* Confidential treatment has been requested for portions of this exhibit.
The copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as "*". A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
TAY ENGINE MAINTENANCE AGREEMENT
dated September 14, 2000
TAM - Transportes Aereos Regionais S.A.
Av. Jurandir, 856
Aeroporte - CEP 04072-000 Sao Paulo
acting for and on behalf of itself or any other subsidiary or affiliate of TAM -
Transportes Aereos Regionais
- - hereinafter collectively referred to as "Operator" -
MTU Motoren- und Turbinen-Union Munchen GmbH
Dachauer Strasse 665
- - hereinafter referred to as "MTU-M" -
- - Operator and MTU-M hereinafter collectively referred to as the "Parties" -
TABLE OF CONTENTS
Clause 1 DEFINITIONS
Clause 2 SCOPE OF SERVICES
Clause 3 RECORDS AND STANDARDS
Clause 4 DELIVERY
Clause 5 TURNAROUND TIMES AND EXCUSABLE DELAY
Clause 6 ORDER PROCESSING
Clause 7 REJECTED PARTS
Clause 8 CHARGES
Clause 9 PAYMENT
Clause 10 TAXES, DUTIES AND CUSTOMS FEES
Clause 11 SUBCONTRACTING
Clause 12 WARRANTY
Clause 13 LIABILITY
Clause 14 MISCELLANEOUS
Clause 15 DURATION AND TERMINATION
Clause 16 REPRESENTATIONS AND WARRANTIES
Clause 17 LAW AND ARBITRATION
Clause 18 NOTICES
Appendix Al ENGINE(S)
Appendix A2 ACCESSORIES
Appendix B CHARGES
Appendix C ESCALATION FORMULAE
Appendix D AIRWORTHINESS AUTHORITIES APPROVALS
Appendix E PARENT COMPANY GUARANTEE
WHEREAS Operator requires maintenance, refurbishment, repair and
modification services with respect to Engines (as hereinafter
WHEREAS MTU-M acknowledges and agrees that any subsidiary or affiliate of
TAM - Transportes Aereos Regionais S.A. may from time to time
operate the Engines and may therefore utilise the services
specified in this Agreement, in its own name.
WHEREAS MTU-M is willing to perform or cause to be performed such services
based upon a staggering and removal plan for the Engines to be
mutually agreed between the Parties and taking into account
WHEREAS Operator and MTU-M intend to meet in reasonable intervals
(approximately twice per year) to consult on the technical and
organizational aspects of this Agreement.
WHEREAS Operator will * place purchase orders for Services on the Engines
with MTU-M and MTU-M will accept the same, in each case, subject
to the terms and conditions of this Agreement.
NOW THEREFORE, in consideration thereof and reliance on the mutual promises
given herein, the Parties hereto agree as follows:
CLAUSE 1 DEFINITIONS
Within the scope of this Agreement, unless otherwise individually
stipulated, the following definitions shall apply:
The Engine related components listed in Appendix A2.
"Aircraft on Ground" indicates that an aircraft is unable to continue
or be returned to revenue service until appropriate corrective action
The number of cycles an item of Supplies has completed since last Shop
The number of cycles an item of Supplies has completed since
1.5 DAC Brasil
The Brasilian airworthiness authority, or any successor organization
Any calendar days.
1.7 Domestic Object Damage or DOD
Damage to any portion of the Engine by a domestic object from the
Engine, such as bolts, brackets, airfoils etc.
1.8 Effective Date
Shall have the meaning set forth in Clause 15.1.
Each TAY650-15 engine listed in Appendix A, subject to additions or
deletions as may be specified by Operator and notified in writing to
MTU-M from time to time.
1.10 Engine Flight Hour (EFH)
The cumulative number of airborne hours in operation of an Engine
computed from the time an aircraft leaves the ground until it touches
the ground at the end of the flight.
1.11 Fixed Prices
The fixed prices relating to the performance of the Services as set
out in Appendix B.
1.12 Flight Cycle
A completed Engine thermal cycle including the application of take off
1.13 Foreign Object Damage or FOD
Damage to any portion of the Engine caused by any object other than an
integral part of the Engine including but not limited to an impact or
ingestion of birds, stones, hail and/or runway, taxiway or apron
gravel and for the avoidance of doubt excluding DOD.
Incoterms 2000 plus later amendments as published by the I.C.C. Paris
valid at the time of conclusion of this Agreement.
1.15 Life Limited Part
Any Part which is admitted by the manufacturer for a defined service
1.16 Line Maintenance
Routine checks, inspections and rectification of malfunctions
performed en route and at base stations during transit, turnaround or
"Major Engine Build Group" as specified in ATA Chapter 72 of the OEM's
illustrated parts catalogue.
Shall also mean any company of the MTU group of companies.
Shall also mean any affiliate or subsidiary of TAM - Regionais S.A.
from time to time.
1.20 Operator Owned Part/Module
Any Operator owned Repair Part or Module used during Work in order
to expedite the Turnaround Time.
1.21 Original Equipment Manufacturer (OEM)
Rolls-Royce plc (P.O. Box 31, Derby DE24 8BJ, England), or any
Any part of an Engine.
1.23 Pool Parts/Modules
All Parts/Modules required in replacement of Parts/Modules for which
the Repair time exceeds the applicable Turnaround Time.
1.24 Purchase Order
An order stating that it is subject to the terms and conditions of
this Agreement issued by Operator to MTU-M and including:
a) The Purchase Order number to be referenced to in all invoices
and other correspondence related to the Work under such
b) A statement of or reference to the applicable Work Statement;
c) Return delivery instructions, including packaging and shipping.
1.25 Rejected Part
Any item removed by MTU-M from a Module or Engine and consequently
replaced by a Part.
1.26 Repair Part
Any Part which is repaired to serviceable condition.
All Work in:
- Maintenance Those actions required for restoring or
maintaining Supplies in serviceable
condition, including servicing, repair,
modification, overhaul, inspection and
determination of condition.
- Modification Services agreed upon between MTU-M and
Operator, which are based upon a
manufacturer's Service Bulletin.
- Testing As defined in the applicable Engine
manufacturer's Overhaul and Repair manual as
well as additional Testing if required by the
MTU-M test procedures.
- Overhaul The Work necessary to return Modules or Parts
to the highest standard specified in the
- Refurbishment The Work necessary to restore an Engine or
(Engine, Module) Module to ensure that cost effective
operation will be achieved.
- Repair To make an Engine or Modules serviceable by
replacing or processing failed or damaged
- Restoration The Work (on/off the aircraft) necessary to
restore Modules or Parts to a specific
- Rework To carry out Work on uninstalled Modules or
- Replacement The action whereby a Module or Part is
removed and another Module or Part is
installed in its place for any reason.
- Inspection An examination of Supplies against a specific
- Midlife Inspection The Work necessary to restore an Engine at
approximately 12,000 Flight Cycles since new
or last Overhaul, as applicable, with the
objective to enable the Engine to be released
for uninterrupted service until the next
1.28 Service Bulletin (SB)
Any document issued by the OEM to notify Operator and MTU-M of
recommended Modifications, substitution of Parts, special
Inspections/checks, reduction of existing life limits or
establishment of first time life limits and conversion from one
Module to another.
1.29 Shop Handling Guide
The shop handling guide agreed by the Parties pursuant to Clause 2.3
1.30 Shop Visit
The performance of Services at MTU-M's facilities or the facilities
of any subcontractor on an Engine or Module which entails either the
separation of pairs of major mating engine flanges or the removal of
a disc, hub, or spool.
Engines, Modules, Parts or any other items of associated equipment
delivered to MTU-M.
The time expressed in operation hours an item of Supplies has
completed since last Shop Visit.
The time expressed in operation hours an item of supplies has
completed since manufacture.
1.34 Turnaround Time (TAT)
The agreed time of performance of Services in respect of an Engine
by MTU-M. Unless otherwise agreed and subject to the provisions of
Clause 5 of this Agreement, the TAT shall commence the Day after
receipt of an Engine or Module by MTU Maintenance do Brasil Ltda.
("MTU Brasil") and ends upon redelivery of such Engine or Module
according to Clause 4. For purposes of TAT an Engine shall be deemed
delivered on the Scheduled Delivery Date (as defined in Clause 5.2)
if such Engine is removed from wing, mounted to a transportation
stand ready to be shipped from Operator's facility together with the
documentation to be furnished to MTU-M pursuant to Clause 3.3.
The performance of Services according to the terms and conditions of
1.36 Work Statement
Statement or statements being part of the Purchase Order which
include(s) the Work requirements applicable to Engines, Modules
or Parts. The Work Statement(s) shall include details relating
- reason for Shop Visit
- disassembly and re-assembly requirements
- Inspection requirements
- Repairs to be accomplished
- Modification standard to be accomplished
and any other information notified by MTU-M to Operator with five
(5) Days prior notice from time to time.
