EX 10.22
CONFIDENTIAL TREATMENT HAS BEEN SOUGHT FOR PORTIONS OF THIS DOCUMENT MARKED WITH
"*" AND SUCH PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SEC.
DALLAS AEROSPACE, INC.
ENGINE AGREEMENT
WITH FRONTIER AIRLINES, INC.
FOR
MANAGING REPAIR
OF JT8D ENGINES
This Agreement dated April 17, 1997, is between DALLAS AEROSPACE, INC., a Texas
Corporation having its principal place of business at ▇▇▇▇ ▇▇▇▇▇ ▇-▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇. ("Seller") and FRONTIER AIRLINES, INC., a
Delaware Corporation having its principal place of business at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇. ("Buyer") in consideration of their
mutual promises and undertakings set forth below, and intending to be legally
bound hereby. The parties agrees as follows:
1A. Repair Management
-----------------
Subject to all the provisions of this Agreement, Seller agrees to accept
and professionally manage the accomplishment of JT8D repair service on
Buyer's engines removed for repair and redeliver the engines to Buyer.
Seller agrees that it will use its best efforts to meet the estimated
repair schedule. Buyer agrees to accept the terms of management by Seller
described as follows:
Engine shall be repaired for return to service by an FAA Approved Repair
Station as mutually agreed upon.
Buyer represents that it has sole authority to authorize repair of this
engine either as the owner or acting on behalf of the owner and Buyer
accepts full responsibility for payment of all repair bills associated with
this Agreement in accordance with Paragraph 5.
The engine shall be serviced in accordance with the planned workscope
approved by Buyer and managed by Seller as required. Seller will keep
Buyer apprised of those Seller recommended workscope changes and of any
significant increases in charges due to changes in the planned workscope.
Upon completion of necessary repairs, the engine will be tested in
accordance with ▇▇▇▇▇ & ▇▇▇▇▇▇▇ specifications and will receive a current
maintenance release and a FAA Form 337 prior to delivery to Buyer.
1B. Field Support Exchange Pool
---------------------------
During the term of this Agreement, Seller will furnish to Buyer at no
charge, one (1) Gearbox Assembly (bare), one (1) First Stage Fan Assembly
(-9A), one (1) Second Stage Fan Assembly (-9A/-17) and two (2) Fan Inlet
Case Assembly (non oil dampened/oil dampened) for use on Buyer's equipment.
When one (1) of the Assemblies mentioned above are consumed by Buyer, the
removed assembly will be returned to Seller by Buyer for rework or
replacement. At that ▇▇▇▇ ▇▇▇▇▇▇ will invoice Buyer for the cost of the
consumed assembly, in accordance with the Labor & Material Charges as
contained in Annex A. Seller will have the removed assembly reworked and
when made serviceable, returned to the Field Support Exchange Pool or offer
a suitable replacement for inclusion in the Exchange Pool. Subject
Assemblies to be returned to Seller by Buyer in like condition and value as
received by Buyer, upon the expiration of this Agreement.
1C. Standby and Lease Engine Charges
--------------------------------
Page 1 of 7
Seller will provide Buyer with one Standby JT8D-9A Engine in Boeing 737
QEC, less nose cowl, tailpipes and thrust reverser, for use on Buyer's
equipment. Buyer agrees to pay Seller a standby fee and all transportation
cost per Annex A of this Agreement.
In the event that Buyer installs the Standby Engine on Buyer's equipment,
lease charges as stated in Annex A of this Agreement will prevail along
with standard stipulations of the than current Engine Lease Agreement. At
no time will the Engine Lease charges in Annex A be increased or decreased
for the term of this Agreement, without mutual written agreement.
Buyer and Seller will execute an Aircraft Engine Lease Agreement for the
Standby Engine or any other Engines that are sent to Buyer prior to
shipment of any Engine (Annex B). The Aircraft Engine Lease Agreement
will stipulate the Standby and Lease Engine charges as stated in Annex A.
2. Term of Agreement
-----------------
This Agreement shall remain in force for three (3) years from the date of
signing. This Agreement may be canceled by either party upon giving of
one hundred and twenty (120) days written notice to the other party for
failure to comply with any material provision of this Agreement and failing
to correct such non-compliance within five (5) days of written notification
of such non-compliance.
