=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q/A
Amendment No. 1
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly period ended September 30, 1996 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________________ to
______________________.
Commission File Number 0-27238
Western Pacific Airlines, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 86-0758778
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
2864 South Circle Drive, Suite 1100
Colorado Springs, Colorado 80906
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (719) 579-7737
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No[ ]
As of November 1, 1996 there were 13,379,890 shares of Common Stock of the
registrant issued and outstanding.
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<PAGE>
WESTERN PACIFIC AIRLINES, INC.
INDEX
PART I. FINANCIAL INFORMATION
Page Number
-----------
Item 1. Financial Information
Balance Sheets
September 30, 1996 and December 31, 1995 3
Statements of Operations
Three Months ended September 30, 1996 and 1995 4
Nine Months ended September 30, 1996 and 1995
Statements of Cash Flows
Nine Months ended September 30, 1996 and 1995 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
<PAGE>
WESTERN PACIFIC AIRLINES, INC.
BALANCE SHEETS
SEPT. 30, 1996 DEC. 31, 1995
-------------- --------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 19,289,039 $ 49,966,697
Restricted cash and cash equivalents 11,249,270 8,350,639
Accounts receivable, net of allowance for
uncollectible accounts of $285,000 and
$350,000 at Sept. 30, 1996 and December
31,1995, respectively 5,724,942 5,248,621
Prepaid expenses and other 15,719,767 4,110,174
Prepaid maintenance 6,668,990 1,648,498
------------- -------------
Total current assets 58,652,008 69,324,629
PROPERTY AND EQUIPMENT, net 39,462,490 13,335,405
PREPAID MAINTENANCE 4,114,435 2,232,797
AIRCRAFT AND ENGINE DEPOSITS 13,983,695 5,887,188
RESTRICTED CASH AND CASH EQUIVALENTS 955,308 571,985
OTHER 1,590,855 267,178
------------- -------------
$ 118,758,791 $ 91,619,182
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 6,009,581 $ 2,206,303
Accrued expenses 12,233,916 11,018,931
Air traffic liability 18,561,439 11,137,622
Other 1,580,824 1,125,409
------------- -------------
Total current liabilities 38,385,760 25,488,265
------------- -------------
LONG-TERM DEBT 15,285,775 -
OTHER LIABILITIES 1,446,528 465,418
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 13,367,050
issued and 13,362,050 outstanding at
September 30, 1996, and 13,220,913 issued
and outstanding at December 31, 1995 13,367 13,221
Deferred management fees (600,000) (900,000)
Additional paid-in capital 79,953,843 79,363,393
Treasury stock (5,000 shares) (82,761) -
Accumulated deficit (15,643,721) (12,811,115)
------------- -------------
Total stockholders' equity 63,640,728 65,665,499
------------- -------------
$ 118,758,791 $ 91,619,182
============= =============
See accompanying notes.
<PAGE>
<TABLE>
WESTERN PACIFIC AIRLINES, INC.
CONDENSED STATEMENT OF OPERATIONS
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPT.30,1996 SEPT.30,1995 SEPT.30,1996 SEPT.30,1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATING REVENUES
- ------------------
Passenger revenue $ 44,374,767 $ 21,813,326 $115,426,934 $ 29,254,546
Cargo and other revenue 1,146,092 476,516 3,113,170 646,563
------------ ------------ ------------ ------------
Total Operating Revenues 45,520,859 22,289,842 118,540,104 29,901,109
------------ ------------ ------------ ------------
OPERATING EXPENSES
- ------------------
Salaries, wages, and benefits 7,671,333 4,720,115 21,872,593 8,529,260
Aircraft lease expense 11,747,081 4,631,320 28,618,915 6,872,853
Aircraft fuel and oil 8,841,993 3,000,529 21,518,814 4,288,733
Other rentals, landing and ground handling 4,288,427 2,588,979 12,645,003 4,173,342
Advertising expense 2,105,384 1,329,535 6,544,083 2,468,798
Insurance 1,238,764 716,199 4,257,656 1,414,402
Maintenance materials and repairs 2,718,466 799,294 6,759,690 1,068,350
Agency commissions 1,631,491 907,579 4,051,106 1,172,516
Depreciation and amortization 1,358,172 563,870 3,209,824 956,766
Other operating expenses 4,892,134 2,871,905 13,191,816 6,993,588
------------ ------------ ------------ ------------
Total Operating Expenses 46,493,245 22,129,325 122,669,500 37,938,608
------------ ------------ ------------ ------------
Operating Income (Loss) (972,386) 160,517 (4,129,396) (8,037,499)
INTEREST INC.,NET OF EXP. 62,061 211,122 1,296,790 553,119
------------ ------------ ------------ ------------
NET INCOME(LOSS) $ (910,325) $ 371,639 $ (2,832,606) $ (7,484,380)
============ ============ ============ ============
INCOME(LOSS) PER COMMON SHARE
AND COMMON SHARE EQUIVALENT $ (0.07) $ 0.03 $ (0.21) $ (0.72)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES AND
COMMON SHARE EQUIVALENTS OUTSTANDING 13,356,066 10,644,000 13,286,723 10,365,005
============ ============ ============ ============
<FN>
<FN1>
See Accompanying Notes
</FN>
</TABLE>
<PAGE>