Clause 2 SCOPE OF CONTRACT
2.1 During the term of this Agreement, Operator agrees to place *
purchase orders for off-wing services required on all Engines,
Modules and Parts owned or operated by it * on MTU-M subject to
the provisions of Clauses 5.7 and 15.3.
2.2 MTU-M agrees to accept all Purchase Orders and will perform, or
cause to be performed, all Services on Engines, Modules and Parts
subject to the terms and conditions of this Agreement.
2.3 All Services will be performed in accordance with
(i) the airworthiness requirements of the FAA and shall comply
with applicable requirements of the DAC Brasil from time to
(ii) the Engine manufacturer's overhaul and repair manuals as
supplemented by MTU-M's/MTU-M's subcontractors' procedures
which procedures shall be agreed and approved by Operator;
(iii) a shop handling guide to be mutually agreed between the
Parties within four (4) weeks following an initial meeting
between Operator and MTU-M to be scheduled within ten (10)
Days of signature of this Agreement by the Parties.
Within one (1) year of the Effective Date, all Services will also
be performed in accordance with the airworthiness requirements of
the Joint Aviation Authorities (the "JAA").
2.4 Scope of Services
2.4.1. Services covered by the * shall be limited to the following
126.96.36.199 Disassembly, cleaning, Inspection and rebuilding of Engines;
188.8.131.52 Rework of Engines, Modules and Parts which have become
unserviceable due to normal wear and tear to a serviceable
184.108.40.206 Engine Testing according to the specifications of the OEM, or
other relevant manufacturer and MTU-M;
220.127.116.11 Technical support including Engineering Services when requested
by Operator, provided the following Engine documentation is made
available to MTU-M:
- Log book or equivalent
- Life of all Life Limited Parts
- In-flight readings of all parameters of the Engine;
18.104.22.168 Replacement of Life Limited Parts upon expiration of the approved
Life Limit as outlined in Appendix B;
22.214.171.124 Administration of warranty claims on Engines, Modules, principle
maintenance assemblies and Parts on behalf of Operator upon
receipt of proper documentation from Operator;
126.96.36.199 Services necessary to render Engines serviceable, when damaged by
FOD up to a maximum amount of *
188.8.131.52 Repair Services on Accessories listed in Appendix A2 during Shop
Visit and installed on the Engine at the time of delivery of such
Engine to MTU-M's facility; and
2.4.2. * ("Additional Services"):
184.108.40.206 Performance of Modifications,
220.127.116.11 Incorporation of Modifications other than those specified in the
Shop Handling Guide, if specifically requested by Operator;
18.104.22.168 Performance of Services related to campaign changes and / or AD -
22.214.171.124 Repairs (i) caused by Operator's failure to comply with the
instructions given in the applicable operation and maintenance
manuals, (ii) otherwise caused by Operator's negligence, or (iii)
necessitated by accident or catastrophic failure;
126.96.36.199 Repairs on Accessories not listed in Appendix A2 as well as
Accessories not installed on the Engine at the time of delivery
of such Engine to MTU-M's facility;
188.8.131.52 (i) Any replacement material for material scrapped or rejected
during any Repair, Midlife Inspection or Overhaul event, not
resulting from normal wear and tear, (ii) services related to a
modification standard deviating from the standards required per
the mutually agreed Shop Handling Guide, or (iii) any replacement
material for material scrapped or rejected in consequence of OEM
design deficiencies on either original equipment or replacement
Parts, incorporated as per OEM specifications and requirements
per the applicable manual, modifications, service bulletins and
AD Notes; and
184.108.40.206 Services necessary to render Engines serviceable, when damaged by
FOD, exceeding an amount of * Only the FOD related Services in
excess of * will be charged.
2.5 Operator's Responsibility
2.5.1 In case of defects or deficiencies in the design or manufacture
of the Supplies by the OEM Operator agrees to exercise all
commercially reasonable endeavours to assist and allow MTU-M to
recover from the OEM all cost and expenses associated with any
measure taken by MTU-M to rectify or repair such defects and
2.5.2 Operator shall use all commercially reasonable endeavours to
increase the on-wing time of the Engines under consideration of
reliability and costs in cooperation with MTU-M. Moreover,
Operator agrees to cooperate with MTU-M with respect to the
determination of the optimum removal date for each eligible
Engine. For the avoidance of doubt it is expressly agreed by the
Parties that nothing contained herein shall limit or shall be
construed as limiting Operator's airworthiness responsibilities
(which shall be paramount).
2.5.3 Operator will report to MTU-M by the tenth (10th) day of each
month the Engine Flight Hours (EFH) of the preceding month for
2.5.4 Operator will report to MTU-M each month the Engine on-wing data
in order to allow MTU-M to evaluate those data by MTU-M's
2.5.5 Operator agrees to assign all assignable and unexpired
maintenance related guarantees, warranties or other remedies
specified in the general terms agreement between Operator and the
OEM regarding the sale of the Engines, in particular any of the
- New Engine Guarantee
- Shop Visit Rate Guarantee
- EGT Guarantee
- Campaign Change Allowance
- New Part Warranty
- FOD Guarantee
- Spare Parts Warranty
- Spare Engine Availability
- Hot/Cold Section Guarantee
- TAY630-15 Maintenance Cost Guarantee
Operator agrees to use all commercially reasonable endeavours to
support MTU-M in the enforcement of any assigned rights as
If these guarantees, warranties or other remedies cannot be
assigned, Operator shall raise claims under said non-assigned
guarantees, warranties or other remedies and shall to the extent
recovered under the relevant warranties/guarantees transfer the
economic benefit to MTU-M.
2.5.6 Operator shall maintain a spare engine level of * of its
operating Engines *
2.6 Should it become necessary for the proper performance to carry
out Services substantially different from those specified in the
Work Statement, MTU-M will promptly notify Operator (in
sufficient detail) of the nature and extent of such Services and
seek Operator's authorization to carry out such different
Services. Operator shall respond in writing (to include telex and
telefax) to such request within * hours. The Turnaround Time
will be increased by the additional time that is needed and
verified by MTU-M due to the delay in question. Any impact on the
agreed TAT resulting from such delay will be promptly advised by
MTU-M (with supporting evidence if requested).
In the event Operator withholds the authorization or direction
for the necessary alteration of the Work Statement for a period
exceeding *, MTU-M may remove the Engine, Module or Part from the
2.7 In recognition of Operator's and MTU-M's desire to stabilize the
financial expectations resulting from this Agreement, the Parties
agree to meet annually to discuss and reconcile the overall
technical and business aspects of this Agreement.
2.8 Operator acknowledges that MTU-M may perform its obligations
under this Agreement by contracting a third party sub-contractor
to undertake any Work requested to be performed. Operator shall
provide commercially reasonable assistance to MTU-M at the cost
and expense of MTU-M during an initiation period of * months
following the Effective Date to have the Work required under this
Agreement performed by other qualified parties as subcontractors
2.9 Operator agrees that it will use reasonable commercial efforts to
assist MTU-M in purchasing spare parts for Operator's Engines
OEM and that such spare parts will be supplied by the OEM to
MTU-M on MTU-M's account.
2.10 Operator agrees that it will provide MTU-M with all information
and technical data, and any other assistance which may be
reasonably requested by MTU-M.
CLAUSE 3 RECORDS AND STANDARDS
3.1 MTU-M will maintain or cause to be maintained throughout the
duration of this Agreement a service organization and facilities
for Services on Engines, Modules, Parts and Accessories in
accordance with the respective manufacturer's manuals and other
applicable documentation. These facilities shall be approved
and/or accepted by the FAA and the DAC Brasil. Within one (1)
year of the Effective Date, these facilities shall also be
approved and/or accepted by the JAA.
3.2 Operator shall provide to MTU-M its General Maintenance Manual
and all pertinent parts of its Maintenance Policy and Procedure
Manual. Moreover, Operator shall either itself furnish to MTU-M,
or cause the OEM to furnish to MTU-M the following technical
information and documentation regarding the Repair, Overhaul and
Maintenance of the Engines, as well as any revisions thereto, and
all other means required to enable MTU-M to maintain, repair and
overhaul Operators Engines and Accessories.
- Illustrated Parts Catalogue
- Inspection Manual
- Maintenance Manual (TNSM)/Engine Manual
- Power Plant Build Up Manuals of the relevant aircraft Engine
- Component Maintenance Manuals
- Tooling and Facility Catalogue.
- NDT Manual
- Service Bulletins
- All Engine related aperture cards
- Blue prints if necessary and as permitted
- Proprietary OEM information as permitted.
3.3 In respect of individual Engines or Modules, Operator shall
provide to MTU-M all documents and supply all information within
Operator's possession or control necessary to establish the
extent of Services required. This includes:
3.3.1 The technical documentation (or any other applicable
3.3.2 Any required variations to the applicable standard Work
specification including Modifications which are required to be
embodied in the Engine or Module during the performance of Work.
