RATE PER FLIGHT HOUR AGREEMENT FOR CFM56-5B ENGINE SHOP MAINTENANCE SERVICES BETWEEN CFM INTERNATIONAL, INC. AND AVIANCATACA HOLDING S.A.

Exhibit 10.16

RATE PER FLIGHT HOUR AGREEMENT

FOR

CFM56-5B

ENGINE SHOP MAINTENANCE SERVICES

BETWEEN

CFM INTERNATIONAL, INC.

AND

AVIANCATACA HOLDING S.A.

Service Agreement Number: 1-2722979761

Dated: February 6, 2013

PROPRIETARY INFORMATION NOTICE

The information contained in this document is CFM International, Inc. (“CFM”) and AVIANCATACA HOLDING S.A. (“AVIANCATACA”) Proprietary Information and is disclosed in confidence. It is the property of the Parties and will not be used, disclosed to others or reproduced without the express written consent of the Parties. If consent is given for reproduction in whole or in part, this notice and the notice set forth on each page of this document will appear in any such reproduction. U.S. export control laws may also control the information contained in this document. Unauthorized export or re-export is prohibited.

TABLE OF CONTENTS


1.	DEFINITIONS	3
2.	SCOPE OF THE SERVICE AGREEMENT	3
3.	TERM OF THE SERVICE AGREEMENT	3
4.	ENGINES AND OPERATING PARAMETERS	3
5.	CFM SERVICE PROGRAM	3
6.	ENGINE SHOP VISIT	5
7.	PRICES	7
8.	INVOICING AND PAYMENT TERMS	7
9.	WARRANTY AND LIMITATION OF LIABILITY	7
10.	DELIVERY – REDELIVERY	8
11.	TURN AROUND TIME	9
12.	ADDITION TO/ REMOVAL FROM SERVICE AGREEMENT	9
13.	COMMUNICATION	10
14.	GENERAL TERMS AND CONDITIONS	11

CFM PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

THIS RATE PER FLIGHT HOUR AGREEMENT FOR ENGINE SHOP MAINTENANCE SERVICES (“Service Agreement”) is made this 6th day of February, 2013, by and between AviancaTaca Holding S.A., a company duly organized under the laws of Panama having a principal place of business at Centro Administrativo, Xxxxxxx Xx Xxxxxx, Xxxxxx, Xxxxxxxx (“AVIANCATACA”), and CFM International, Inc., having its principal place of business at 0000 Xxxxxxxx Xxx, Xxxx Xxxxxxx, Xxxx 00000 XXX (“CFM”), (each a “Party” and collectively referred to herein as “Parties”).

WHEREAS, AVIANCATACA desires to enter into the Service Agreement with CFM whereby CFM will perform or cause to be performed the maintenance, repair, and overhaul of certain CFM56-5B engines operated by AVIANCATACA (“MRO”).

WHEREAS, CFM agrees to provide or cause to be provided such MRO services.

NOW THEREFORE, in consideration of the mutual covenants herein contained, the Parties agree as follows:

1.0

DEFINITIONS

Capitalized terms used in this Service Agreement and not otherwise defined have the meanings set forth in Exhibit A.

2.0

SCOPE OF THE SERVICE AGREEMENT

This Service Agreement contains the terms and conditions applicable to the sale by CFM and the purchase by AVIANCATACA of the CFM Service Program.

The Engines covered by this Service Agreement are described in Article 4.

CFM will provide the Covered Services on the basis of a combination of a Popular Rate and a Restored Rate per Engine Flight Hour covering each Engine for a period of fifteen (15) years from the date of each Engine delivery to AVIANCATACA.

[*]

3.0

TERM OF THE SERVICE AGREEMENT

This Service Agreement will commence on the date of execution of this Service Agreement, (the “Commencement Date”). Each Engine will be covered by this Service Agreement for the period beginning on the delivery date of such Engine to AVIANCATACA and covered for a period of fifteen (15) years, as specified in Exhibit B.

This Service Agreement will continue, unless sooner terminated, for a period ending on the earlier to occur of the completion of the coverage period described above or [*] (the “Term”).

4.0

ENGINES AND OPERATING PARAMETERS

The Engines covered by this Service Agreement and the base operating parameters are set forth on Exhibit B.

5.0

CFM SERVICE PROGRAM

5.1

Covered Services

5.1.1

[*]

[*]

CFM AND AVIANCATACA PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

5.1.3

Engine Management Services and Diagnostic Services

CFM will provide the following diagnostics services:

Engine condition data will be automatically processed by diagnostics software 24 hours a day, 7 days a week (“24x7”) when received at the designated CFM facility. CFM will be responsible for operating and maintaining the diagnostics software and the necessary facilities. AVIANCATACA shall have access to the web-based tools for reviewing Engine condition data and assessing Engine health.

Customer Notification Reports (“CNR”) for Engine condition monitoring trend shift observation, including engineering review, analysis, and recommendations will be provided to AVIANCATACA, as requested by AVIANCATACA, on a 24x7 basis.

Monthly Engine thrust derate report.

Access to diagnostics engineers for Engine diagnostic support and consultation as required.

Periodic teleconference to review reports and program status.

Weekly engine health trend summary and analysis reports.

AVIANCATACA acknowledges and agrees that any such information provided to AVIANCATACA by CFM for use in troubleshooting and managing operations is, for regulatory purposes, advisory only, that CFM is not responsible for line maintenance or other actions or consequences resulting from such advice, and for purpose of compliance with AAA requirements, AVIANCATACA is solely responsible for identifying and resolving any aircraft or Engine faults or adverse trends.

5.1.4

Lease Engine Coverage

CFM shall use reasonable efforts to provide the following lease engine coverage

If AVIANCATACA has an aircraft on ground (“AOG”) situation because the number of Engines in process at the CFM Designated Repair Station for Qualified Shop Visits exceeds the required quantity of spare Engines, as set forth in Exhibit B, and none of AVIANCATACA’s spare Engines are available because they are either receiving a Qualified Shop Visit or installed on an aircraft operated by AVIANCATACA and not by a third party, AVIANCATACA is eligible for the lease engine coverage described in this Article 5.1.4,

ii.

Within twenty-four (24) hours of being notified by AVIANCATACA that the above described AOG situation exists, CFM shall advise AVIANCATACA of the location of the closest available lease engine,

iii.

CFM shall Deliver or cause to be Delivered, such lease engine to AVIANCATACA, Ex Works (Incoterms 2010), at a CFM housekeeping facility or other mutually agreed location. CFM shall endeavor to provide this engine in a neutral QEC configuration. All transportation costs, including insurance will be AVIANCATACA’s responsibility,

iv.

CFM’s obligation to provide such lease engine will terminate when the AOG condition is corrected by the Redelivery of an Engine to AVIANCATACA and the passage of a reasonable amount of time to install such Engine in replacement of the leased engine, subject to AVIANCATACA’s obligation to return the lease engine set forth below,

AVIANCATACA shall pay then-current market rates (but not to exceed the EFH rate that would apply)for the hourly restoration charges and the LLP fees per flight cycle payable under the lease in respect of the lease engine until the lease engine is removed from AVIANCATACA’s aircraft. CFM will waive the daily engine rental fees payable under the lease in respect of the lease engine.

Lease Engine Condition:

CFM’s provision of such lease engine is predicated upon the following:

The Parties have established a mutually agreed Removal Schedule.

CFM AND AVIANCATACA PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

ii.

AVIANCATACA shall use best efforts to ship Engines for Qualified Shop Visits as soon as practicable, but no later than seven (7) Days following removal from the aircraft if the Engine removal is a scheduled event or at an AVIANCATACA main hub (as specified in the operating parameters tables in Exhibit B). If the Engine removal is not a scheduled event and not at an AVIANCA main hub, then AVIANCTACA shall use best efforts to ship the Engine as soon as practicable.

iii.

