site Stock
is either missing, or is partially or totally damaged, or does not have
its related Documentation at the time Rolls-Royce carries out its
inspection/audit, Operator shall pay as liquidated damages to Rolls-Royce
an amount equal to the then current list price for a new corresponding
part.
1.5 Use
Operator shall use any of the Parts comprising the On-Site Stock in
accordance with its operational needs, solely to replace an equivalent
Unserviceable Part.
1.6 On-Site Stock Adjustment
The Parties agree to review Attachment 1, the On-Site Stock list, at each
Evaluation Meeting. Following this review, and subject to the mutual
agreement of the parties, the composition of the On-Site Stock may be
amended. In this eventuality, Exhibit H will be amended to reflect the new
composition of the On-Site Stock. Parts to be returned by Operator shall
be packed according to ATA Specifications, with the related Documentation,
delivered DDP (Incoterms 2000) Rolls-Royce's Facility and shall be
received by Rolls-Royce in serviceable condition. In the event that a
re-composition of the Stock results in a revised value, Rolls-Royce
reserves the right to modify the Availability Fee of the On-Site Stock as
described in Clause 5 hereof.
1.7 Return of the On-Site Stock
Promptly on the end of the Term or in the event of early termination of
this Agreement, Operator shall return the On-Site Stock and its related
Documentation to Rolls-Royce, in a serviceable condition, as received from
Rolls-Royce at Operator's expense or purchase it in compliance with the
conditions specified in Clause 1.8 hereof.
In the event that the On-Site Stock is returned with Unserviceable Parts,
Operator accepts liability for any associated modification, Rework, test
and re-certification or replacement
Page 74 of 78
Rolls-Royce Corporation/Astral Aviation
General Terms Agreement
costs for such Parts. Operator shall pay such costs immediately upon
presentation of the corresponding invoice by Rolls-Royce.
1.8 Purchase of On-Site Stock
At the end of the Term, Operator may purchase the On-Site Stock at the
price and payment conditions to be timely agreed between the Parties,
provided Operator is not in default of any obligation under this
Agreement.
Payment for any part subject to purchase by Operator and invoiced by
Rolls-Royce shall be remitted to Rolls-Royce by Operator within thirty
(30) days from such date of invoice.
1.9 On-Site Stock Default
If Operator fails to return the On-Site Stock to Rolls-Royce within
fifteen (15) days of the end of this Agreement or does not purchase it,
Rolls-Royce may levy late return fees equating to zero point five per cent
(0.5%) of the total On-Site Stock value, per day of delay over the
Specified Date until actual receipt by Rolls-Royce of all parts comprising
the On-Site Stock. In addition, Rolls-Royce shall be entitled to take
action to re-posses the On-Site Stock by any convenient or appropriate
means, in accordance with the law, and to hold Operator liable for any
damages, losses, reclaiming costs (including representation and court
costs), Rework and associated expenses, and Rolls-Royce or its agent may
for this purpose enter any premises belonging to or occupied by Operator.
2 Rolls-Royce Stock
Rolls-Royce will maintain at its own risk of loss of or damage and its own
facilities a stock of Parts to support Operator's requirements for Parts.
3 Procedures
3.1 In order to replace an Unserviceable Part with an equivalent part from the
On-Site Stock or from the Rolls-Royce Stock, Operator shall observe the
following procedures:
3.1.1 Withdraw an equivalent part from the On-Site Stock;
3.1.2 In the event there is no equivalent part available on the On-Site
Stock, request from Rolls-Royce an equivalent part from the
Rolls-Royce Stock;
3.1.3 Upon withdrawal of a part from the On-Site Stock or receipt of a
part from the Rolls-Royce Stock, Operator shall, where required
by Rolls-Royce, shall deliver to Rolls-Royce the corresponding
Unserviceable Part in accordance with Clause 3.5 below;
3.1.4 Whenever a part is to be withdrawn from the On-Site Stock,
Operator shall immediately request from Rolls-Royce an equivalent
part from the Rolls-Royce Stock to replenish the On-Site Stock.
3.2 Except as set forth in Clause 1.3 or 5 relating to costs, no additional
payment shall be due by Operator to Rolls-Royce should the part withdrawn
from the On-Site Stock or received from the Rolls-Royce Stock be in a
better or newer condition compared to the Unserviceable Part. Similarly,
no compensation shall be due by Rolls-Royce to Operator should the
opposite occur.
