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Sample Business Contracts

V2500 General Terms of Sale Agreement [Side Letter No. 13] - JetBlue Airways Corp. and IAE International Aero Engines AG

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IAE Building
400 Main Street
East Hartford, CT 06108 USA

 

23 April 2003

 

JetBlue Airways Corporation
19 Old Kings Highway South, Suite 23
Darien, Connecticut 06820
Attention: Vice President and Treasurer

 

Subject:                                                     Side Letter No. 13 to the V2500 General Terms of Sale Agreement between JetBlue Airways Corporation and IAE International Aero Engines AG dated May 4, 1999

 

Dear Tom:

 

IAE is pleased to submit to JetBlue this Side Letter No. 13 to the Agreement (as defined below) in support of JetBlue’s firm purchase from Airbus of sixty-five (65) incremental A320 Aircraft powered by V2527-A5 Propulsion Systems (the “Incremental Firm Aircraft”), and its option to purchase fifty (50) A320 Aircraft powered by V2527-A5 Propulsion Systems (the “New Option Aircraft”, the Incremental Firm Aircraft and the New Option Aircraft are referred to collectively herein as the “Incremental Aircraft”), all for delivery in accordance with the delivery schedule set forth in Exhibit B-1 hereto.

 

The Incremental Aircraft shall constitute ‘Aircraft’ for all purposes under the Agreement, except as otherwise noted herein.  All other Firm Aircraft (not including the Firm Incremental Aircraft) that have not been delivered to JetBlue as of the date of this Side Letter shall be referred to herein as the “Existing Firm Aircraft.”  Capitalized terms used herein which are not otherwise defined shall have the same meaning as those given to them in the V2500 General Terms of Sale Agreement between JetBlue Airways Corporation (“JetBlue”) and IAE International Aero Engines AG (“IAE”) dated May 4, 1999 (the “Agreement”).

 

1.                                       Fleet Introductory Assistance Credit for Incremental Aircraft and Existing Firm Aircraft

 

1.1                                 To assist JetBlue with the introduction of the Incremental Aircraft into its fleet and to support delivery of the Existing Firm Aircraft, IAE will issue the following credits to JetBlue’s account with IAE:

 



 

***

 

The credits in the above table with respect to the Incremental Firm Aircraft shall escalate from a base month of January 2003 in accordance with Escalation Formula I set forth in Exhibit B-2 hereto.  The credits in the above table with respect to the New Option Aircraft shall escalate from a base month of January 2003 in accordance with Escalation Formula II set forth in Exhibit B-2 hereto.

 

1.1.1                        For all of the Existing Firm Aircraft yet to be delivered, a credit in the amount of U.S.***.  These credits shall escalate from a base month of January 2003 in accordance with Escalation Formula I set forth in Exhibit B-2 hereto.

 

1.1.2                        Each such credit above may be used by JetBlue towards the purchase of V2500 Spare Parts, tooling and services from IAE, but unless JetBlue provides written notice to IAE at least ninety (90) days prior to delivery of each applicable Incremental Aircraft, the total amount of such credit available for such Incremental Aircraft shall be assigned to the Aircraft Manufacturer to be applied toward the payment for the Propulsion Systems for such Incremental Aircraft.

 

1.1.3                        In the event any credit, or portion thereof, under this Clause 1 is assigned to the Aircraft Manufacturer, JetBlue acknowledges that the credit shall not vest in the Aircraft Manufacturer until delivery to and acceptance by JetBlue of the respective Incremental Aircraft or existing Firm Aircraft yet to be delivered.

 

2.                                       IAE and JetBlue agree that the foregoing Section 1 shall replace in its entirety Section 1 of the existing Agreement.

 

3.                                       With respect to Propulsion Systems for installation on Incremental Aircraft (“Installed Propulsion Systems”), which are delivered by IAE under this Side Letter, the escalation per annum for the period of 1 January 2003 through delivery, applicable to the net Propulsion System and Spare Engine prices shall be the escalation per annum amount as determined by the application of the applicable Escalation Formulae I or II, as the case may be, set forth as Exhibit B-2 to this Side Letter No. 13 and, where applicable, the ***.