AVIANCATACA is in full compliance with the records requirements of Article 6.2.

AVIANCATACA and CFM shall negotiate and enter into an engine lease agreement based upon IATA Document No. 5016-00, MASTER SHORT-TERM ENGINE LEASE AGREEMENT, dated December 1, 2002, as may be amended from time to time (the “IATA Master”) together with a lease agreement substantially in the form of Annex 2 thereto incorporating, subject to the terms and conditions contained in such lease agreement, the terms of the IATA Master.

Return of Lease Engines:

[*]

Sole Remedy:

The foregoing provisions of this Paragraph 5.1.4 will constitute the sole remedy of AVIANCATACA and the sole liability of CFM for lease engine availability and resolution of AOG conditions under this Service Agreement.

5.2

Additional Services

5.2.1

[*]

5.2.2

CFM Engineering Support Services

CFM will provide the following engineering support services:

Notify AVIANCATACA of any deviations from the configuration specification of Engines Delivered for Service, and request resolution of same.

Provide an Engine findings report (which may include photographs identifying damage detected and repairs) accomplished.

Consultation on trend reports.

Advice covering Engine enhancements.

CFM will work with AVIANCATACA in inspection of records for used engines being considered by AVIANCATACA for acquisition and shop visit development for return of leased engines, but AVIANCATACA shall be solely responsible for making the final determination as to the quality of the used engines.

5.3 [*]

6.0

ENGINE SHOP VISIT

6.1

[*]

6.2

Procedure

AVIANCATACA shall Deliver the Engine to the CFM Designated Repair Station.

AVIANCATACA shall issue a purchase order to CFM and CFM shall accept the purchase order to the extent it complied with this Service Agreement, CFM shall process the performance of the Services in accordance with the AVIANCATACA requirements specified in such purchase order, provided that, in any event, any conflicting terms and conditions of this Service Agreement shall take precedence over any terms and conditions set forth on such purchase order or CFM acceptance document.

AVIANCATACA shall provide all applicable Engine records, as required by the AAA or as reasonably requested by CFM, and the shop visit data listed in Exhibit C to the extent that the data is not otherwise available to CFM.

CFM AND AVIANCATACA PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

Following Delivery of each Engine at the CFM Designated Repair Station, together with the documents described in Paragraphs (b), and (c) above, CFM shall diligently perform or cause to be performed the Induction of the Engine and shall proceed with the Services requested by such purchase order in accordance with Paragraph (b) above.

CFM will inform AVIANCATACA as to whether the shop visit meets the criteria for a Qualified Shop Visit within a commercially reasonable period of time, not to exceed two (2) weeks after Induction of the Engine.

Upon Induction, CFM will notify AVIANCATACA of any components or LRU’s missing from the Engine. CFM will replace such missing items at AVIANCATACA’s expense as Supplemental Services, unless (i) AVIANCATACA notifies CFM in writing within forty eight (48) hours after receiving CFM’s notice that AVIANCATACA wishes to furnish such missing items; and (ii) AVIANCATACA delivers such missing items to the CFM Designated Repair Station within three (3) weeks.

CFM shall Redeliver a Serviceable Engine to AVIANCATACA.

CFM will prepare and package the Serviceable Engine in shipping stands or containers provided by AVIANCATACA at the time of Delivery in accordance with CFM’s standard commercial practices.

CFM shall provide AVIANCATACA with copies of all work records required by AAA as agreed to in writing by CFM and AVIANCATACA.

CFM shall use only CFM approved parts, materials and published repairs; CFM may not use any non-OEM repairs without AVIANCA/TACA’s prior approval, which may be withheld for any reason. Any deviations from this requirement will require AVIANCATACA’s approval in advance of fitment to the Engine. For parts that are typically time tracked during the course of an overhaul, no replacement part may have a TSN which exceeds the TSN of the Engine in which it is to be installed or of the part which it is replacing. Any replacement part must have a modification and SB status at least as high as that of the part which it is replacing.

6.3

[*]

6.4

Title and Risk of Loss to Parts or Material

CFM furnished parts and material incorporated into an Engine will be deemed to have been sold to AVIANCATACA and title to such parts and material will pass to AVIANCATACA or the owner of the Engine with good title to Parts free and clear upon incorporation into such Engine. Risk of loss or damage to such parts and material will pass to AVIANCATACA upon Redelivery of the Engine.

Title to and risk of loss of any parts (including Repairable and LLP parts) removed from the Engine that are replaced by other parts will pass to CFM free and clear upon incorporation of replacement parts into the Engine.

For removed parts, AVIANCATACA shall provide the associated records, including BTB trace, non-incident statement and CFM-approved parts and repairs certification, to the extent not already available to CFM, as reasonably requested by CFM.

6.5

Engine Configuration

AVIANCATACA shall Deliver the Engine to the CFM Designated Repair Station in a basic engine configuration, equipped with the LRUs listed in Exhibit F. CFM shall Redeliver the Engine in the same basic engine configuration.

In the event an Engine is Delivered with parts or components or QEC equipment in addition to the basic configuration, such Engine shall be Redelivered in the same configuration as Delivered, unless otherwise mutually agreed by the Parties. Any work performed to return such parts or components or QEC equipment in a Serviceable condition will be charged to AVIANCATACA as Supplemental Services.

The Engine Redelivered to AVIANCATACA will have incorporated Airworthiness Directives and CFM Service Bulletins as specified in Article 5.1.1.

CFM AND AVIANCATACA PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

To the extent allowed under Article 6.2, CFM may elect to use used Rotable Parts, and/or repaired parts in Serviceable condition in Engines Redelivered to AVIANCATACA, and such Rotable Parts, and/or repaired parts will be a CFM part of similar configuration as the parts in the Engine Delivered to CFM.

6.6	Sales and Leasing Transactions.

Upon conducting a sale/lease back, leasing or Engine sale transaction, AVIANCATACA will promptly provide CFM with the relevant details, including the other party(ies) involved, lease term, return conditions and any other information reasonably requested by CFM.

For Engines subject to a sale/lease back, leasing or Engine sale transaction, the Parties will, to the extent permitted by the terms of such lease or sale, mutually agree to modify the Workscope and/or the LLP Minimum Build to minimize their investments in accordance with the amount of time the Engine will be covered under the Agreement and the lease return conditions. In the event the terms of such lease or sale require another party’s consent to provide the requested information, AVIANCATACA will undertake all reasonable efforts to obtain the required consent.

7.0

PRICES

*[Four pages have been removed pursuant to a request for confidential treatment]

8.0

[*]

9.0

WARRANTY AND LIMITATION OF LIABILITY

For this Article 9, the term “CFM” shall be deemed to include CFM, GE and Snecma, the CFM Designated Repair Station and CFM’s subsidiaries, assigns, subcontractors, suppliers, Services providers, and their respective directors, officers, employees, and agents.

9.1

Workmanship Warranties

9.1.1

[*]

9.1.2

Conditions and Limitation of Liability

This Services Warranty is applicable only if: the Engine, following Redelivery, (a) has been transported, stored, installed, operated, handled, maintained and repaired in accordance with AVIANCATACA’s AAA approved maintenance program and applicable manuals and regulatory requirements, as well as the then-current CFM recommendations as stated in AMM or CFM manual, Airworthiness Directives, Service Bulletins or other relevant written instructions; and (b) has not been subjected to accident, misuse, abuse or neglect.