Further variations to any specific Work on an Engine or Module
will be agreed between MTU-M and Operator;
3.3.3 Any further information concerning the condition of the Engine or
3.3.4 Life of all Life Limited and/or time tracking Parts, Life Limited
3.3.5 Module tracking list;
3.3.6 AD-Note status;
3.3.7 Service Bulletin status and Service Bulletin requirements (may be
included in workscope);
3.3.8 Operator's special requirements;
3.3.9 Removal reason;
3.3.10 Installed powerplant accessory component sheet, a listing by
nomenclature of each accessory component, Part number, quantity,
time and cycles and serial number (EBU List Accessory
List/Accessory Life List);
3.3.11 Log book or equivalent and Part (Module) cards;
3.3.12 Engine/Part installation data records;
3.3.13 Purchase Order; and
3.3.14 Trend Monitoring and In-flight readings (as mutually agreed upon)
of all Engine parameters on that specific Engine from its last
flight prior to removal.
3.4 MTU-M will ensure that the record system will include
documentation of all Services performed, Rework operations
required and disposition of all Parts replaced. MTU-M agrees to
keep all records herein described in form and detail sufficient
for accurate and expeditious administration of the Agreement and
shall furnish to Operator the following records and reports, as
applicable for each Shop Visit:
3.4.1 Engine, Module, Part or accessory serial numbers;
The general exterior condition of the Engine, Module or Part and
List of the missing and/or damaged external Parts; and
Borescope/chamberscope results, as applicable.
3.4.2 The following information for each cycle controlled and Life
Limited Part installed during a Shop Visit:
b) Part number;
c) Serial number;
d) Total operating cycles and hours accumulated to date;
e) Total cycles remaining;
f) Major maintenance events (date, TSN, CSN) if available.
3.4.3 A list of all Life Limited Parts determined to be scrap
identified by Module installed, Part number, quantity and reason
3.4.4 A list by nomenclature of each accessory component, Part number,
quantity, Part time and serial number.
3.4.5 One (1) copy of the applicable engine and/or accessory test logs.
3.4.6 A report summarizing condition detected subsequent to Engine
3.5 MTU-M shall be required to complete and properly execute, or
cause to be completed and properly executed, Federal Aviation
Administration (FAA) Form 8130-3, and for major repairs FAA Form
337, or its equivalent for Supplies repaired, modified and/or
tested by MTU-M or its subcontractors under this Agreement.
MTU-M undertakes to store all records provided to it by Operator
hereunder safely as the property of Operator and to return the
same to Operator upon request or expiry of this Agreement (in
respect of an Engine).
Upon the request from Operator accident and damage reports,
including pictures and laboratory investigation results will be
issued by MTU-M.
Clause 4 DELIVERY
4.1 MTU-M shall appoint MTU Brasil to handle on behalf of Operator
relevant import/export procedures related to the transactions
contemplated in this Agreement, except for the payment of any Taxes
(as defined in Clause 10) due upon such import/export transactions,
which shall subject to the provisions of Clause 10 be the entire and
sole responsibility of Operator. In this regard, the parties agree and
acknowledge that Operator itself shall be the importer/exporter of
record of all Engines, Modules, Parts and other items imported
into/exported from Brasil under this Agreement. Operator agrees that,
upon request of MTU-M or MTU Brasil, Operator will timely do, execute,
acknowledge and/or deliver and/or to cause to be done, executed,
acknowledged and/or delivered, all such acts and documents as may be
required to allow MTU Brasil to conduct all relevant imports/exports
for and on behalf of Operator. Delivery of Engines, Modules, Parts and
other items requiring Work to MTU Brasil shall be the obligation of
4.2 Operator shall advise MTU-M of its intention to deliver Engines,
Modules, Parts and other items no less than * prior to their dispatch.
4.3 No less than two (2) Days prior to each such dispatch of an Engine,
MTU-M shall advise Operator of the sub-contractor where each such
Engine will be serviced. If there is no sub-contractor willing to
perform the Work, MTU-M may at its option either (i) provide Operator,
subject to Clause 2.5.6, with a leased engine in case Operator is in
zero spare situation for as long as the relevant Engine is repaired,
or (ii) allow Operator to have the Work performed by the closest DAC
approved OEM maintenance facility able to perform such Work within no
less than the Turnaround time set forth herein. In case MTU-M elects
to supply a leased engine, (a) such lease shall be subject to a
separate lease agreement, and (b) MTU-M shall bear the cost of
providing such lease engine (including, for the avoidance of doubt,
any cost incurred in delivering or re-delivering such leased engine)
except that any maintenance reserves for such leased engines shall be
borne by Operator. In case MTU-M elects to allow Operator to have the
Work performed by the closest DAC approved OEM maintenance facility
able to perform the Work, MTU-M will bear the cost of any such Work
performed by such OEM maintenance facility (including, for the
avoidance of doubt, transportation cost, taxes and fees) that exceed
US Dollars * as may be escalated by MTU-M in accordance with Appendix
C hereof, per Engine Flight Hour since last scheduled Shop Visit
(Midlife Inspection or Overhaul, as applicable) as follows:
MTU-M shall bear the cost exceeding * (as escalated in accordance
with item 3 of Appendix C) with respect to a Midlife Inspection,
and the cost of an Overhaul exceeding the amount determined in
accordance with the following formula:
Engine Flight Hours operated since last Overhaul (or, in case of
new engines, since manufacture) multiplied by * as escalated in
accordance with item 3 of Appendix C less * for the Midlife
Inspection (as escalated in accordance with item 3 of Appendix C)
preceding the current Overhaul Shop Visit.
Such additional costs shall be paid to Operator without deductions on
or prior to the date Operator is required to settle the invoice of the
OEM maintenance facility in respect of such Work. Notwithstanding
anything herein to the contrary, the obligations of MTU-M contained in
this Clause 4.3 shall terminate three (3) years after the Effective
Date (i.e. on July 1, 2003).
4.4 Risk of loss or damage shall be borne by Operator until arrival at MTU
4.5 Upon receipt of Engines, Modules or Parts to MTU Brasil (as evidenced
by signature of an acknowledgement of delivery) risk of loss or damage
shall pass to MTU-M.
4.6 After completion of Work, MTU-M shall be obliged to redeliver Engines,
Modules, Parts and other items to Operator at MTU Brasil and give
notice to Operator of such redelivery in due course of time. Risk of
loss or damage shall remain with MTU-M until the relevant Engines,
Parts or Modules are received by Operator at ist facility as evidenced
by signature of an acknowledgement of receipt by Operator.
CLAUSE 5 TURNAROUND TIME (TAT) AND EXCUSABLE DELAY
5.1 Prior to delivery of an Engine, Module, Part or other item to MTU-M
and after inspection by MTU-M, MTU-M and Operator shall agree on a
reasonable TAT for such Engine, Module or Part and upon delivery of an
Engine to MTU-M and after Inspection by MTU-M, MTU-M shall perform its
Services within the following TAT:
MTU-M will use commercially reasonable efforts to Derform Work on a
complete Engine within a TAT of * If a shorter TAT will have to be met
on certain occasions upon request of Operator, MTU-M will use
commercially reasonable efforts to try to comply with such request and
shall keep Operator informed, if requested by Operator, of the TAT.
5.2 Compliance with an agreed TAT requires * advance notification by
Operator that an Engine or Module is being or will be shipped for
Services ("Scheduled Delivery Date"). In the event that MTU-M does not
receive such advance notification (e.g. in the event of an unscheduled
Engine removal), the TAT shall commence with the start of Services on
the Engine or Module but not later than * after receiving the Engine
or Module at MTU-M including the documentation listed in Clause 3.3.
5.3 Any technical requests from MTU-M to Operator which will affect the
TAT have to be answered by Operator within * provided always that if
such a request is received by Operator later than 4 p.m. (Sao Paulo
time) on a Friday, Operator's response shall be received by MTU-M no
later than 6 p.m. (Sao Paulo time) of the following Monday. If no
replies are received within that time, the TAT will be increased by
the additional time which is needed and verified by MTU-M due to the
delay in question. Any impact on the TAT resulting from this decision
will be advised by MTU-M together with supporting evidence of any
delay in the TAT.
5.4 MTU-M shall not be liable for exceeding the TAT due to reasons
contained in Clause 5.7 - Excusable Delays.
5.5 MTU-M shall promptly notify Operator when Excusable Delays occur or
impending delays are likely to occur and shall continue to advise
Operator of new shipping schedules and/or changes thereto.