Operator shall request Parts in accordance with the above procedure by
issuing to Rolls-
Page 75 of 78
Rolls-Royce Corporation/Astral Aviation
General Terms Agreement
Royce the Exchange Order and Unserviceable Part Form (hereinafter referred
to as the "Form") which is set out in Attachment 2 hereto.
3.3 Delivery of Rolls-Royce Parts
Delivery of Parts shall be as elsewhere specified in this Agreement.
Rolls-Royce shall have the right to make any necessary corrections or
changes in part numbers and nomenclatures, or to substitute parts,
provided that interchangeability thereof is not affected.
3.4 Disposition of Unserviceable Parts
Rolls-Royce shall advise Operator from time to time which Parts are
Reworkable and which are irreparable. Rolls-Royce reserves the right, at
its sole discretion, to revise at any Evaluation Meeting which Parts are
Reworkable and irreparable. Revisions associated with this clause will not
result in any amendment to the charges stipulated in Clause 5 below.
3.5 Reworkable Parts
Within forty eight (48) hours after receipt by Operator of a Part from the
Rolls-Royce Stock as stipulated above, if the Part is identified by
Rolls-Royce as a Reworkable part, Operator shall deliver the equivalent
Unserviceable Part DDP (Incoterms 2000) to Rolls-Royce's Facility, so that
such Unserviceable Part can be Reworked and re-integrated into the
Rolls-Royce Stock as a replacement.
If the Unserviceable Part is not received by Rolls-Royce within forty
eight (48) hours after the lead time stipulated in the preceding paragraph
due to a reason not being an Excusable Delay, Operator's sole liability to
Rolls-Royce shall be payment to Rolls-Royce, upon presentation of a
corresponding invoice, of five hundred U.S. dollars ($ 500.00) per day of
delay. Such liquidated damage will not, in any event, exceed one hundred
percent (100%) of the then current list price for a new corresponding
Part.
If the cost of the Rework of the Unserviceable Part exceeds seventy-five
percent (75%) of the list price of an item the Rework shall be considered
"Beyond Economical Rework". Operator shall, at its sole election, within
forty eight (48) hours after receipt of Rolls-Royce's written notice to
that effect, either: (i) request Rolls-Royce to return the Unserviceable
Part to Operator and simultaneously, Operator shall return to the On-Site
Stock the part withdrawn thereof according to Article 3.1 above, in
airworthiness condition, or (ii) immediately pay to Rolls-Royce an amount
equal to seventy-five percent (75%) of the then current list price for a
new corresponding Part.
If Rolls-Royce determines Unserviceable Parts returned are not Qualified
Parts having suffered Qualifying Events (such as No-Fault Found or subject
to abnormal corrosion, wear and tear, etc.) Rolls-Royce shall charge
Operator for either the Rework or replacement of such Unserviceable Part.
3.6 Irreparable Parts
Parts removed from Engines which are identified by Rolls-Royce as
irreparable parts will be scrapped locally by Operator. Within thirty (30)
days of the end of each month, Operator shall provide Rolls-Royce with a
certificate stating the number of each such parts replaced during the
preceding month.
Page 76 of 78
Rolls-Royce Corporation/Astral Aviation
General Terms Agreement
3.7 Operator's Parts Usage
During the Evaluation Meeting, Rolls-Royce and Operator shall review
Operator's Engine fleet consumption of Parts compared to the worldwide
engine fleet. If, allowing for Operator's specific maintenance schedule
and operating conditions, Operator's usage of Parts is significantly worse
than Rolls-Royce's recommendations and the levels exhibited by the
worldwide fleet, Rolls-Royce and Operator will review the reasons causing
the high usage and agree to changes in Operator's maintenance practices to
address such differences. Rolls-Royce reserves the right to modify the
flight hour fee as described at Clause 5.3 below to address such
disproportionate usage.
