CONFIDENTIAL AMENDMENT No. 17 TO PURCHASE AGREEMENT DCT-014/2004
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EXHIBIT
10.39(q)
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CONFIDENTIAL
TREATMENT
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REQUESTED
PURSUANT TO RULE 24b-2
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Certain
portions of this exhibit have been omitted pursuant to a request
for
confidential treatment under Rule 24b-2 of the Securities Exchange
Act of
1934. The omitted materials have been filed separately with the Securities
and Exchange Commission.
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CONFIDENTIAL
AMENDMENT
No. 17 TO PURCHASE AGREEMENT DCT-014/2004
This
Amendment No. 17 to Purchase Agreement DCT-014/2004, dated as of November 14,
2006 (“Amendment No. 17”) relates to the Purchase Agreement DCT-014/2004 (the
“Purchase Agreement”) between Embraer - Empresa Brasileira de Aeronáutica S.A.
(“Embraer”) and Republic Airline Inc. (“Buyer”) dated March 19, 2004 as amended
from time to time (collectively referred to herein as “Agreement”). This
Amendment No. 17 is between Embraer and Buyer, collectively referred to herein
as the “Parties”.
This
Amendment No. 17 sets forth additional agreements between Embraer and Buyer
relative to Buyer’s purchase of additional eight (8) EMBRAER 175 model aircraft
and to the addition of four (4) Option Aircraft.
Except
as
otherwise provided for herein all terms of the Purchase Agreement shall remain
in full force and effect. All capitalized terms used in this Amendment No.
17,
which are not defined herein, shall have the meaning given in the Purchase
Agreement. In the event of any conflict between this Amendment No. 17 and the
Purchase Agreement the terms, conditions and provisions of this Amendment No.
17
shall control.
WHEREAS,
In
connection with the Parties’ agreement above mentioned, the Parties have now
agreed to amend the Purchase Agreement as provided for below:
NOW,
THEREFORE, for good and valuable consideration which is hereby acknowledged
Embraer and Buyer hereby agree as follows:
1.
Subject:
Article
2 of the Purchase Agreement is hereby deleted and replaced as
follows:
“Subject
to the terms and conditions of this Agreement:
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2.1
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Embraer
shall sell and deliver and Buyer shall purchase and take delivery
of
forty-eight (48) EMBRAER 170 Aircraft and thirty-eight (38) EMBRAER
175
Aircraft (as identified in Article 5.1 of this
Agreement);
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| 2.3 | Embraer shall provide to Buyer the Services and the Technical Publications; and |
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2.4
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Buyer
shall have the option to purchase up to seventy-nine (79) Option
EMBRAER
170 Aircraft, in accordance with Article
23.”
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2.
Payment:
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2.1
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A
new sentence is hereby added to the end of the the first paragraph
of
Article 4.1 as follows:
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| “Buyer has already paid to Embraer prior to the execution of Amendment No. 17 to this Agreement a *** deposit (the “*** Deposit”) per Firm Aircraft on order prior thereto, and *** and ***.” |
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2.1
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The
penultimate sentence of the last paragraph of Article 4.1 is hereby
deleted and replaced as follows:
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| “Any progress payment for *** would otherwise be due *** shall be due ***.” |
____________
***Confidential
***Confidential
3.
Firm Aircraft:
The
table containing the delivery schedule in Article 5.1 of the Purchase Agreement
is hereby deleted in its entirely and replaced with the following:
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Firm
A/C
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Delivery
Month
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Firm
A/C
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Delivery
Month
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49
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Jan
07
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86
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08
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Note:
The
first 48 XXXXXXX 000 Xxxxxxxx (Xxxxxxxx #0 xx # 00) were already
delivered.
____________
***Confidential
***Confidential
4.
Option Aircraft:
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4.1
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The
opening paragraph of Article 23 and delivery schedule table of the
Purchase Agreement are hereby deleted and replaced by the
following:
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| “Buyer shall have the option to purchase up to seventy-nine (79) additional Option Aircraft, to be delivered on the last day of the applicable month set forth below or such earlier date in such month specified pursuant to Article 7.1: |
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Option
A/C
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Delivery
Month
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Option
A/C
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Delivery
Month
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1
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Jul
08
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| 4.2 | Article 23.5.1 is hereby deleted and replaced by the following: |
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“23.5.1
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Notwithstanding
the terms of Article 23.5 above, if Buyer exercises its option for
the
first Option Group, such option shall be exercised by Buyer on or
before
April 30, 2007.”
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| 5. New Attachment “A-2”: | Attachment “A-2” to the Purchase Agreement is hereby deleted and replaced with Attachment “A-2” to this Amendment No. 17. |
| 6. Attachment “B”: | Embraer shall provide to Buyer ***, *** necessary to reflect all relevant information regarding the inclusion of the EMBRAER 175 *** Aircraft. If requested by Buyer, ***, which will ***, and this ***. |
| 7. Attachment “E”: | Attachment “E” to the Purchase Agreement is hereby deleted and replaced with Attachment “E” to this Amendment No. 17. |
| 8. Attachment “F”: | Attachment “F” to the Purchase Agreement is hereby deleted and replaced with Attachment “F” to this Amendment No. 17. |
| 9. Attachment “H-1”: | Attachment “H-1” to the Purchase Agreement is hereby deleted and replaced with Attachment “H-1” to this Amendment No. 17. |
All
other
provisions of the Agreement which have not been specifically amended or modified
by this Amendment No. 17 shall remain valid in full force and effect without
any
change.
(Signature
page follows)
____________***Confidential
IN
WITNESS WHEREOF, EMBRAER and BUYER, by their duly
authorized officers, have entered into and executed this Amendment No. 17 to
Purchase Agreement to be effective as of the date first written
above.
| EMBRAER - Empresa Brasileira de Aeronáutica S.A. | Republic Airline Inc. | ||
| /s/ Xxxxxxxxx Xxxxxx Curado | /s/ Xxxxx Xxxxxxx | ||
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Name:
Xxxxxxxxx Xxxxxx Curado
Title: Executive Vice President Airline Market |
Name:
Xxxxx
Xxxxxxx Title: President |
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| Date: November 14, 2006 | |||
| Place: Indianapolis |
| /s/ Xxxx Xxxx X. Xxxxxx | |||
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| Name:
Xxxx Xxxx X.
