V2500 General Terms of Sale Agreement [Side Letter No. 1] - IAE International Aero Engines AG and New Air Corp.
[LETTERHEAD]
May 4, 1999
Mr. David G. Neeleman
New Air Corporation
6322 South 3000 East
Suite L201
Salt Lake City, Utah 84121
Subject: Side Letter No. 1 to the V2500 General Terms of Sale between IAE
International Aero Engines AG ("IAE") and New Air Corporation ("New
Air") dated May 4, 1999
Gentlemen:
We refer to the V2500 General Terms of Sale bearing reference marks
P:\NewAir\airgta.doc dated May 4, 1999 between IAE and New Air such contract
being hereinafter referred to as the "Contract." Capitalized terms used
herein and not otherwise defined in this Side Letter No. 1 shall have the
meanings assigned thereto in the Contract.
This Side Letter No. 1 provides for certain financial assistance from IAE to New
Air in support of the integration of the Aircraft into its fleet.
1. FLEET INTRODUCTORY ASSISTANCE CREDIT
1.1 To assist New Air with the introduction of the Firm Aircraft
into its fleet, IAE will issue a credit to New Air's account
with IAE in the amount of U.S.[****] per A320 aircraft
for each of the Firm Aircraft purchased by New Air.
1.2 Each such credit will be issued upon delivery to and
acceptance by New Air of the corresponding Firm Aircraft.
1.3 Furthermore, each such credit shall be escalated using the IAE
Escalation formula set forth in Exhibit B2 to the Contract
from a base month of January 1999, to the earlier of: (a) the
scheduled delivery set forth in Exhibit B1 to the Contract of
the corresponding Firm Aircraft; or (b) the actual delivery
date of the corresponding Firm Aircraft.
1.4 Each such credit described in Clause 1.1 may be used by New
Air towards the purchase of V2500 Spare Parts, tooling and
services from IAE, but
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[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
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unless New Air provides written notice to IAE at least ninety
(90) days prior to delivery of each applicable Firm Aircraft,
the total amount of such credit available for such Aircraft
shall be assigned to the Aircraft Manufacturer to be applied
toward the payment for the Propulsion Systems for such Firm
Aircraft. The net aircraft price (which shall include the
available Aircraft Manufacturer's credit applicable to such
Aircraft) of any Aircraft to be financed by IAE shall reflect
the full amount of any IAE credit available for such Aircraft.
In the event any credit, or portion thereof, under this
Clause 1.4 is assigned to the Aircraft Manufacturer, New Air
acknowledges that the credit shall not vest in the Aircraft
Manufacturer until delivery to and acceptance by New Air of
the respective Firm Aircraft.
2. FLEET EXPANSION ASSISTANCE CREDIT
2.1 To assist New Air with the expansion of its V2500-A5
powered A320 family fleet, IAE will issue a credit to New
Air's account with IAE in the amount of U.S.[****] per
aircraft for each of the V2524-A5 powered A319 Option
Aircraft purchased by New Air, a credit of U.S.[****] per
aircraft for each of the V2527-A5 powered A320 Option
Aircraft purchased by New Air, and a credit of U.S.[****]
per aircraft for each of the V2533-A5 powered A321-200
Option Aircraft purchased by New Air.
2.2 Each such credit will be issued upon delivery to and
acceptance by New Air of the corresponding Option Aircraft.
2.3 Furthermore, each such credit shall be escalated using the IAE
Escalation formula set forth in Exhibit B2 to the Contract
from a base month of January 1999, to the earlier of: (a) the
scheduled delivery set forth in Exhibit B1 to the Contract of
the corresponding Option Aircraft; or (b) the actual delivery
date of the corresponding Option Aircraft.
2.4 Each such credit described in Clause 2.1 may be used by New
Air towards the purchase of V2500 Spare Parts, tooling and
services from IAE, but unless New Air provides written
notice to IAE at least ninety (90) days prior to delivery
of each applicable Option Aircraft, the total amount of
such credit available for such Aircraft shall be assigned
to the Aircraft Manufacturer to be applied toward the
payment for the Propulsion Systems for such Option Aircraft.
In the event any credit, or portion thereof, under this
Clause 2.4 is assigned to the Aircraft Manufacturer, New Air
acknowledges that the credit shall not vest in the Aircraft
Manufacturer until delivery to and acceptance by New Air of
the respective Option Aircraft.