WESTERN PACIFIC AIRLINES, INC.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED
SEPT.30,1996 SEPT.30,1995
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (2,832,606) $ (7,484,379)
Adjustments to reconcile net loss to net cash
used in operations -
Depreciation and amortization 3,209,824 896,382
Gain on asset sale/leaseback (55,413) -
Amortization of deferred management fee 300,000 200,000
Increase in receivables (476,321) (4,222,527)
Increase in prepaid expenses and other (11,609,593) (2,532,927)
Increase in prepaid maintenance (6,902,130) (2,014,047)
Increase in aircraft and engine deposits (2,296,507) (4,004,866)
Increase in restricted cash (3,281,954) (9,310,293)
Increase in other assets (1,323,677) (425,154)
Increase in accounts payable 3,803,278 135,886
Increase in accrued expenses 1,214,985 6,919,447
Increase in air traffic liability 7,423,817 10,690,243
Increase in other liabilities 536,696 219,496
------------ ------------
Net cash used in operating activities (12,289,601) (10,932,739)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (29,336,909) (9,783,614)
Increase in production and option deposits (5,800,000) -
------------ ------------
Net cash flows used in investing activities (35,136,909) (9,783,614)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in long-term debt 16,616,117 -
Principal payments on long-term debt (375,100) -
Sale of common stock, net of issuance costs - 551,850
Sale of preferred stock, net of issuance costs - 10,208,983
Additional issuance costs related to IPO (362,223) -
Sale of common stock in connection with the ESPP 200,761 -
Exercise of stock options 752,058 -
Purchase of treasury stock (82,761) -
------------ ------------
Net cash flows provided by financing activities 16,748,852 10,760,833
------------ ------------
DECREASE IN CASH (30,677,658) (9,955,520)
CASH, beginning of period 49,966,697 13,002,743
------------ ------------
CASH, end of period $ 19,289,039 $ 3,047,223
============ ============
See Accompanying Notes
<PAGE>
WESTERN PACIFIC AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS
1. PREPARATION OF FINANCIAL STATEMENTS
The accompanying financial statements are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments) which are, in
the opinion of management, necessary for a fair presentation of the financial
position and operating results for the interim periods. The organization and
business of the Company, accounting policies followed by the Company, and
other information are contained in the notes to the Company's audited
financial statements filed as part of the Company's December 31, 1995 Annual
Report on Form 10-K. This quarterly report should be read in conjunction with
such annual report. The results of operations for the nine months ended
September 30, 1996 may not necessarily be indicative of the results for the
entire fiscal year ending December 31, 1996.
2. LONG TERM DEBT
In April, 1996, the Company purchased a 1989 Boeing 737-300 aircraft for
cash and a $16.6 million note payable to a third party. The note, which
matures in April 2011, requires monthly payments of principal and interest,
which accrues annually at 10.4 percent. The note is subject to the terms of a
credit agreement, security agreement and chattel mortgage. The terms of these
agreements require the Company to deposit an amount per flight hour into a
maintenance cost reserve fund, which the Company may subsequently draw from as
actual airframe and engine overhaul expenses are incurred. The reserve fund
requirement may be eliminated in the event the Company achieves certain
tangible net worth targets or enters into acceptable Maintenance Service
Program agreements with third party maintenance providers. The Company may
prepay the note starting in April 2000, subject to certain prepayment
provisions. The note payable is collateralized by the aircraft.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THIS REPORT ON FORM 10-Q CONTAINS FORWARD LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER
MATERIALLY. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES
INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN THE SECTION ENTITLED
"OUTLOOK: ISSUES AND UNCERTAINTIES", AS WELL AS THOSE DISCUSSED ELSEWHERE IN
THE COMPANY'S REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
OVERVIEW
The Company commenced operations on April 12, 1994 as a development stage
enterprise organized to operate a low-fare, medium-haul, scheduled passenger
airline from its hub at the Colorado Springs Airport. From its inception until
it commenced flight operations on April 28, 1995, the Company's activities
were limited to start-up activities, including raising capital, recruiting key
operating personnel, developing computerized passenger reservation and
information systems, negotiating airport facilities and aircraft leases,
contracting ground handling and aircraft maintenance services, conducting
pilot and flight attendant training and obtaining FAA certification. The
Company incurred approximately 75% of its development and start-up expenses
during the period from January 1, 1995 to April 27, 1995.