Xxxxxx Title: Director of Contracts - Airline Market |
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| Date: November 14, 2006 | |||
| Place: Sao Xxxx Dos Xxxxxx, XX, Brazil |
| Witnesses: | |||
| Witness: Xxxxxx Xxxxxxx Xxxxx | Witness: Xxxx-Xxxx Xxxxxx | ||
| Name: Xxxxxx Xxxxxxx Xxxxx | Name: Xxxx-Xxxx Xxxxxx | ||
Acknowledged
and agreed by Republic Airways Holdings Inc. with respect to all terms of this
Amendment No.17, Amendment No.10 to the Letter Agreement and all previous
amendments, in its capacity as “Guarantor” pursuant to the Guaranty by it to
Embraer dated March 19, 2004.
| /s/ Xxxxx Xxxxxxx | |||
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| Name:
/Xxxxx
Xxxxxxx Title: President |
| /s/ Xxxx-Xxxx Xxxxxx | |||
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| Name:
Xxxx-Xxxx
Xxxxxx Title: Vice President of Corporate Development |
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| Date: November 14, 2006 | |||
| Place: Indianapolis |
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ATTACHMENT “A-2”
- EMBRAER 175 AIRCRAFT CONFIGURATION
Delta
Configuration
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1.
EMBRAER 175 CONFIGURATION
EMBRAER
175 Standard Aircraft
The
EMBRAER 175 Aircraft shall be manufactured according to (i) the standard
configuration specified in the Preliminary Technical Description PTD-175 Rev.
4
dated May 2003, which although not attached hereto, is incorporated herein
by
reference, and (ii) the characteristics described in the items
below.
2.
EMBRAER 175 Optional Equipment
The
EMBRAER 175 Aircraft will also be fitted with the following options selected
by
Buyer:
2.1
Aircraft Model and Engines
| a) |
EMBRAER
175 LR
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| b) |
GE
CF34-8E5 Engines
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2.2
Options By Ata Chapter
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____________
***Confidential
***Confidential
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ATTACHMENT “A-2”
- EMBRAER 175 AIRCRAFT CONFIGURATION
Delta
Configuration
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***
3.
FINISHING
The
Aircraft will be delivered to Buyers as follows:
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3.1
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EXTERIOR FINISHING: |
The
fuselage of the Aircraft shall be painted according to Buyer’s color and paint
scheme which shall be supplied to Embraer by Buyer on or before six (6) months
prior to the relevant Aircraft ContractualDeliveryDate.
The
wings
and the horizontal stabilizer of all Aircraft shall be supplied in the standard
colors, i.e., xxxx BAC707.
| 3.2 |
INTERIOR
FINISHING:
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Buyer
shall inform Embraer on or before *** months prior to the relevant Aircraft
Contractual Delivery Date of its choice of materials and colors of all and
any
item of interior finishing such as seat covers, carpet, floor lining on galley
areas, side walls and overhead lining, galley lining and curtain. The
above-mentioned schedule for definition of interior finishing shall only be
applicable if Buyer selects its materials from the choices offered by and
available at Embraer. In case Buyer opts to use different materials and or
patterns, such schedule shall be mutually agreed between the Parties at the
time
of signature of the Purchase Agreement.
| 3.3 |
BUYER
FURNISHED AND BUYER INSTALLED EQUIPMENT (BFE and
BIE):
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Buyer
may
choose to have carpets, tapestries, seat covers and curtain fabrics supplied
to
Embraer for installation in the Aircraft as BFE. Materials shall conform to
the
required standards and comply with all applicable regulations and airworthiness
requirements. Delays in the delivery of BFE equipment or quality restrictions
that prevent the installation thereof in the time frame required by the Aircraft
manufacturing process shall entitle Embraer to either delay the delivery of
the
Aircraft or present the Aircraft to Buyer without such BFE, in which case Buyer
*** of the Aircraft. All BFE equipment shall be delivered to Embraer in DDP
-
Embraer facilities in São Xxxx dos Xxxxxx, XX, Brazil (Incoterms 2000)
conditions.
The
Aircraft galleys have provisions for the following BIE items that, unless timely
agreed by the Parties, are not supplied or installed by Embraer: Trolleys,
ovens, coffee makers, hot jugs and standard units.
4.
REGISTRATION MARKS AND TRANSPONDER CODE
The
Aircraft shall be delivered to Buyer with the registration marks painted on
them. The registration marks and the transponder code shall be supplied to
Embraer by Buyer no later than ninety (90) Days before each relevant Aircraft
Contractual Delivery Date.
IT
IS
HEREBY AGREED AND UNDERSTOOD BY THE PARTIES THAT IF THERE IS ANY CONFLICT
BETWEEN THE TERMS OF THIS ATTACHMENT “A-2” AND THE TERMS OF THE TECHNICAL
DESCRIPTION ABOVE REFERRED, THE TERMS OF THIS ATTACHMENT “A-2” SHALL
PREVAIL.
____________
***Confidential
***Confidential
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ATTACHMENT “E”
- DIRECT MAINTENANCE COST GUARANTEE
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I. Embraer,
subject to the terms, conditions and limitations contained in this Attachment,
shall guarantee the incurred direct maintenance cost (the “Maintenance Cost
Guarantee”) for the fleet of Aircraft subject of the Purchase Agreement as
follows:
| a. |
The
Maintenance Guarantee for the Aircraft shall be for the period that
begins
at ***.
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| b. |
For
the first *** period commencing with the first Aircraft Actual Delivery
Date, the Achieved cumulative Maintenance Cost - AMC for replacement,
repair, overhauls and inspections of Buyer's Aircraft, shall not
exceed a
Maintenance Cost Guarantee (MCG1)
rate of:
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| c. |
For
the first *** period commencing with the first Aircraft Actual Delivery
Date, the Achieved cumulative Maintenance Cost - AMC for replacement,
repair, overhauls and inspections of Buyer's Aircraft, shall not
exceed a
Maintenance Cost Guarantee (MCG1)rate
of:
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| d. |
The
*** shall be ***.
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| e. |
Measurement
will be computed annually on the anniversary date of ***. The results
will
be reconciled year by year until
***.
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| f. |
In
the event at the end of each annual measurement period, the AMC is
higher
than the MCG, Embraer shall *** as provided for
below:
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***
| g. |
Buyer
shall use *** efforts to calculate and submit to Embraer the AMC
quarterly, in electronic format, *** after the end of each quarter
during
the Guarantee Term. In the event that Buyer fails to submit such
data to
Embraer as described in the preceding sentence, Embraer shall send
a
written notice to Buyer requesting such data, and the guarantee contained
in this Attachment shall terminate in the event Buyer fails to submit
the
AMC to Embraer within *** of such written notice.