 

4.                                       Notwithstanding any other provision of this Side Letter No. 13, the escalation per annum for the period from 1 January 2003 through delivery for all of the credits set forth in Clauses 1 and 4 of this Side Letter No. 13 and the applicable Spare

 


[***]                   Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

IAE PROPRIETARY INFORMATION

 

2



 

Engine credit provided by IAE shall be the escalation per annum amount as determined by the application of the applicable Escalation Formulae I and II, as the case may be, set forth as Exhibit B-2 to the Side Letter No. 13 and, where applicable, the ***.

 

5.                                       JetBlue hereby places a firm and unconditional order with IAE for the purchase of a minimum of twelve (12) new firm V2527-A5 spare Engines (the “New Firm Spare Engines”) and eight (8) new option V2527-A5 spare Engines (the “New Option Spare Engines”) and agrees to otherwise purchase, operate and maintain a minimum ratio of new spare engines to new installed V2500-A5 engines on the Incremental Aircraft of no less than *** with respect to each Engine thrust level per Aircraft model (or such ratio is maintained with respect to all engines at the applicable or higher thrust level for A319-100, A320-200 or A321-200 aircraft), all for delivery according to the schedule set forth in Exhibit B-2 to this side letter.  IAE and JetBlue agree that the New Firm Spare Engines and all existing firm spare engines ordered but, as of the date of this side letter, undelivered, shall be escalated from January 2003 in accordance with Escalation Formula I set forth in Exhibit B-2 hereto.  IAE and JetBlue further agree that the New Option Spare Engines shall be escalated from January 2003 in accordance with Escalation Formula II set forth in Exhibit B-2 hereto.

 

6.                                       Exhibits B-1 (Aircraft Delivery Schedule) and B-2 (Spare Engine Delivery Schedule) to the Agreement are removed in their entirety and replaced by the new Exhibit B attached hereto.

 

7.                                       IAE also confirms that on delivery of every *** Aircraft, starting with the *** delivered aircraft, JetBlue shall be entitled to receive the U.S.*** spare parts credits provided in Side Letter No. 6 to the Agreement with respect to all of the firm and option delivered to JetBlue, including the Incremental Aircraft and delivered New Option Aircraft, which as noted above, constitute ‘Aircraft’ for all other purposes, including this credit, under the Agreement.  In addition, independent of the foregoing credit, IAE shall issue on the delivery of every *** Incremental Aircraft, a U.S.*** spare parts credit.  Such credits shall escalate from the base month of January 2003 in accordance with Escalation Formula I set forth in Exhibit B-2 hereto.

 

8.                                       IAE confirms that all of the Incremental Aircraft when purchased and delivered to JetBlue, shall be covered under the guarantees, including the Maintenance Cost Guarantee provided to JetBlue with respect to all of its other Aircraft, both delivered and firmly ordered.

 


[***]                   Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

3



 

9.                                       IAE hereby confirms that it will provide a second dedicated Customer Support Representative to JetBlue starting by the 1st quarter of 2003.  Such second representative will be at no charge, for so long as JetBlue operates sixty (60) or more V2500-A5 powered aircraft.  JetBlue will provide reasonable office facilities for the second Customer Support Representative and other accommodation and support equivalent to that provided to the existing customer support representative charge.

 

10.                                 IAE will immediately credit JetBlue’s spare parts account receivables with IAE prior to January 1, 2002 for the total net amount outstanding of approximately U.S.$ ***, provided that JetBlue agrees to an allocation of all its spare parts credits existing prior to that date against such outstanding account receivable amount.

 

11.                                 ***

 

12.                                 Flexibility Rights

 

12.1                           From and including calendar year *** Incremental Aircraft may be converted by JetBlue into a firm order for another model of aircraft (either A319-100 or A321-200 powered by V2500-A5 Propulsion Systems).

 

12.2

 

13.                                 Exclusivity

 

JetBlue agrees that until December 31, 2011 each Aircraft, including any Incremental Aircraft, and any further single aisle aircraft acquired by JetBlue to fill the mission carried out by such Aircraft, shall be powered by new V2500-A5 Propulsion Systems, except that such exclusivity shall automatically terminate upon the occurrence of a Change of Control Event with respect to JetBlue or IAE as defined below.  Nothing in this Section 13 or in any other provision of this Side Letter No. 13, or the Agreement it is a part of, shall be construed to prevent JetBlue at any time from either (a) merging with any other airline, (b) acquiring a controlling interest in any other airline, or (c) acquiring all or substantially all the assets of any other airline, regardless of the type of aircraft and engines owned or operated by such other airline at the time of such merger or acquisition.  Moreover, in the event of such a merger or acquisition, nothing in this Section 8 or in any other provision of this Side Letter No. 13 shall be construed to prevent JetBlue from honoring any aircraft or engine purchase commitments entered into by such other airline prior to its merger with or acquisition by JetBlue.