3.8 Title And Risk
Title to On-Site Stock shall remain with Rolls-Royce. Operator may not,
under any circumstances, perform or permit an action to be taken that may
be detrimental to Rolls-Royce's title to and property in the On-Site
Stock, including without limitation, Operator must not transfer, sell,
charge, pawn, mortgage, negotiate, dispose of, or intend to negotiate or
dispose of the On-Site Stock; and Operator shall take the necessary
measures in order to prevent the On-Site Stock or part of the On-Site
Stock from being seized or taken away, or to check the On-Site Stock in
the event of a seizure by distress or any other similar legal process.
However, if the On-Site Stock or part of the On-Site Stock is seized or
taken away, Operator must immediately inform Rolls-Royce in writing and
indemnify Rolls-Royce for any losses, costs or expenses incurred by
Rolls-Royce as a result of the above-mentioned events.
Title to and risk of loss or damage to Unserviceable Parts shall pass from
Operator to Rolls-Royce upon receipt and acceptance by Rolls-Royce of such
Unserviceable Part. Title to Parts withdrawn by Operator from the On-Site
Stock shall pass from Rolls-Royce to Operator upon receipt and acceptance
by Rolls-Royce of the equivalent Unserviceable Part or upon receipt by
Rolls-Royce of the corresponding Part price in case of non-delivery of the
Unserviceable Part in exchange of a part withdrawn from the On-Site Stock
or non-acceptance of such part by Rolls-Royce.
Title to parts delivered to Operator from the Exchange Stock, except when
such part were delivered to replace a corresponding part at the On-Site
Stock, shall pass to Operator upon receipt and acceptance by Operator.
Risk of loss or damage to any exchange part withdrawn by Operator from the
On-Site Stock or delivered by Rolls-Royce to Operator from the Exchange
Stock shall pass from Rolls-Royce to Operator at the time of delivery of
any such part to Operator`s Facility.
4 Miscellaneous
4.1 Rolls-Royce shall, within the Airworthiness Directive ("AD") period and in
a manner co-ordinated with Operator, incorporate in the parts comprising
the On-Site Stock and the Exchange Stock free of charge to Operator,
presuming the modifications are classified as AD mandatory by the FAA,
compliance with which is required within the Period of Cover.
4.2 Except as specified above, Rolls-Royce shall have the right, but not the
obligation, to incorporate, at its sole discretion, any change developed
as product improvement in the parts comprising the On-Site Stock and the
Exchange Stock, at its own cost.
4.3 Every six (6) months following signature of this Agreement up to the end
of the Term, the Parties shall meet, at a mutually agreed upon time and
place, to evaluate the following cases (the "Evaluation Meeting(s)"):
Page 77 of 78
Rolls-Royce Corporation/Astral Aviation
General Terms Agreement
4.3.1 cases in which Unserviceable Part(s) was/were sent by Operator
with no fault found ("No fault found cases");
4.3.2 cases where delays in delivery and related penalties occurred;
4.3.3 cases requiring On-Site Stock adjustment;
4.3.4 logistics performance of both Parties;
4.3.5 Operator's Parts usage.
4.4 Operator shall not install any part from the On-Site Stock or Exchange
Stock in any aircraft other than the Aircraft, except if Rolls-Royce has
given to Operator its previous written approval. Notwithstanding
Rolls-Royce's approval, Operator shall be liable for and hold Rolls-Royce
harmless from any such installation.
4.5 Operator shall not enter into nor permit any pooling or exchange
arrangement in respect of the parts listed in Attachments 1 or 2 without
prior written consent of Rolls-Royce.
5 Charges
Operator shall pay the following fees for the services described and
carried out by Rolls-Royce according to this Agreement:
5.1 INTENTIONALLY DELETED
5.2 The Flight Hour fee as set out in Clause 7 of this Exhibit.
Page 78 of 78
PRIVATE DATA
NOT TO BE DISCLOSED WITHOUT THE PRIOR WRITTEN CONSENT OF BOTH PARTIES
(EXCEPT AS REQUIRED BY APPLICABLE LAW, REGULATORY AUTHORITIES,
COURT ORDER, VALID SUBPOENA OR DISPUTE RESOLUTION PROCEEDINGS)
August 13, 2001
Astral Aviation, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxx, X.X.X. 00000
Dear Sirs:
Side Letter Agreement Number One to General Terms Agreement, reference
RRC/AST/MG755
Financial Assistance
Rolls-Royce Corporation ("Rolls-Royce") and Astral Aviation, Inc. ("Astral
Aviation") have entered into a General Terms Agreement referenced MG755 dated
August 13, 2001 relating to amongst other things the purchase of support
equipment and the provision of warranties and guarantees (the "GTA").