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The
Parties shall use *** efforts to reach an agreement over the data annually
within *** after the submission of AMC in regard to any fourth quarter. In
the
event that the AMC contains *** that is out of the reasonable control of ***,
the Parties shall also discuss the reasons for such *** and whether it should
be
included in the calculation of the AMC. Any credit amount will be credited
to
Buyer *** after the agreement regarding the annual period. Such credit may
be
used by Buyer only toward ***.
| h. |
This
Maintenance Guarantee is based upon the following assumptions, and
any
change to the assumptions shall result in an appropriate recalculation
of
the MCG rate specified in items “b” and “c” above, at Embraer
criteria.
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Fleet
Size: A
minimum
fleet size of *** Aircraft (*** EMBRAER 170 and *** EMBRAER 175 delivered in
accordance with Article 5 of the Purchase Agreement ***).
| § |
Economic
condition:
***.
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| § |
Utilization:
The guarantee covers a minimum of *** flight hours per cycle, ***
APU hour
per flight hour plus or minus *** APU hour per flight hour and ***
APU
cycle per flight cycle plus or minus *** APU cycle per flight cycle.
Buyer's
fleet-wide average
annual Aircraft utilization shall be *** flight hours, plus or minus
***.
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| § |
Labor
rate:
*** per man-hour ***.
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____________
***Confidential
***Confidential
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ATTACHMENT “E”
- DIRECT MAINTENANCE COST GUARANTEE
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| § |
Maintenance
Review Board Report: MRB
170.
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| § |
Economic
condition:
***.
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| § |
Utilization:
The guarantee covers a minimum of *** flight hours per cycle, ***
APU hour
per flight hour plus or minus *** APU hour per flight hour and ***
APU
cycle per flight cycle plus or minus *** APU cycle per flight cycle.
Buyer's
fleet-wide average
annual Aircraft utilization shall be *** flight hours, plus or minus
***.
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| § |
Labor
rate:
*** per man-hour ***.
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| § |
Maintenance
Review Board Report: MRB
170.
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| i. |
The
following are the elements covered under this Maintenance
Guarantee:
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| 1. | Material cost for non-repairable parts purchased from or through Embraer and / or Embraer approved vendors. |
| 2. |
Overhaul/repair
costs incurred at Embraer approved repair
facilities.
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| 3. |
Expendable
which can be accounted for on an unit basis, i.e. filters, gaskets,
excluding wire, rivets, nuts, bolts, washers, pins, brackets, tie
wraps.
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| 4. |
Parts
and materials consumed through scheduled maintenance according to
the
Maintenance Review Board Report
(MRB).
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| j. |
The
following elements are not covered under this guarantee:
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| 1. |
Costs
associated with taxes, levies, imposts, customs
fees.
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| 2. |
Shipping,
receiving, ferry, packing, storage, warehousing and insurance
expenses.
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| 3. |
General
administrative and overhead
expenses.
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| 4. |
Restoration
expenses incurred due to damage to or failure of Aircraft, components
or
parts caused by accident, incident, FOD or Acts of God, negligence,
abuse,
misuse and/or maintenance errors.
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| 5. |
When
the Aircraft or any of its parts has/have been altered or modified
by
Buyer, without prior approval from Embraer or from the manufacturer
of the
parts through a service bulletin, provided such approvals have not
been
unreasonably withheld.
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| 6. | Consumables including but not limited to fluids, water, oils, sealants, washing compounds, cleansers, solvents, and lubricants. |
| 7. |
Labor
costs (excluding the *** related to *** and the *** service bulletins
implementation, provided that *** have been *** in writing *** in
order
***).
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| 8. |
Normal
line operations activities (i.e. Aircraft servicing) including but
not
limited to walkaround (i.e. visual inspection), fueling, parking,
washing,
lavatory servicing and gallery servicing.
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| 9. |
Service
bulletins and or airworthiness
directives.
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| 10. |
Parts
or components returned from vendors with “no-fault” found, i.e.,
re-certification charges without any repair and associated labor.
Any part
removed and replaced from an Aircraft which does not solve the Aircraft
problem (poor troubleshooting) and associated
labor.
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| 11. |
Leasing
or loan fees related to the aircraft or any of its parts which are
being
used in place of an unserviceable unit.
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| 12. |
Any
part supplied on a “no-charge basis” or for which a warranty credit or
replacement part has been supplied.
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| 13. |
Aircraft
downtime costs.
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| 14. |
Any
parts that are changed during scheduled or unscheduled maintenance,
due to
failure, which are still under the warranty period and, are not submitted
to Embraer or the suppliers for warranty
credit.
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| 15. | Cabin equipment and furnishing materials, such as but not limited to carpets, seat covers, galley equipment and passenger commodities. |
***Confidential
|
ATTACHMENT “E”
- DIRECT MAINTENANCE COST GUARANTEE
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| 16. |
Spare
parts prices that exceed the prices obtainable from Embraer, provided,
in
the event that *** in a reasonable time frame, *** may *** and ***
will
reasonably agree on ***.
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| 17. |
In
cases of deterioration, wear, breakage, damage or any other defect
resulting from the use of inadequate packing methods when returning
items
to Embraer or its representatives.
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| 18. |
Maintenance
problems caused by Buyer’s negligence or misuse of parts or Buyer’s
failure to take all maintenance actions on the Aircraft as recommended
in
all applicable maintenance manuals.
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| 19. |
Maintenance
problems involving Aircraft or parts that has / have been involved
in an
accident, or when parts either defective or not complying to
manufacturer’s design or specification have been
used.
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| 20. |
Maintenance
problems involving parts that have had their identification marks,
designation, seal or serial number altered or
removed.
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| 21. |
Extraordinary
costs incurred as a result of any labor disruption or dispute involving
a
significant work action that affects in whole or part the Aircraft’s
normal operation or maintenance.
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| 22. |
Engines,
related parts and related LRU
costs.