 


[***]                   Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

4



 

A “Change of Control Event” shall mean any event in which (i) JetBlue, or (ii) a third party other than an existing shareholder of IAE as of the date of this Side Letter No. 13, sells, leases or otherwise disposes of all or substantially all of its assets or JetBlue’s or IAE’s registered shares, as the case may be.

 

Except as expressly amended by this Side Letter No. 13 all provisions of the Agreement remain in full force and effect.

 

Very truly yours,

 

Agreed to and Accepted on behalf of:

IAE International Aero Engines AG

 

JetBlue Airways Corporation

 

 

 

 

 

 

 

 

 

 

 

Name

 

Name

 

 

 

 

 

 

 

 

Title

 

Title

 

 

 

 

 

 

 

 

Date

 

Date

 

5



 

EXHIBIT B-1

 

AIRCRAFT DELIVERY SCHEDULES

 

As of April 2003

 

Glossary Note:

 

                  Delivered Aircraft are indicated by Italics typeface

 

                  Existing Firm Aircraft are indicated by normal typeface

 

                  Incremental Aircraft, including all Firm Incremental Aircraft and all Option Aircraft are indicated by bold typeface

 

Rank No.

 

Aircraft

 

Delivery

No. 1

 

Firm Aircraft

 

*** 2000

No. 2

 

Firm Aircraft

 

*** 2000

No. 3

 

Firm Aircraft

 

*** 2000

No. 4

 

Firm Aircraft

 

*** 2000

No. 5

 

Firm Aircraft

 

*** 2000

No. 6

 

Firm Aircraft

 

*** 2000

No. 7

 

Firm Aircraft

 

*** 2001

No. 8

 

Firm Aircraft

 

*** 2001

No. 9

 

Firm Aircraft

 

*** 2001

No. 10

 

Firm Aircraft

 

*** 2001

No. 11

 

Firm Aircraft

 

*** 2001

No. 12

 

Firm Aircraft

 

*** 2001

No. 13

 

Firm Aircraft

 

*** 2001

No. 14

 

Firm Aircraft

 

*** 2002

No. 15

 

Firm Aircraft

 

*** 2002

No. 16

 

Firm Aircraft

 

*** 2002

No. 17

 

Firm Aircraft

 

*** 2002

No. 18

 

Firm Aircraft

 

*** 2002

No. 19

 

Firm Aircraft

 

*** 2002

No. 20

 

Firm Aircraft

 

*** 2002

No. 21

 

Firm Aircraft

 

*** 2002

No. 22

 

Firm Aircraft

 

*** 2002

No. 23

 

Firm Aircraft

 

*** 2002

No. 24

 

Firm Aircraft

 

*** 2002

No. 25

 

Firm Aircraft

 

*** 2002

 


[***]                   Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

6



 

No. 26

 

Firm Aircraft

 

*** 2002

No. 27

 

Firm Aircraft

 

*** 2002

No. 28

 

Firm Aircraft

 

*** 2002

No. 29

 

Firm Aircraft

 

*** 2003

No. 30

 

Firm Aircraft

 

*** 2003

No. 31

 

Firm Aircraft

 

*** 2003

No. 32

 

Firm Aircraft

 

*** 2003

No. 33

 

Firm Aircraft

 

*** 2003

No. 34

 

Firm Aircraft

 

*** 2003

No. 35

 

Firm Aircraft

 

*** 2003

No. 36

 

Firm Aircraft

 

*** 2003

No. 37

 

Firm Aircraft

 

*** 2003

No. 38

 

Firm Aircraft

 

*** 2003

No. 39

 

Firm Aircraft

 

*** 2003

No. 40

 

Firm Aircraft

 

*** 2003

No. 41

 

Firm Aircraft

 

*** 2003

No. 42

 

Firm Aircraft

 

*** 2003

No. 43

 

Firm Aircraft

 

*** 2003

No. 44

 

Firm Aircraft

 

*** 2003

No. 45

 

Firm Aircraft

 

*** 2004

No. 46

 

Firm Aircraft

 

*** 2004

No. 47

 

Firm Aircraft

 

*** 2004

No. 48

 

Firm Aircraft

 