3. Labor and Material Charges
--------------------------
The estimated and final invoice charges for labor and material shall be
invoiced per the terms contained in Annex A.
4. Scheduling and Engine Process Time
----------------------------------
The current average engine process time (turn-time) for bare engine is
about sixty (60) calendar days from date of induction to date of
completion. Seller agrees that it will use its best efforts to meet the
scheduled process time requirements of Buyer.
5. Payment
-------
Seller shall submit estimated invoice for the charges on the engine.
Buyer shall make the following payments:
. Initial (Estimated) Invoice
After engine disassembly and inspection, Seller shall provide an
initial (estimated) invoice for the engine repair charges to Buyer
and payment shall be made in full within thirty (30) days.
. Second Invoice
Upon completion of the engine, an invoice shall be provided to Buyer
for any charge beyond the estimated invoice and payment shall be
made in full within thirty (30) days.
. Final Invoice
After all repairs are complete and outside vendor charges are known, a
final (reconciliation) invoice will be issued for any additional
charges or credits due. Payment shall be made in full within thirty
(30) days.
. Credit Agreement
Page 2 of 7
Seller may apply a late fee of one percent (1%) per month on any past
due balance. Buyer will be responsible for payment of any
collection costs and reasonable attorney's fees to collect any past
due account.
6. Delays
------
The engine process time is a best efforts estimate only and Seller shall
not be liable to Buyer for any loss or damage sustained by the Buyer or
other party as a result of failure to comply with such date or period for
completion or delivery.
7. Transfer of Engine and Delivery of Records
------------------------------------------
Buyer will be responsible for all transportation cost of the engine.
All required maintenance records will be made available to Seller when
requested.
8. Inspection of Powerplant and Inventory of Powerplant Appliances
---------------------------------------------------------------
Upon induction of the engine, the repair station will conduct an internal
and external inspection to determine the presence of any defects and
perform an inventory of all installed accessories. Seller will advise
Buyer of any inventory discrepancies and of any unreported conditions
found.
9. Engine Determined to be Beyond Economical Repair (BER)
------------------------------------------------------
Seller will assist Buyer in reviewing the options available including but
not limited to the availability of an exchange engine (price to be mutually
agreed upon) or the purchase of the BER engine by Seller, for those engines
determined by Buyer to be BER. For any such BER engine, Buyer may exchange
the engine with a supplier other than Seller, after comparing offers. Any
cost associated with the BER engine by Seller will be invoiced to Buyer in
accordance with the Labor & Material charges as contained in Annex A if the
engine is exchanged with a supplier other than Seller.
10. Scrapped Material
-----------------
Parts deemed scrap will be held by Seller for a material review by Buyer
for thirty (30) days. All scrap material will be disposed of locally
unless otherwise notified in writing by Buyer.
11. Warranty
--------
EACH ENGINE REPAIR STATION WILL WARRANT IT'S OWN REPAIR WORK AGAINST
DEFECTIVE WORKMANSHIP OF REPAIRS PERFORMED, AND SUCH ENGINE REPAIR STATION
WILL BE DIRECTED BY SELLER TO ISSUE SUCH WARRANTY DIRECTLY TO BUYER.
STANDARD WARRANTIES ARE USUALLY FOR TWELVE (12) MONTHS OR TWELVE HUNDRED
(1200) FLIGHT HOURS, WHICHEVER OCCURS FIRST, BUT COULD DIFFER BETWEEN
REPAIR FACILITIES.
ANY SUBCONTRACT WORK PERFORMED SHALL CARRY WITH IT WHATEVER WARRANTIES ARE
OFFERED BY THE SUBCONTRACTOR; AND SUCH WARRANTIES SHALL PASS THROUGH TO
BUYER FROM SELLER.
PARTS PURCHASED IN "FACTORY NEW" CONDITION FROM ORIGINAL EQUIPMENT
MANUFACTURERS (OEM's) OR FAA PARTS MANUFACTURER APPROVAL (PMA) SHALL CARRY
WARRANTIES AGAINST DEFECTS IN MATERIAL OR WORKMANSHIP AS PROVIDED BY THE
OEM OR PMA; AND SUCH WARRANTIES SHALL PASS THROUGH TO BUYER FROM SELLER.