5.6 If the actual TAT in respect of an Engine exceeds the TAT
referred to in this Clause 5 (as such period maybe extended
pursuant to this Agreement) and if Operator is in, or during
such event of delay enters into, a zero spare engine situation,
Operator may as its sole remedy for such delay (i) require MTU-M
to have a spare engine delivered to Operator (at Operator's
facility in Sao Paulo) within * of MTU-M being notified of
such zero spare engine situation, or failing which (ii) claim
damages from MTU-M in an amount not exceeding the cost of
leasing an engine until such time as the delayed Engine is
delivered to Operator (including, for the avoidance of doubt,
any cost incurred in delivering or re-delivering such leased
engine). Any maintenance reserves * to be paid for such leased
engine shall be borne by Operator. Such claim is only permitted
(i) if Operator has maintained an appropriate quantity of spare
Engines as specified in Clause 2.5.6, and (ii) is furthermore
limited to the costs of a lease Engine until the Engine so
delayed is redelivered to Operator. In the event MTU-M provides
a lease Engine, such lease shall be subject to a separate lease
5.7 The party actually performing Services hereunder (the "Service
Provider"), i.e. MTU-M (if performing Services) or MTU-M's
subcontractors (if performing Services), shall not be charged
with any liability for delay or non-delivery when due to any of
the following events ("Excusable Delays")
(i) delays of Operator, single source suppliers of the Service
Provider, or the OEM;
(ii) acts of God or the public enemy, fires, riots;
(iii) compliance in good faith with any applicable foreign or
domestic governmental regulations or order whether or not
it proves to be valid or invalid provided that compliance
with any governmental or domestic regulations or orders in
Germany, Brazil (or where the Services are to be provided
by a subcontractor, the jurisdiction of such subcontractor)
which the Service Provider ought reasonably to have been
aware of and ought reasonably to have complied with shall
not constitute an Excusable Delay;
(iv) labor disputes at companies other than MTU-M or any of its
(v) unusually severe weather or
(vi) any other cause beyond the control of the Service Provider
which could not reasonably be foreseen.
To the extent the occurrence of an Excusable Delay causes actual
delay to the Turnaround Time or renders them in part or whole
impossible, the time for the performance shall be extended for
as many Days beyond the agreed TAT as is required to obtain
removal of such causes.
This provision shall, however, not relieve MTU-M from using its
best efforts to avoid or remove such causes and to continue
performance with reasonable dispatch whenever such causes are
removed. In case that upon occurrence of an Excusable Delay it
is evident that the resulting impact on the Service Provider is
such as to delay the performance of Services on the Engines,
Modules and Parts then undergoing Services at the Service
Provider (hereinafter the "Affected Items") for more than *
Operator shall have the right to either (i) terminate the
Purchase Order relating to the Services for the Affected Items
to the extent the Services cannot be completed by the Service
Provider due to such Excusable Delay and take possession of the
Affected Items in the possession of the Service Provider or
shipping agents and cause such Services to be completed by
another maintenance provider without any obligation on the
Service Provider's part for any Services so performed by another
maintenance provider, or (ii) cause MTU-M to have the Services
provided by another Service Provider not afected by the
For the avoidance of doubt it is expressly agreed that once such
impact on MTU-M is removed, Operator will continue to send all
Engines, Modules and Parts needing Services to MTU-M.
CLAUSE 6 ORDER PROCESSING
6.1 Operator will provide MTU-M with a Purchase Order number before
commencement of Services.
6.2 In the event that Operator delivers an incomplete Engine or
Module, MTU-M will promptly following discovery of any such
deficiency inform Operator in writing of the missing Parts. In
case Operator does not react within 1 * upon such information,
the TAT may be increased accordingly. Should Operator promptly
request to add the missing Parts, MTU-M will use commercially
reasonable efforts to deliver the requested Parts together with
the Engine or Module.
Requested accessories which are not available at the date of
redelivery of an Engine or Module will be sent separately to
Operator when such accessories become available.
6.3 In case of Reworks MTU-M shall not perform uneconomical Rework,
i.e. when the costs for the Rework of a Part exceed * of the
then current list price for the respective new Part. In such
case MTU-M shall replace the removed Part by a new one and
charge the price for it according to Appendix B.
CLAUSE 7 REJECTED PARTS
All Parts removed during Work and determined by MTU-M as rejected shall
become MTU-M's property.
All Parts removed during Work and determined by MTU-M as scrap will be held
for Operator's review and disposition. Such disposition by Operator shall
occur twice per calendar year. If such disposition for any such Parts is
delayed for any reason whatsoever for more than *, it shall be conclusively
deemed that Operator has transferred title to any such Parts to MTU-M, and
MTU-M may dispose of such Parts at its sole discretion.
CLAUSE 8 CHARGES
For all Services Operator shall pay the sums charged in accordance with
Appendix B subject to the Escalation Formula contained in Appendix C.
Engines delivered for the performance of Services in a given year shall be
invoiced at the charges applicable to such year.
CLAUSE 9 PAYMENT
9.1.1 For Services' * stipulated in Appendix B, MTU-M will render
invoices * following redelivery of an Engine in accordance with
9.1.2 For Services * stipulated in Appendix B, MTU-M shall render an
initial invoice within * after completion of Work. The final
invoice shall be issued not later than * after completion of Work.
9.2 Invoices shall be issued in US-Dollars and promptly forwarded to
Operator in duplicate.
9.3 Unless otherwise provided herein, all invoices shall be
payable(within * (the due date) after date of issue) all payments
shall be made in * in US-Dollars on MTU-M's bank account with *
Operator shall promptly furnish copies of the documents evidencing
wire transfer of all such payments to the attention of the
Financial Director, MTU-M.
9.4 In case of Excusable Delays, MTU-M shall be entitled to payment of
an adequate and reasonable partial payment for Services already
rendered as may be agreed by MTU-M and Operator on a case by case
9.5 If Operator is in default of any payment obligation, MTU-M is
without reminder and prejudice to any other rights entitled to
charge interest at * any outstanding sum, starting from the due
date of payment until the date payment is received.
9.6 If Operator is in default of any payment obligation, MTU-M may
postpone the performance of its own obligations under this
Agreement until such payment is made.
9.7 Operator is not entitled to withhold payments or to make any
deductions whatsoever unless accepted by MTU-M or affirmed by an
arbitral ruling under Clause 16 or a judgment of a court of
9.9 MTU-M shall be entitled to a general lien on any of the Supplies
delivered by Operator which are in the care, custody and control of
MTU-M under this Agreement together with any amounts due to MTU-M from
Operator which have arisen with respect to respect to other or
previous Services performed by MTU-M for Operator. Such provision
shall also apply if any Supply owned or leased by Operator passes into
the hands of MTU-M at a later date and MTU-M has claims out of the
business relationship at the time the lien is claimed.
CLAUSE 10 TAXES, DUTIES AND CUSTOMS FEES
10.1 MTU-M shall pay all Taxes (as defined below) levied on either Party by
authorities in the Federal Republic of Germany.
10.2 Any and all Taxes levied by any authority in Brazil on MTU-M or
Operator, including, but not limited to, the Import Duty (ID) and Tax
on Industrialized Products (IPI) levied on the importation of goods
into Brazil, shall be borne by Operator, except for (a) the Income Tax
Withholding (Imposto de Renda na Fonte - "Current Income Tax"), which
shall be withheld by Operator from amounts due to MTU-M under this
Agreement, if thus required by Brazilian law; and (b) the Tax on
Transactions Related to the Circulation of Goods and Interstate and
Intermunicipal Transport and Communication Services ("ICMS"), if any,
due upon the importation of new Engines, Modules and Parts into Brazil
in connection with MTU-M's performance of its obligations under this
Agreement. In this regard, MTU-M shall grant Operator a rebate on the
charges due by Operator under this Agreement in the exact amount of
the ICMS actually paid by Operator (if any) upon importation by
Operator of relevant Engines, Modules and Parts into Brazil, provided
(i) Operator evidences actual payment of such ICMS in a form
satisfactory to MTU-M; (ii) the rate at which the ICMS is paid by
Operator is not higher than 4%; (iii) Operator does not fail to
benefit from any ICMS benefit (including ICMS reduction or exemption)
that may be available; (iv) Operator is unable to and actually does
not offset such ICMS against any Taxes due by Operator, nor directly
or indirectly recover such ICMS in any form whatsoever; and (v) if so
allowed by applicable regulations, upon written request of MTU-M,
Operator promptly assigns, transfers or makes in any form available to
MTU-M and/or any company indicated by MTU-M the ICMS credits earned by
Operator upon the abovementioned imports. If any of the conditions set
forth in items (i) and (iii) through (v) above is not met, MTU-M's
obligation set forth in the immediately preceding sentence (i.e. to
grant Operator a rebate at a rate of 4%) shall not apply.
The Parties hereby acknowledge and agree that (i) the compensation due
by Operator to MTU-M under this Agreement, was established assuming
that (i) invoices issued hereunder will be issued by MTU Motoren- und
Turbinen-Union Munchen GmbH, and (ii) the only Taxes that will levy in
Brazil on payments by Operator to MTU Motoren- und Turbinen-Union
Munchen GmbH in connection with the transactions contemplated in this
Agreement are Current Income Tax and ICMS; (ii) in the event (a) the
Current Income Tax and/or the ICMS become due at a rate higher than
its current rate; (b) it is later determined that other Taxes are also
due in Brazil on payments made by Operator to MTU-M in connection with
MTU-M's performance of its obligations under this Agreement; and/or
(c) new Taxes are Created and become due in Brazil on payments due by
Operator to MTU-M in connection with MTU-M's performance of its
obligations under this
For purposes of this Agreement, the term "Tax" or "Taxes" shall mean
all federal, state, or municipal taxes, charges, fees, levies,
imposts, duties (including import duties), tariffs, surcharges, or
other assessments, including, without limitation, sales, use,
transfer, gross receipts, excise, withholding or any similar charges
or assessments and all taxes, charges, fees, levies, imposts, duties,
tariffs, surcharges, or other assessments placed by, or replacing, any
of the above, or other tax or governmental fee of any kind whatsoever
directly or indirectly imposed by any governmental authority,
including any interest or penalties or additions thereto, whether
disputed or not.
