EXHIBIT 10.40A(1)
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST.
CONTRACT CHANGE ORDER
PURCHASER: Atlantic Coast Airlines
PURCHASE AGREEMENT NO.: P.A.-0350 AIRCRAFT TYPE:CRJ-200
C.C.O. NO.: 13 DATED: 28/04/99
PAGES AFFECTED: N/A Page 1 of 2
____________________________________________________________
_________________________
1.0 REASON FOR CHANGE - Agreed Change
2.0DESCRIPTION OF CHANGE - To amend the Purchase Agreement with the
incorporation of the Letter Agreement No. 0350-25 for the change in
delivery month of the -----------Aircraft from-----------------------.
3.0 PRICE - Not Applicable
4.0 PAYMENT - Not Applicable
5.0 CUSTOMER SERVICES - Not Applicable
6.0 TECHNICAL MATTERS - Not Applicable
7.0 OTHER -
7.1 Letter Agreement No. 0372-25 attached hereto is
hereby created and made a part of the Agreement.
ALL OTHER TERMS AND CONDITIONS OF THE AGREEMENT WILL REMAIN
UNCHANGED
For administrative purposes only, a consolidation of the
amendments contained in this CCO is attached. In the event
of inconsistencies between the attached pages and this CCO,
this CCO shall prevail.
____________________________________________________________
_________________________
FOR AND ON BEHALF OF: FOR AND ON BEHALF
OF:
Bombardier Inc. Atlantic Coast
Airlines
Signed: _______________________________
Signed:_____________________
Date: ___28/04/98__ Date:
__28/04/99_
April 28, 1999
Our Ref: B99-7701-MD-RJ0350-025
Atlantic Coast Airlines
1 Export Drive,
Dulles, Virginia,
U.S.A. 20166
Letter Agreement No. 025 to Purchase Agreement No. RJ-0350
dated January 8, 1997 (the "Agreement" between Bombardier
Inc. ("BRAD") and Atlantic Coast Airlines ("Buyer") relating
to the purchase of forty-three (43) Canadair Regional Jet
Aircraft (the "Aircraft")
Subject: Change in Delivery Month
Gentlemen:
This letter constitutes an integral part of the Agreement
and evidences our further agreement with the matter set
forth below. All terms used herein and in the Agreement and
not defined herein, shall have the same meaning as in the
Agreement.
1. Bombardier has requested that Buyer start the delivery
and acceptance process of the ---------- Aircraft -----
----- on --------------, with the closing and
execution of the interim lease agreement ACL-332 on ---
-----------. -----------------------------------------
----, Bombardier will issue to Buyer a credit memo in
the amount of -----------------------------------------
------------------------------------------ upon the
execution of such lease agreement for the ----------
Aircraft.
2. The provisions of this Letter Agreement are personal to
Buyer and shall not be assigned or otherwise disposed
of by Buyer without the prior written consent of
Bombardier.
3. This Letter Agreement constitutes an integral part of
the Agreement and is subject to the terms and
conditions contained therein. To the extent of any
inconsistency or conflict between this Letter Agreement
and the Agreement, this Letter Agreement shall prevail.
Yours truly,
BOMBARDIER INC.
________________________ Date:_____________
Name: Marianella de la Barrera
Title: Account Executive, Contracts
Bombardier Regional Aircraft Division
Acknowledged and Accepted:
this________day of April, 1999
ATLANTIC COAST AIRLINES
________________________ Date:_____________
Name:
Title:
Atlantic Coast Airlines
CONTRACT CHANGE ORDER
PURCHASER: ATLANTIC COAST AIRLINES
PURCHASE AGREEMENT NO.: CRJ-0350 AIRCRAFT TYPE: CRJ
C.C.O. NO.: 14 DATED: July 29, 1999
PAGES AFFECTED: See below PAGE 1 of 38
REASON FOR CHANGE
1. To amend the Purchase Agreement to (i) give effect to the exercise by
Buyer of 17 Option Aircraft and thereby increase the order to 60 Firm
Aircraft, (ii) to provide Buyer with interim aircraft in the event of
a delay in delivery of those Aircraft scheduled to deliver in the-----
------ (iii) to introduce a new Maintenance Cost Guarantee Letter
Agreement to reflect the current order of 60 Aircraft and to include
within the Letter Agreement the 3 CRJ aircraft purchased by Buyer
pursuant to purchase agreement PA-0454, (iv) to revise the Completion
Rate Guarantee Letter Agreement and the Operational Restrictions
Letter Agreement to include the CRJ aircraft purchased by Buyer
pursuant to purchase agreement PA-0454, and (v) to give Buyer the
conditional right to assign its right to purchase and lease up to
seventeen (17) Aircraft to a new corporation to be formed in the
United States.