Page 3 of 7
BUYER ACKNOWLEDGES THAT SELLER IS NOT A REPAIR OR OVERHAUL AGENCY AND DOES
NOT PERFORM REPAIR, OVERHAULS OR ANY OTHER WORK DIRECTLY ON OR TO SUBJECT
PARTS OR ENGINES. AS SUCH, IT IS FULLY ACKNOWLEDGED BY BUYER THAT SELLER
DOES NOT DIRECTLY PROVIDE ANY WARRANTIES EXPRESS OR IMPLIED, INCLUDING
WARRANTIES OF SUITABILITY FOR A PARTICULAR PURPOSE, USE OR SERVICE. IN NO
EVENT SHALL SELLER BE LIABLE FOR ANY ACTUAL OR CONSEQUENTIAL DAMAGES
ARISING WITH RESPECT TO MATERIAL, WORK, REPAIRS, OVERHAULS, PURCHASES OR
SERVICES SUPPLIED UNDER OR IN CONNECTION WITH THIS AGREEMENT.
12. Waiver
------
Except as set forth in Section 10. above Buyer hereby waives any right of
action or claims it may have against Seller arising out of the maintenance
or repair of the engine, other than for the gross negligence or willful
misconduct of Seller and Seller's appointed repair stations.
13. Indemnification
---------------
At all times following delivery of each powerplant, Buyer agrees to assume
liability for and to defend, indemnify, protect Seller and it's officers,
directors, employees and agents from and against any an all liabilities,
damage, losses, taxes, (other than taxes on net income) claims, actions,
suits, judgments, demands and/or expenses of whatsoever kind, including
without limitation reasonable legal fees, costs and expenses imposed on,
incurred by, or asserted against Seller, it's officers, directors,
employees and/or agents, or otherwise, for the death of or injury to any
person or persons (other than any officers, directors, employees or agents
of Seller) or for the loss of, damage to, or the destruction of any
property, including any one or more of the powerplants, in any manner
arising or resulting from the ownership, possession, registration, use,
condition, performance, airworthiness, maintenance or modification of the
powerplant or Buyer's operation of the powerplant, or arising or resulting
from any third party or parties using, maintaining, modifying or operating
the powerplant, or from any other cause whatsoever, including the doctrine
of strict liability.
Buyer's indemnity shall not apply to any death or bodily injury, or any
loss of, damage to or destruction of any property or any other liabilities
or claims whatsoever which were caused by the gross negligence or willful
misconduct of Seller or it's officers, directors, employees or agents.
Buyer shall have the obligation to control the negotiation and settlement
of any claim or defense of any action or suit brought against Seller, it's
officers, directors, employees and/or it's agents from which Buyer has
indemnified Seller. Seller shall reasonably assist Buyer, if requested, in
the defense of any such action or suit, at Buyer's expense, without
releasing or waiving any obligation, liability or undertaking on the part
of Buyer.
14 Notices
-------
Any notices required or permitted to be given hereunder shall be in writing
and shall be given to the parties at their respective address shown below,
or to such other address as either party may subsequently notify the other
and shall be deemed given when a copy is sent by facsimile transmission
with the original thereof sent by certified mail.
If to Seller: DALLAS AEROSPACE, INC.
▇▇▇▇ ▇▇▇▇▇ ▇-▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇
Director Product Support
Phone: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Page 4 of 7
If to Buyer: FRONTIER AIRLINES, INC.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
------------------------------------
------------------------------------
Phone: ( ) Facsimile: ( )
--- ---------- --- -----------
15. Governing Law and Assignment
----------------------------
This Agreement shall be binding upon its successors and assigns of each
party; however, this Agreement may not be assigned by either party without
the prior written consent of the other party.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Texas.
Executed by the parties as of the date first written above.
Dallas Aerospace, Inc. Frontier Airlines, Inc.
By: By:
---------------------- ----------------------
Name: Name:
--------------------- ---------------------
Title: Title:
-------------------- --------------------
Date: Date:
--------------------- ---------------------
Page of 5 of 7
ANNEX A - JT8D SCHEDULE OF CHARGES
A. Engine Shop Charges
Function Charges to Buyer
-------- ----------------
All Shop Cost *
(Labor, Special Processes, Test Charges, Outside
Services, Expendable Material, etc.)