Taxes imposed in any other jurisdiction shall be borne by the relevant
Party on whom such taxes are levied, provided that TAM shall not be
responsible for any Taxes due in any jurisdiction other than Brazil in
connection with the performance by MTU-M of its obligations under this
In the event that any Party shall be held responsible by any taxing
authority for the collection or payment of Taxes to be borne by the
other Party and shall be required to pay the same to such authority,
such other Party shall reimburse the first Party the full amount of
such payment and any expenses connected therewith upon the first
Party's first demand therefor.
10.3 Operator reserves the right to use its commercially reasonable efforts
to negotiate and enter into an arrangement with the Brazilian taxing
authorities for an exemption for the assessment and payment of import
duties, tariffs or similar taxes imposed on any and all goods,
material or services imported to Brazil under this Agreement.
CLAUSE 11 SUBCONTRACTING
Notwithstanding anything contained herein to the contrary, MTU-M may
subcontract all or part of the Work to be performed by MTU-M hereunder
to the OEM or to another qualified party to perform the type of Work
subcontracted to it by MTU-M.
Any subcontracting shall not release MTU-M from its obligations under
this Agreement and MTU-M shall remain liable to Operator for the
performance of Services under this Agreement by any subcontractor as
if such Services were performed by MTU-M. MTU-M shall use best
endeavours to ensure that all Work subcontracted is undertaken by
reputable Maintenance facilities appropriately certified by all
relevant authorities and able to perform the Services to the standard
required of MTU-M pursuant to this Agreement. Nothing in this Clause
will cause MTU-M to be liable for any default by a subcontractor where
MTU-M or another subcontractor remedies that default.
Operator shall if requested by MTU-M assist MTU-M at no cost to
Operator in securing appropriate subcontractors for all or part of the
Work covered under this Agreement without in any way warranting the
ability of such third parties to perform the Services or warranting
the quality of such Services.
CLAUSE 12 WARRANTY
12.1 MTU-M warrants that at the time of delivery of serviced Engines the
Services will have been performed in a skilled and workmanlike
manner in accordance with best industry practice and in accordance
with the requirements of this Agreement. This warranty is limited to
MTU-M's correcting at its facilities within a reasonably prompt
period of time and at its own cost and expense such Services as are
shown to MTU-M's reasonable satisfaction to be defective, provided
that the defect has arisen within * following delivery to Operator
or the * following delivery whichever shall first occur, provided
further that written notice of the defect is received by MTU-M
within: * after discovery by Operator. Transportation charges for
return of defective Engines to MTU-M and their reshipment will be
borne by MTU-M, subject to Clause 12.7 herebelow. In the event of a
justified warranty claim hereunder the warranty period shall be
extended by the time required to carry out the work.
12.2 Non-compliance of an Engine with the specified performance and
consumption rates can only be determined and demonstrated by a test
run at MTU-M's facilities or any test cell agreed between both
12.3 MTU-M's warranty shall not apply if after redelivery by MTU-M
Operator, its servants, agents, subcontractors or third parties have
abused, altered or repaired the Engine or Module or have not
operated the Engine or Module in accordance with the manufacturer's
operating instructions or recommendations.
12.4 If an Engine defect was caused due to the failure of a new Part
properly installed by MTU-M, MTU-M will assign to the fullest extent
possible the warranty granted by the manufacturer of such new part
to Operator. In the event that the warranty related to such new Part
cannot be assigned, MTU-M will administer and enforce the warranty
claim against the manufacturer on behalf of Operator and pass the
respective remedies on to Operator. In any event MTU-M's liability
shall be limited to the extent outlined in this Clause 12 and Clause
13 herebelow and shall apply if all attempts at judicial actions
against the manufacturer have failed.
12.5 MTU-M assumes no warranty for Parts supplied by Operator and
properly installed by MTU-M.
12.6 Within two (2) months after notification by Operator MTU-M will use
its reasonable efforts to determine if a warranty claim can be
12.7 In case Operator asserts a warranty claim according to this Clause
12 and as a result of the investigation it is established that MTU-M
is not liable for the defects claimed, the reasonable and properly
incurred costs of investigation as well as any other reasonable and
incurred costs and expenses connected with such claim shall be borne
by Operator and due and payable upon receipt of the respective
12.8 MTU-M acknowledges and agrees that it shall bear responsibility in
accordance with this Clause 12 for any Engine defect caused due to
Work performed by any of MTU-M's subcontractors and that Operator
shall not be required to take any action against such subcontractor.
The Operator agrees that the provisions of Clause 12.4 above will
apply where the defect is caused by a new Part installed by a
12.9 EXCLUSIVE WARRANTIES AND REMEDIES
THE FOREGOING WARRANTIES ARE EXCLUSIVE AND ARE GIVEN AND ACCEPTED IN
LIEU OF (i) ANY AND ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE; AND (ii) ANY
OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN CONTRACT, TORT OR
STRICT LIABILITY, WHETHER OR NOT ARISING FROM MTU-M's NEGLIGENCE,
ACTUAL OR IMPUTED. THE REMEDIES OF THE OPERATOR SHALL BE LIMITED TO
THOSE PROVIDED IN THIS AGREEMENT TO THE EXCLUSION OF ANY AND ALL
OTHER REMEDIES, INCLUDING WITHOUT LIMITATION, INCIDENTAL OR
CONSEQUENTIAL DAMAGES. NO AGREEMENT VARYING OR EXTENDING THE
FOREGOING WARRANTY, REMEDIES OR THIS LIMITATION WILL BE BINDNG UPON
MTU-M UNLESS IN WRITING, SIGNED BY TWO DULY AUTHORIZED OFFICERS OF
CLAUSE 13 LIABILITY
13.1 MTU-M, its officers, directors, employees, agents and subcontractors
(collectively herein "the Indemnified Parties") shall not be liable
for any damage to or loss of the aircraft and other properties owned
or operated by Operator or injury or death or any other damage
sustained by Operator, its personnel or third parties due to or in
connection with or in consequence of the performance or
non-performance of Services under this Agreement unless caused by
willful misconduct or negligence of an Indemnified Party.
13.2 In cases of negligence any liability of the Indemnified Parties
shall be limited for any and all claims which might arise under or
out of this Agreement to * per occurrence or in the aggregate per
Throughout the term of this Agreement, MTU-M shall maintain in full
force, at its expense, appropriate aviation products third party
liability insurances in respect of the liabilities specified in
Clause 13.2 in accordance with current aviation insurance practice.
MTU-M shall provide evidence of such insurances to Operator from
time to time.
13.3 Except for the Indemnified Parties' liability outlined in Clauses
13.1 and 13.2 above, Operator shall indemnify and hold harmless the
Indemnified Parties from any and all liability claims including
costs and expenses incident thereto. The obligation by TAM to
indemnify pursuant to this Clause 13 shall, however, exclude (i)
MTU-M's officers, directors and employees, (ii) MTU-M's property,
and (iii) the property of third parties in the care custody and
control of MTU-M.
13.4 Throughout the term of this Agreement, Operator shall maintain in
full force, at its expense, the following insurance:
a) Comprehensive aircraft third party, passenger (including
personal injury), baggage (checked or unchecked), cargo and
mail legal liability insurance for a combined single limit of
* per occurrence. Such insurance shall name the Indemnified
Parties as additional insured.
b) Hull All Risks, Hull War and Allied Perils insurances covering
Operator's aircraft against loss or damage. Such Hull
insurances shall contain a waiver of recourse in favour of the
Indemnified Parties, except in cases of the Indemnified
Parties' liability outlined above in this Clause 13.
Upon MTU-M's request Operator shall have its insurers provide
certificates of insurance evidencing the coverages required under a)
and b) above. Each insurance certificate shall provide for at least
fourteen (14) days' written notice to MTU prior to any premature
or reduction of coverages or limits. Any deductibles shall be the
sole responsibility of Operator.
13.5 For the purposes of this Clause 13, the term "Indemnified Parties"
shall also include the companies of the MTU group of companies (MTU
Maintenance Hannover GmbH etc.).
CLAUSE 14 MISCELLANEOUS
The rule of construction that ambiguities or inconsistencies are to
be resolved against the drafting Party shall not be employed in the
interpretation of this Agreement to favour any Party against the
other. Ambiguities or inconsistencies shall be resolved by applying
the most reasonable interpretation under the circumstances, giving
full consideration to the intentions of the Parties at the time of
conclusion of this Agreement.