PAGES TO BE SUBSTITUTED NEW/REVISED PAGES
Purchase Agreement pages no. 56 & 56A Attachment 1 to CCO #14 dated
July 29, 1999
Purchase Agreement page no. C-1 Attachment 2 to CCO #14 dated July 29,
1999
Letter Agreement No. 006 page no. 2 Attachment 3 to CCO #14 dated
July 29, 1999
Letter Agreement No. 008A Attachment 4 to CCO #14
dated July 29, 1999
Letter Agreement No. 009C Attachment 5 to CCO #14
dated July 29, 1999
Letter Agreement No. 026 Attachment 6 to CCO #14 dated July 29,
1999
Letter Agreement No. 027 Attachment 7 to CCO #14 dated July 29,
1999
DESCRIPTION OF CHANGE:
P.A. and all Letter Agreements
All references to forty-three (43) Aircraft are hereby changed to refer
to sixty (60) Aircraft.
P.A. Pages 56 & 56A - DELIVERY SCHEDULE
The delivery schedule is amended to add Aircraft forty-four (44)
through sixty (60).
P.A. Page C-1 - FSR TERM
The term for the FSR is amended from ----------------------------------
-----------------------, due to the exercise of the seventeen (17)
Option Aircraft.
Letter Agreement No. 003B - (OPTION AIRCRAFT)
Letter Agreement No. 003B is no longer applicable and is hereby
canceled
Letter Agreement No. 006 - (OPERATIONAL RESTRICTIONS)
Letter Agreement is revised to include the CRJ aircraft to be delivered
under purchase agreement PA-0454 between Buyer and Bombardier.
Letter Agreement No. 008A (SCHEDULE COMPLETION RATE)
Letter Agreement No. 008 is hereby deleted and replaced with Letter
Agreement No. 008A to
include the CRJ aircraft to be delivered under purchase agreement PA-
0454 between Buyer and Bombardier.
Letter Agreement No. 009C (AIRFRAME DIRECT MAINTENANCE COST)
Letter Agreement No. 009B is hereby deleted and replaced with Letter
Agreement No. 009C to
incorporate changes to reflect a new guarantee value for the Airframe
Direct Maintenance Cost Guarantee ("ADMCG") which takes into account
Buyer's current order of sixty (60) Aircraft, and to include under the
Letter Agreement CRJ aircraft to be delivered to Buyer pursuant to
purchase agreement PA-0454 between Bombardier and Buyer.
The guarantee value shall be ------------------------------------------
-----------------------------------------------------------------------
--------
Letter Agreement No. 026 - INTERIM AIRCRAFT
Letter Agreement No. 026 is introduced to provide Buyer with interim
CRJ aircraft for lease in the event Bombardier requires these to meet
the year 2000 aircraft deliveries.
Letter Agreement No. 027 - ASSIGNMENT
Letter Agreement No. 027 is introduced to provide Bombardier's
conditional consent to Buyer with respect to Buyer's request to assign
its right to purchase and to lease up to seventeen (17) of the Aircraft
being exercised via this Contract Change Order to a new corporation to
be formed in the United States.