In consideration of Astral Aviation entering into the GTA the parties agree to
amend and supplement the GTA as follows:
Terms used herein and not defined herein shall have the meanings assigned to
them in the GTA.
1. Spare Engine Financial Assistance
1.1 Spare Engine Discount
Rolls-Royce is pleased to provide a * discount off the Base Price of
each of the four (4) spare Engines purchased by Astral Aviation in
support of the 20 Firm Aircraft.
1.2 Spare Engine Escalation Adjustment
Rolls-Royce is pleased to adjust the datum year for each of the four
(4) spare Engines purchased by Astral Aviation in support of the 20
Firm Aircraft from a * level to a * economic level, thereby
providing escalation relief to Astral Aviation *.
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
1.3 Spare Engine Credits
Upon delivery of each of the four (4) spare Engines purchased by
Astral Aviation in support of the 20 Firm Aircraft, Rolls-Royce shall
issue to Astral Aviation a credit note in the amount of *
(fixed level).
1.4 If Astral Aviation should not accept delivery of and operate the
Aircraft contemplated in this Side Letter Agreement and the spare
Engines ordered in accordance with the GTA, then the value of any
credits on a per aircraft basis becoming due to or received by Astral
Aviation pursuant to this Side Letter or the GTA will be reduced on a
pro-rata basis except that the above credit amount shall not be
reduced as long as Astral Aviation takes delivery of and operates a
minimum of eighteen (18) Aircraft. The short-term lease (maximum of 3
months lease period) of an Aircraft to another operator and / or the
operation of the Aircraft by a Astral Aviation wholly-owned subsidiary
and / or the operation of the Aircraft by its parent company Midwest
Express Airlines, Inc. shall not impact Rolls-Royce obligation to
provide the credits as set out above.
The credits set out in Clause 1.3 above may be used towards any of the
following purposes:
1.4.1 Reduction of the spare Engine price for each of the four (4)
firm spare Engines to be purchased from Rolls-Royce of up to
* of the spare Engine list price;
1.4.2 Acquisition of IP spares and support equipment purchased from
Rolls- Royce;
1.4.3 Reduction of up to 50% of the charges for Covered Services
under the Total Support Package set out in Exhibit G of the
GTA; or
1.4.4 Reduction of lease rentals and other costs associated with the
lease of spare Engines from Rolls-Royce Partners Financing
Limited; or
1.4.5 Reduction of lease rentals and other costs associated with the
lease of emergency Engines from Rolls-Royce Corporation.
1.5 Reduced Spare Engine Pre-Delivery Payments
The parties agree to amend Clause 4 of Exhibit of E-1 of the GTA with
respect to the four (4) firm Spare Engines, as follows:
* Therefore, Astral Aviation shall make payments in respect of Spare
Engines as follows:
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
RRC/AST/MG757 Side Letter No. 1 to RRC GTA Page 2 of 6
o *; and
o *.
2. Initial Provisioning Spare Parts and Tooling
Rolls-Royce is pleased to provide the following financial assistance in
support of Astral Aviation's Initial Provisioning:
2.1 A credit in the amount of * (2001 levels), to be used to
purchase Rolls-Royce-supplied Initial Provisioning Spare Parts; and
2.2 A credit in the amount of * (2001 levels), to be used to
purchase Rolls-Royce-supplied Initial Provisioning Tooling. A list of
recommended Tooling can be provided upon request.
3. Training
3.1 Rolls-Royce will provide free of charge training to Astral Aviation
for the following courses:
Management Orientation (2 days);
Pilot Familiarization (1-4 days); and
Operations and Line Maintenance (5 days).
3.2 Free of charge training shall be provided for up to * students
for each course for each Aircraft to be delivered, and must be
attended within two (2) years after the delivery of the last Aircraft.
Rolls-Royce agrees that Astral Aviation may, at its option, aggregate
the free of charge training to be provided with respect to the twenty
(20) Firm Aircraft and obtain such training in advance of the delivery
of said Aircraft, subject to Rolls-Royce's reasonable class size and
staffing limitations; Rolls-Royce will therefore make adequate
training slots available so that if Astral Aviation so chooses, it may
have up to * students take each of the courses prior to the delivery
of the first Firm Aircraft. All training shall be conducted either at
Rolls-Royce's Indianapolis, Indiana, facility or at the facilities of
Astral Aviation in Milwaukee, Wisconsin.