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| 23. |
Nacelle
and Thrust Reverser.
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| 24. |
BFE
(Buyer Furnished Equipment) and / or BIE (Buyer Installed Equipment)
costs.
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| 25. |
Maintenance
reserves.
|
| 26. |
GSE
(Ground Support Equipment) costs.
|
| 27. |
For
the purpose of calculating the Achieved Maintenance Cost Guarantee,
the
materials and labor costs related to the New US Airways Aircraft,
Owned
Aircraft and GECC Aircraft shall be accounted for at the time these
aircraft start their revenue service by Buyer under this Purchase
Agreement. All previous materials cost and labor costs shall be
disregarded. The total number of previous flight hours and cycles
of such
additional aircraft (New US Airways Aircraft, Owned Aircraft and
GECC
Aircraft) New US Airways Aircraft, Owned Aircraft and GECC Aircraft
shall
be considered.
|
| II. |
The
foregoing maintenance guarantee is provided subject to Buyer’s adherence
to the following general
conditions:
|
| a. |
Airplane
Operation: Aircraft shall be operated in airline service in accordance
with the applicable Air Authority regulations and as recommended
by
Embraer through the official and updated Operations and Airplane
Flight
Manual.
|
| b. |
Inspection
Program: The Aircraft shall be maintained in accordance with the
current
Maintenance Review Board Report - (MRB), and the checks shall in
no event
occur at a time *** of the maintenance interval recommended by the
current
Maintenance Review Board Report - (MRB). Buyer’s Maintenance Program must
have provisions for escalating the checks interval as soon as the
applicable Air Authority allows. Buyer’s program should also include the
use of task cards to assist the maintenance personnel in performing
inspection task.
|
| c. |
Aircraft
Manuals: Buyer shall keep a complete set of Embraer recommended manuals
up-to-date and available to airline personnel for assisting them
with the
maintenance and operation of the Aircraft. A set of recommended manuals
or
a electronic link to the data should be available at all maintenance
bases
(line or heavy) and shall be maintained with the latest revisions
at all
times.
|
| d. |
Warranty:
Buyer shall have at minimum, one person which will be dedicated to
the
Aircraft warranty program. This person(s) will be trained by Embraer
warranty department on the correct procedures for filing Buyer warranty
claims in accordance with mutually agreed format. This person(s)
shall
also be responsible for the filing of warranty claims directly to
suppliers for credit, repair or
replacement.
|
____________
***Confidential
***Confidential
|
ATTACHMENT “E”
- DIRECT MAINTENANCE COST GUARANTEE
|
| e. |
Parts
Repair: All shop repairs shall be performed in Embraer’s or Embraer’s
suppliers’ authorized repair shops.
|
| f. |
Staff
levels: Buyer shall have available reasonable staff to properly maintain
the Aircraft during scheduled and unscheduled maintenance. This shall
include, but not be limited to, mechanics, electricians, avionics
specialists, inspectors, cleaners, ground personnel and flight crews
licensed or certified by the applicable Air Authority as required
by the
applicable Air Authority
regulations.
|
| g. |
Training:
Buyer is required to put in place a training program approved by
the local
airworthiness authority, which, at a minimum, shall include the following
items:
|
| 1. |
initial
and recurrent training for pilots in the
Aircraft;
|
| 2. |
initial
and recurrent training for flight attendants in the Aircraft;
and
|
| 3. |
initial
and recurrent training for the maintenance staff (airframe, powerplant,
electric avionics specialists) in the
Aircraft.
|
A
reasonable number of maintenance specialist will require supplier’s
training.
Buyer
is
required to train to the above standards a reasonable number of new hired
employee who will work in or on the Aircraft.
| h. |
Spare
Parts Limitation: Spare parts price shall not exceed the prices obtainable
from Embraer. In the event that Embraer cannot supply a part to Buyer
in a
reasonable time frame, Embraer may authorize the purchase of such
part by
Buyer from a third party at a price in excess of Embraer’s price, Embraer
and Buyer will mutually agree on the portion of such price to be
included
in this guarantee provided Buyer maintained the minimum stock level
recommended by Embraer.
|
| i. |
Buyer
will be required to provide Embraer an every three month service
bulletin
status report, containing service bulletin number, Aircraft serial
number,
Aircraft total time and total
cycles.
|
| j. |
Ground
Support Equipment: Embraer shall provide Buyer a list of tooling
and
ground support equipment required to maintain the Aircraft, this
list
shall be subject to Buyer’s reasonable approval. Buyer will be required to
maintain these levels of required tooling and ground support equipment
in
good working order at all times.
|
| k. |
Reliability
Reporting: Buyer is to provide monthly to Embraer an Aircraft reliability
report. This report shall include Aircraft total time and cycles,
component removals, shop finding reports and tear down reports (for
each
failure completed) by authorized agencies and SDR’s (Service Difficult
Report) with date, Aircraft registration, problem description, maintenance
action, and part number and serial number of the components removed
and
installed. Buyer shall use the ATA 100 chapter breakdown format for
all
reports.
|
| l. |
Accounting
System:
|
| 1. |
Buyer
shall have an accounting system, subject to Embraer’s reasonable approval,
which demonstrates the ability to discriminate between chargeable
and
non-chargeable costs and expenses. Buyer’s accounting system shall be
presented to Embraer, upon Embraer’s written request, *** before
***.
|
| 2. |
Upon
Embraer’s written request, Buyer shall also provide on a *** basis an
activity and expenditure report satisfactory to Embraer, in electronic
format and in accordance with Embraer’s Service News Letter for data
exchange.
|
| 3. |
Upon
Embraer’s written request, Embraer and Buyer may convene frequently
meetings to address issues concerning the AMC and to identify methods
to
decrease Buyer’s maintenance costs. At a minimum, Embraer and Buyer shall
have two meetings per year to confirm and compute all costs claimed
by
Buyer. Buyer shall permit Embraer access to all Buyer data which
can be
used to verify any reports produced pursuant to this Attachment.
|
| m. |
Duplicated
Guarantee: If Buyer negotiates directly with any of Embraer’s
suppliers/vendors a particular maintenance cost guarantee or equivalent
program (including fleet hour agreements),
|
____________
***Confidential
***Confidential
|
ATTACHMENT “E”
- DIRECT MAINTENANCE COST GUARANTEE
|
or
an
alternative support program with Embraer, the Parties shall negotiate in good
faith and agree on the
portion of cost related to this equipment/system that shall be excluded from
the
MCG rate, specified in Article I.b and I.c, and shall result in an appropriate
recalculation of the MCG.