ALL OTHER TERMS AND CONDITIONS OF THE AGREEMENT WILL REMAIN UNCHANGED
___________________________________________________________________________
_____
FOR AND ON BEHALF OF: FOR AND ON BEHALF OF:
BOMBARDIER INC. ATLANTIC COAST AIRLINES
Signed: __________________________ Signed:__________________________
Date: __________________________ Date:
__________________________
APPENDIX II
DELIVERY SCHEDULE
First Aircraft ---------
Second Aircraft-----------
Third Aircraft--------------
Fourth Aircraft------------
Fifth Aircraft--------------
Sixth Aircraft-------------
Seventh Aircraft-----------
Eighth Aircraft-----------
Ninth Aircraft ---------
Tenth Aircraft ----------
Eleventh Aircraft------------
Twelfth Aircraft--------------
Thirteenth Aircraft------------
Fourteenth Aircraft-------------
Fifteenth Aircraft-------------
Sixteenth Aircraft-----------
Seventeenth Aircraft----------
Eighteenth Aircraft-----------
Nineteenth Aircraft---------
Twentieth Aircraft---------
Twenty-first Aircraft-------------
Twenty-second Aircraft--------------
Twenty-third Aircraft--------------
Twenty-fourth Aircraft--------------
Twenty-fifth Aircraft----------
Twenty-sixth Aircraft-----------
Twenty-seventh Aircraft--------
Twenty-eighth Aircraft---------
Twenty-ninth Aircraft----------
Thirtieth Aircraft-------------
Thirty-first Aircraft---------------**
Thirty-second Aircraft---------------**
Thirty-third Aircraft-------------**
Thirty-fourth Aircraft--------------**
Thirty-fifth Aircraft--------------
Thirty-sixth Aircraft--------------
APPENDIX II
DELIVERY SCHEDULE (CONTINUED)
Thirty-seventh Aircraft-------------
Thirty-eighth Aircraft-------------
Thirty-nine Aircraft-------------
Fortieth Aircraft-------------
Forty-first Aircraft--------------
Forty-second Aircraft -----------
Forty-third Aircraft -------------
Forty-fourth Aircraft --------------
Forty-fifth Aircraft --------------**
Forty-sixth Aircraft -----------
Forty-seventh Aircraft ---------------**
Forty-eighth Aircraft ---------------
Forty-ninth Aircraft ----------------**
Fiftieth Aircraft ----------------**
Fifty-first Aircraft --------------**
Fifty-second Aircraft ---------------**
Fifty-third Aircraft ---------------**
Fifty-fourth Aircraft --------------
** Fifty-fifth Aircraft --------------**
Fifty-sixth Aircraft -------------**
Fifty-seventh Aircraft -----------**
Fifty-eighth Aircraft --------------**
Fifty-ninth Aircraft ----------------**
Sixtieth Aircraft ------------------
CUSTOMER SUPPORT SERVICES
ANNEX A - TECHNICAL SUPPORT, SPARE PARTS, TRAINING AND
TECHNICAL DATA
The following Customer Support Services are those services
to which reference is made in Article 3 of the Agreement.
ARTICLE 1 - TECHNICAL SUPPORT
1.1 Factory Service
BRAD agrees to maintain or cause to be maintained the
capability to respond to Buyer's technical inquiries,
to conduct investigations concerning maintenance
problems and to issue findings and recommend action
thereon. This service shall be provided for as long as
ten (10) CL-600-2B19 aircraft remain in commercial air
transport service.
1.2 Field Service Representative
1.2.1 Services
BRAD shall assign one (1) Field Service
Representative ("FSR") to Buyer's main base of
operation or other location as may be mutually
agreed.
1.2.2 Term
*** Such assignment shall be for ---------------------
-------------- based on the purchase and delivery
of sixty (60) Aircraft to Buyer (should Buyer
eventually take delivery of less than sixty (60)
Aircraft, the term shall be accordingly amended as
per Letter Agreement No. 003B Article 3.0), and
shall commence approximately one (1) month prior
to the Delivery Date of the first Aircraft. The
FSR assignment may be extended on terms and
conditions to be mutually agreed.
1.2.3 Responsibility
The FSR's responsibility shall be to provide
technical advice to Buyer for the line maintenance
and operation of the Aircraft systems and
troubleshooting during scheduled and unscheduled
maintenance by Buyer's designated personnel ("FSR
Services").
(vi) not operating the Aircraft in normal commercial
airline service.
** 5.0 The term of this Letter Agreement shall commence on the
date of start of revenue service of Buyer's first Aircraft
and shall expire five (5) years thereafter and pertains to
the Aircraft included in the Agreement and the aircraft to
be delivered under purchase agreement PA-0454 between Buyer
and Bombardier dated July 29, 1999.
6.0 Without limitation to the foregoing, during any period of
grounding or operational restrictions, BRAD will diligently
work to correct the cause(s) relating thereto and Buyer will
provide all reasonable assistance, if required.
7.0 Limitation
7.1 --------------------------------------------------
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July 29, 1999
Our Ref: B96-7701-RJTL-RJ0350-008A
Atlantic Coast Airlines
515A Shaw Road,
Sterling, Virginia,
U.S.A. 20166
Gentlemen,
Letter Agreement No. 008A to Purchase Agreement No. RJ-0350 dated
January 8, 1997 (the "Agreement" between Bombardier Inc. ("BRAD")
and Atlantic Coast Airlines ("Buyer") relating to the purchase of
sixty (60) Canadair Regional Jet Aircraft (the "Aircraft")
This Letter Agreement No. 008A dated July 29, 1999 cancels and
supersedes Letter Agreement No. 008 dated January 8, 1997.