*** 2004

No. 49

 

Firm Aircraft

 

*** 2004

No. 50

 

Firm Aircraft

 

*** 2004

No. 51

 

Firm Aircraft

 

*** 2004

No. 52

 

Firm Aircraft

 

*** 2004

No. 53

 

Firm Aircraft

 

*** 2004

No. 54

 

Firm Aircraft

 

*** 2004

No. 55

 

Firm Aircraft

 

*** 2004

No. 56

 

Firm Aircraft

 

*** 2004

No. 57

 

Firm Aircraft

 

*** 2004

No. 58

 

Firm Aircraft

 

*** 2004

No. 59

 

Firm Aircraft

 

*** 2005

No. 60

 

Firm Aircraft

 

*** 2005

No. 61

 

Firm Aircraft

 

*** 2005

No. 62

 

Firm Aircraft

 

*** 2005

No. 63

 

Firm Aircraft

 

*** 2005

No. 64

 

Firm Aircraft

 

*** 2005

No. 65

 

Firm Aircraft

 

*** 2005

No. 66

 

Firm Aircraft

 

*** 2005

 


[***]                   Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

7



 

No. 67

 

Firm Aircraft

 

*** 2005

No. 68

 

Firm Aircraft

 

*** 2005

No. 69

 

Firm Aircraft

 

*** 2005

No. 70

 

Firm Aircraft

 

*** 2005

No. 71

 

Firm Aircraft

 

*** 2005

No. 72

 

Firm Aircraft

 

*** 2005

No. 73

 

Firm Aircraft

 

*** 2005

No. 74

 

Firm Aircraft

 

*** 2005

No. 75

 

Firm Aircraft

 

*** 2006

No. 76

 

Firm Aircraft

 

*** 2006

No. 77

 

Firm Aircraft

 

*** 2006

No. 78

 

Firm Aircraft

 

*** 2006

No. 79

 

Firm Aircraft

 

*** 2006

No. 80

 

Firm Aircraft

 

*** 2006

No. 81

 

Firm Aircraft

 

*** 2006

No. 82

 

Firm Aircraft

 

*** 2006

No. 83

 

Firm Aircraft

 

*** 2006

No. 84

 

Firm Aircraft

 

*** 2006

No. 85

 

Firm Aircraft

 

*** 2006

No. 86

 

Firm Aircraft

 

*** 2006

No. 87

 

Firm Aircraft

 

*** 2006

No. 88

 

Firm Aircraft

 

*** 2006

No. 89

 

Firm Aircraft

 

*** 2006

No. 90

 

Firm Aircraft

 

Year 2007

No. 91

 

Firm Aircraft

 

Year 2007

No. 92

 

Firm Aircraft

 

Year 2007

No. 93

 

Firm Aircraft

 

Year 2007

No. 94

 

Firm Aircraft

 

Year 2007

No. 95

 

Firm Aircraft

 

Year 2007

No. 96

 

Firm Aircraft

 

Year 2007

No. 97

 

Firm Aircraft

 

Year 2007

No. 98

 

Firm Aircraft

 

Year 2007

No. 99

 

Firm Aircraft

 

Year 2007

No. 100

 

Firm Aircraft

 

Year 2007

No. 101

 

Firm Aircraft

 

Year 2007

No. 102

 

Firm Aircraft

 

Year 2007

No. 103

 

Firm Aircraft

 

Year 2007

No. 104

 

Firm Aircraft

 

Year 2007

 

 

 

 

 

No. 105

 

Firm Aircraft

 

Year 2008

No. 106

 

Firm Aircraft

 

Year 2008

 


[***]                   Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

8



 

No. 107

 

Firm Aircraft

 

Year 2008

No. 108

 

Firm Aircraft

 

Year 2008

No. 109

 

Firm Aircraft

 

Year 2008

No. 110

 

Firm Aircraft

 

Year 2008

No. 111

 

Firm Aircraft

 

Year 2008

No. 112

 

Firm Aircraft

 

Year 2008

No. 113

 

Firm Aircraft

 

Year 2008

No. 114

 

Firm Aircraft

 

Year 2008

No. 115

 

Firm Aircraft

 

Year 2008

No. 116

 

Firm Aircraft

 

Year 2008

No. 117

 

Firm Aircraft

 

Year 2008

 

 

 

 

 

No. 118

 

Firm Aircraft

 

Year 2009

No. 119

 

Firm Aircraft

 