14.2 Order of Precedence
In the event that there are any conflicts of inconsistencies between
the provisions of this Agreement and the appendices hereto, the
provisions of this Agreement shall prevail.
14.3 Merger of Negotiations
The terms and provisions contained herein constitute the entire
agreement between the Parties and 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 scope
of this Agreement 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 subject matter
hereof and shall supersede all such representations, agreements,
statements and understandings.
14.4 Property and Risk
The risk in respect of loss of or damage to the Supplies shall pass
to MTU-M on delivery to MTU-M in accordance with Clause 4 hereof and
shall remain with MTU-M until redelivered in accordance with Clause
MTU-M shall maintain and shall procure that any subcontractor
performing services also maintains insurance coverage in an amount
of not less than thirty million US Dollars (30,000,000 US $) against
loss of or damage to the Supplies while they are in its or any of
its subcontractor's care, custody and control in accordance with
current aviation insurance practice. MTU-M shall provide evidence of
such insurances if requested by Operator, from time to time.
Should any item of Supplies delivered to MTU-M or any of its
subcontractors according to Clause 4 above while being in MTU-M's or
any of its subcontractor's care, custody and control be damaged,
howsoever, MTU-M as its sole responsibility and as Operator's sole
remedy with regard thereto, will either (as MTU-M may in its
discretion decide) provide an adequate replacement or pay to
Operator the actual replacement cost of such item of Supplies.
MTU-M shall at all times ensure that Supplies in its care, custody
and control or in the care, custody and control of any
subcontractor do not by its or its subcontractor's act or omission
become the subject of any lien, tax, charge, duty or encumbrance
and MTU-M shall indemnify Operator against all costs, expenses and
damages which Operator may incur or suffer by reason of MTU-M
failing to carry out its obligations under this Clause.
Except as otherwise provided in this Agreement, MTU-M shall ensure
that the Engines remain free and clear of all liens other than
liens arising by operation of the law.
14.6 Title to Parts
MTU-M shall ensure that full legal and beneficial title to Parts
incorporated into Engines during Services shall pass to the owner
of such Engines free and clear of all liens and encumbrances upon
re-delivery of such Engines to Operator.
14.7 Title to Exchanged Parts
Operator and MTU-M each represent and warrant that they will
accomplish transfer of the full legal title of any item exchanged
hereunder free and clear of all charges, liens and encumbrances.
Operator warrants the authorization of the owner of such items to
effect such exchange of title. Either Party will only with the
prior written consent of the other enter into any arrangement or
agreement which might prejudice or impair its ability to perform
its obligations under this Clause.
Neither Party hereto may assign any of its rights or obligations
hereunder without prior written consent of the other Party except
that MTU-M may assign claims for monies due hereunder to a bank or
to a bank or other financial institution. Any assignment by MTU-M
as aforementioned shall be on terms that Operator's obligations
hereunder shall not be increased as a result of such assignments.
MTU-M shall remain liable for the performance of all its
obligations hereunder, notwithstanding any such assignment. Any
assignment made in violation of this Clause shall be null and void.
14.9 Alterations and Amendments
This Agreement shall not be altered or amended in any way other
than by agreement in writing (to include telex) entered into by the
Parties after the date of this Agreement, which is expressly stated
to amend or alter this Agreement.
14.10 Negation of Waiver
Failure of either Party at any time to enforce any of the
provisions of this Agreement shall not be construed as a waiver or
forbearance by such Party of such provisions or in any way affect
the validity of this Agreement or part thereof.
14.11 Partial Invalidity
In case one or more of the provisions contained in this Agreement
should be or become fully or in part invalid, illegal or
unenforceable, the validity, legality or enforceability of the
remaining provisions contained in this agreement shall not be
affected in any way or impaired thereby, and the Parties shall to
the extent possible replace such invalid, illegal or unenforceable
provision(s) by another clause or clauses considering the economic
intention of the Parties.
None of the provisions of this Agreement shall be considered by
either Party as precedent for any further agreements between the
Parties which relate to the same subject matter hereof.
Operator shall have the right to appoint a representative at MTU-M
to consult with MTU-M during performance of Services. All costs
connected with such appointment shall be borne by Operator.
If requested by Operator, MTU-M will appoint a representative in
Brasil to consult with Operator during performance of Services. All
costs associated with such appointment shall be borne by MTU-M.
14.14 Communication and Accommodation
MTU-M shall provide Operator's representative with reasonable
office space and adequate telephone access at MTU-M's expense.
The appropriate airworthiness authorities and Operator's
representatives may at all reasonable times, upon advance notice,
inspect the performance of Services. Any such inspection shall not
constitute an acceptance of Services.
CLAUSE 15 DURATION AND TERMINATION
15.1 Subject to Clause 15.4 below, this Agreement shall become effective
on July 1st, 2000 regardless of the date this Agreement is signed by
both Parties (the "Effective Date"), and it shall automatically
terminate and become null and void on June 30th, 2015. For any
Purchase Orders placed prior to the date of expiration or
termination this Agreement shall continue to be valid until
fulfillment of all obligations of the Parties thereunder.
15.2 The rights and obligations of the Parties under the following
clauses shall survive any termination or expiration of this
Clause 12 (WARRANTY)
Clause 13 (LIABILITY)
Clause 17 (APPLICABLE LAW AND ARBITRATION).
If either Operator or MTU-M makes an agreement with creditors
compounding debts, enters into liquidation whether compulsory or
voluntary (otherwise than for the purpose of amalgamation or
reconstruction), becomes insolvent, suffers a receiver of the whole
or parts of its assets to be appointed, or commits a breach of any
of its obligations under this Agreement (hereinafter collectively"
Termination Events"), the defaulting Party shall have thirty (30)
Days upon notification by the non-defaulting Party to remedy any
such Termination Event or provide an acceptable plan for the remedy
otherwise the non-defaulting Party shall have the right without
prejudice to its other rights or remedies under applicable laws
which rights or remedies shall be cumulative and not exclusive:
a) to terminate this Agreement or any Purchase Order hereunder by
written notice (to include telex), and
b) to stop any Work already commenced and to refuse to commence
any further Work.
For the avoidance of doubt, it is expressly agreed between the
Parties that Purchase Orders placed by Operator with MTU-H on or
before the effective date of termination shall continue to be
subject to the provisions of this Agreement.
15.4 Conditions Precedent
The Agreement and its Annexes shall become effective subject to the
following conditions precedent being fullfilled:
a) signature of the V2500-A5 Maintenance Agreement between the
Parties relating to the performance of Services by MTU
Maintenance Hannover GmbH for Operator's V2500-A5 engine fleet,
b) signature of the Sale and Purchase Agreement relating to the
sale of up to twelve (12) V2500-A5 engines from Operator to MTU
Maintenance Hannover GmbH, and
c) signature of the lease agreement between the Parties relating
to the lease of six (6) V2500-A5 engines from MTU Maintenance
Hannover GmbH to Operator.
CLAUSE 16 REPRESENTATIONS AND WARRANTIES
Each of the Parties hereby represents and warrants that:
16.1 It is a limited liability company duly constituted and validly
existing under the laws of its country of incorporation, its
obligations under and pursuant to this Agreement constitute its
legal, valid, binding and enforceable obligations (save to the
extent that enforcement may be limited by applicable bankruptcy,
insolvency, moratorium or other laws for the protection of creditors
and debtors generally and general principles of equity) and that
this Agreement has been duly executed by it;
16.2 The execution and delivery by it of this Agreement, the consummation
by it of any of the transactions contemplated hereby and compliance
by it with any of the terms and conditions hereof do not require any
consent of any trustee or holder of any indebtedness or other
obligation of it, violate any term or condition of its constitutive
documents, contravene any provision of or constitute or will
constitute a default under or pursuant to or result in any breach of
or the creation of any lien (other than as contemplated under this
Agreement) on or over any of its assets or any other agreement or
instrument to which it is a party or by which it is bound;
16.3 No consent of, giving of notice to, registration with or taking of
any other action in respect of any government entity in its country
of incorporation is required for the execution by it of this
CLAUSE 17 LAW AND ARBITRATION
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York
, United States of America, but
without giving effect to the principles of conflicts of laws thereof.