3.3 Each student will be provided with one (1) copy of the training
material. Five (5) additional copies and a reproducible master of the
training material shall be provided for Astral Aviation' internal use
and copying no later than the date the first Firm Aircraft is
delivered.
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
RRC/AST/MG757 Side Letter No. 1 to RRC GTA Page 3 of 6
4. Manuals
Rolls-Royce will provide free of charge * copies of each of the
Manuals (as detailed in Exhibit D, Clause 2.4 of the GTA) to Astral
Aviation, together with a * year revision service or as long as
Astral Aviation operates a minimum of ten (ten) Aircraft.
5. Representative Services
Rolls-Royce will make available the services of a Customer Support
Representative (as detailed in Exhibit D, Clause 2.3 of the GTA) at Astral
Aviation' facilities in Milwaukee *.
6. Obligations of Astral Aviation
The obligations of Rolls-Royce set out herein are subject to the following
conditions:
6.1 Astral Aviation shall acquire, subject to its rights and remedies
under its contract with Airframer for the purchase of Aircraft, and
take delivery of at least twenty (20) new Aircraft ;
6.2 Astral Aviation shall operate in regular and frequent airline service
any Aircraft delivered from delivery of such Aircraft;
6.3 Astral Aviation shall not be in material breach (that has not been
cured within any applicable cure period) of any of its obligations
under the GTA and the contracts referred to in Clause 9 of the GTA ;
6.4 Astral Aviation undertakes that the Aircraft that Astral Aviation may
acquire will be AE3007 powered;
6.5 The GTA shall remain in effect and not be terminated by Rolls-Royce in
accordance with Clause 9 of the GTA.
7. General Conditions
7.1 All credits granted to Astral Aviation in this Side Letter Agreement
and the GTA are personal to Astral Aviationare (subject to Clause 14.4
of the GTA), are non-assignable, and are not convertible to cash.
7.2 Unless otherwise amended herein, the provisions of the GTA are hereby
incorporated by reference in this Side Letter Agreement. In the event
of any inconsistency or conflict between this Side Letter Agreement
and the GTA, the provisions of this Side Letter Agreement shall
control.
7.3 This Side Letter Agreement constitutes the entire agreement between
Rolls-Royce and Astral Aviation, superseding all prior oral or written
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
RRC/AST/MG757 Side Letter No. 1 to RRC GTA Page 4 of 6
agreements, understandings, representations and negotiations, on the
subject matter hereof; and there are no conditions affecting this Side
Letter Agreement that are not expressed herein. This Side Letter
Agreement shall not be amended in any way other than by agreement in
writing, entered into by the parties hereto after the date of this
Side Letter Agreement, which is expressly stated to amend this Side
Letter Agreement. This Side Letter Agreement shall not be amended or
terminated orally.
7.4 THIS SIDE LETTER AGREEMENT SHALL BE SUBJECT TO AND INTERPRETED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
EXCLUDING ITS CONFLICT OF LAW RULES, AND EXCLUDING THE UNITED NATIONS
CONVENTION FOR THE INTERNATIONAL SALE OF GOODS (CISG, 1980, {"VIENNA
CONVENTION").
This Side Letter Agreement is expressly made subject to Clause 14.9.1
of the GTA.
RRC/AST/MG757 Side Letter No. 1 to RRC GTA Page 5 of 6
Please confirm your agreement to the above by executing this letter in the space
provided below.
Yours faithfully,
For Rolls-Royce Corporation For Astral Aviation, Inc.
By: /s/ X.X. Xxxxxxxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------------ -------------------------------
Name: X.X. Xxxxxxxxxx Name: Xxxxx X. Xxxxxx
Title: V.P. Finance Corp. & Regional Title: President & CEO
Airlines, N.A.
By: /s/ Xxxxx X.X. Xxxxxx
Name: Xxxxx X.X. Xxxxxx
Title: Commercial Director
RRC/AST/MG757 Side Letter No. 1 to RRC GTA Page 6 of 6