| III. |
Buyer
shall not unreasonably reject Embraer’s recommendations, changes or
solutions to elements of maintenance that would result in cost savings,
as
reasonably determined by the
Parties.
|
| IV. |
EXCEPT
AS OTHERWISE PROVIDED IN THIS AGREEMENT THE GUARANTEES, OBLIGATIONS
AND
LIABILITIES OF EMBRAER, AND REMEDIES OF BUYER SET FORTH IN THIS AIRCRAFT
MAINTENANCE COST GUARANTEE ARE EXCLUSIVE AND IN SUBSTITUTION FOR,
AND
BUYER HEREBY WAIVES, RELEASES AND RENOUNCES, ALL OTHER RIGHTS, CLAIMS,
DAMAGES AND REMEDIES OF BUYER AGAINST EMBRAER OR ANY ASSIGNEE OF
EMBRAER,
EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO
ANY
GUARANTEED LEVEL OF AIRCRAFT MAINTENANCE
COSTS.
|
| V. |
The
guarantee hereby expressed is established between Embraer and Buyer
and it
cannot be transferred or assigned to others, unless stated in this
Agreement or by previous written consent of
Embraer.
|
|
ATTACHMENT “F”
- SCHEDULE RELIABILITY GUARANTEE
|
I. Definitions.
a. Available
for Dispatch: An Aircraft which is on the ground and cleared for dispatch by
signature of Buyer's responsible maintenance personnel at least *** before
the
scheduled departure time of the initial flight in any given day shall be deemed
to be "available for dispatch".
b. Maintenance
Interruption.
1. A
maintenance interruption occurs when the malfunction of an item, or necessary
checking and/or corrective actions, cause a revenue flight not to take place
or
a flight delay exceeding ***.
2. For
the
purposes of this guarantee, only the initial Maintenance Interruption shall
be
accounted as interruption. Maintenance Interruption of any or all flights on
subsequent days arising from the initial Maintenance Interruption shall not
constitute an additional Maintenance Interruption.
3. Before
a
flight may be considered as a Maintenance Interruption for the purpose of this
Schedule Reliability Guarantee the Aircraft must be inspected for mechanical
failure or malfunction.
4. A
repetitive problem, which caused an actual maintenance interruption and was
not
previously corrected, shall not be counted as a Maintenance
Interruption.
5. To
be
accounted as a Maintenance Interruption, any malfunction reported, either verbal
or written, must result in maintenance corrective action. “No-trouble-found” or
“could not duplicate” or “reset” events shall not be accounted as Maintenance
Interruption.
6. A
maintenance interruption that occurs due to failures of systems or parts from
suppliers or vendors that have a separate maintenance interruption guarantee
agreement with Buyer, and which is not assigned to Embraer, shall not be
considered as a Maintenance Interruption.
c. Achieved
Dispatch Reliability Percentage (“ADRP”).
ADRP
is
the actual dispatch reliability percentage obtained by Buyer's fleet of Aircraft
in regular revenue service, which are the subject of this
Agreement.
ADRP
shall be computed monthly commencing *** by Buyer, as follows:
***
II. Embraer,
subject to the conditions and limitations expressed herein, will guarantee
the
Aircraft’s schedule reliability percentage as follows:
a. The
average ADRP for the *** period after *** delivered under the Purchase
Agreement, shall be ***; for the *** period the ADPR shall be ***; for the
***
period the ADPR shall be ***; for the *** period the ADPR shall be ***, for
the
*** period (the “Final Period”) the ADPR shall be ***.
b. In
the
event that the ADRP in any of the *** periods referred to above is lower than
GDR for the relevant period, Embraer shall diligently, after notification by
Buyer:
1. Make
recommendations concerning Buyer's programs, publications and maintenance and
operational policies to improve ADRP.
2. Take
all
measures, as deemed necessary and appropriate by Embraer when vendor action
does
not provide the required improvement in the ADRP.
3. ***
Embraer shall issue a proposal to Buyer showing the price of the relevant
Service Bulletin and the effectiveness of such modification for
Buyer.
____________
***Confidential
***Confidential
|
ATTACHMENT
"F" - SCHEDULE RELIABILITY GUARANTEE
|
c. In
the
event the average ADRP at the end of any of the *** periods described in
paragraph “II.a.” is lower than the GDR for such period, Embraer shall credit
Buyer for Maintenance Interruptions calculated according to the following
formula:
***
In
the
event the average ADRP at the end of any of the *** periods described in
paragraph “II.a.” above is *** for such period, the *** calculated according to
the formula above shall be ***.
Measurements
will be calculated and submitted by Buyer *** after the end of each *** referred
to in Article II a. herein. The Parties shall do their efforts to reach an
agreement over the data *** of the submission thereof. Any achieved credit
amount will be credited to Buyer or to Embraer *** after each agreement date
for
each of the ***. Buyer may use such credit only toward ***. Embraer may use
such
credit only for ***.
The
sum
of all credits under this Dispatch Reliability Guarantee shall not exceed ***
for Buyer’s
entire
Aircraft fleet for the *** periods.
d. This
dispatch reliability guarantee is based upon the following assumptions provided
by Buyer, and any change to the assumptions shall be cause for reevaluation
or
adjustments of this guarantee upon the reasonable agreement of the
Parties.
Fleet
Size:
Minimum
of ***.
Utilization:
The
guarantee covers a minimum of *** flight hours per cycle, *** APU hour per
flight hour plus or minus *** APU hour per flight hour and *** APU cycle per
flight cycle plus or minus *** APU cycle per flight cycle. Buyer's
fleet-wide average
annual Aircraft utilization shall be *** flight hours, plus or minus
***.
For
all
purposes of this guarantee, the regularly scheduled revenue Aircraft departures
and the Maintenance Interruptions related to the SAC Aircraft, Owned Aircraft
and GECC Aircraft shall be accounted for at the time these aircraft start their
revenue service by Buyer under this Purchase Agreement. All previous regularly
scheduled revenue Aircraft departures and Maintenance Interruptions shall be
disregarded.
e. The
following elements are not covered under this guarantee:
- Interruptions
of scheduled flights due to reasons other than Aircraft mechanical failures,
including without limitation:
- Air
Traffic Control
- Weather,
acts of God, FOD, wars, riots, third party criminal acts
- Accidents
- Incidents
- Negligence
- Conditions
that exist prior to dispatch which lead to a flight interruption and could
have
been prevented by maintenance prior to dispatch (including but not limited
to
worn, flat and cut tires, servicing (ATA Chapter 12), dead batteries, and worn
brakes)
- Hard
landing.