The United Nations Convention on Contracts for the International Sale
of Goods shall not govern this Agreement or the rights and obligations
of the Parties hereunder. Any and all disputes arising out of or in
connection with this Agreement between the Parties shall be finally
settled under the rules of the American Arbitration Association by
three (3) arbitrators. Each Party shall name one (1) arbitrator within
thirty (30) Days following notification by the other Party; the two
(2) arbitrators so chosen shall then select a third arbitrator as
chairman. Should one (1) Party delay nomination of its arbitrator or
if an arbitrator does not take up his office or if he is prevented
from taking up his office at the correct time for any other reason, or
if the two (2) arbitrators cannot agree within thirty (30) Days as to
the choice of the chairman, the President of the American Arbitration
Association shall be asked to appoint such arbitrator. The Rules of
Conciliation and Arbitration of the American Arbitration Association
shall apply for the arbitration proceedings. The place of arbitration
shall be New York
, New York
, United States of America. All arbitration
filings and proceedings shall be in the English language. A Party
entitled under an award by the arbitrators to receive an amount of
money shall be entitled to recover its costs, including reasonable
attorneys' fees, incurred in preparing for and participating in the
arbitration proceeding and any ancillary proceedings, including
proceedings to compel or enjoin arbitration or to request, confirm or
set aside an award, in the same ratio as the total amount of money
ultimately awarded to such Party divided by the amount claimed by such
CLAUSE 18 NOTICES
Any notice or communication to be served pursuant to this Agreement
shall be sent by registered mail, telefax, telex or delivered
personally (and a copy - which shall not constitute notice hereunder-
shall also be promptly transmitted by e-mail to the other Party) and
shall be deemed to have been duly given when received by the
addressees under the following address:
TAM - Transportes Aereos Regionais S.A.
Av. Jurandir, 856 - Lote 4 - Hangar VII
Attn. Mr. Jose Maluf
Aeroporte - CEP 04072-000 Sao Paulo
MTU Motoren- und Turbinen-Union Munchen GmbH
Attn: General Counsel
Dachauer Strasse 665
Phone: +49-89-1489 3815
Fax: +49-89-1489 5814
MTU Maintenance Hannover GmbH
Attn: General Counsel
Munchner Strasse 31
Phone: +49-511-78 06-388
Fax: +49-511-78 06-100
or such other place of business as may be notified in writing by the
other Party to this Agreement from time to time.
All notices, reports, certificates, data and communications pertaining
to this Agreement shall be in the English language. The giving of any
required hereunder may be waived in writing by the Party entitled to
receive such notice.
IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be
executed and delivered on its behalf by its duly authorized representative(s) as
of the Effective Date.
TAM - Transportes Aereos MTU Motoren- and Turbinen-Union
Regionais S.A. Munchen GmbH
By /s/ By /s/
Title Title EXEC. V.P. SALES AND CUST. S
By /s/ By /s/
Title Contracts Director Title Attorney
OLVAN ODALVO BOARO JR
OLVAN ODALVO BOARO JR
TO THE TAY MAINTENANCE SERVICE AGREEMENT
BETWEEN TAM TRANSPORTES AEREOS REGIONAIS S.A.
AND MTU MAINTENANCE HANNOVER GMBH
DATED SEPTEMBER 14, 2000
LIST OF ENGINES: TAY 650-15
- ------- -----
page 1 of 1
The following TAY650-15 Accessories are covered by the Agreement, when removed
during a shop visit:
PART NUMBER/ IPC
REFERENCE DESCRIPTION ATA CHAPTER
- ---------------- ----------- -----------
B36110104 HP BLEED VALVE SENSING SWITCH,
7th/12th STAGE AIR BLEED 36-11-01
B715001 *ALL LT ELECTRICAL HARNESS 71-50-01
JR32500A LP/IP ONCE PER REVOLUTION PROBE 72-35-43
EU51936 MAGNETIC CHIP DETECTORS AND HOUSINGS 72-61-10
775C62NWR FUEL DRAIN VALVE ASSEMBLY 73-11-03
QA03198 LP FUEL FILTER ELEMENT 73-11-03
GD501 HP FUEL PUMP 73-11-05
B73110601 FUEL SPRAY NOZZLES 73-11-06
SC503 HP FUEL SHUT OFF VALVE 73-11-07
EJP101 FUEL DRAINS EJECTOR PUMP 73-11-08
LPG500 LP SHAFT GOVERNOR 73-21-02
SV500 APPROACH IDLE SOLENOID 73-21-06
05407 FUEL FILTER PRESSURE DIFFERENTIAL SWITCH 73-33-01
1453PGCP115 FUEL LOW PRESSURE WARNING SWITCH 73-34-01
44302 HE IGNITION UNIT 74-11-01
CI650091 HE IGNITION LEADS 74-21-02
Y183-6 HE IGNITION PLUGS 74-21-03
17343-83-860 LP COOLING AIR OUTLET SWITCH 77-22-01
JR31762A EPR PROBES 77-41-01
T3K12-21-41PN EPR TRIM PLUG 77-41-03
S110-50-911 FUEL TEMPERATURE TRANSMITTER 77-42-02
3002KGA-1 LP AND HP TACHO GENERATORS 77-43-01
S684-8-34 TGT THERMOCOUPLES 77-45-01
B77450202 TGT THERMOCOUPLE HARNESS 77-45-02
LK83996 TGT THERMOCOUPLE JUNCTION 77-45-03
R18-8xx TGT BALLAST RESISTOR 77-45-03
R20-871 TGT TRIMMING RESISTOR 77-45-03
APTE65RT175G OIL PRESSURE TRANSMITTER 77-47-01
APTE128RT175G OIL TEMPERATURE TRANSMITTER 77-47-02
OMP2506-9 OIL PRESSURE FILLER 79-10-01
9201000-272 OIL TANK CONTENTS TRANSMITTER 79-10-01
MPA30502 OIL FILTER ELEMENT 79-10-01
JR31848A FUEL COOLED OIL COOLER 79-22-01
1138PGCP115 OIL LOW PRESSURE WARNING SWITCH 79-32-01
QA05167 OIL FILTER DIFFERENTIAL PRESSURE SWITCH 79-32-01
3214684-5 AIR START CONTROL VALVE 80-11-02
page 1 of 1
Operator shall pay for services rendered the amounts invoiced in accordance with
1 SERVICES COVERED BY THE FIXED PRICES AS SET FORTH IN CLAUSE 2.4.1
1.1 The Fixed Price for Midlife Inspection shall be US$ *
1.2 The Fixed Price for Overhaul shall be determined in accordance with the
Engine Flight Hours operated since last Overhaul (or, in case of new
engines, since manufacture) multiplied by * US Dollars * as escalated in
accordance with item 3 of Appendix C less the fixed price for the Midlife
Inspection set forth in item 1 of this Appendix B (as escalated in
accordance with item 3 of Appendix C) preceding the current Overhaul Shop
Visit provided that the Fixed Price for Overhaul shall (i) not be less than
* as escalated in accordance with item 3 of Appendix C, and (ii) shall not
exceed * as escalated in accordance with item 3 of Appendix C.
(Price basis January 01, 2000)
1.3 The Fixed Prices are valid and binding until December 31st, 2000, and shall
be subject to escalation in accordance with item 3 of Appendix C to this
MTU-M reserves the right to make appropriate adjustments to the Fixed
The Fixed Prices shall become payable in accordance with Clause 9 of this
Agreement for Midlife Inspection or Overhaul events of Engines as follows:
- Midlife Inspection Shop Visit:
to be performed upon approximately 12,000 Flight Cycles since new or,
as applicable, since previous Overhaul, as per
page 1 of 2
Shop Handling Guide, aiming at the refurbishment of an Engine's high
- Overhaul Shop Visit, incl. of Replacement of Life Limited Parts to be
performed upon expiration of time limits on Life Limited Parts.
2 SERVICES NOT COVERED BY THE FIXED PRICES AS SET FORTH IN CLAUSE 2.4.2
Operator shall pay to MTU-M the costs invoiced as per the actual invoice of
MTU-M's authorized subcontractor.
In addition, MTU-M shall invoice to Operator a three percent (3%) handling
fee on any such invoice, provided that such handling fee shall be limited
to US$ 30,000 plus travel expenses, and Operator shall pay MTU-M such
handling fee in accordance with Clause 9 of this Agreement.
page 2 of 2
1. Labor Rate Escalation
The Labor rate will be adjusted * using the cumulated adjustment factor for
labor costs as published * MTU-H will inform the Operator or the
of the factor for the next The change in the factor will reflect the
actual effects of labor costs incurred by MTU-H.
The Labor rate shall not be adjusted before * and escalation shall
thereafter not exceed *
2. Material Price Escalation
Material prices * will be adjusted * using the * average material price
increase according to *
3.1 Fixed Price Escalation
The Fixed Prices stipulated in Appendix B shall be subject to * escalation
in accordance with the following formula.
3.2 Limitation of Fixed Price Escalation
Based on the assumptions specified in Appendix B the Fixed Prices
stipulated in Appendix B will result in Engine maintenance cost per Engine
Flight Hour of * . Such Fixed Prices shall be escalated as specified
in Clause 3.1 above (hereinafter the "Escalated Fixed Price").
In consideration of a similar fixed price offer received by Operator from a
party other than MTU-H, which fixed price offer results in Engine
maintenance cost per Engine Flight Hour of US$ 102.00 / EFH (Price Basis
2000), (such offer hereinafter the "Comparison Offer"), and which
Comparison Offer shall be subject to a fixed escalation of 2,6% per year
starting as of January 01, 2001, the following shall apply with regard to
the Escalated Fixed Price:
MTU-H shall make all commercially reasonable efforts in order to keep the
applicable maintenance cost below such Comparison Offer.