B. DAI's Subcontract *
C. Material Charges
New Material *
Serviceable Non-Life Limited Material *
Serviceable Life Limited Material *
Exchange Serviceable Rotable Material *
D. Engine Management Services
Engine Management
Repair Cost of $200,000. or more *
Repair Cost of $101,000. to $199,000. *
Repair Cost of $100,000 or less *
E. Standby and Lease Engine Charges
Standby *
Lease Engine *
F. Freight Charges
Engine/Engine Stand *
Modules-Exchange Pool *
Other Parts/Accessories *
Page 6 of 7
ANNEX B - AIRCRAFT ENGINE LEASE AGREEMENT
Page 7 of 7
AIRCRAFT ENGINE LEASE AGREEMENT
THIS AGREEMENT is made as of the 17th day of April between DALLAS
AEROSPACE, INC., a Texas Corporation having its principal place of business at
▇▇▇▇ ▇▇▇▇▇ ▇-▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, ▇.▇.▇. ("Lessor"), and FRONTIER
AIRLINES, INC., a Delaware Corporation having its principal place of business at
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇. (Lessee").
In consideration of the mutual promises and undertakings set forth
below, and intending to be legally bound, the parties hereby agree as follows:
1. Definitions. The following capitalized terms used in this agreement shall
-----------
have the meanings set forth below.
a. "Engine" - An aircraft Engine owned by Lessor of the type(s) and
model(s) described on Schedules A and B attached hereto, together with
all the ▇▇▇▇▇ & ▇▇▇▇▇▇▇ basic accessories and full Boeing 737 QEC on the
Engine at the time it is delivered by Lessor to Lessee or to a carrier
for transport to Lessee.
b. "Standby/Lease Term" - Will begin on the day when an Engine and
associated records are delivered to the Lessee or to a carrier for
delivery to Lessee (whichever occurs first) and ends on the date on
which the Engine and associated records are returned to Lessor as
provided herein. The Standby/Lease Term Lease term is for ____________
days and may be extended by mutual consent of Lessee and Lessor.
2. Standby/Lease of Engines. At the request of Lessee from time to time during
------------------------
the term of this agreement and subject to all of the provisions hereof,
Lessor shall provide standby/lease Engines to Lessee to be operated by
Lessee.
3. Rental. Lessee shall pay rental to Lessor for the Lease Term at Lessor's
------
rates in effect at the time of the Engine lease. Lessor's current rental
rates for Engines in effect on the date of this agreement are set forth on
Schedule A. All rental rates are exclusive of applicable taxes, which shall
be paid by Lessee in addition to the rental (excluding only taxes on the
income received by Lessor).
4. Standard Terms and Conditions. Each standby/lease of an Engine to Lessee
-----------------------------
pursuant to this agreement shall be subject to Lessor's Standard Terms and
Conditions for Engine Leases (Schedule C), a copy of which is attached hereto
and made a part hereof.
5. Termination. This agreement may be terminated by Lessor as set forth in
-----------
Schedule C, effective upon giving notice of such termination to Lessee,
provided that the provisions of this Agreement will continue to apply to any
Engine which is leased to Lessee at the time of such termination.
Furthermore, any such termination shall not affect the rights or obligations
of the parties hereunder which have accrued or become fixed as of the
effective termination date.
Page 1 of 12
IN WITNESS WHEREOF, the parties have signed this agreement as of the date
first written above.
FOR DALLAS AEROSPACE, INC. FOR FRONTIER AIRLINES, INC.
(Lessor) (Lessee)
By: By:
------------------------- ---------------------------
Title: Title:
---------------------- ------------------------
Name: Name:
----------------------- -------------------------
Officer of: Officer of:
Dallas Aerospace, Inc.
------------------------------
Page 2 of 12
SCHEDULE A
to Aircraft Engine Lease Agreement
----------------------------------
A. Lessee shall pay monthly Rental Fees as shown, monthly in advance on the
first day of each month. Operating hour/cycle charges shall be paid on the
15th day of each month following the month in which the operating
hours/cycles were accumulated on the Engine.