Notwithstanding the provisions of Article 9.4, any warranty for Engines or parts, LRU’s, components and material thereof, including the design, material or engineering defects of a manufacturer, will be the warranty, if any, of the manufacturer of such Engines or parts, LRU’s, components or material thereof.

The foregoing will constitute the sole remedy of AVIANCATACA and the sole liability of CFM for defective workmanship relative to the Engines. The liability of CFM connected with or resulting from the Services warranty shall not in any event exceed the cost of correcting the defect as provided above, and, upon the expiration of the shortest period described therein, all such liability will terminate. In no event shall CFM be liable for any special, expectation, consequential, incidental, resultant, indirect, punitive or exemplary damages (including loss of use, loss of profit or loss of revenue in connection with the Engines).

CFM AND AVIANCATACA PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

THE SERVICES WARRANTY SET FORTH HEREIN IS EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES AND GUARANTEES WHETHER WRITTEN, STATUTORY, ORAL OR IMPLIED (INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY IMPLIED WARRANTY ARISING FROM COURSE OF DEALING, COURSE OF PERFORMANCE, OR USAGE OF TRADE).

9.2

Assignment of Warranties

AVIANCATACA may not assign the Services warranty without CFM’s prior written consent. However, CFM will consent to a Services warranty assignment to AVIANCATACA’s lessor or operating subsidiaries and affiliates upon written request, concurrent with the sale or return off lease of an Engine for which the warranty period has not expired, subject to the terms and conditions of a mutually agreed warranty assignment letter.

9.3

Pre-existing Warranties.

AVIANCATACA will assure that any requested repair of an Engine, accessory or component that is covered under a third party warranty that is not assigned to CFM will be performed directly by that third party at no expense to CFM. Notwithstanding the above, CFM may accept a purchase order for the time and material repair of a warranted item from AVIANCATACA or the third party giving the warranty.

9.4

Superseding Warranties.

During the Term of this Service Agreement, AVIANCATACA acknowledges that the obligations undertaken by CFM hereunder, except with respect to the provision of Supplemental Services hereunder, supersede the following Warranties set forth in the GTA, and the following Special Guarantees set forth in Letter Agreement No. 1 to the GTA

Extended New Engine and Module Guarantee

Extended New Parts Guarantee

Extended Ultimate Life Guarantee

Campaign Change Guarantee

Extended Ultimate Life Rotating Parts Guarantee

AOG Guarantee

Any other Engine program considerations undertaken by CFM in any other agreement

for these Engines, relating to shop visits. Upon termination of this Service Agreement, any such warranties or commercial obligations with remaining life will be restored to AVIANCATACA.

10.0

DELIVERY – REDELIVERY

10.1

Delivery

All Engines to be Serviced will be Delivered by AVIANCATACA to the CFM Designated Repair Station. Such Engines will be shipped within five (5) days following removal from the aircraft. AVIANCATACA will not Deliver piece parts or components for repair separate from AVIANCATACA’s Engine without CFM’s written consent.

10.2

Packaging

AVIANCATACA is responsible for all packaging, labeling and associated documentation of the Engine at Delivery, in accordance with the International Civil Aviation Organizations (ICAO) Technical Instructions for the Safe Transport of Dangerous Goods by Air, and if the Engine is to be transported over the United States of America, the US Department of Transport Regulations 48 CFR 171-180. If required by applicable law or regulations, AVIANCATACA will further provide a material safety data sheet to CFM at Delivery of the Engine indicating any substances contained within the Engine to be consigned. AVIANCATACA will indemnify, defend and hold harmless CFM from all or any claims, liabilities, damages, judgments, costs, penalties, fines and/or any punitive damages imposed, alleged, or assessed by any third party against CFM and caused by and to the extent of AVIANCATACA’s non-compliance with this Article 10.2.

CFM AND AVIANCATACA PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

10.3

Shipping Stands

AVIANCATACA will provide and maintain all shipping stands, shipping containers, mounting adapters, inlet plugs and covers, required to package the Engine for Delivery and Redelivery.

10.4

Redelivery

After completion of Services, CFM will prepare and package the Engine for Redelivery to AVIANCATACA and provide a Services records package that complies with AAA regulations.

Redelivery dates are based upon receipt by CFM of all information necessary to permit CFM to proceed with the Services immediately and without interruption.

In the event Redelivery of an Engine cannot occur due to any act or failure to act by AVIANCATACA, CFM may place such Engine into storage. In such event, CFM will notify AVIANCATACA and CFM’s Redelivery obligations will be deemed fulfilled and all risk of loss or damage to the Engine shall pass to AVIANCATACA on the date of such storage. Any amounts payable to CFM upon Redelivery will be payable thirty (30) days after the date of CFM’s invoice. Promptly upon receipt of CFM’s invoice, AVIANCATACA will reimburse CFM for all expenses incurred by CFM, including, but not limited to, preparation for and placement into storage, handling, inspections, preservation and insurance of the Engine. Upon payment of all amounts due hereunder, CFM will assist and cooperate with AVIANCATACA in the removal of Engine that has been placed in storage.

AVIANCATACA will indemnify, defend and hold harmless CFM from all or any claims, liabilities, damages, judgments, costs, penalties, fines and/or any punitive damages imposed, alleged, or assessed by any third party against CFM and caused by and to the extent of AVIANCATACA’s non-compliance with this Article 10.4.

11.0

TURN AROUND TIME

11.1

[*]

12.0

ADDITION TO/ REMOVAL FROM SERVICE AGREEMENT

12.1

Addition of Engines

AVIANCATACA and CFM may agree to amend Exhibit B to add Engines to the Service Agreement after the Commencement Date. For each added Engine, AVIANCATACA will provide the Engine serial number, aircraft tail number, previous operator, current owner, operating time and flight cycles since new and, if applicable, the operating time and flight cycles since the last shop visit, shop visit reports, historic thrust and derate information and applicable thrust rating. CFM will evaluate the effect on the Rate Per Flight Hour pricing, and Service Credit amounts and distribution schedule, taking into consideration effects on the fleet size, age and condition of the Engines and other commercial considerations and may adjust the Rate Per Flight Hour pricing accordingly.

12.2

Removal of Engines

AVIANCATACA may remove an Engine from this Service Agreement upon advance written notice, only if AVIANCATACA is no longer operating the Engine and is no longer responsible for maintenance of the Engine for the following reasons:

Bona fide sale or other bona fide transfer to an unaffiliated third party;

An unplanned return to the lessor; or

If the Engine has been reasonably determined to be BER.

CFM AND AVIANCATACA PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

In all cases of Engine removal, provided that AVIANCATACA is in compliance with Article 6.6, AVIANCATACA may select which Engine will be removed, provided that the engine(s) being removed is representative of a fleet average engine, unless AVIANCATACA’s lessor dictates otherwise.

Any Engine removal will be subject to the reconciliation provisions set forth below.

12.2.1

Reconciliation. The following applies to Engines removed as a result of a removal per Paragraph (a), (b) or (c) above:

If a removed Engine has not undergone a Qualified Shop Visit for Covered Services, no penalties nor reconciliation will apply. CFM will retain the Popular Rate xxxxxxxx through the date of removal.

If a removed Engine has undergone at least one (1) Performance Restoration Shop Visit for Covered Services, no penalties nor reconciliation will apply. CFM will retain the Popular Rate xxxxxxxx through the date of removal.