In the event that the Escalated Fixed Price exceeds the Comparison Offer
escalated as specified above and during the same escalation period, MTU-H
and TAM will share the amount to which the Escalated Fixed Price exceeds
the escalated Comparison Offer in a ratio of one third (1/3) to be borne by
TAM and two thirds (2/3) to be borne by MTU-H.
Such cost sharing of the amount to which the Escalated Fixed Price may
exceed the escalated Comparison Offer shall become effective and first be
applied with the escalation to be performed on January 1st, 2004, provided
however, that the actual cost indeed exceed the escalated cost per the
comparison offer, as illustrated for reference purposes in the table set
4. Price adjustment according to the above escalation formulae shall be
performed * and shall be applicable to Services performed between
TO THE TAY ENGINE MAINTENANCE AGREEMENT TAM / MTU
[Intentionally left blank]
TO THE TAY ENGINE MAINTENANCE AGREEMENT TAM / MTU
GUARANTY, dated ____________________, 2000, made by TAM-Compania De
Investimentos Em Transportes S.A., a company (sociedade por acoes) organized and
existing under the laws of Brazil (the "GUARANTOR"), in favor of MTU Motoren-
und Turbinen-Union Munchen GmbH ("MTU").
WHEREAS, MTU desires to enter into that certain TAY Engine Maintenance
Agreement dated as of September 14, 2000 (said Agreement, as it may hereafter be
amended or otherwise modified from time to time, being the "MAINTENANCE
AGREEMENT", the terms defined therein and not otherwise defined herein being
used herein as therein defined) with TAM-Transportes Aereos Regionais S.A., a
corporation organized and existing under the laws of Brazil ("TAM").
NOW, THEREFORE, in consideration of the premises and in order to induce MTU
to enter into the Maintenance Agreement, the Guarantor hereby agrees as follows:
SECTION 1.01. GUARANTY.
The Guarantor hereby unconditionally guarantees the punctual payment when
due and the punctual performance of all obligations of TAM now or hereafter
existing under the Maintenance Agreement (such obligations being the
"OBLIGATIONS"), and agrees to pay any and all expenses (including counsel fees
and expenses) reasonably incurred by MTU in enforcing any rights under this
Guaranty within five business days of receipt of a written demand notice under
this Guaranty. Without limiting the generality of the foregoing, the Guarantor's
liability shall extend to all amounts which constitute part of the Obligations
and would be owed by TAM under the Maintenance Agreement but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization, or similar proceeding involving TAM.
SECTION 1.02. GUARANTY ABSOLUTE.
The Guarantor guarantees that the Obligations will be paid or performed,
respectively, strictly in accordance with the terms of the Maintenance
Agreement, regardless of any law, regulation, or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of MTU with
respect thereto. The obligations of the Guarantor under this Guaranty are
independent of the Obligations, and a separate action or actions may be brought
and prosecuted against the Guarantor to enforce this Guaranty, irrespective of
whether any action is brought
App E / TAY
page 2 of 4
against TAM or whether TAM is joined in any such action or actions. The
liability of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
(i) any lack of validity or enforceability of the Maintenance
(ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to departure from the Maintenance Agreement,
including, without limitation, any increase in the Obligations resulting
from the extension of additional services or forbearance to TAM or any of
its subsidiaries or otherwise;
(iii) any taking, exchange, release, or non-perfection of any
collateral, or any taking, release, or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Obligations;
(iv) any manner of application of collateral, or proceeds thereof, to
all or any of the Obligations, or any manner of sale or other disposition
of any collateral for all or any of the Obligations or any other assets of
TAM or any of its affiliates;
(v) any change, restructuring, or termination of the corporate
structure or existence of TAM; or
(vi) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, TAM or a guarantor.
(vii) this Guaranty shall continue to be effective or be reinstated,
as the case may be, if at any time any payment or performance of any of the
Obligations is rescinded or must otherwise be returned by MTU upon the
insolvency, bankruptcy, or reorganization of TAM or otherwise, all as
though such payment had not been made.
SECTION 1.03. WAIVER.
The Guarantor hereby waives promptness, diligence, notice of acceptance,
and any other notice with respect to any of the Obligations and any requirement
that MTU protect, secure, perfect, or insure any security interest or lien or
any property subject thereto or exhaust any right or take any action against TAM
or any other person or entity or any collateral.
SECTION 1.04. SUBROGATION.
The Guarantor will not exercise any right which it may acquire by way of
subrogation under this Guaranty, by any payment made hereunder or otherwise,
until all the Obligations and all other amounts payable under this Guaranty
shall have been paid or performed in full and MTU shall cease to be obligated
under the Maintenance Agreement for any reason ("MTU'S COMMITMENT"). If any
amount shall be paid to the Guarantor on account of such subrogation rights at
any time prior to the later of (x) the payment or performance in full of the
Obligations and payment in full of all other amounts payable under this Guaranty
or (y) the expiration or termination of MTU's Commitment, such amount shall be
held in trust for the benefit of MTU and shall forthwith be paid to MTU to be
credited and applied upon the Obligations, whether
App E / TAY
page 3 of 4
matured or unmatured, in accordance with the terms of the Maintenance Agreement
or to be held by MTU as collateral security for any Obligation thereafter
existing. If (i) the Guarantor shall make payment to MTU, or fulfill, of all or
any part of the Obligations, (ii) all the Obligations shall be paid or performed
in full and all other amounts payable under this Guaranty shall be paid in full,
and (iii) the Commitment shall have expired or terminated, MTU will, at the
Guarantor's request, execute, and deliver to the Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to the Guarantor of an interest in the
Obligation resulting from such payment by the Guarantor.
SECTION 1.05. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES.
(a) The Guarantor hereby irrevocably submits to the jurisdiction of any New
State or Federal court sitting in New York
City, Borough of Manhattan and
any appellate court from any thereof in any action or proceeding arising out of
or relating to this Guaranty, and the Guarantor hereby irrevocably agrees that
all claims in respect of such action or proceeding may be heard and determined
in such New York
State court or in such Federal court. The Guarantor hereby
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of such action or proceeding. The
Guarantor hereby irrevocably appoints___________________(the "PROCESS AGENT"),
with an office on the date hereof at _______________, New York
, New York
100______________, United States, as its agent to receive on behalf of the
Guarantor and its property service of copies of the summons and complaint and
any other process which may be served in any such action or proceeding. Such
service may be made by mailing or delivering a copy of such process to the
Guarantor in care of the Process Agent at the Process Agent's above address, and
the Guarantor hereby irrevocably authorizes and directs the Process Agent to
accept such service on its behalf. As an alternative method of service, the
Guarantor also irrevocably consents to the service of any and all process in any
such action or proceeding by the mailing of copies of such process to the
Guarantor at its address specified in Section 1.07. The Guarantor agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
(b) Nothing in this Section shall affect the right of MTU to serve legal
process in any other manner permitted by law or affect the right of MTU to bring
any action or proceeding against the Guarantor or its property in the courts of
any other jurisdictions.
(c) To the extent that the Guarantor has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution, or otherwise) with respect to itself or its property, the
Guarantor hereby irrevocably waives such immunity in respect of its obligations
under this Guaranty and, without limiting the generality of the foregoing,
agrees that the waivers set forth in this subsection (c) shall have the fullest
scope permitted under the Foreign Sovereign Immunities Act of 1976 of the United
States and are intended to be irrevocable for purposes of such Act.
App E / TAY
page 4 of 4
SECTION 1.06. AMENDMENTS, ETC.
No amendment or waiver of any provision of this Guaranty, and no consent to
any departure by the Guarantor herefrom, shall in any event be effective unless
the same shall be in writing and signed by MTU, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
SECTION 1.07. ADDRESSES FOR NOTICES.
All notices and other communications provided for hereunder shall be in
writing (including telecopier) and mailed, telecopied, or delivered to it, if to
the Guarantor, at its address at TAM - Transportes Aereos Regionais S.A., Av.
Jurandir, 856 - Lote 4 - Hangar VII, Attn. Mr. Jose Maluf, Contracts Director,
Aeroporte - CEP 04072-000 Sao Paulo, Brasil, Phone: +55 - 11 - 5582-8675, Fax:
+55 - 11 - 5581-9167, E-mail: email@example.com, and if to MTU, at its address
specified in the Maintenance Agreement, or, as to either party, at such other
address as shall be designated by such party in a written notice to the other
party. All such notices and other communications shall, when mailed or
telecopied, be effective on the day following the day when deposited in the
mails or telecopied (and OK transmission receipt is obtained), respectively.
SECTION 1.08. NO WAIVER; REMEDIES.
No failure on the part of MTU to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 1.09. GOVERNING LAW.
This Guaranty shall be governed by, and construed in accordance with, the
laws of the State of New York
without regard to the provisions on conflict of
SECTION 1.10. ASSIGNMENT.
MTU may not assign any of its rights hereunder without prior written
consent of the Guarantor. Any assignment made in violation of this Section shall
be null and void.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
TAM-Compania De Investimentos Em