Standby Aircraft Engine Standard Rental Rates (US$)
Manufacturer Model Serial Number Per Month
------------ ------ ------------- ---------
▇▇▇▇▇ & Whitney JT8D-9A ________ $ *
Full Boeing
737 QEC
Once the Engine is removed from standby status and is placed into service by
Lessee than the following rates will immediately take effect:
Leased Aircraft Engine Standard Rental Rates (US$)
Manufacturer Model Serial Number Per Day Per Operating
------------ ------ ------------- ------- -------------
Hour/Cycle*
----------
▇▇▇▇▇ & ▇▇▇▇▇▇▇ JT8D-9A ________ $ * USD $ * USD
Full Boeing per hour or
737 QEC cycle*
*Whichever is greater
Plus Post Rental Inspection Charges. Upon return of Engine, Lessor will
conduct borescope inspection, comply with a cell run, and subject to the
results of these inspections, issue a Serviceable Yellow Tag. Lessee will
be billed costs of post rental inspection.
B. Standby/Lease charges will commence upon the date in which the engine
leaves Dallas Aerospace's facility and continues until the engine is
received at Lessor's facility in Dallas, Texas.
C. This Lease is contingent upon Lessor receiving JT8D off-wing engines for
repair. The off-wing engine repairs will be determined under a separate
agreement for managing the repairs.
D. Post Lease inspection or repair charges required and paid by Lessor shall
be invoiced to Lessee in the amount of charges paid by Lessor.
E. Prior to shipment of engine Lessee will wire transfer a deposit equal to
five percent (5%) of the stipulated loss value of the Engine as defined
under Schedule C, Section 11 of this Agreement to Lessor's U.S. Bank
Account. Wire transfer instructions are as follows:
Page 3 of 12
To the Account of Dallas Aerospace, Inc.
Account No. 4054-7609
ABA No. ▇▇▇▇▇▇▇▇▇,
CITIBANK, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
F. Lessee agrees to pay as necessary other miscellaneous applicable freight,
transportation, repair, legal, insurance, test and inspection charges which
might arise as described in Schedule "C" Items "3", "4", "5", "7", "11" and
"12".
Page 4 of 12
SCHEDULE B
to Aircraft Engine Lease Agreement
----------------------------------
Engine Disk Sheet
Page 5 of 12
SCHEDULE C
to Aircraft Engine Lease Agreement
----------------------------------
STANDARD TERMS AND CONDITIONS FOR ENGINE LEASES
1. Applicability. These terms and conditions shall apply to each lease of an
--------------
Engine by Lessor to Lessee pursuant to the attached Aircraft Engine Lease
Agreement (hereafter referred to as the "Agreement") and shall form a part of
the agreement. Capitalized terms used herein shall have the meanings defined
in the Agreement.
2. Credit Approval and Payment. Each lease of an Engine to Lessee shall be
----------------------------
subject to credit approval of Lessee by Lessor's Financial Services
Department. Lessee shall pay the rental and applicable taxes to Lessor
according to the terms of invoices which will be prepared and submitted by
Lessor to Lessee. All payments to Lessor by Lessee hereunder shall be made
in U.S. Dollars and shall be payable at the payment location appearing on
Lessor's invoices to Lessee, or otherwise at Dallas, Dallas County, Texas.
Any invoiced amounts not paid when due shall bear interest at the highest
rate permitted by applicable law from the due date until paid at the lesser
of: (i) the highest lawful rate which may be established in written
agreements, or (ii) 18% per annum. Lessee shall reimburse Dallas Aerospace,
Inc., for reasonable attorney's fees and other legal expenses incurred by
Lessor for the purpose of attempting to collect any past due sums payable by
Lessee hereunder or for the purpose of repossessing an Engine following the
expiration of the Lease Term.
3. Delivery and Redelivery. Lessor will deliver the Engine to Lessee on the
------------------------
Delivery Date F.O.B. the Lessor's facility. The Engine will have a F.A.A.
approved return to service tag affixed to it. Upon termination of the Lease
the Engine will be redelivered F.O.B. to Lessor's facility in Dallas, Texas
in serviceable condition as set forth in this Lease Agreement.
4. Use and Operation. Without the prior written consent of Lessor, the Engines
------------------
shall be operated only by Lessee, and shall continuously remain in the
possession of Lessee except during periods of maintenance and transportation
incident thereto. Any such consent by Lessor shall not excuse Lessee from
performing any of its obligations under the agreement. Lessee shall operate
the Engines in accordance with the recommendations of the manufacturers
thereof, and otherwise in a lawful, safe, and prudent manner. All operations
of the Engines shall be properly recorded in the records for the Engines.