Subject: Schedule Completion Rate
1.0 This letter constitutes an integral part of the Agreement
and evidences our further agreement with the matters set
forth below. All terms used herein and in the Agreement and
not defined herein, shall have the same meaning as in the
Agreement.
2.0 Intent
The intent of the Schedule Completion Rate ------------
---------- is to achieve the full potential of the
inherent technical reliability of Buyer's sixty 60
Aircraft exercised by Contract Change Order No. 14 to
the Agreement together with Buyer's three (3) CRJ
aircraft purchased by Buyer pursuant to purchase
agreement PA-0454 dated July 29, 1999 between Buyer and
Bombardier Inc. (together redefined as the "Aircraft"
for purposes of this Letter Agreement only) -----------
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3.0 Definition
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4.0 --------------------------------------------------
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5.0 -------------------------------------------------------
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7.0 Assumptions
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8.0 Conditions and Limitations
8.1 ----------------------------------------
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8.2 Reporting
Buyer shall provide to BRAD not later than --
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--- all reports as required by Buyer's regulatory
authority relating to dispatch reliability and
schedule completion. ----------------------------
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----- Buyer shall also provide BRAD such other
information and data as BRAD may reasonably
request for the purpose of analyzing -------------
--------------. BRAD shall respond to the data in
a timely manner and shall provide Buyer with a
summary of fleetwide dispatch reliability reports
--------------------------------------------------
-------------------------
8.3 Master Record
The master record of Schedule Completion Rate
will be maintained by BRAD in its format based
upon information provided by Buyer's maintenance
control program as requested herein.
BRAD will provide a copy to Buyer of the
data. Buyer shall review the data and if it is
not in agreement with Buyer's records, Buyer and
BRAD will consult to resolve any differences.
9.0 Corrective Action
9.1 In the event the achieved schedule
completion rate, as reported to Buyer by
BRAD, ---------------------------------------
---------------------- BRAD and Buyer will
jointly review the performance for that
period to identify improvement changes
required. ----------------------------------
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a) ---------------------------------------------
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9.2 ---------------------------------------------
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shall be dependent upon the quality, extent and
regularity of information and data reported to
BRAD by Buyer.
10.0 Implementation of Changes
Buyer may, at its option, decline to implement any
change proposed by BRAD under Article 9.0 above. If
Buyer so declines, ------------------------------------
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13.0 Limitation of Liability
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14.0 The provisions of this Letter Agreement are personal to
Buyer and shall not be assigned or otherwise disposed of by Buyer
without the prior written consent of BRAD, which consent shall
not be unreasonably withheld. Should Buyer request to assign this
Letter Agreement to another entity, BRAD reserves the right to
revise the ------------------to reflect any deviation in any of
the underlying assumptions used to generate the------------------
- --- and to revise the maximum compensation credit to reflect any
changes in the number of Aircraft covered
15.0 This Letter Agreement constitutes an integral part of
the Agreement and subject to the terms and conditions
contained therein.
16.0 In the event of the Termination of the Agreement, this
Letter Agreement shall become automatically null and void.
Should there be any inconsistency between this Letter Agreement
and the Agreement with respect to the subject matter covered by
the terms hereof, then this Letter Agreement shall prevail.
Yours truly,
BOMBARDIER INC.
________________________ Date:_____________
Michel Bourgeois
Vice President, Contracts
Acknowledged and Accepted
Atlantic Coast Airlines
________________________ Date:_____________
Kerry B. Skeen
President and C.E.O.
LETTER AGREEMENT NO. 009C SUPERSEDED
July 29, 1999
Atlantic Coast Airlines
515A Shaw Road,
Sterling, Virginia,
U.S.A. 20166
Letter Agreement No. 026 to Purchase Agreement No. RJ-0350
dated January 8, 1997 (the "Agreement" between Bombardier
Inc. ("BRAD") and Atlantic Coast Airlines ("Buyer") relating
to the purchase of sixty (60) Canadair Regional Jet Aircraft
(the "Aircraft")
Subject: Interim Aircraft
Gentlemen:
This letter constitutes an integral part of the Agreement
and evidences our further agreement with respect to the
matters set forth below. All terms used herein and in the
Agreement and not defined herein, shall have the same
meaning as in the Agreement.