- Late
out
of maintenance
- Force
majeure
- Crew
refusal
- Optional
equipment other than that identified on Attachment “A” to this
Agreement
- Operational
delays or cancellations not related to maintenance
- Passenger
and/or baggage loading
- Non-availability
of spares or equipment
- Non-availability
of personnel
____________
***Confidential
|
ATTACHMENT
"F" - SCHEDULE RELIABILITY GUARANTEE
|
- Operation
interruptions or Maintenance Interruptions, which occurred due to items, related
in the Minimum Equipment List (“XXX”) issued and/or approved by the local
regulatory authority was followed
- If
the
Aviation Authority grounds Buyer's fleet, or one of Buyer’s
Aircraft
- Maintenance
problems caused by Buyer’s negligence or misuse of parts or Buyer’s failure to
take all maintenance actions on the Aircraft as recommended in all applicable
maintenance manuals
- Maintenance
problems involving Aircraft or parts that has/have been involved in an accident,
or when parts either defective or not complying to manufacturer’s design or
specification have been used.
- Maintenance
problems involving parts that have had their identification marks, designation,
seal or serial number altered or removed
- Maintenance
problem resulting from inadequate packing for shipment and storage
- A
flight
interruption
shall
not be considered as a Maintenance Interruption if, at the time of the
interruption, Buyer has a spare aircraft in its fleet, even though for a
different model, that could commercially reasonable be used to avoid such
interruption and is not otherwise deployed in service
- Regulatory
changes compliance
- Cancellations
or delays caused by components repaired in non-approved local airworthiness
authority shop
- Flight
cancellation or delay occurred due to one same problem on the same Aircraft
within fourteen (14) consecutive days period.
III. The
foregoing dispatch reliability guarantee is provided subject to Buyer's
adherence in all material respects to the following general
conditions:
a. Airplane
Operation: Aircraft shall be operated in airline service in accordance with
the
Aviation Authority regulations and as recommended by Embraer through the
official and most updated Operations and Airplane Flight Manual. Buyer shall
have available one spare Aircraft for each twenty Aircraft at all
times.
b. Inspection
Program: The Aircraft shall be maintained in accordance with the most current
MRB document. Buyer’s program must have provisions for escalating the checks
intervals as soon as the Aviation Authority allows. Buyer’s program should also
include the use of task cards to assist the maintenance personnel in performing
inspection tasks.
c. Aircraft
Manuals: Buyer shall keep a complete set of Embraer recommended manuals
up-to-date and available to airline personnel for assisting them with the
maintenance and operation of the Aircraft. A set of recommended manuals should
be available at all maintenance bases (line or heavy) and shall be maintained
with the latest revisions at all times.
d. XXX:
Buyer shall keep its XXX up to date, with the most current issue.
e. Stocking
Levels: Buyer shall be responsible to stock and maintain the recommended spare
parts list (RSPL) in inventory, throughout the guarantee period. There shall
be
a minimum inventory level at each line maintenance base along with the major
parts being stored at the heavy maintenance facility. In the event during the
ADR meetings, the Aircraft does not achieve the guaranteed values, and if the
cause of this non-performance is the lack of spare parts initially recommended
by Embraer for the RSPL and not purchased by Buyer, this guarantee will not
be
applicable. Embraer is to receive annually an inventory list from the Buyer
that
shows current stocking levels and the locations of all Aircraft spare parts
and
will make any recommendations on additional inventory if needed.
f. Parts
Repair: All shop repairs shall be performed in Embraer’s or Embraer’s suppliers'
authorized repair shops.
|
ATTACHMENT
"F" SCHEDULE RELIABILITY
GUARANTEE
|
g. Staff
Levels: Buyer shall have available reasonable staff to properly maintain the
Aircraft during scheduled and unscheduled maintenance. This shall include,
but
not be limited to, mechanics, electricians, avionics specialists, inspectors,
cleaners, ground personnel and flight crews licensed or certified by the
Aviation Authority as required by Aviation Authority regulations.
h. Training:
Buyer is required to put in place a training program approved by the Aviation
Authority, which, at a minimum, shall include the following items:
1. Initial
and recurrent training for pilots in the Aircraft;
2. Initial
and recurrent training for flight attendants in the Aircraft; and
3. Initial
and recurrent training for the maintenance staff (airframe, power plant,
electric avionics specialists) in the Aircraft.
Any
maintenance specialist (engine, APU, avionics) will require suppliers' training.
Buyer
is
required to train to the above standards any new hired employee who will work
in
or on the Aircraft.
i. Aircraft
Cleaning: Buyer shall keep the Aircraft reasonably clean, inside and out, by
commercial airline standards at all times. This includes without limitation,
the
engines, wheel xxxxx, nacelles, landing gear and flight control areas.
j. Service
Bulletins: When Embraer recommends that Buyer implement a service bulletin
which
improves performance or dispatch reliability, enhances flight operations or
decreases maintenance costs, ***, and Buyer concludes by a cost benefit analysis
that the SB is commercially reasonable, Embraer Customer Support Department
shall contact Buyer's Vice President of Maintenance, in writing, with
recommendations that the service bulletin be complied with. Buyer will schedule
the Aircraft for incorporation of such service bulletin ***, but, subject to
Embraer agreement which shall not be unreasonably withheld, Buyer may schedule
it for incorporation during a maintenance check, so as to minimize interruption
to scheduled service.
k. Ground
Support Equipment: Embraer shall provide Buyer two lists of tooling and ground
support equipment required to maintain the Aircraft, which lists shall be
subject to Buyer's reasonable approval. One list will cover line maintenance
bases while the other will apply to heavy maintenance facilities. Buyer will
be
required to maintain these levels of required tooling and ground support
equipment in good working order at all times.