If a removed Engine has undergone at least one Qualified Shop Visit for Covered Services, but not a Performance Restoration Shop Visit, CFM will calculate the total cumulative charges for all Covered Services provided for such removed Engine as if such Services were provided on a Supplemental Services basis and the Supplemental Services pricing had applied (“Supplemental Charges”). CFM will then compare such Supplemental Charges to the total cumulative Restored Rate Covered Services payments received from AVIANCATACA for such removed Engine. If the Supplemental Charges are greater than the total cumulative Restored Rate Covered Services payments received from AVIANCATACA, CFM will invoice AVIANCATACA for the difference, together with a detailed explanation of the calculations reflected in such invoice. AVIANCATACA will pay such invoice within thirty (30) Days of receipt. If the Supplemental Charges are less than the total cumulative Restored Rate Covered Services payments received from AVIANCATACA, CFM will credit to AVIANCATACA within thirty (30) Days the difference between the total cumulative Restored Rate Covered Services payments received from AVIANCATACA and the Supplemental Charges. CFM will retain the Popular Rate xxxxxxxx through the date of removal.

12.2.2

Impact of Removals. CFM will evaluate the effect of the removal from the Service Agreement of more than forty percent (40%) of the Engines from the AVIANCATACA fleet on the Rate Per Flight Hour pricing, taking into consideration effects on the fleet size, age and condition of the Engines. CFM may adjust the Rate Per Flight Hour pricing accordingly if the number of Engines covered by the Service Agreement decreases to less than sixty percent (60%) of the total fleet of Engines operated by AVIANCATACA, without taking into account any engines that are added to the program in accordance with Article 12.1. In such event, the adjusted Rate Per Flight Hour pricing will be mutually agreed and the Service Agreement will be amended accordingly. AVIANCATACA will pay the adjusted Rate Per Flight Hour pricing for all EFH incurred by all Engines that remain covered by the Service Agreement from the date of the Engine removal that triggered the rate adjustment.

In the event the Parties do not agree on the adjusted Rate Per Flight Hour pricing within ninety (90) Days from the date of the Engine removal that triggered the rate adjustment, CFM may terminate this Service Agreement upon written notice to AVIANCATACA.

13.0

COMMUNICATION

CFM will assign a program manager who will be the point of contact for AVIANCATACA with respect to implementation of the CFM Service Program (“CFM Program Manager”).

CFM AND AVIANCATACA PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

AVIANCATACA will also designate a point of contact to communicate with the CFM Program Manager.

The CFM Program Manager will:

Draft a Procedures Manual and submit it to AVIANCATACA for mutual approval;

Work with the AVIANCATACA, on a monthly basis, to develop a Removal Schedule which will identify by serial number the Engine(s) to be removed during the following six (6) month period, the anticipated reason for removal of each, and the schedule for Delivery.

14.0

GENERAL TERMS AND CONDITIONS

General terms and conditions provided in Exhibit I are an integral part of this Service Agreement.

Counterparts: This Service Agreement may be signed by the Parties in separate counterparts, and any single counterpart or set of counterparts, when signed and delivered to the other Parties shall together constitute one and the same document and be an original Service Agreement for all purposes.

CFM AND AVIANCATACA PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

IN WITNESS WHEREOF, the Parties hereto have executed this Service Agreement as of the day and the year first above written.

CFM INTERNATIONAL, INC.

AVIANCATACA HOLDING S.A.

BY:

PRINTED NAME:

TITLE:

CFM AND AVIANCATACA PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

EXHIBITS


EXHIBIT A:		DEFINITIONS

EXHIBIT B:		ENGINES COVERED AND OPERATIONAL PARAMETERS

EXHIBIT C:		SHOP VISIT DATA

EXHIBIT D:		PRICE ADJUSTMENT MATRIX

EXHIBIT E:		ESCALATION

EXHIBIT F:		LRU

EXHIBIT G:		SUPPLEMENTAL SERVICES PRICING

EXHIBIT H:		CFM DESIGNATED REPAIR STATIONS

EXHIBIT I:		GENERAL TERMS AND CONDITIONS

EXHIBIT J:		ON-SITE SUPPORT

EXHIBIT K:		FLIGHTLINE LRU SUPPORT

CFM AND AVIANCATACA PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

EXHIBIT A: DEFINITIONS

Capitalized terms used herein but not otherwise defined have the following meanings:

“Act of God”—An event that directly and exclusively results from the occurrence of natural causes beyond the reasonable control of the Parties.

“Additional Services”—The Services described in Article 5.2.

“Aircraft Accident”—An occurrence caused by the operation of an aircraft in which any person suffers a fatal injury or serious injury as a result of being in or upon the aircraft or by direct contact with the aircraft or anything attached to the aircraft, or in which the aircraft receives damage or a third party’s property is damaged in any way.

“Aircraft Incident”—An occurrence, other than an Aircraft Accident, caused by the operation of an aircraft that affects or could affect the safety of operations and that is investigated and reported.

“Airworthiness Directive” or “AD”—A document issued by the AAA having jurisdiction over the Engines, identifying an unsafe condition relating to such Engines and, as appropriate, prescribing inspections and the conditions and limitations, if any, under which the Engines may continue to operate.

“AMM”—Aircraft Maintenance Manual.

“Approved Aviation Authority” or “AAA”—As applicable, the FAA, EASA, the Aeronáutica Civil of Colombia, Dirección General de Aviación Civil of Ecuador, Autoridad de Aviacion Civil of El Salvador, Directorate General of Civil Aviation of Costa Rica or Dirección General de Aeronáutica Civil del Peru.

“Beyond Economic Repair” or “BER”—When the cost, calculated on a Supplemental Services basis, to restore an Engine to the requirements of the Repair Specification exceeds sixty five percent (65%) of the fair market value of a comparable Serviceable engine.

“CFM Designated Repair Station” or “CFM DRS” or “DRS”—The repair facilities designated by CFM, which are certified by the AAA to perform the Services hereunder and where Services are performed on Engines.

“CFM Program Manager”—Has the meaning provided in Article 13.

“CFM Service Program”—All off-wing work required on an Engine to restore the Engine to Serviceable condition in accordance with the Repair Specification, the Workscope and the terms of this Service Agreement, including Supplemental Services.

“CLP”—The manufacturer’s Current catalog or manufacturer’s Current list price pertaining to a new Engine or part thereof.

“Commencement Date”—Has the meaning provided in Article 3.

“Contracted Months”—Has the meaning provided in Article 7.3.

“Covered Services”—The Services described in Article 5.1.

“Current”—As of the time of the applicable Service or determination.

“Day”—Calendar day unless expressly stated otherwise in writing. If performance is due on a public holiday recognized by the CFM DRS, performance will be postponed until the next business day (Monday through Friday).

CFM AND AVIANCATACA PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

“Delivery”—The arrival of an Engine together with all applicable records and required data Delivery Duty Paid (“DDP”), International Chamber of Commerce, Incoterms 2010, at the CFM Designated Repair Station, whereby AVIANCATACA fulfills the obligations of seller and CFM fulfills the obligations of buyer. “Deliver” will mean the act by which AVIANCATACA accomplishes Delivery.

“Delivery Point”—in the case of Flightline LRU Support, means the CFM facility located in Villaroche, France.

“Dollars” or “U.S. $”—The lawful currency of the United States of America.

“EASA”—the European Aviation Safety Authority,

“Engine”—Each bare engine assembly or, as applicable, Engine module, which is covered by this Service Agreement and identified in Exhibit B, including its essential components as described in Exhibit F.

“Engine Flight Hour” or “EFH”—Engine flight hour expressed in hourly increments of aircraft flight from wheels up to wheels down.

“Entry Into Service”—The date when the Engine is delivered to AVIANCATACA by the airframer or by CFM, as a New Engine.

“FAA”—Federal Aviation Administration of the United States

“FIM”—Fault Isolation Manual.

“Foreign Object Damage” or “FOD”—Damage to any portion of the Engine caused by impact with or ingestion of a non-Engine object such as birds, stones, hail, ice, vehicles, tools or debris. FOD may be further classified as a “Major FOD,” which means FOD that causes an out of limit condition per the Aircraft Maintenance Manual, and which, either immediately or over time, requires the Engine to be removed from service or prevents the reinstallation of the Engine.