5. Repair and Maintenance. At its sole expense, Lessee shall cause required
----------------------
field-level maintenance to be performed on the Engines in accordance with all
applicable requirements and recommendations of the manufacturers thereof, and
shall promptly repair any damage to an Engine occurring during the Lease Term
in a facility acceptable to Lessor, resulting from improper operation,
foreign object ingestion, accidents or any other causes, whether or not
involving the fault of Lessee; except, with normal wear and tear excepted.
Lessee shall cause all maintenance of, and repairs to, the Engines to be
recorded in the records for the Engines. Each accessory, part, or component
installed on an Engine in connection with a repair shall be identical in
manufacturer and part number to the item which it replaces, shall be
airworthy and in serviceable condition, and if a life-limited or "hard time"
item shall have a remaining life equal to or greater than the remaining life
of the replaced item.
6. Reports. Lessee shall report to Lessor the number of hours and cycles the
--------
Engines have been operated monthly and other information regarding the
location, condition, operation, performance and
Page 6 of 12
maintenance of the Engines at such times and in such manner as Lessor may
direct. Lessee shall immediately report to Lessor all information regarding
any incident, accident or abnormal occurrence which may have been caused in
whole or part by the condition, operation or performance of an Engine and
which involves actual or potential loss of or damage to an Engine or to other
property, or injury to or death of any person. Lessee shall cooperate with
any investigation of such incident, accident or abnormal occurrence by Lessor
or its representatives.
7. Return Condition, Acceptance and Inspection. At the end of the Lease Term,
--------------------------------------------
or at such time as that Lease Term may be sooner terminated in accordance
with Section 11 below, Lessee shall have an acceptable Engine test and a
borescope acceptable to Lessor performed at an FAA approved facility and
provide a serviceable tag for the Engine from said facility. Lessee shall
promptly return the Engines to Lessor in the same serviceable condition as at
the beginning of the Lease Term, ordinary wear and tear resulting from proper
operation excepted. Lessee shall pay to Dallas Aerospace, Inc., on demand
the cost of repairing the Engine to return it to serviceable condition or for
replacing any accessories, parts, or components of the Engines which are
damaged or missing when the Engines are returned to Lessor.
At all reasonable times, Lessor and its representatives shall have the right
to inspect the Engines while in the possession of Lessee or others and to
examine all log books and other records reflecting the operation and
maintenance of the Engines.
8. Title. At all times, title to the Engines shall remain solely in Lessor.
------
Lessee shall not represent to other persons, firms or governmental
authorities that Lessee has any interest in the Engines, other than as
Lessee. Lessee shall take such actions as Lessor may direct for the purposes
of evidencing Lessor's ownership of the Engines and/or notifying other
persons or firms of such ownership. Lessee shall not permit any lien,
security interest or encumbrance to attach to an Engine as a result of any
act or omission by Lessee, and shall promptly cause the discharge, release,
or termination of any such lien, security interest or encumbrance, at the
expense of Lessee.
9. Warranty. Lessor warrants to Lessee that Lessor has the right to lease to
---------
Lessee. Lessor further warrants to Lessee that the Engines are in airworthy
condition at the beginning of the Lease Term. The sole remedy of Lessee if
an Engine does not conform to the foregoing warranty shall be the repair or
replacement of such Engine or the nonconforming portion thereof by Lessor.
EXCEPT AS SET FORTH ABOVE IN THIS SECTION, DALLAS AEROSPACE, INC., MAKES NO
EXPRESS OR IMPLIED WARRANTY INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR PURPOSE OR ANY IMPLIED WARRANTY
ARISING FROM COURSE OF DEALING OR USAGE OF TRADE IN REGARD TO THE ENGINES.
THE ENGINES ARE LEASED TO AND ACCEPTED BY LESSEE "AS-IS" AND "WITH ALL
------- ---------
FAULTS." LESSOR SHALL NOT BE LIABLE TO LESSEE FOR ANY INCIDENTAL OR
--------
CONSEQUENTIAL DAMAGES INCLUDING, WITHOUT LIMITATION, ANY LOSS OR REVENUES,
PROFITS OR USE EVEN IF LESSOR HAS BEEN NOTIFIED IN ADVANCE OF THE POSSIBILITY
OF SUCH DAMAGES. NO OFFICER, EMPLOYEE OR AGENT OF LESSOR HAS AUTHORITY TO
MODIFY OR EXPAND LESSOR'S LIABILITY UNDER THIS SECTION.