1.0 --------------------------------------------------
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--- BRAD shall have the flexibility to provide
interim Canadair Regional Jet Aircraft (the
"Interim Aircraft") on lease for periods not
exceeding ------------------ under the following
general conditions:
BRAD shall provide written notice to Buyer of its
intention to substitute Interim Aircraft for the -
---------- Aircraft deliveries and a form of short
term lease no later than ---------------- prior to
the first day of the Scheduled Delivery Date of
each of the ------------- Aircraft deliveries.
After notice to Buyer of BRAD's intention to
provide the first Interim Aircraft, Buyer shall
have-------------------------- to review the form
of lease and to negotiate with BRAD with respect
to the form of lease, unless the parties mutually
agree to extend the lease negotiation period. The
parties shall negotiate such lease terms in good
faith. Thereafter, Buyer shall advise BRAD if it
elects to accept the Interim Aircraft or to defer
the corresponding ------------- Aircraft delivery
to a Scheduled Delivery Date when Bombardier will
have Aircraft available (within the three (3)
month period identified in this paragraph 1.0).
The Interim Aircraft shall;
i)be in a neutral paint scheme;
ii) require no additional crew training
(other than what is currently required for
Buyer's flight and maintenance personnel);
iii) be leased at a lease rate -----------
------------------------------------------
------------------------------------------
------------------------------------------
----------------
iv) require maintenance reserves --------
------------------------------ and
v)have a lease period which shall end on the
day Buyer obtains FAA approval to add the
applicable --------- Aircraft on Buyer's
operations specifications, which will
occur no later than ---------------- after
the initial day of the lease, unless the
parties mutually agree otherwise to extend
the term of the Interim Aircraft lease.
1.1 With respect to the Interim Aircraft other
than the first Interim Aircraft accepted by
Buyer, Buyer shall have the right, within ---
--------------------- following notice from
BRAD of a substitution of a ------------
Aircraft with an Interim Aircraft, to elect
not to take the Interim Aircraft and to defer
the corresponding -------------- Aircraft
delivery to a Scheduled Delivery Date when
Bombardier will have Aircraft available
(within the --------------------- period
identified in paragraph 1.0).
1.2 BRAD shall use reasonable efforts to minimize
use of the Interim Aircraft as substitute
aircraft for Buyer's ------------- Aircraft,
so as to minimize slip of Buyer's -----------
---- Aircraft in the following calendar year.
1.3 The form of lease for the Interim Aircraft
shall conform to this Letter Agreement and
will contain reasonable terms which shall be
subject to the mutual agreement of the
parties.
2.0 In the event of the termination of the Agreement,
this Letter Agreement shall become automatically
null and void.
3.0 The provisions of this Letter Agreement are
personal to Buyer and shall not be assigned or
otherwise disposed of by Buyer without the prior
written consent of Bombardier.
4.0 This Letter Agreement constitutes an integral part of
the Agreement and is subject to the terms and
conditions contained therein. To the extent of any
inconsistency or conflict between this Letter Agreement
and the Agreement, this Letter Agreement shall prevail.
Yours truly,
BOMBARDIER INC.
________________________ Date:_____________
Michel Bourgeois
Vice-President, Contracts
Acknowledged and Accepted
ATLANTIC COAST AIRLINES
________________________ Date:_____________
Kerry B. Skeen
President and C.E.O.
July 29 1999
Atlantic Coast Airlines
515A Shaw Road,
Sterling, Virginia,
U.S.A. 20166
Letter Agreement No. 027 to Purchase Agreement No. RJ-0350
dated January 8, 1997 (the "Agreement" between Bombardier
Inc. ("BRAD") and Atlantic Coast Airlines ("Buyer") relating
to the purchase of sixty (60) Canadair Regional Jet Aircraft
(the "Aircraft")
Subject: Assignment
Gentlemen:
This letter constitutes an integral part of the Agreement
and evidences our further agreement with respect to the
matters set forth below. All terms used herein and in the
Agreement and not defined herein, shall have the same
meaning as in the Agreement.