l. Reliability
Reporting: Buyer shall monthly provide to Embraer, in electronic format, a
reliability and maintenance cost report in accordance with the latest revision
of the Embraer’s Service News Letter for data exchange.
m. Rejection:
Buyer shall not unreasonably reject Embraer's recommendations / changes /
solutions which in Embraer's opinion, would result in an improvement in Buyer's
dispatch reliability. Any such rejection shall be cause for re-evaluation and/or
adjustment of this guarantee. Anything in this Agreement to the contrary
notwithstanding, Buyer shall not be required to comply with or implement, and
the benefits and rights provided Buyer hereunder will not be adversely affected
by, Buyer’s not complying with or implementing any Embraer recommendation /
changes / solutions (including without limitation, recommended service
bulletins) or any provision of applicable product literature for which
compliance is not mandated by the local airworthiness authority rules and
regulations if Buyer has determined in good faith that such recommendation
/
change / solution or provision of such product literature is not reasonably
expected to result in a net economic benefit to Buyer in light of all applicable
facts and circumstances, including, without limitation, the number of man-hours
reasonably estimated by Embraer to be required to accomplish such recommendation
/ change / solution, the labor cost to be incurred, the potential reduction
in
maintenance costs to be realized, the time value of money and the period which
would be required for such savings resulting from the improvement in dispatch
reliability to offset the labor and other costs associated with such man-hours
(provided that Buyer may not consider any benefits to Buyer under any product
guarantees to the extent resulting from Buyer’s decision to comply or not to
comply with or implement a recommendation, change, or solution).
____________
***Confidential
***Confidential
|
ATTACHMENT
"F" SCHEDULE RELIABILITY GUARANTEE
|
n. Certification
or Regulatory Changes: The achieved maintenance interruption shall not take
into
account those interruptions, which were originated by conformity to mandatory
regulatory change.
|
o.
|
Achieved
Dispatch Reliability Review Meeting: An Achieved Dispatch Reliability
Review Meeting shall be scheduled, if necessary, and at the end of
each
six (6) month period of Buyer's Aircraft operation. Representatives
of
Buyer and Embraer shall participate in the meetings and will:
|
1. Review
current Achieved Dispatch Reliability;
2. Eliminate
irrelevant or non-Aircraft-intrinsic interruption claims from computed
cancellation rates; and
3. Review
Buyer's compliance with Service Bulletins as required by Article III.j herein,
review disputed claims, and consider methods for improvement of Achieved
Dispatch Reliability.
Buyer
shall permit Embraer access to all Buyer data which can be used in understanding
and analyzing the dispatch reliability failure.
p. Duplicated
Guarantee: If Buyer negotiates directly with any of Embraer’s suppliers/vendors
a particular dispatch or completion reliability guarantee, or an alternative
support program with Embraer, this
amount shall be excluded from the guarantee rate, specified in Article III.a,
and shall result in an appropriate recalculation of this guarantee in accordance
with Embraer criteria.
IV. Suspension
| a. |
This
guarantee shall be automatically suspended and shall not apply during
the
period of any labor disruption or dispute involving a significant
work
action, which affects in whole or in part the Aircraft normal operation
and maintenance.
|
| b. |
This
guarantee shall be automatically suspended and shall not apply during
the
computation period of which worldwide EMBRAER 170 fleet (excluding
Buyer’s
Aircraft) average dispatch reliability percentage is at least 1%
higher
than Buyer’s Aircraft dispatch reliability
percentage.
|
V. Buyer
will not include in the calculation of the ADRP Maintenance Interruptions
occurring under any of the circumstances listed below:
a. When
the
Aircraft has been used in an attempt to break records, or subjected to
experimental flights, or in any other way not in conformity with the flight
manual or the airworthiness certificate, or subject to any manner of use in
contravention of the applicable aerial navigation or other regulations or rules,
issued or recommended by government authorities of whatever country in which
the
Aircraft is operated, when accepted and recommended by ICAO; and
b. When
the
Aircraft or any of its parts has/have been altered or modified by Buyer, without
prior approval from Embraer or from the manufacturer of the parts through a
service bulletin, provided such approval has not been unreasonably
withheld.
VI. THE
GUARANTEES, OBLIGATIONS AND LIABILITIES OF EMBRAER, AND REMEDIES OF BUYER SET
FORTH IN THIS SCHEDULE RELIABILITY GUARANTEE ARE EXCLUSIVE AND IN SUBSTITUTION
FOR, AND BUYER HEREBY WAIVES, RELEASES AND RENOUNCES, ALL OTHER RIGHTS, CLAIMS,
DAMAGES AND REMEDIES OF BUYER AGAINST EMBRAER OR ANY ASSIGNEE OF EMBRAER,
EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY ACHIEVED
DISPATCH RELIABILITY.
VII. The
terms
and conditions of this dispatch reliability guarantee do not alter, modify
or
impair, in any way, the terms and conditions of Attachment “C“ (Aircraft
Warranty Certificate) to the Purchase Agreement.
VIII. The
guarantee hereby expressed is established between Embraer and Buyer and it
cannot be transferred or assigned to others, unless by previous written consent
of Embraer.
|
ATTACHMENT “H-1”
- PERFORMANCE GUARANTEE EMBRAER 175
|
|
1.
|
GUARANTEES
|
|
|
Embraer, subject to the conditions and limitations hereby expressed, and considering the Aircraft EMBRAER 175 LR version with a maximum takeoff weight of 85,517 lb (38,790 kg), equipped with Embraer furnished General Electric CF34-8E5 engines, guarantees that each Aircraft on the relevant Actual Delivery Date shall comply with the following performance: |
|
1.1
|
CRUISE
SPECIFIC AIR RANGE
|
|
The
cruise specific air range(SAR) in a standard day (ISA), at the aircraft
gross weights, pressure altitudes and Mach numbers noted below shall
not
be less than the guarantee value:
|
***.
|
2.
|
AIRCRAFT
CONFIGURATION
|
|
2.1
|
The
guarantees stated above are based on the
Aircraft configuration as defined in the Technical Description PTD-175
Rev. 5 dated April 2005, plus specific Buyer configuration options
as
defined at Attachment “A” to the Purchase Agreement, (hereinafter referred
to as the “Detail Specification”). If necessary, appropriate adjustment to
this Aircraft Performance Guarantees shall be made for changes in
such
Detail Specification (including but not limited to Buyer requests
for
changes, Proposal of Major Changes or any other changes mutually
agreed
upon between the Buyer and Embraer) approved in writing by the Buyer
and
Embraer. Such adjustments shall be accounted for by Embraer in its
evidence of compliance with the guarantees.