“GTA”—the General Terms Agreement between CFM and AVIANCATACA, No.CFM-1-2887169891, dated February 6, 2013.

“IATA Master” – Has the meaning provided in Article 5.1.4.

“Induction”—The date work commences on the Engine at the CFM Designated Repair Station when all of the following have taken place: (i) CFM’s receipt of the Engine and required data, (ii) Parties’ approval of the preliminary Workscope, (iii) CFM’s receipt of an acceptable purchase order, (iv) Parties’ agreement on use of the AVIANCATACA furnished equipment; and (v) receiving inspection (including pre-testing if needed).

“Life Limited Part” or “LLP”—A part with a limitation on use established by CFM or the AAA, stated in cumulative EFH or cycles.

“LLP Minimum Build”—The minimum quantity of cycles and/or hours that every LLP must have at the completion of a Performance Restoration Shop Visit. The LLP Minimum Build shall be the threshold used to determine which LLP are replaced at a Performance Restoration Shop Visit.

“Line Replaceable Unit” or “LRU”—A major control or accessory that is mounted on the external portion of an Engine, as listed in Exhibit F.

“MRO” shall have the meaning provided in the recitals.

“New Engine”—An Engine which has not undergone a shop visit, which has less than one hundred (100) EFH since new and which contains only CFM approved parts and CFM approved repairs.

“On-Site Support” or “OSS”—Has the meaning provided in Article 5.2.1.

CFM AND AVIANCATACA PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

“Part”—A part originally sold by CFM.

“Performance Restoration Shop Visit”—The Services, performed during a shop visit in which, at a minimum, the following modules are exposed, disassembled and subsequently refurbished: the high-pressure turbine, combustor and the high pressure compressor, if required to retain the performance of the high-pressure compressor. If the LLP core stack is replaced, it is considered a Performance Restoration Shop Visit.

“Pool”—means the collective reference to Serviceable LRU necessary for Standard Exchange as listed in Exhibit J.

“Popular Rate” or “Popular Rate per Engine Flight Hour”—The Popular Rate per Engine Flight Hour provided in Article 5.1 and priced in accordance with Article 7.1.

“Primary Hub”—The main airport where AVIANCATACA performs the majority of its engine removal off wing.

“Procedures Manual”—A separate document, not part of this Service Agreement, which provides detailed procedures and guidance for the administration of the Service Agreement. In case of conflict between the Procedures Manual and the Service Agreement, the Service Agreement will prevail.

“Qualified Shop Visit”—Has the meaning provided in Article 5.1.1.

“QEC”—Quick Engine Change.

“Rate” or “Rate Per Engine Flight Hour”—The rate for Covered Services or Additional Services as set forth in Article 7.

“Redelivery”—The shipment of a Serviceable Engine with legally required certifications, Ex Works, International Chamber of Commerce, Incoterms 2010, at the CFM Designated Repair Station, whereby AVIANCATACA fulfills the obligations of buyer and CFM fulfills the obligations of seller. “Redeliver” will mean the act by which CFM completes Redelivery.

“Removal Schedule”—The schedule jointly developed by CFM and AVIANCATACA for Engine removal off wing for Services or Engine removal from operation.

“Repair” – In the case of Flightline LRU Support, means the disassembly, inspection, repair, reassembly and test when applicable, of an LRU in accordance with the applicable CFM shop manual and/or documents (such as vendor’s CMM) approved and authorized by the EASA or FAA, as applicable.

“Repair Specification”—The AVIANCATACA repair specification which establishes the minimum baseline to which an Engine or part thereof will be inspected, repaired, modified, reassembled and tested to make and Engine Serviceable. Such Repair Specification will meet or exceed the recommendations of CFM’s operational specifications, applicable CFM maintenance or overhaul manuals and AVIANCATACA’s maintenance plan that has been approved by the AAA.

“Repairable”—Capable of being made Serviceable.

“Restored Rate per Engine Flight Hour” or “Restored Rate”—Services provided pursuant to Article 5.1 and priced in accordance with Article 7.1.

“Rotable Part”—A new or used Serviceable Part drawn from a common pool of Parts used to support one or more customers. A Rotable Part replaces a similar Part removed from an Engine when such removed Part requires repair.

“Service(s)”—With respect to an Engine or part thereof, all or any part of those maintenance, repair and overhaul services provided under this Service Agreement as either Covered Services or Supplemental Services. “Serviced” will be construed accordingly.

CFM AND AVIANCATACA PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

“Service Agreement”—This Service Agreement, as the same may be amended or supplemented from time to time, including all its Exhibits.

“Service Bulletin” or “SB”—The document as issued by CFM to notify the operator of modifications, substitution of parts, special inspections, special checks, or conversion of an Engine from one model to another.

“Service Credit” —Credits that may be applied towards payment for Services, as described in Article 7.3.

“Serviceable”—Meeting all CFM and AAA specified standards for airworthiness.

“Standard Exchange”—In the case of Flightline LRU Support, means any exchange of Unserviceable equipment with a Serviceable one which is available and fully interchangeable with such Unserviceable equipment.

“Supplemental Charges”—Has the meaning provided in Article 7.2.

“Supplemental Services”—Those Services provided pursuant to Article 5.3.

“Term”—Has the meaning provided in Article 3.

“TSM”—Trouble Shooting Manual.

“TSN”—Time since new

“Turn Around Time”—The number of Days from Induction until the Engine is ready for Redelivery (as evidenced solely by placement of the Serviceable tag or equivalent governing agency compliance tag, on such Engine) exclusive of any Excusable Delays as defined in Exhibit I, Article 4.

“Unserviceable”—Not meeting all CFM and AAA specified standards for airworthiness.

“Used Engine”—An Engine which has undergone a shop visit or which has more than one hundred (100) EFH since new.

“Workscope”—Has the meaning provided in Article 6.3.

“Workscope Planning Guide”—The document published by CFM which describes the “on condition” maintenance concept for the Engines. This document communicates the timing and extent of work required to enable operators to achieve reliability, performance, and maintenance cost goals.

CFM AND AVIANCATACA PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

EXHIBIT B: ENGINES COVERED AND OPERATIONAL PARAMETERS

*[Eleven pages have been removed pursuant to a request for confidential treatment].

CFM AND AVIANCATACA PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

EXHIBIT I: GENERAL TERMS AND CONDITIONS

Table of Contents


ARTICLE 1	-	LIMITATION OF LIABILITY AND INDEMNIFICATION

ARTICLE 2	-	TERMINATION

ARTICLE 3	-	TAXES

ARTICLE 4	-	EXCUSABLE DELAY

ARTICLE 5	-	PATENTS

ARTICLE 6	-	INFORMATION AND DATA

ARTICLE 7	-	GOVERNMENTAL AUTHORIZATION & EXPORT SHIPMENT

ARTICLE 5	-	WAIVER OF IMMUNITY

ARTICLE 9	-	NOTICES

ARTICLE 10	-	LIENS

ARTICLE 11	-	APPLICABLE LAW – DISPUTE RESOLUTION

ARTICLE 12	-	MISCELLANEOUS

ARTICLE 1 – LIMITATION OF LIABILITY AND INDEMNIFICATION

Total Liability. The total liability of CFM for any and all claims, whether in contract, warranty, tort (including negligence but excluding willful misconduct), product liability, patent infringement or otherwise, for any damages arising out of, connected with or resulting from the Service Agreement or the performance or non-performance of any Service or from the manufacture, sale, Redelivery, resale, repair, overhaul, replacement or use of the Engine or any item or part thereof, will not exceed: (i) the price allocable to the repaired or overhauled item, part or Service which gives rise to the claim; or (ii) the value of the Engine which gives rise to the claim, whichever is greater. Notwithstanding the foregoing, in no event will CFM or AVIANCATACA have any liability hereunder, whether as a result of breach of contract, warranty, tort (including negligence but excluding willful misconduct), product liability, patent infringement or otherwise, for any special, consequential, incidental, resultant or indirect damages, (including, without limitation, loss of: use, profit, revenue or goodwill) or punitive or exemplary damages.

