V2500 General Terms of Sale Agreement [Side Letter No. 9] - IAE International Aero Engines AG and JetBlue Airways Corp.
[Letterhead of International Aero Engines]
December 31, 2001
JetBlue Airways Corporation
19 Old Kings Highway South, Suite 23
Darien, Connecticut 06820
Attention: Vice President and Treasurer
Subject: Side Letter No. 9 to the V2500 General Terms of Sale Agreement
between JetBlue Airways Corporation and IAE International Aero
Engines AG dated May 4, 1999
Dear Tom:
We refer to the V2500 General Terms of Sale Agreement between JetBlue Airways
Corporation ("JetBlue") and IAE International Aero Engines AG ("IAE") dated May
4, 1999 (the "Contract"). Capitalized terms used herein which are not otherwise
defined shall have the same meaning as those given to them in the Agreement.
This Side Letter No. 9, entered into as of December 31, 2001, details JetBlue's
purchase of additional V2500-A5 powered A320 aircraft and expands IAE's
financial support for certain Firm Aircraft.
1. PURCHASE OF ADDITIONAL AIRCRAFT
a. JetBlue hereby makes the firm and irrevocable election to exercise
purchase rights for an additional ten (10) A320-200 aircraft each
powered by V2527-A5 Propulsion Systems for delivery as set forth in
the Exhibit B-1 to this Side Letter (the "Firm Third Deal
Aircraft"),
b. The definition of "Aircraft" set forth in Clause 1.1 of the Contract
is removed in its entirety and replaced by the following new Clause
1.1:
"1.1 "Aircraft" shall mean (i) the thirty-three (33) new Airbus A320-200
aircraft each powered by V2527-A5 Propulsion Systems bearing Rank
No. 1 through 40 in the delivery schedule attached as Exhibit B-1
hereto, but excluding the aircraft bearing Rank Numbers 18, 23, 26,
28, 30, 33, and 39 (the "Firm First Deal Aircraft"), (ii) the
thirty-one (31) new Airbus A320-200 aircraft each powered by
V2527-A5 Propulsion Systems
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bearing Rank No. 42 through 74 in the delivery schedule attached as
Exhibit B-1 hereto, including the aircraft bearing Rank No. 18 (the
"Firm Second Deal Aircraft"), but excluding the aircraft bearing
Rank Numbers 41, 44, 63, and 64, (iii) the ten (10) new Airbus
A320-200 aircraft each powered by V2527-A5 Propulsion Systems
bearing Rank Numbers 23, 26, 28, 30, 33, 39, 41, 44, 63, and 64
respectively (the "Firm Third Deal Aircraft"), (iv) JetBlue's option
to purchase thirty (30) new Airbus A320 family aircraft each powered
by V2500-A5 Propulsion Systems (the "Option A320 Aircraft"), and (v)
and reserve options to purchase nineteen (19) new Airbus A320 family
aircraft each powered by V2500-A5 Propulsion Systems (the "Reserve
Option Aircraft;" together with the Option A320 Aircraft, the
"Option Aircraft"), all for delivery as set forth in Exhibit B-1 to
this Contract. The Firm First Deal Aircraft, Firm Second Deal
Aircraft and Firm Third Deal Aircraft are together referred to as
the "Firm Aircraft".
c. Exhibit B-1 to the Contract is removed in its entirety and replaced
by new Exhibit B-1 attached hereto.
2. FLEET EXPANSION ASSISTANCE FOR FIRM THIRD DEAL AIRCRAFT
a. To assist JetBlue with the expansion of its V2527-A5 powered A320
family fleet, IAE will issue a credit to JetBlue's account with IAE
in the amount of U.S.$[****] per aircraft for each of the Firm
Third Deal Aircraft.
b. Each such credit will be issued upon delivery to and acceptance by
JetBlue of the corresponding Firm Third Deal Aircraft.
c. Furthermore, each such credit shall be escalated using the IAE
Escalation formula set forth in Exhibit B-2 to the Contract from a
base month of [****], to the earlier of: (a) the scheduled
delivery set forth in Exhibit B-1 to the Contract of the
corresponding Firm Third Deal Aircraft; or (b) the actual delivery
date of the corresponding Firm Third Deal Aircraft.
d. Each such credit described in Clause 2 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 Firm Third
Deal 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
Third Deal 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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e. In the event any credit, or portion thereof, under this Clause 2
is assigned to the Aircraft Manufacturer, JetBlue acknowledges
that the credit shall nor vest in the Aircraft Manufacturer until
delivery to and acceptance by JetBlue of the respective Firm Third
Deal Aircraft.