10. Indemnity. Lessee shall defend Lessor and its employees and underwriters
----------
(individually or collectively, the "Indemnified Parties") against any claims
or suits seeking recovery of damages from the Indemnified parties for loss
of or damage to property or for injury to or the death of any person arising
out of the possession, use, operation or condition of an Engine by Lessee or
by others during the Lease Term; except as caused by the negligence or
willful misconduct of the indemnified parties. Lessee shall indemnify the
Indemnified Parties against any sums paid to settle such claims or suits,
any damages and costs awarded by judgment in such suits, and any incidental
costs and expenses
Page 7 of 12
incurred in connection with the claims or suits (including, without
limitation, reasonable attorney's fees if for any reason Lessee does not
defend the Indemnified Parties as required herein). Lessor shall endeavor to
promptly notify Lessee of any such claims or suits, but any delay in giving
notice to Lessee shall not excuse Lessee from its defense and indemnity
obligations except to the extent, if any, that Lessee is prejudiced by the
delay. Lessor shall furnish reasonable cooperation to Lessee and its
representatives in the defense of such claims or suits at the request and
expense of Lessee. The defense and indemnity obligations of Lessee under
this section shall survive the end of the Lease Term and the expiration or
termination of the agreement.
11. Insurance. During the term of the Agreement, Lessee shall continuously
----------
maintain the following types of insurance coverage with insurance companies
of recognized international standing.
a. physical damage insurance protecting against loss of or damage to the
Engines at all times while an Engine is in the possession of Lessee or
others (whether or not installed on an aircraft) or is being transported
to or from Lessor, in amounts sufficient to cover the full replacement
value of the Engine(s),__________________ Thousand U.S. Dollars
($______.00), with any loss payable to Lessor as its interests may
appear; and
b. aviation liability insurance, including contractual liability coverage
for the indemnity obligation of Lessee hereunder, with minimum limits of
$100 million per occurrence (or such other limits as may be approved by
Lessor), and with Lessor named as an additional insured as to any
liability arising in connection with the agreement.
Upon the execution of the agreement and during the term hereof, Lessee shall
cause Lessor to be furnished with one or more certificates of insurance
reflecting the effectively of the above coverages and endorsements and
providing for not less than thirty days prior written notice to Lessor in
the event of cancellation or modification of the coverages reflected
thereon.
12. Premature Termination of Lease Term. Lessor may terminate the Lease Term
------------------------------------
for an Engine immediately upon the occurrence of any of the following
events:
a. Lessee fails to pay when due any rental charge, overhaul or repair
charge, or other sum owing to Lessor under the agreement or otherwise,
and does not cure such failure within three days after the earlier of:
(i) the date on which Lessee has knowledge of such failure, or (ii) the
date on which Lessor gives notice thereof to Lessee;
b. Lessee fails to comply with any provision of the agreement or to
perform any of its obligations hereunder, and does not cure such failure
within ten days after the date on which Lessor gives notice thereof to
Lessee; or
c. Lessee makes a general assignment for the benefit of creditors, or
generally fails to meet its financial obligations as they become due, or
becomes the subject of voluntary or involuntary bankruptcy proceedings,
or has a receiver or custodian or liquidator appointed for any of its
assets, or ceases to conduct the whole or a substantial portion of its
business in the manner in which such business was conducted on the date
of the agreement.
Lessor shall give notice of any such termination to Lessee, following which
Lessee shall immediately discontinue further operation of the Engines and
shall return the Engines and records to Lessor at Carrollton, Texas or at
such other location as Lessor may direct, at the expense of Lessee.
13. Miscellaneous.
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Page 8 of 12
a. Notices. All notices required or permitted to be given hereunder shall
-------
be in writing and shall be deemed to have been given when hand-delivered
or sent by next business day delivery service to the party to which they
are directed at the address shown below, or to such other address as
either party shall hereafter notify the other:
(i) If to Lessee, to:
FRONTIER AIRLINES, INC.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
----------------------------------
Phone: ( )
--- ------------------
Facsimile: ( )
--- ----------------
(ii) If to Lessor, to:
DALLAS AEROSPACE, INC.