In no event will CFM have any liability hereunder, whether as a result of breach of contract, warranty, tort (including negligence but excluding willful misconduct), product liability, patent liability, or otherwise, for the design, material, workmanship, engineering defects or product liability and any damages whatsoever, including damages to personal property and for personal injury or death, caused in any way by the manufacturer of the parts, LRU’s, components or material, thereof, or related thereto, provided that this in no way limits the liability of CFM for third party claims or under any General Terms Agreement or Letter Agreement to which CFM and AVIANCATACA are parties.

In the event AVIANCATACA uses non-CFM parts or non-CFM approved LRU’s, parts or repairs in an Engine and such LRU’s, parts or repairs cause personal injury, death or property damage to third parties, AVIANCATACA shall indemnify and hold harmless CFM from all claims and liabilities associated therewith. The preceding indemnity shall apply whether or not CFM was provided a right under this Service Agreement to remove such LRU’s, parts or repairs, and irrespective of the exercise by CFM of such right

CFM AND AVIANCATACA PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

B.	Definition. For the purpose of this Article 1, the term “CFM” is deemed to include CFM and its parent and affiliated companies, the subcontractors and suppliers of any Services furnished hereunder, and the directors, officers, employees, agents and representatives of each.

ARTICLE 2 – TERMINATION

A.	Termination Events. The Service Agreement may be terminated as follows:

Late Payment. In the event that AVIANCATACA fails to make payments to CFM within the time periods specified herein, CFM may terminate all or any portion of this Service Agreement upon thirty (30) days written notice to AVIANCATACA, unless AVIANCATACA cures such failure within such period following receipt of this notice.

Insolvency. Either Party may terminate or suspend performance of all or any portion of this Service Agreement if the other Party: (A) makes any agreement with creditors due to its inability to make timely payments of its debts; (B) enters into bankruptcy or liquidation, whether compulsory or voluntary; (C) becomes insolvent; or (D) becomes subject to the appointment of a receiver of the whole or material part of its assets. If such termination should occur, the defaulting Party will not be relieved of its obligations hereunder.

Material Breach. Either Party may terminate this Service Agreement upon ninety (90) Days written notice to the other for failure to comply with any material provision of this Service Agreement unless the failure has been cured prior to such ninety (90) Days (except for late payment, as described in Paragraph A.1 above).

B.	Activity After Termination. In the event the Service Agreement is terminated, the following shall cumulatively apply, in addition to any other right or remedy allowable under this Service Agreement or applicable law:

Payment for Services Performed. In the event of termination of this Service Agreement for any reason, AVIANCATACA will pay CFM for all Services or work performed by or caused to be performed by CFM up to the time of such termination under the applicable terms and prices of this Service Agreement including all costs, fees, and charges incurred by CFM in providing support and material under this Service Agreement, including lease engines.

Reconciliation. In addition to the above, the terms of the reconciliation under the removal of Engines provisions of Article 12 of the Service Agreement will apply.

Work in Process, Redelivery of AVIANCATACA’s Engines. Upon the termination or expiration of this Service Agreement, CFM will complete all work in process in a diligent manner and Redeliver all Engines, parts and related documentation, provided that AVIANCATACA (a) has paid in full all charges for all such Services and material, plus all costs, fees and penalties, incurred by CFM in providing support, including any lease engines, and (b) has returned all lease engines provided under this Service Agreement.

ARTICLE 3 – TAXES

Taxes, Duties, or Charges. In addition to the price for the Services, AVIANCATACA agrees to pay, upon demand, all taxes (including, without limitation, sales, use, excise, turnover or value added taxes), duties, fees, charges or assessments of any nature (but excluding any income taxes) (hereinafter “Taxes”) assessed or levied in connection with performance of this Service Agreement.

CFM AND AVIANCATACA PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

Reimbursement/Refund. If payment of any such Taxes is made by CFM (or the applicable affiliated company), AVIANCATACA will reimburse CFM (or the applicable affiliated company) upon demand, such reimbursement excluding, inter alia, penalties and interests which could have been levied against CFM (or the applicable affiliated company). AVIANCATACA will use all reasonable efforts to obtain a refund thereof. If all or any part of any such Taxes is refunded to CFM, CFM (or the applicable affiliated company) will repay to AVIANCATACA such part thereof as CFM (or the applicable affiliated company) refunded.

Withholdings. All payments by AVIANCATACA to CFM (or the applicable affiliated company) under this Service Agreement will be free of all withholdings of any nature whatsoever, except to the extent otherwise required by law, and if any such withholding is so required, AVIANCATACA will pay an additional amount such that after the deduction of all amounts required to be withheld, the net amount received by CFM (or the applicable affiliated company) will equal the amount that CFM (or the applicable affiliated company) would have received if such withholding had not been required. If the aforementioned mechanism contradicts the law of country United States of America, the Parties shall amend this Service Agreement in order to increase the respective prices and amounts provided for by this Service Agreement so that the initial prices and amounts are preserved.

ARTICLE 4 – EXCUSABLE DELAY

Excusable Delay. Either Party will be excused from, and will not be liable for, any delay in performance or failure to perform hereunder (except for the obligation to pay money or credit or debit an account which will not be excused hereunder), and will not be deemed to be in default for any delay in or failure of performance hereunder due to causes beyond its reasonable control. Such causes will be conclusively deemed to include, but not be limited to acts of God, fire, terrorism, war (declared or undeclared), severe weather conditions, earthquakes, epidemics, material shortages not caused by any CFM act or failure to act, insurrection, acts or omissions of the other Party, any act or omission by any governmental authority, strikes, labor disputes, acts or threats of vandalism or terrorism (including disruption of technology resources), or transportation shortages (each an “Excusable Delay”). The time of performance shall be extended for a period equal to the time lost by reason of delay, including time to overcome the effect of the delay, without discriminating against the non-delayed Party.

Continuing Obligations. Article 4.A will not, however, relieve either Party from using its commercially reasonable efforts to avoid or remove such causes of delay and continue performance with reasonable dispatch when such causes are removed. During the period of an Excusable Delay, CFM will have the right to invoice AVIANCATACA for Services actually performed.

Extended Delay Termination. If delay resulting from any of the foregoing causes extends for more than six (6) months and the Parties have not agreed upon a revised basis for continuing the Services, including any adjustment of the price, then either Party, upon thirty (30) Days written notice to the other, may terminate the purchase order that covers the delayed Services.

ARTICLE 5 – PATENTS

Claims. CFM shall defend, indemnify and hold harmless AVIANCATACA and its affiliates, officers, agents and employees against and handle all claims and defend any suit or proceeding brought against AVIANCATACA or its affiliates, officers, agents and employees insofar as based on a claim that, without further combination, any Service provided or to be provided hereunder or any material or process used in the repair of any items furnished under this Service Agreement constitutes an infringement of any patent or copyright of any country.