Year 2009

No. 120

 

Firm Aircraft

 

Year 2009

No. 121

 

Firm Aircraft

 

Year 2009

No. 122

 

Firm Aircraft

 

Year 2009

No. 123

 

Firm Aircraft

 

Year 2009

No. 124

 

Firm Aircraft

 

Year 2009

No. 125

 

Firm Aircraft

 

Year 2009

No. 126

 

Firm Aircraft

 

Year 2009

No. 127

 

Firm Aircraft

 

Year 2009

 

 

 

 

 

No. 128

 

Firm Aircraft

 

Year 2010

No. 129

 

Firm Aircraft

 

Year 2010

No. 130

 

Firm Aircraft

 

Year 2010

No. 131

 

Firm Aircraft

 

Year 2010

No. 132

 

Firm Aircraft

 

Year 2010

No. 133

 

Firm Aircraft

 

Year 2010

No. 134

 

Firm Aircraft

 

Year 2010

No. 135

 

Firm Aircraft

 

Year 2010

No. 136

 

Firm Aircraft

 

Year 2010

No. 137

 

Firm Aircraft

 

Year 2010

 

 

 

 

 

No. 138

 

Firm Aircraft

 

Year 2011

No. 139

 

Firm Aircraft

 

Year 2011

No. 140

 

Firm Aircraft

 

Year 2011

No. 141

 

Firm Aircraft

 

Year 2011

No. 142

 

Firm Aircraft

 

Year 2011

No. 143

 

Firm Aircraft

 

Year 2011

 

9



 

New Option Aircraft

 

 

 

 

No. 144

 

Option Aircraft

 

*** 2006

No. 145

 

Option Aircraft

 

*** 2006

No. 146

 

Option Aircraft

 

Year 2007

No. 147

 

Option Aircraft

 

Year 2007

 

 

 

 

 

No. 148

 

Option Aircraft

 

Year 2008

No. 149

 

Option Aircraft

 

Year 2008

No. 150

 

Option Aircraft

 

Year 2008

No. 151

 

Option Aircraft

 

Year 2008

 

 

 

 

 

No. 152

 

Option Aircraft

 

Year 2009

No. 153

 

Option Aircraft

 

Year 2009

No. 154

 

Option Aircraft

 

Year 2009

No. 155

 

Option Aircraft

 

Year 2009

No. 156

 

Option Aircraft

 

Year 2009

No. 157

 

Option Aircraft

 

Year 2009

No. 158

 

Option Aircraft

 

Year 2009

No. 159

 

Option Aircraft

 

Year 2009

No. 160

 

Option Aircraft

 

Year 2010

No. 161

 

Option Aircraft

 

Year 2010

No. 162

 

Option Aircraft

 

Year 2010

No. 163

 

Option Aircraft

 

Year 2010

No. 164

 

Option Aircraft

 

Year 2010

No. 165

 

Option Aircraft

 

Year 2010

No. 166

 

Option Aircraft

 

Year 2010

No. 167

 

Option Aircraft

 

Year 2010

 

 

 

 

 

No. 168

 

Option Aircraft

 

Year 2011

No. 169

 

Option Aircraft

 

Year 2011

No. 170

 

Option Aircraft

 

Year 2011

No. 171

 

Option Aircraft

 

Year 2011

No. 172

 

Option Aircraft

 

Year 2011

No. 173

 

Option Aircraft

 

Year 2011

No. 174

 

Option Aircraft

 

Year 2011

No. 175

 

Option Aircraft

 

Year 2011

No. 176

 

Option Aircraft

 

Year 2011

No. 177

 

Option Aircraft

 

Year 2011

No. 178

 

Option Aircraft

 

Year 2011

No. 179

 

Option Aircraft

 

Year 2011

No. 180

 

Option Aircraft

 

Year 2011

 


[***]                   Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

10



 

No. 181

 

Option Aircraft

 

Year 2012

No. 182

 

Option Aircraft

 

Year 2012

No. 183

 

Option Aircraft

 

Year 2012

No. 184

 

Option Aircraft

 

Year 2012

No. 185

 

Option Aircraft

 

Year 2012

No. 186

 

Option Aircraft

 

Year 2012

No. 187

 

Option Aircraft

 

Year 2012

No. 188

 

Option Aircraft

 

Year 2012

No. 189

 

Option Aircraft

 

Year 2012

No. 190

 

Option Aircraft

 