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[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
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3. SPARE ENGINE ASSISTANCE CREDIT
3.1 To assist New Air in its purchase from IAE of new spare
V2500 Engines to support the New Air Aircraft, IAE will
issue spare Engine Assistance Credit to the Basic Contract
Price set forth in Exhibit B2 to the Contract to New Air's
account with IAE in the amount of US[****] in January 1999
dollars for each V2524-A5 spare Engine, US[****] in January
1999 dollars for each V2527-A5 spare Engine and US[****]
in January 1999 dollars for each V2533-A5 spare Engine
purchased by New Air from IAE pursuant to Clauses 2.2.2 and
2.2.3 of the Contract.
3.2 Each such credit will be issued upon the delivery to and
acceptance by New Air of the corresponding spare Engine.
Acceptance by New Air of this credit from IAE shall be deemed
for this Contract confirmation of New Air's acceptance of the
corresponding spare Engine.
3.3 Furthermore, each such credit shall be escalated using the IAE
Escalation formula set forth in Exhibit B2 to the Contract
from a base month of January 1999, to the earlier of: (a) the
scheduled delivery date for such corresponding spare Engine
determined pursuant to the Contract; or (b) the actual
delivery date of the corresponding spare Engine.
3.4 Each such credit shall be used by New Air toward the final
payment for the invoice price of such spare Engine or
toward the purchase of Spare Parts from IAE.
3.5 IAE agrees to make reasonable efforts to effect delivery of
the Purchased Items under Clause 2.5.1 Ex-Works (INCOTERMS
1990) Connecticut, U.S.A.
4. SPARE ENGINE PAYMENT TERMS
4.1 Clause 2.7.1 of the Contract is deleted in its entirety and
replaced with the following:
"2.7.1 New Air will make payment in United States Dollars as
follows:
2.7.1.1 Upon signature of this Contract, New Air
shall pay to IAE a non-refundable deposit of [****]
of the Estimated Purchase Price of the Purchased Items.
2.7.1.2 Eighteen (18) months before the scheduled
delivery of each of the Purchased Items, New Air
shall pay to IAE a further non-refundable deposit of
[****] of the Estimated Purchase Price of such item.
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[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
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2.7.1.3 Twelve (12) months before the scheduled
delivery of each of the Purchased Items, New Air
shall pay to IAE a further non-refundable deposit of
[****] of the Estimated Purchase Price of such item.
2.7.1.4 Immediately prior to the delivery of each
of the Purchased Items, New Air shall pay to IAE the
balance of the Purchase Price of such item."
4.2 Clause 2.7.7 of the Contract is deleted in its entirety and
replaced with the following:
"2.7.7 For the purpose of this Clause 2.7, the "Estimated
Purchase Price" of any of the Purchased Items shall
be calculated in accordance with the following
formula.
P = B x [****]
where:
P is the Estimated Purchase Price
B is the applicable Basic Contract Price
N is the year of scheduled delivery minus the year
for which the Basic Contract Price is defined"
5. SPARE PARTS CREDITS
5.1 To assist New Air with procuring its stock of Initial
Provisioning Spare Parts from IAE, IAE will credit New Air's
account with IAE in the amount of U.S.[****] (January 1999
Dollars) in January 2000 following the delivery and acceptance
by New Air of its first Leased Aircraft in accordance with the
delivery schedule attached as Schedule B1 to this Contract, or
if New Air has not taken such Leased Aircraft in accordance
with such delivery schedule, then the date two months after
the date of the delivery and acceptance by New Air of its
first Leased Aircraft, but in no event prior to January 2000.
Such credit shall be used by New Air for the purchase of
Initial Provisioning Spare Parts from IAE.
5.2 To assist New Air with the cost of removing Engines for
warranty repair under the V2500 Engine and Parts Service
Policy set forth as Exhibit D1 to the Contract, IAE agrees to
credit New Air's account with IAE in the amount of U.S.[****]
(January 1999 Dollars) promptly after the occurrence of New
Air's first Engine removal for warranty repair covered under
such V2500 Engine and Parts Service Policy. Such credit shall
be used by New Air for the purchase of Spare Parts from IAE.
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[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
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6. SPARE PARTS PAYMENT
The following is added to the end of Clause 3.13.3 of the Contract
after IAE:
"; provided, however, that with respect to any such payment for
spare parts, but not for spare Engines, New Air may elect to pay IAE
by check. Payments by check shall be sent directly to the attention
of the IAE Accounting Manager by overnight courier and otherwise
must be in accordance with the payment terms set forth herein. A
remittance advice must accompany each check payment and be faxed to
IAE's attention to give prior notice of a payment coming by check."
Except as expressly amended by this Side Letter No. 1, all provisions of the
Contract remain in full force and effect.
Very truly yours, Agreed to and Accepted on behalf of:
IAE International Aero Engines AG New Air Corporation
/s/ [Illegible] /s/ David G. Neeleman
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Name Name
VP. Sales CEO
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Title Title
5-3-99 5-5-99
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Date Date
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