CFM AND AVIANCATACA PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

Liability. AVIANCATACA shall promptly notify CFM in writing and give CFM exclusive authority, information and assistance (at CFM’s expense) for the handling, defense or settlement of any claim, suit or proceeding. In case such material or process is held in such claim, suit or proceeding to constitute infringement and the use of said Service or material or process is enjoined, CFM shall, at its own expense either (1) settle or defend such claim or suit or proceeding arising therefrom, or (2) procure for AVIANCATACA the right to continue using said Service or material or process in the item repaired under the Service Agreement, or (3) replace same with an item satisfactory to AVIANCATACA and incorporating non-infringing Service, material or process, or (4) modify same so it becomes satisfactory and non-infringing, or (5) refund the repair price applicable to such material or process with the option to be selected by CFM. CFM shall not be responsible to AVIANCATACA for incidental or consequential damages, including, but not limited to, costs, expenses, liabilities and/or loss of profits resulting from loss of use under this Article 5.

Indemnification. The preceding Paragraph B shall not apply: (1) to any material or process or part thereof of AVIANCATACA design or specification, or used at AVIANCATACA’s direction in any repair under the Service Agreement, or (2) to the use of any material or process furnished under the Service Agreement in conjunction with any other apparatus, article, material or process. As to any material or process or use described in the preceding sentence, CFM assumes no liability whatsoever for patent or copyright infringement, and AVIANCATACA shall, in the same manner as CFM is obligated to AVIANCATACA above, indemnify, defend and hold CFM harmless from and against any claim or liability, including costs and expense in defending any such claim or liability in respect thereto.

Remedy. THE FOREGOING SHALL CONSTITUTE THE SOLE AND EXCLUSIVE REMEDY OF AVIANCATACA AND THE SOLE LIABILITY OF CFM FOR PATENT OR COPYRIGHT INFRINGEMENT BY ANY MATERIAL OR PROCESS AND IS SUBJECT TO THE LIMITATION OF LIABILITY SET FORTH IN ARTICLE 1, “LIMITATION OF LIABILITY AND INDEMNIFICATION.”. THE PATENT WARRANTY OBLIGATIONS RECITED ABOVE ARE IN LIEU OF ALL OTHER PATENT WARRANTIES WHATSOEVER, WHETHER ORAL, WRITTEN, EXPRESSED, IMPLIED OR STATUTORY (INCLUDING ANY WARRANTY OF MERCHANTABILITY AND FITNESS FOR PARTICULAR PURPOSE OR ANY IMPLIED WARRANTY ARISING FROM COURSE OF DEALING, COURSE OF PERFORMANCE, OR USAGE OF TRADE), EXCEPT AS ARISING UNDER ANY GENERALTERMS AGREEMENT OR LETTER AGREEMENT BETWEEN THE PARTIES.

ARTICLE 6 – NON DISCLOSURE

Non-Disclosure. Unless the Parties otherwise agree herein or further in writing, any of the terms of the Service Agreement or any knowledge, information or data which the Parties have or may disclose to each other shall be held in confidence and may not be either disclosed or used for any purpose, except:

To the extent required by government agencies and courts for official purposes, disclosure may be made to such agencies and courts. In such event, a suitable restrictive legend limiting further disclosure shall be applied.

The existence of the Service Agreement and its general purpose only may be stated to others by either of the Parties without approval from the other.

CFM may disclose the same to its parents, affiliates, subsidiaries, joint venture participants, engineering service provider, or consultants as needed to perform the Services provided under this Service Agreement.

The preceding clause will not apply to information which (1) is or becomes part of the general public knowledge or literature otherwise than as a result of breach of any confidentiality obligation, or (2) was, as shown by written records, known to the receiving Party prior to receipt from the disclosing Party.

CFM AND AVIANCATACA PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

B.	Intellectual Property. Nothing contained in this Service Agreement will convey to either Party the right to use the trademarks of the other, or convey or grant to either Party any license under any patent owned or controlled by the other Party.

C,	Press Releases. In addition, neither Party will issue any press nor other media release or make any public statement with respect to this Service Agreement without the prior written approval of the other Party, as to the fact and the content of any such media release or public statement.

ARTICLE 7 – GOVERNMENTAL AUTHORIZATION & EXPORT SHIPMENT

AVIANCATACA shall be the importer and/or exporter of record and shall be responsible for the timely application for, obtaining and maintaining any required authorization, such as export license, import license, exchange permit or any other required governmental authorization relating to the Engine, and shall be responsible for complying with all U.S., French and other foreign government licensing and reporting requirements. At AVIANCATACA’s request and expense, CFM will assist AVIANCATACA in its application for any required U.S. or French export licenses. CFM will not be liable if any authorization is not renewed or is delayed, denied, revoked or restricted, and AVIANCATACA will not thereby be relieved of its obligation to pay for Services performed by CFM. All transported Engines will be subject to the U.S. Export Administration Regulations and/or International Traffic in Arms Regulations and (ii) the French export control regulations. AVIANCATACA agrees not to dispose of U.S. or French origin items provided by CFM other than in and to the country of ultimate destination and/or as identified in an approved government license or authorization, except as said laws and regulations may permit.

ARTICLE 8 – WAIVER OF IMMUNITY

To the extent that AVIANCATACA or any of its property is or becomes entitled at any time to any immunity on the grounds of sovereignty or otherwise from any legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any competent court, from service of process, from attachment prior to judgment, from attachment in aid of execution, or from execution prior to judgment, or other legal process in any jurisdiction, AVIANCATACA hereby irrevocably waives the application of such immunity and particularly, the U.S. Foreign Sovereign Immunities Act, 28 U.S.C. 1602, et. seq., and agrees not to plead or claim, any such immunity with respect to its obligations, liabilities or any other matter under or arising out of or in connection with this Service Agreement or the subject matter hereof. Such agreement shall be irrevocable and not subject to withdrawal in any and all jurisdictions.

ARTICLE 9 – NOTICES

A.	Acknowledgement. Any notices under this Service Agreement shall be in writing and be delivered or sent by mail, express/shipping service or electronic transmission to the respective Parties at the following addresses, which may be changed by written notice:

TO:


AVIANCATACA Holding S.A.		CFM INTERNATIONAL Inc.

	Xx Xxxxx 00 Xx. 00-00, Xxxx 00	0000 Xxxxxxxx Xxx
	Xxxxxx, Xxxxxxxx	Xxxx Xxxxxxx, Xxxx 00000 XXX

Attn:	Secretary	Attn. : CFM Services General Manager
	Facsimile Number: (00)0000-0000 xxx 0000
	Telephone Number: (00)00000000 xxx 0000

and

	Centro Administrativo, Xxxxxxx Xx Xxxxxx, Xxxxxx, Xxxxxxxx	0000 Xxxxxxxx Xxx, Xxxx Xxxxxxx, Xxxx 00000 XXX

Attn. :	Engineering Director and Power Plan Manager	Att. : CFM Services General Manager

CFM AND AVIANCATACA PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

Effect of Notices. Notices will be effective and will be deemed to have been given to (or “received by”) the recipient: (A) upon delivery, if sent by courier, express mail, or delivered personally; (B) on the next business day following receipt, if sent by facsimile with a receipt of confirmation; or (C) on the fifth (5th) business day after posting (or on actual receipt, if earlier) in the case of a letter sent prepaid first class mail. Whenever the words “notice” or “notify” or similar words are used herein, they mean the provision of formal notice as described in this Article 9. Whenever words such as “advise”. “inform” or similar words are used, they mean the use of informal information provided to lower-level operating managers.

ARTICLE 10 – LIENS

Other Liens. AVIANCATACA: (i) acknowledges that CFM has the legal right to assert mechanic’s liens or other statutory or common law liens under applicable law (foreign or domestic) against Engines following performance of Services under this Service Agreement, and (ii) agrees to supply such information, including name and address of the owner of each Engine, as reasonably requested by CFM to facilitate filing of such liens in New York or any other jurisdiction where Services may be performed. CFM may, at its option, notify the owners of the existence of this Service Agreement and CFM’s lien rights arising from performance of Services.