Year 2012

No. 191

 

Option Aircraft

 

Year 2012

No. 192

 

Option Aircraft

 

Year 2012

No. 193

 

Option Aircraft

 

Year 2012

 

Leased Aircraft

 

Year
 
Number
 
Delivery Dates

1999

 

1

 

(1) ***

2000

 

3

 

(1) ***, (1) ***, (1) ***

2001

 

4

 

(1) ***, (2) ***, (1) ***

2003

 

1

 

(1) ***

2004

 

1

 

(1) ***

 

 

 

 

 

 

 

 

 

 

TOTAL

 

10

 

All but the last lease aircraft have been delivered

 


[***]                   Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

11



 

EXHIBIT B-2

 

PURCHASED ITEMS, PRICE,

 

ESCALATION FORMULA AND DELIVERY

 

As of April 2003

 

Rank
No.

 

Purchased Item

 

Basic Contract
Price
U.S. Dollars
(January 2003)

 

Qty.

 

Delivery Date

1

 

V2527-A5 spare Engine:

 

***

 

1

 

***/99

2

 

V2527-A5 spare Engine:

 

***

 

1

 

***/00

3

 

V2527-A5 spare Engine:

 

***

 

1

 

***/01

4

 

V2527-A5 spare Engine:

 

***

 

1

 

***/02

5

 

V2527-A5 spare Engine:

 

***

 

1

 

***/02

6

 

V2527-A5 spare Engine:

 

***

 

1

 

***/03

7

 

V2527-A5 spare Engine:

 

***

 

1

 

***/04

8

 

V2527-A5 spare Engine:

 

***

 

1

 

***/05

9

 

V2527-A5 spare Engine:

 

***

 

1

 

***/06

10

 

V2527-A5 spare Engine:

 

***

 

1

 

***/07

11

 

V2527-A5 spare Engine:

 

***

 

1

 

***/08

12

 

V2527-A5 spare Engine:

 

***

 

1

 

***/06

13

 

V2527-A5 spare Engine:

 

***

 

1

 

***/07

14

 

V2527-A5 spare Engine:

 

***

 

1

 

***/08

15

 

V2527-A5 spare Engine:

 

***

 

1

 

***/08

16

 

V2527-A5 spare Engine:

 

***

 

1

 

***/09

17

 

V2527-A5 spare Engine:

 

***

 

1

 

***/09

18

 

V2527-A5 spare Engine:

 

***

 

1

 

***/10

19

 

V2527-A5 spare Engine:

 

***

 

1

 

***/10

20

 

V2527-A5 spare Engine:

 

***

 

1

 

***/11

21

 

V2527-A5 spare Engine:

 

***

 

1

 

***/11

22

 

V2527-A5 spare Engine:

 

***

 

1

 

***/12

23

 

V2527-A5 spare Engine:

 

***

 

1

 

***/12

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

23

 

 

 


[***]                   Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

12



 

Option Spare Engines

 

 

V2524-A5 Spare Engine:

 

$***

V2527-A5 Spare Engine:

 

$***

V2533-A5 Spare Engine:

 

$***

 


[***]                   Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

13



 

EXHIBIT B-2

 

ESCALATION FORMULA I

 

1.                                       Any unit base price or other sum expressed to be subject to escalation from a base month to a month of delivery or other date of determination in accordance with the IAE Escalation Formula will be subject to escalation in accordance with the following formula:

 

P = Pb (***

L + ***

M + ***

E)

 

Lo

Mo

Eo

 

Where:

 

P                                         = the invoiced purchase price or escalated sum rounded to the nearest U.S. Dollar.

 

Pb                                  = unit base price or other sum.

 

Lo                                  = the “Average Hourly Earnings of Aircraft Engine and Engine Parts Production Workers” SIC Code 3724  published by the Bureau of Labor Statistics in the U.S. Department of Labor for the month preceding the base month by four months.

 

L                                         = the “Average Hourly Earnings of Aircraft Engine and Engine Parts Production Workers” SIC Code 3724 for the month preceding the month of delivery or other date of determination by four months.

 

Mo                             = the “Producer Price Index, Code 10, for Metals and Metal Products” published by the Bureau of Labor Statistics in the U.S. Department of Labor for the month preceding the base month by four months.

 

M                                    = the “Producer Price Index, Code 10, for Metals and Metal Products” for the month preceding the month of delivery or other date of determination by four months.