3. ADDITIONAL FINANCIAL SUPPORT
a. In consideration of JetBlue's exercise of purchase rights for the
Firm Third Deal Aircraft, IAE is pleased to provide advanced
credits to JetBlue. These additional credits will be paid at the
delivery of each of the Firm First Deal Aircraft listed in Exhibit
A-1 to this Side Letter No. 9.
b. The amount of the credit (the "Third Deal Advanced Credits") for
each of the Firm First Deal Aircraft listed in Exhibit A-l to this
Side Letter No. 9 will be an additional credit amount which is
equal to the following: [****]
c. Each of the Third Deal Advanced Credits will be issued upon
delivery to end acceptance by Jet Blue of the corresponding Firm
First Deal Aircraft.
d. Each such Third Deal Advanced Credits described 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
Firm First Deal Aircraft, the total amount of such credit
available for such Firm First Deal Aircraft shall be assigned to
the Aircraft Manufacturer to be applied toward the payment for the
Propulsion Systems for such Firm First Deal Aircraft.
4. SPARE ENGINE PURCHASE
a. Clause 2.2.2 of the Contract is removed in its entirety and
replaced by the following new Clause 2.2.2 as follows:
"2.2.2 JetBlue hereby places a firm and unconditional order with IAE for
the purchase of a minimum of twelve (12) new V2527-A5 spare
Engines (the
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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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"Firm Spare Engines") for delivery according to the schedule set
forth in Exhibit B-2 to this Contract."
b. Section 3 to Side Letter No. 1 to the Contract is replaced in its
entirety by new Section 3 as follows:
"3. SPARE ENGINE ASSISTANCE CREDIT
3.1 To assist JetBlue in its purchase from IAE of new spare V2500
Engines to support the JetBlue Aircraft, IAE will issue to
JetBlue's account with IAE a credit in an amount equal to [****]
percent ([****]%) of the Basic Contract Price of the Firm Spare
Engines or Option Spare Engines, as the case may be, delivered in
accordance with the schedule set forth in Exhibit B-2 to the
Contract.
3.2 Each such credit amount, escalated from the base month of [****]
in accordance with the IAE Escalation Formula set forth in
Exhibit B-2 to the Contract, will be escalated to the earlier of
scheduled or actual delivery date of the corresponding Firm
or Option Spare Engine. Each such credit may be used by JetBlue
toward the final payment for the corresponding Firm or Option
Spare Engine or for the purchase of V2500 spare parts from IAE.
3.2.1 In the event of an inexcusable delay of the delivery of
such spare engine caused solely by IAE, the credit amounts
shall be escalated to the actual delivery date of the
corresponding Firm or Option Spare Engine.
3.3 Each such credit will be issued upon the delivery to and
acceptance by JetBlue of the corresponding spare Engine.
Acceptance by JetBlue of this credit from IAE shall be deemed for
this Contract confirmation of JetBlue's acceptance of the
corresponding spare Engine.
3.4 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."
5. CREDIT AVAILABILITY AND REIMBURSEMENT
a. JetBlue and IAE hereby agree that if JetBlue fails to take
scheduled delivery of any Firm Aircraft or informs IAE or Airbus,
or IAE in its sole discretion determines, that it will not take
scheduled delivery, of any or all of such Aircraft, then IAE will
promptly discontinue the issuance of the Third Deal Advanced
Credits to JetBlue and JetBlue will promptly repay to IAE (i) all
FIA Credits (as such advanced credits are defined in Side Letter
No. 8) not yet
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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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repaid according to the terms of Side Letter No. 8 and (ii) all
Third Deal Advanced Credits already paid to JetBlue, subject to
the limitations in 5.b. below, with interest as set forth herein.
Scheduled delivery is herein defined as delivery in accordance
with the delivery schedule attached as Exhibit B-1 to this Side
Letter No. 9. In addition, if:
(i) The present ownership of JetBlue, or a portion thereof
which is greater than 50 percent of the present
ownership is transferred to a third party, or
there has been a change in the beneficial
ownership of the total voting power of all classes of
stock then outstanding which are normally entitled to
vote in the election of JetBlue's directors. If JetBlue
can demonstrate to the satisfaction of IAE that the
surviving company resulting from the transfer is at
least as credit worthy as JetBlue prior to such
transfer then IAE will waive its rights under this
Paragraph (i).
(ii) JetBlue fails to make payment of any indebtedness for
borrowed money which, in the aggregate, is greater than
U.S.$[****] (or its equivalent in other currencies)
when due (subject to any applicable period of grace) or
any default or event of default occurs which causes
such indebtedness to become, or to permit any person to
declare the same, due prior to its normally maturity
and such person has not waived its right to declare the
same due.