Enforcement. If AVIANCATACA fails to tender any payment owing under this Service Agreement and CFM initiates foreclosure with respect to any Engine pursuant to a mechanic’s lien, then AVIANCATACA agrees to supply to CFM all records, log books and other documentation pertaining to the maintenance condition of the Engine reasonably available to it, and a certificate either (i) certifying that the Engine has not been involved in any Aircraft Accident or Incident or (ii) specifying the date and facts surrounding any Accident or Incident in which the Engine has been involved and the nature and extent of the damage sustained (such records, log books, certificate and other documentation referred to hereinafter as the “Engine Documents”). The Parties recognize that the failure by AVIANCATACA to deliver the Engine Documents may have a material, adverse effect on the value of any Engine with respect to which foreclosure has been initiated by CFM and the ability of CFM to sell or lease the Engine, and that the damages CFM may sustain as a result are not readily calculable.

ARTICLE 11 – APPLICABLE LAW – DISPUTE RESOLUTION

Applicable Law. This Service Agreement shall be construed, interpreted and applied, and the legal relations between the Parties determined, in accordance with the laws of the State of New York (U.S.A.). The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Service Agreement

Dispute Resolution. If any dispute arises relating to this Service Agreement, the Parties will endeavor to resolve the dispute amicably, including by designating senior managers who will meet and use commercially reasonable efforts to resolve any such dispute. If the Parties’ senior managers do not resolve the dispute within sixty (60) days of first written request, either Party may request that the dispute be settled and fully and finally determined by binding arbitration, in accordance with the International Chamber of Commerce pursuant to its rules of Conciliation and Arbitration, by one or more arbitrators appointed in accordance with said rules. The place of arbitration and hearings shall be Miami, Florida, USA. The arbitration shall be in English and the opinion shall be rendered in English. The arbitration award shall be final and binding by any Party in any court of competent

CFM AND AVIANCATACA PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

jurisdiction, and shall waive any claim appeal whatsoever against it. The arbitrators will have no authority to award punitive damages or any other damages not measured by the prevailing Party’s actual damages, and may not, in any event, make any ruling, finding or award that does not conform to the terms and conditions of the Service Agreement. All statements made or materials produced in connection with this dispute resolution process and arbitration are confidential and will not be disclosed to any third party except as required by law or subpoena. The Parties intend that the dispute resolution process set forth in this Article 11 will be their exclusive remedy for any dispute arising under or relating to this Service Agreement or its subject matter.

Exception. Either Party may at any time, without inconsistency with this Article, seek from a court of competent jurisdiction any equitable, interim or provisional relief to avoid irreparable damage. This Article will not apply to and will not bar litigation regarding claims related to a Party’s proprietary or intellectual property rights, nor will this Article be construed to modify or displace the ability of the Parties to effectuate any termination contemplated in Article 2.

ARTICLE 12 – MISCELLANEOUS

Assignment of Agreement. This Service Agreement, any related purchase order or any rights or obligations hereunder may not be assigned, in whole or in part, without the prior written consent of the other Party, except that AVIANCATACA’s consent will not be required for an assignment by CFM to one of CFM’s parent companies. In the event of any such assignment, AVIANCATACA will be so advised in writing. Any assignment in contradiction of this clause will be considered null and void.

Beneficiaries. Except as otherwise expressly provided to the contrary, the rights herein granted and this Service Agreement are for the benefit of the Parties hereto and are not for the benefit of any third person, firm or corporation, except as expressly provided herein with respect to GE and Snecma.

C.	Survival Of Certain Clauses. The rights and obligations of the Parties under the following Articles of this Service Agreement as amended and related Exhibits shall survive the expiration, termination or completion of this Service Agreement:

•

Warranty and Limitation of Liability

•

Limitation of Liability and Indemnification

•

Taxes

•

Patents

•

Non Disclosure

•

Governmental Authorization & Export Shipment

•

Waiver of Immunity

•

Applicable Law – Dispute Resolution

•

Miscellaneous

General Rules of Contract Interpretation. Article and paragraph headings contained in this Service Agreement are inserted for convenience of reference only and do not limit, affect or restrict in any way the meaning and the interpretation of this Service Agreement. Words used in the singular shall have a comparable meaning when used in the plural and vice versa, unless the contrary intention appears. Words such as “hereunder”, “hereof” and “herein” and other words beginning with “here” refer to the whole of this Service Agreement, including amendments. References to Articles, Sections, Paragraphs or Exhibits will refer to the specified Article, Section, Paragraph or Exhibit of this Service Agreement unless otherwise specified.

Language. The English language will be used in the interpretation and performance of this Service Agreement. All correspondence and documentation arising out of or connected with this Service Agreement and any related purchase order(s), including Engine records and Engine logs, will be in the English language.

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Severability. The invalidity or unenforceability of any part or provision of this Service Agreement, or the invalidity of its application to a specific situation or circumstance, shall not affect the validity legality and enforceability of the remainder of this Service Agreement, or its application to other situations or circumstances. In addition, if a part of this Service Agreement becomes invalid, the Parties will endeavor in good faith to reach agreement on a replacement provision that will reflect, as nearly as possible, the intent of the original provision.

G.	Non-Waiver.Any failure or delay in the exercise of rights or remedies hereunder will not operate to waive or impair such rights or remedies. Any waiver given will not be construed to require future or further waivers.

Currency Judgment. This is an international transaction in which the specification of United States Dollars is of the essence. No payments required to be made under this Service Agreement will be discharged by payments in any currency other than United States Dollars, whether pursuant to a judgment, arbitration award or otherwise.

No Agency Fees. Each Party represents and warrants to the other that no officer, employee, representative or agent of it has been or will be paid a fee or otherwise has received or will receive any personal compensation or consideration by or from the other Party in connection with the obtaining, arranging or negotiation of this Service Agreement or other documents entered into or executed in connection herewith.

J.	No Agency. Nothing in this Service Agreement will be interpreted or construed to create a partnership, agency or joint venture between CFM and AVIANCATACA.

K.	Titles/Subtitles. The titles and subtitles given to the sections of the Service Agreement are for convenience. They do not limit or restrict the context of the article or section to which they relate.

Entire Agreement ; Modification. This Service Agreement, together with its Exhibits and any amendment (or Letter Agreement relating hereto, if any), contains and constitutes the entire understanding and agreement between the Parties respecting the subject matter hereof, and supersedes and cancels all previous negotiations, pre-existing agreements, commitments and writing in connection herewith. This Service Agreement may not be released, discharged, abandoned, supplemented, modified or waived, in whole or in part, in any manner, orally or otherwise, except by a writing of concurrent or subsequent date signed and delivered by a duly authorized officer or representative of each of the Parties hereto making specific reference to this Service Agreement and the provisions hereof being released, discharged, abandoned, supplemented, modified or waived.

Counterparts. This Service Agreement may be executed in one or more counterparts, all of which counterparts will be treated as the same binding agreement, which will be effective as of the date set forth on the first page hereof, upon execution by both Parties and delivery by each Party hereto to the other Party of one or more such counterparts. Delivery of an executed counterpart of a signature page to this Service Agreement by telecopy or electronic mail shall be as effective as delivery of a manually executed counterpart.

*[Three pages have been removed pursuant to a request for confidential treatment].

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RATE PER FLIGHT HOUR AGREEMENT FOR CFM56-5B ENGINE SHOP MAINTENANCE SERVICES BETWEEN CFM INTERNATIONAL, INC. AND AVIANCATACA HOLDING S.A.

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