 

Eo                                  = the “Producer Price Index, Code 5, for Fuel and Related Products and Power” published by the Bureau of Labor Statistics in the U.S. Department of Labor for the month preceding the base month by four months.

 


[***]                   Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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E                                         = the “Producer Price Index, Code 5, for Fuel and Related Products and Power” for the month preceding the month of delivery or other date of determination by four months.

 

2.

The values of the factors ***

L and ***

M and ***

E

 

 

Lo

Mo

Eo

 

respectively, shall be determined to the nearest fourth decimal place.  If the fifth decimal is five or more, the fourth decimal place shall be raised to the next higher number.

 

3.                                       If the U.S. Department of Labor ceases to publish the above statistics or modifies the basis of their calculation, then IAE may substitute any officially recognized and substantially equivalent statistics.

 

4.                                       The Basic Contract Prices contained in this Exhibit B are subject to escalation from a Base Month of January 1999 to the month of delivery using Lo, Mo and Eo values for September 1998.

 

5.                                       If the application of the formula contained in this Exhibit B results in a Purchase Price which is lower than the Basic Contract Price, the Basic Contract Price will be deemed to be the Purchase Price for such Supplies.

 


[***]                   Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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ESCALATION FORMULA II

 

1.               Any unit base price or other sum expressed to be subject to escalation from a base month to a month of delivery or other date of determination in accordance with the IAE Escalation Formula will be subject to escalation in accordance with the following formula:

 

Pi

 

=

 

(Pb+F) x CPI where:

 

 

 

 

 

Pi

 

=

 

the invoiced purchase price or escalated sum rounded to the nearest U.S. Dollar.

 

 

 

 

 

Pb

 

=

 

unit base price or other sum.

 

 

 

 

 

F

 

=

 

*** (N)(Pb)

 

 

 

 

 

N

 

=

 

the calendar year of scheduled delivery or other date of determination minus 2003

 

 

 

 

 

CPI

 

=

 

*** (L) + *** (M)

 

 

 

 

 

L

 

=

 

Labor Ratio defined below

 

 

 

 

 

M

 

=

 

Material Ratio defined below

 

 

 

 

 

IAE’s Composite Price Index (“CPI”) is the sum of *** percent of the Labor ratio and *** percent of the Material Ratio, with the sum rounded to the nearest ten thousandth.

 

 

 

 

 

The quarterly value published for the Employment Cost Index will be deemed to apply to each month of the quarter.

 

 

 

 

 

The Labor Ratio is the “Employment Cost Index (ECI) Wages and Salaries for Aircraft Manufacturing, SIC Code 3721” as published at the time of scheduled engine delivery by the Bureau of Labor Statistics, U.S. Department of Labor for the arithmetic average of the fifth, sixth and seventh months (rounded to the nearest tenth) preceding the month of scheduled delivery for each engine/equipment; divided by the value of SIC Code 3721 for the arithmetic average of the fifth, sixth and seventh months (rounded to the nearest tenth) preceding the base month.

 


[***]                   Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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The Material Ratio is the “Producer Price Indexes, Industrial Commodities” as published at the time of scheduled engine delivery by the Bureau of Labor Statistics, U.S. Department of Labor, for the arithmetic average of the fifth, sixth and seventh months (rounded to the nearest tenth) preceding the month of scheduled delivery for each engine/equipment; divided by the value for Industrial Commodities for the arithmetic average of the fifth, sixth and seventh months (rounded to the nearest tenth) preceding the base month

 

 

 

 

 

For a given month, the escalation shall be computed by using the applicable Index value, which the Bureau has published as the time of delivery or other date of determination.

 

2.                                       If the U.S. Department of Labor changes the base year for determination of the Index values as defined above, such re-based values will be incorporated in the escalation calculation.

 

3.                                       If the U.S. Department of Labor revises the methodology used for the determination of the values to be used to determine the CPI or, for any reason, has not released values needed to determine the CPI, IAE, in its sole discretion, shall select a substitute for such values from data published by the Bureau of Labor Statistics or otherwise make revisions to the escalation formula such that the escalation will as closely as possible approximate the result that would have been attained by continuing the use of the original escalation formula and values as they may have fluctuated during the applicable time period.

 

4.                                       The invoiced purchase price, which in no event shall be less than the unit base price, shall be the final price.  If the calculated sum of L + M is less than 1.0000, then the value of the sum is adjusted to 1.0000.

 

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