▇▇▇▇ ▇▇▇▇▇ ▇-▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇, Director Products Support
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
b. No Waiver. No act or failure or delay in acting by either party shall
----------
be deemed to be a waiver of any right or remedy given to it in the
Agreement, except for an express written waiver signed by an authorized
representative of that party.
c. No Assignment. Lessee may not assign the agreement or sublease any
--------------
Engine without the prior written consent of Lessor and any attempted
assignment or sublease by Lessee without such consent shall be of no
legal effect.
d. Successors. The agreement shall be binding upon the successors and
-----------
permitted assigns of Lessee and shall inure to the benefit of the
successors and assigns of Lessor.
e. Severability. If any provision of the agreement should be declared
-------------
illegal or unenforceable by a court of competent jurisdiction, such
declaration shall not affect the legality or enforceability of any other
provision of the agreement.
f. Governing Law. The agreement shall be interpreted in accordance with
--------------
the laws of the state of Texas, excluding any conflicts of law provisions
thereof which would result in the application of the laws of any other
jurisdiction. In any suit arising out of the agreement, Lessee hereby
irrevocably agrees to be subject to the non-exclusive personal
jurisdiction of the courts of the state of Texas and the federal courts
located in the state of Texas and agrees that the venue for such suit is
proper in Dallas, County, Texas. Lessee agrees to be subject to the
Texas Long Arm Statute for service of process.
Page 9 of 12
g. Entire Agreement. The agreement contains the entire agreement of the
----------------
parties as to the general subject matter hereof and supersedes any prior
negotiations, understandings or agreements regarding such subject matter.
The terms or conditions of any purchase order or other commercial
document pertaining to the leasing of Engines which may be submitted to
Lessor by Lessee shall not be binding upon Lessor.
Page 10 of 12
EQUIPMENT DELIVERY RECEIPT
FROM: FRONTIER AIRLINES, INC. (Lessee)
TO: DALLAS AEROSPACE, INC. (Lessor)
The undersigned hereby acknowledges that on this______th day of_______, 1996,
Lessor delivered to Lessee that certain JT8D-_____Engine, Manufacturer's Serial
Number__________in Shipping Stand Serial Number_____and certain Engine records
in Lessor's possession required by Lessee, including a copy of the disk profile
attached as Schedule B to the Aircraft Engine Lease Agreement. The undersigned
further acknowledges receipt of and acceptance of the Engine, basic engine
components and all such records in compliance thereof with all the terms and
conditions of that certain Aircraft Engine Lease Agreement dated as of_________,
______, between Lessee and Lessor.
Signed this______th day of______, 199_.
FOR: FRONTIER AIRLINES, INC.
By:
--------------------------
Name:
------------------------
Title:
-----------------------
Page 11 of 12
AIRCRAFT ENGINE LEASE AGREEMENT
STANDARD USAGE REPORT
FOR
FRONTIER AIRLINES, INC.
Date: Return Form By Fax: Dallas Aerospace
------------------------------ Leasing Dept.
▇▇▇-▇▇▇-▇▇▇▇
Contact:
---------------------------
Total Operating Cycles Operated for Previous Month:
--------------------
Total Operating Hours Operated for Previous Month:
----------------------
Aircraft Engine Beginning Totals for Previous Month: Hours/ Cycles
----------------------------
Aircraft Engine Ending Totals for Previous Month: Hours/ Cycles
-------------------------------
Please note that Dallas Aerospace, Inc. bills based on total operating
hours/total operating cycles, whichever is greater. We require that both the
operating hours/cycles be reported, for the prior months usage, on this form and
returned to us no later than the 5th day of each month during the Lease Term. We
also request that you list the engines total hours/cycles above for the
beginning and end of the previous months usage.
Frontier Airlines' billing period starts on the 1st day of each month and should
conclude on the last day of each month for each billing period during the Lease
Term.
DEFINITIONS:
Operating Cycle: A completed take-off and landing sequence.
Operating Hour: The engine operating time from start-up to shutdown.
I,____________________________, acknowledge that on this____day of_______,
199_, that the numbers reported above are true and correct according to our
records.
Signature:
---------------------------
Name:
--------------------------------
Title:
-------------------------------
Page 12 of 12