1.0 Buyer shall have the right to assign its right to
purchase and to lease up to seventeen (17) Aircraft
being exercised by Contract Change Order No. 14
(Aircraft 44-60) to a new corporation to be formed in
the U.S. ("Newco") subject to:
(i) Newco shall be a U.S. citizen;
(ii) section 1110 of the U.S. Bankruptcy Code applies;
(iii) the provisions of Articles 20.1, 20.2, 20.3 of
the Agreement and Article 4.0 of Letter Agreement
No. 005b;
(iv) financing shall be based on Buyer's credit; and
(v) additional reasonable terms and conditions required
due to the different structure of the transaction
and aircraft operations following disclosure and
due diligence of the transaction envisaged.
3.0 Subject to the satisfaction of the foregoing, the
assignment shall then be an assignment permitted
pursuant to the terms of Article 20 of the
Agreement, such that Newco will be entitled to all
benefits (including FIPP) as contained in the
Agreement.
4.0 In the event of the termination of the Agreement,
this Letter Agreement shall become automatically
null and void.
5.0 The provisions of this Letter Agreement are
personal to Buyer and shall not be assigned or
otherwise disposed of by Buyer without the prior
written consent of Bombardier.
Yours truly,
BOMBARDIER INC.
________________________ Date:_____________
Michel Bourgeois
Vice-President, Contracts
Acknowledged and Accepted
ATLANTIC COAST AIRLINES
________________________ Date:_____________
Kerry B. Skeen
President and C.E.O.
CONTRACT CHANGE ORDER
PURCHASER: Atlantic Coast Airlines
PURCHASE AGREEMENT NO.: RJ-350 AIRCRAFT TYPE: CRJ
C.C.O. NO.: 15 DATED: September 10,
1999
PAGES: 21
REASON FOR CHANGE:
To amend the Purchase Agreement to (i) revise the Scheduled
Delivery Dates for the Twenty-fourth, the Twenty-sixth through
Thirty-first and Thirty-Third through Sixtieth Aircraft, and (ii)
introduce a new Airframe Direct Maintenance Cost Guarantee Letter
Agreement to reflect the current order of sixty (60) Aircraft and
to include within the Letter Agreement the six (6) CRJ aircraft
purchased by Buyer pursuant to purchase agreement PA-0454.
PAGES TO BE SUBSTITUTED: NEW/REVISED PAGES
Purchase Agreement pages 56 and 56A Attachment No. 1 to CCO
No. 15
Letter Agreement No. 009C Attachment No. 2 to CCO No. 15
DESCRIPTION OF CHANGE:
P.A. Pages 56 & 56A - Appendix II (Delivery Schedule)
The Delivery Schedule is amended by revising the Scheduled
Delivery Dates for the Twenty-fourth, the Twenty-sixth through
Thirty-first and the Thirty-Third through Sixtieth Aircraft.
Letter Agreement No. 009D (Airframe Direct Maintenance Cost)
Letter Agreement No. 009C is hereby deleted and replaced with
Letter Agreement No. 009D to incorporate changes to reflect a new
guarantee value for the Airframe Direct Maintenance Cost Guarantee
("ADMCG") which takes into account Buyer's current order of Sixty
(60) Aircraft, and to include under the Letter Agreement CRJ
aircraft to be delivered to Buyer pursuant to purchase agreement
No. PA-0454 between Bombardier and Buyer.
The guarantee value shall be --------------------------------------
- --------------------------------------------------------------------
- -------------
ALL OTHER TERMS AND CONDITIONS OF THE AGREEMENT WILL REMAIN
UNCHANGED
____________________________________________________________________
____________________
FOR AND ON BEHALF OF: FOR AND ON BEHALF OF:
Bombardier Inc. Atlantic Coast Airlines
Bombardier Aerospace
Regional Aircraft
Signed: __________________________
Signed:__________________________
Date: ____________________________ Date:
___________________________
APPENDIX II
DELIVERY SCHEDULE
First Aircraft-------------
Second Aircraft---------------
Third Aircraft---------------
Fourth Aircraft-----------------
Fifth Aircraft----------------
Sixth Aircraft-----------------
Seventh Aircraft----------------
Eighth Aircraft----------------
Ninth Aircraft----------------
Tenth Aircraft---------------
Eleventh Aircraft----------------
Twelfth Aircraft------------------
Thirteenth Aircraft-----------------
Fourteenth Aircraft-----------------
Fifteenth Aircraft---------------
Sixteenth Aircraft---------------
Seventeenth Aircraft---------------
Eighteenth Aircraft---------------
Nineteenth Aircraft---------------
Twentieth Aircraft---------------
Twenty-first Aircraft----------------
Twenty-second Aircraft--------------