(iii) JetBlue commences any case, proceeding or other action
with respect to JetBlue or its property in any
jurisdiction relating to bankruptcy, insolvency,
reorganization, dissolution, liquidation, winding-up,
or relief from, or with respect to, or readjustment of,
debts or obligations.
(iv) JetBlue seeks the appointment of a receiver, trustee,
custodian, or other similar official for JetBlue for
all or substantially all of its assets, or JetBlue
makes a general assignment for the benefit or its
creditors.
(v) JetBlue otherwise becomes the object of any case,
proceeding or action of the type referred to in the
preceding clauses (iii) or (iv) which remains unstayed,
undismissed or undischarged for a period of sixty (60)
days.
(vi) An action is commenced against JetBlue seeking issuance
of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of
its assets which remains unstayed, undismissed or
undischarged for a period of sixty (60) days; or
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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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(vii) In the opinion of IAE, a material adverse change has
occurred with respect to the financial condition or
operations of JetBlue since the date of this side
letter.
Then, in the event that any of the conditions listed in the
above paragraphs (i) through (vii) occur, JetBlue will no
longer receive: 1) any Third Deal Advanced Credits as
described in this Side Letter. JetBlue will instead
immediately pay IAE in immediately available funds (i) all FIA
Credit amounts already advanced and not yet repaid, and (ii)
all Third Deal Advanced Credits, subject to the limitations in
5.b. below, together with interest on the late payment of any
such amounts at [****] ([****]%), such rate to be determined
as of the date that the original payments were due. An
interest penalty for late payment will be applied from the
date such FIA Credits (as such advanced credits are defined in
Side Letter No. 8) or Third Deal Advanced Credits were due to
be paid to IAE until the date that IAE receives payment
therfor.
b. In the event that the repayment of the Third Deal Advanced
Credits is triggered pursuant to the foregoing Clause 5.a.,
the amount of Third Deal Advanced Credits not requiring
repayment to IAE is based upon the ratio of Third Deal
Aircraft delivered in accordance with the schedule in Exhibit
B-1 to the number of Third Deal Aircraft firmly ordered by
JetBlue. Such ratio will be calculated at the time the
repayment is triggered as provided above. So, for example, if
at the time repayment is triggered, JetBlue has taken delivery
of [****] out of the ten (10) firmly ordered Third Deal
Aircraft, JetBlue will be required to repay IAE [****]
([****]%), with interest as provided above, of the Third Deal
Advance Credits provided to JetBlue.
Except as expressly amended by this Side Letter No. 9 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 JetBlue Airways Corporation
/s/ ILLEGIBLE /s/ T.E. Anderson
---------------------------------- ------------------------------------
Name Name
TREASURER VICE PRESIDENT
---------------------------------- ------------------------------------
Title Title
1/8/02 1/8/02
---------------------------------- ------------------------------------
Date Date
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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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EXHIBIT A-1
FIRM AIRCRAFT ELIGIBLE FOR APPLICATION OF THIRD DEAL ADVANCED
CREDIT
<TABLE>
<CAPTION>
RANK NO. AIRCRAFT DELIVERY
<S> <C> <C>
No. 14 Firm Aircraft [****] 2002
No. 15 Firm Aircraft [****] 2002
No. 16 Firm Aircraft [****] 2002
No. 17 Firm Aircraft [****] 2002
No. 19 Firm Aircraft [****] 2002
No. 20 Firm Aircraft [****] 2002
No. 21 Firm Aircraft [****] 2002
No. 22 Firm Aircraft [****] 2002
No. 24 Firm Aircraft [****] 2002
No. 25 Firm Aircraft [****] 2002
No. 27 Firm Aircraft [****] 2003
No. 29 Firm Aircraft [****] 2003
No. 31 Firm Aircraft [****] 2003
No. 32 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. 40 Firm Aircraft [****] 2004
</TABLE>
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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.
<Page>
EXHIBIT B-1
AIRCRAFT DELIVERY SCHEDULES
As of December 2001
<TABLE>
<CAPTION>
RANK NO. AIRCRAFT DELIVERY
<S> <C> <C>
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
No. 26 Firm Aircraft** [****] 2002
No. 27 Firm Aircraft [****] 2003
No. 28 Firm Aircraft** [****] 2003
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
</TABLE>
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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.