|
|
|
In
the event a change is made to any law,
governmental regulation or requirement, or in the interpretation
of any
such law, governmental regulation or requirement that affects the
certification basis for the Aircraft, and as a result thereof, a
change is
made to the configuration and/or the performance of the Aircraft
in order
to obtain certification, the guarantees set forth in this Aircraft
Performance Guarantee shall be appropriately modified to reflect
any such
change.
|
|
2.2
|
The performance guarantees of Article 1 of this Attachment shall be adjusted by Embraer for the following in its evidence of compliance with such guarantees: |
a. Changes
to the Detail Specification including Major Changes or any other changes
mutually agreed upon between the Buyer and Embraer.
b. The
difference between the weight allowances of optional items listed in the Detail
Specification and the actual weights.
|
3.
|
GUARANTEE
CONDITIONS
|
| 3.1 | All guaranteed performance data are based on the ICAO International Standard Atmosphere (ISA) unless otherwise specified. Altitudes are pressure altitudes. |
| 3.2 | The FAA Regulations referred to in this Attachment are, unless otherwise specified, the Certification Basis regulations specified in the Aircraft Type Certificate Data Sheet. |
| 3.3 |
The cruise specific air range
and the
climb, cruise and descent portions of the mission guarantees include
allowances for normal electrical power extraction and normal operation
of
the air conditioning system. Normal power extraction shall be defined
as
not less than a 41 kW total electrical and hydraulic loads. Normal
operation of the air conditioning system
|
____________
***Confidential
|
ATTACHMENT
“H-1” - PERFORMANCE GUARANTEE EMBRAER 175
|
|
|
|
|
|
|
|
|
shall
be defined as operation in the automatic
mode, with the temperature control set to maintain a nominal cabin
temperature of 70 °F,
and all air conditioning systems operating normally. This operation
nominally allows a maximum cabin pressure differential of *** lb
per
square inch, with a nominal Aircraft cabin ventilation rate of ***
cu.ft
per min at *** ft including passenger cabin recirculation (nominal
recirculation is ***%). The APU is turned off unless otherwise specified.
|
|
3.5
|
The
cruise specific air range, speed and the
climb, cruise, and descent portions of the mission guarantees are
based on
an Aircraft center of gravity location of ***% of the mean aerodynamic
chord.
|
|
3.6
|
Performance, where applicable, is based on a fuel Lower Heating Value (LHV) of 18,580 BTU per pound and a fuel density of 6.7 lb per U.S. gallon. |
|
4.
|
PARTIES’
OBLIGATIONS ACCORDING TO THIS
GUARANTEE
|
|
4.1
|
During
the Aircraft acceptance to be performed
by Buyer in accordance with Article 7 of the Purchase Agreement,
Buyer
shall check the Aircraft performance specified in Article 1 of this
Attachment H, by using the Aircraft Flight Manual (AFM) or by comparing
the flight test data, at the atmospheric conditions prevailing during
the
flight, with the information presented in the Supplementary Performance
Manual (SPM), as applicable. All performance guarantee under this
Attachment are in accordance with both manuals above mentioned, taking
into consideration the established tolerances.
|
|
4.2
|
Embraer’s
obligations in respect to the
guarantees stated in Article 1 of this Attachment are limited to
Buyer’s
right to ***, should it be reasonably verified that such Aircraft,
during
the acceptance procedure specified in Article 7 of the Purchase Agreement,
cannot comply with the performances guaranteed hereunder, after Embraer
has had a reasonable opportunity to cure such deficiencies in accordance
with Article 7 of the Purchase Agreement. ***
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|
4.3
|
In
case, during the above mentioned acceptance
procedure, it is proven that the Aircraft performance does not comply
with
the performances specified in Article 1 of this Attachment, but Buyer
considers it satisfactory by accepting delivery of such Aircraft,
then
Embraer shall not be liable to any claim or demand whatsoever from
Buyer
with respect to such performance guarantees.
|
|
4.4
|
Upon acceptance of the Aircraft by Buyer, all obligations of Embraer regarding the Aircraft performance guarantees shall cease. |
|
5.
|
GUARANTEE
COMPLIANCE
|
|
5.1
|
Compliance
with the guarantees of Article 1 of this Attachment shall be based
on the
conditions specified in that article, the Aircraft configuration
contained
in Attachment “A” to the Purchase Agreement and the guarantee conditions
of Article 3 above.
|
|
5.2
|
Compliance
with the cruise specific air range, and the climb, cruise and descent
portions of the mission guarantees shall be established by calculations
based on the comparison mentioned in paragraph 4.1 above.
|
|
5.3
|
The
data derived from tests shall be adjusted as required by conventional
methods of correction, interpolation or extrapolation in accordance
with
established engineering practices to show compliance with the performance
guarantee.
|
|
5.4
|
Compliance
with the Equipped Empty Weight guarantee shall be based on information
in
the appropriate approved weight and balance manual, and associated
document or report.
|
____________
***Confidential
***Confidential
|
ATTACHMENT
"H-1" PERFORMANCE GUARANTEE EMBRAER 175
|
|
6.
|
EXCLUSIVE
GUARANTEES
|
|
6.1
|
The only performance guarantees applicable to the Aircraft are those set forth in this document. The performance guarantees set forth herein are established between Buyer and Embraer and may not be transferred or assigned to others, unless by previous written consent of Embraer. |
|
6.2
|
THE GUARANTEES, OBLIGATIONS AND LIABILITIES OF EMBRAER, AND REMEDIES OF BUYER SET FORTH IN THIS PERFORMANCE GUARANTEE ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND BUYER HEREBY WAIVES, RELEASES AND RENOUNCES, ALL OTHER RIGHTS, CLAIMS, DAMAGES AND REMEDIES OF BUYER AGAINST EMBRAER OR ANY ASSIGNED OF EMBRAER, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY ACHIEVED PERFORMANCE. |
The
terms
and conditions of this performance guarantee do not alter, modify or impair,
in
any way, the terms and conditions of Attachment “C” (Aircraft Warranty
Certificate) to the Purchase Agreement.