Twenty-third Aircraft----------------*
Twenty-fourth Aircraft----------------
Twenty-fifth Aircraft------------
* Twenty-sixth Aircraft---------------*
Twenty-seventh Aircraft--------------
* Twenty-eighth Aircraft------------
* Twenty-ninth Aircraft-------------*
Thirtieth Aircraft---------------
* Thirty-first Aircraft----------------
Thirty-second Aircraft--------------
* Thirty-third Aircraft--------------
* Thirty-fourth Aircraft---------------
* Thirty-fifth Aircraft-------------
* Thirty-sixth Aircraft-------------
APPENDIX II
DELIVERY SCHEDULE (CONTINUED)
* Thirty-seventh Aircraft--------------*
Thirty-eighth Aircraft----------------*
Thirty-nine Aircraft----------------
* Fortieth Aircraft----------------
* Forty-first Aircraft----------------*
Forty-second Aircraft --------------
* Forty-third Aircraft --------------
* Forty-fourth Aircraft ---------------
* Forty-fifth Aircraft ---------------*
Forty-sixth Aircraft --------------
* Forty-seventh Aircraft -----------*
Forty-eighth Aircraft --------------
* Forty-ninth Aircraft ---------------*
Fiftieth Aircraft ---------------
* Fifty-first Aircraft ---------------*
Fifty-second Aircraft ---------------
* Fifty-third Aircraft ----------------*
Fifty-fourth Aircraft ----------------
* Fifty-fifth Aircraft ---------------*
Fifty-sixth Aircraft ----------------
* Fifty-seventh Aircraft --------------
* Fifty-eighth Aircraft ------------*
Fifty-ninth Aircraft ---------------
* Sixtieth Aircraft -----------------
September 10, 1999
Our Ref: B96-7701-RJTL-RJ0350-009D
Atlantic Coast Airlines
515A Shaw Road,
Sterling, Virginia,
U.S.A. 20166
Dear Sirs,
Letter Agreement No. 009D to Purchase Agreement No. RJ-
0350 dated January 8, 1997 (the "Agreement" between
Bombardier Inc. ("BRAD") and Atlantic Coast Airlines,
Inc. ("Buyer") relating to the purchase of sixty (60)
Canadair Regional Jet Aircraft (the "Aircraft")
This Letter Agreement No. 009D dated September 10, 1999
cancels and supersedes Letter Agreement No. 009C dated
July 29, 1999.
Subject: Airframe Direct Maintenance Cost
1.0 This letter constitutes an integral part of the
Agreement and evidences our further agreement with
the matters set forth below. All terms used
herein and in the Agreement and not defined
herein, shall have the same meaning as in the
Agreement.
2.0 Intent
2.1 The intent of the Airframe direct
maintenance cost ----------- is to achieve
the full potential of the maintainability of
the Buyer's sixty 60 Aircraft exercised by
Contract Change Order No. 14 to the Agreement
together with Buyer's six (6) CRJ aircraft
purchased by Buyer pursuant to purchase
agreement PA-0454 dated July 29, 1999 between
Buyer and Bombardier Inc. (together redefined
as the "Aircraft" for purposes of this Letter
Agreement only) -----------------------------
------------------- ------------------------
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2.2 The "Airframe" shall mean the Aircraft
excluding Power Plant Parts, APU parts,
seatcovers and carpets, Collins Avionics
Components, Buyer Furnished Equipment (BFE)
and Ground Support Equipment (GSE).
3.0 Airframe Direct Maintenance Cost ----------
3.1 ----------------------------------------
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3.1.1 The term of this
Letter Agreement shall commence on
the first day of the month following
delivery of the first Aircraft and
shall end seven (7) years thereafter;
3.1.2 ----------------------
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4.0 Calculation of Cost
4.1 Airframe Direct Maintenance Material
Cost ("ADMMC")
The ADMMC is defined as the cost of
material consumed, which excludes initial
provisioning purchases, for the direct
airframe maintenance of the aircraft, less
any transportation, duties, taxes or license
fees. Notwithstanding Buyer's internal cost
allocation system all elements of indirect
material such as cleaning supplies,
consumable tools, hydraulic fluids, oils and
greases, welding supplies and adhesives are
excluded from the calculation of ADMMC.
4.2 Airframe Direct Outside Service Cost
("ADOSC")
The ADOSC is defined as the cost
expended in outside services for direct
airframe and component maintenance of the
aircraft. The ADOSC shall include the total
outside service charges of both labour and
material costs, but excluding transportation
and taxes.