<Page>
<TABLE>
<S> <C> <C>
No. 38 Firm Aircraft [****] 2003
No. 39 Firm Aircraft** [****] 2003
No. 40 Firm Aircraft [****] 2004
No. 41 Firm Aircraft** [****] 2004
No. 42 Firm Aircraft* [****] 2004
No. 43 Firm Aircraft* [****] 2004
No. 44 Firm Aircraft** [****] 2004
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* [****] 2005
No. 54 Firm Aircraft* [****] 2005
No. 55 Firm Aircraft* [****] 2005
No. 56 Firm Aircraft* [****] 2005
No. 57 Firm Aircraft* [****] 2005
No. 58 Firm Aircraft* [****] 2005
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* [****] 2006
No. 66 Firm Aircraft* [****] 2006
No. 67 Firm Aircraft* [****] 2006
No. 68 Firm Aircraft* [****] 2006
No. 69 Firm Aircraft* [****] 2006
No. 70 Firm Aircraft* [****] 2007
No. 71 Firm Aircraft* [****] 2007
No. 72 Firm Aircraft* [****] 2007
No. 73 Firm Aircraft* [****] 2007
No. 74 Firm Aircraft* [****] 2007
</TABLE>
*Firm Second Deal Aircraft
**Firm Third Deal 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.
<Page>
OPTION AIRCRAFT
<TABLE>
<S> <C> <C>
No. 75 Option Aircraft [****] 2004
No. 76 Option Aircraft [****] 2006
No. 77 Option Aircraft [****] 2006
No. 78 Option Aircraft [****] 2006
No. 79 Option Aircraft [****] 2006
No. 80 Option Aircraft [****] 2006
No. 81 Option Aircraft [****] 2006
No. 82 Option Aircraft [****] 2006
No. 83 Option Aircraft [****] 2007
No. 84 Option Aircraft [****] 2007
No. 85 Option Aircraft [****] 2007
No. 86 Option Aircraft [****] 2007
No. 87 Option Aircraft [****] 2007
No. 88 Option Aircraft [****] 2007
No. 89 Option Aircraft [****] 2007
No. 90 Option Aircraft [****] 2008
No. 91 Option Aircraft [****] 2008
No. 92 Option Aircraft [****] 2008
No. 93 Option Aircraft [****] 2008
No. 94 Option Aircraft [****] 2008
No. 95 Option Aircraft [****] 2008
No. 96 Option Aircraft [****] 2008
No. 97 Option Aircraft [****] 2008
No. 98 Option Aircraft [****] 2008
No. 99 Option Aircraft [****] 2008
No. 100 Option Aircraft [****] 2009
No. 101 Option Aircraft [****] 2009
No. 102 Option Aircraft [****] 2009
No. 103 Option Aircraft [****] 2009
No. 104 Option Aircraft [****] 2009
</TABLE>
Under the terms of its purchase agreement with Airbus for the Aircraft, JetBlue
has the right to receive delivery positions for Purchase Right Aircraft (also
referred to as Reserve Option Aircraft hereunder) equal to the number of Option
Aircraft as to which JetBlue has exercised its option purchase rights. Airbus
has granted JetBlue conversion rights for each of the nineteen (19) Option
Aircraft and Purchase Right Aircraft (also referred to as Reserve Option
Aircraft hereunder) from A320 Aircraft to the A321-200 or A319 aircraft type on
twenty-one months notice to Airbus. No dates are specified for delivery of these
Purchase Right Aircraft (also referred to as Reserve Option Aircraft hereunder).
Such delivery dares will be determined at the time options are exercised by
JetBlue.
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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.
<Page>
LEASED AIRCRAFT
<TABLE>
<CAPTION>
YEAR NUMBER DELIVERY PERIOD
---- ------ ---------------
<S> <C> <C>
1999 1 (1) [****]
2000 3 (1) [****], (1) [****], (1) [****]
2001 4 (1) [****], (2) [****], (1) [****]
2003 1 (1) [****]
TOTAL 9 All but the last of the leased aircraft
have been delivered
</TABLE>
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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.
<Page>
EXHIBIT B-2
PURCHASED ITEMS, PRICE,
ESCALATION FORMULA AND DELIVERY
As of December 2001
<TABLE>
<CAPTION>
Basic Contract
Rank Purchased Item Price Qty. Delivery Date
No. U.S. Dollars
(January 1999)
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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 [****]/06
11 V2527-A5 spare Engine: $[****] 1 [****]/07
12 V2527-A5 spare Engine: $[****] 1 [****]/08
<CAPTION>
Option Spare Engines
--------------------
<S> <C> <C>
V2524-A5 spare Engine: $[****]
V2527-A5 spare Engine: $[****]
V2533-A5 spare Engine: $[****]
</TABLE>
* These spare Engines have been delivered to JetBlue.
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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.
<Page>
IAE ESCALATION FORMULA
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.
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.
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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. 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.
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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.