4.3 Hourly Airframe Direct Maintenance Cost ("ADMC")
The following formula shall be used to
calculate the hourly ADMC:
ADMC = ADMMC + ADOSC
T
Where:
ADMMC = Airframe Direct
Maintenance Material Cost,
ADOSC = Airframe Direct Outside
Service Cost,
T = Total flight hours for the
Aircraft recorded for the
applicable period.
4.4 Exclusion of In-House Labour Costs
For more certainty, the parties agree
that all labour costs incurred in-house by
Buyer in maintaining the Aircraft, including
but not limited to scheduled and routine
maintenance, troubleshooting, removal and
installation of parts, is excluded-----------
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5.0 ------------------
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6.0 Final Adjustment
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8.0 Reporting
8.1 Buyer will furnish data to BRAD to allow
BRAD to carry out its analysis and tracking
of Buyer's maintenance costs with respect to
-----------------. If Buyer is not in
agreement with BRAD's request for specific
data and format, Buyer and BRAD will consult
to resolve any differences.
8.2 BRAD shall provide a quarterly report to
Buyer on the status of the Airframe direct
maintenance cost based on the data submitted
by Buyer and approved by BRAD. BRAD shall
review the report and, if the supporting data
is not in agreement with Buyer's records,
Buyer and BRAD will consult to resolve any
differences. -------------------------------
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8.3 BRAD shall not contest any data, as
supplied by Buyer, once the -----------------
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9.0 Limitation of Liability
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10.0 The provisions of this Letter Agreement are
personal to Buyer and shall not be assigned or
otherwise disposed of by Buyer without the prior
written consent of BRAD, which shall not be
unreasonably withheld. Should Buyer request to
assign this Letter Agreement to another entity,
BRAD reserves the right to revise the ------------
--------- to reflect any deviation in any of the
underlying assumptions used to generate the ------
--------------------, and to revise the maximum
compensation credit to reflect any changes in the
number of Aircraft covered.
11.0 This Letter Agreement constitutes an integral part
of the Agreement and subject to the terms and
conditions contained therein.
12.0 In the event of the termination of the Agreement,
this Letter Agreement shall become automatically null
and void unless this Agreement is terminated by Buyer
pursuant to Article 16.1 or 16.2 as a result of a
default or breach of this Agreement by BRAD, or as a
result of an Excusable Delay or -----------------------
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Should there be any inconsistency between this Letter
Agreement and the Agreement with respect to the subject
matter covered by the terms hereof, then this Letter
Agreement shall prevail.
Yours very truly,
BOMBARDIER INC.
________________________ Date:_____________
Scott Preece
Manager, Contracts
Acknowledged and Accepted
ATLANTIC COAST AIRLINES
________________________ Date:_____________
Kerry B. Skeen
President and C.E.O.
APPENDIX A
AIRFRAME DIRECT MAINTENANCE COST ----------
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The following is a listing of all assumptions used to
determine --------- per flight hour. It is understood
by the parties that these assumptions may change in
which case the parties, with mutual agreement, will
adjust -----------
1. All costs are based upon Specification.
2. All costs are based on the maintenance inspection
intervals in the Buyer's regulatory agency
approved maintenance program.
3. All costs are expressed in July 1, 1997 United
States Dollars subject to escalation in accordance
with the terms of Appendix B of this Letter
Agreement, and are rounded to the nearest whole
dollar.
5. Buyer's subcontract airframe labour rate per man-
hour is ------------------------------------------
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6. --------------------------------------------------
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7. Annual average Aircraft utilization is not more
than -------------------------------------- flight
hours per year.
8. Buyer's average annual flight duration for the
Aircraft will be -------------------- minutes per
departure.
9. Total number of Aircraft Buyer has on firm order
from BRAD (including delivered Aircraft under the
Agreement and Aircraft purchased by Buyer pursuant
to purchase agreement PA-0454 between Buyer and
Bombardier) --------------------------------
Should Buyer's average annual flight duration
change throughout the ----------------------------
--------, a new Airframe Direct Maintenance Cost -
--------------- value will be generated as per the
following formula:
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9. Buyer's subcontracted maintenance cost levels are:
ATA CHAPTER PERCENT
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APPENDIX B
ADMCG Economic Adjustment Formula
The ADMCG economic adjustment will be calculated using
the ----------------------------------- Formula. The ---
- --------- term is specified in Section 3.1.1 of the
Letter Agreement.
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