The Company began flight operations on April 28, 1995 with two Boeing 737-
300 aircraft and provided six daily round-trips between Colorado Springs and
five cities. During 1995, the Company continued to add aircraft and cities,
and had 12 aircraft providing 26 round-trips between Colorado Springs and 16
cities across the United States at December 31, 1995. The following chart
indicates the Company's expansion of service since December 31, 1995.
<PAGE>
Total Number
Number of Round
As of Month End of Aircraft Trips Service Changes
- --------------- ----------- -------- ----------------------------------
January 1996 12 26 Started one round-trip to Atlanta,
reduced one round-trip to Dallas
February 1996 12 28 Started one round-trip in each of
Nashville, San Antonio, and San
Jose, and withdrew service from
Wichita
March 1996 13 28 Added an additional round-trip to
Phoenix and Las Vegas and reduced
one trip per day to each of
Seattle and San Francisco
May 1996 14 30 Started one round-trip to Portland,
and added one additional round-trip
to Newark
June 1996 16 (1) 33 Added an additional trip to San
Antonio, San Diego and San Francisco
July 1996 17 35 Added an additional trip to Atlanta
and Seattle
September 1996 15 31 Started one round trip to Orlando
and Ontario (CA); reduced one trip
per day to each of Newark, Atlanta,
Oklahoma City, San Antonio, Seattle,
and San Francisco
(1) The Company wet leased two Boeing 727-200 aircraft for the seasonal period
covering mid-June through September 5, 1996. The Company took delivery of its
fifteenth aircraft in July 1996.
The Company has previously announced that on December 4, 1996, it will withdraw
service to San Jose, California and eliminate one round trip to San Diego and
add service to Miami, Florida.
RESULTS OF OPERATIONS
Operating Revenues
Airline revenue is primarily a function of the number of passengers flown
and the fares charged by the airline. Passenger ticket sales are recognized as
revenue when the transportation is provided. The Company's fares are generally
non-refundable and changes in travel plans may be made only prior to scheduled
departure for a $35 change fee, plus any fare increase. Fares for passengers
who do not cancel in advance of scheduled departure and do not take the
scheduled flight are recognized as revenue when the scheduled flight departs.
The chart presented below compares the Company's passenger load factor to
the incremental growth in capacity as measured by available seat miles (ASM).
The airline industry is extremely seasonal, with the highest load factors
typically occurring in the summer months, and the lowest load factors
occurring during September through October and January, February, April and
May. The Company's load factor increased 1.0 percentage point for the quarter
ended September 30, 1996 from the quarter ended June 30, 1996, primarily due
to seasonality. The Company's load factor decreased 10.0 percentage points
when comparing the quarter ended September 30, 1996 to the quarter ended
September 30, 1995. This decrease can be attributed to adverse publicity
related to the ValuJet and TWA accidents which occurred in May and July, 1996,
respectively; aggressive summer 1996 capacity increases and pricing initiatives
by competitors at both Colorado Springs and Denver; and the reimposition of the
10% federal excise tax on tickets.
<TABLE>
<CAPTION>
Passenger Total Increase (Decrease)
Operating Period Load Factor Available Seat Miles in Capacity)
- ---------------- ----------- -------------------- ------------------
(000s)
<C> <C> <C>
May 1995 60.3% 46,934 --
June 1995 60.7 82,720 76.2%
Quarter ended September 30, 1995 67.5 320,462 147.2 (1)
Quarter ended December 31, 1995 60.1 428,067 33.6
Quarter ended March 31, 1996 58.7 565,706 32.2
Quarter ended June 30, 1996 56.5 622,519 10.0
Quarter ended September 30, 1996 57.5 745,821 19.8
<FN>
<FN1>
(1) Calculated as the increase in capacity over total available seat miles
for the months of May and June 1995 combined.
</FN>
</TABLE>
<PAGE>
Generally, passenger revenue per revenue passenger mile (RPM) or yield, has
increased since the Company's inception due to a combination of factors
including increases in average fares and decreases in discounted introductory
fares as a percentage of total fares. However, in periods when the Company
introduces promotional fares in new markets or uses promotional fares to
stimulate additional travel in existing markets, the Company generally
experiences a decrease in passenger revenue per RPM as is reflected in the
decline in the passenger revenue per RPM during the fourth quarter of 1995.
The Company believes that the negative impact of entering new markets and the
use of discounted fares should decrease as the Company increases its overall
revenue base and customer awareness. For the quarter ended September 30, 1996,
the Company produced a yield of 10.36 cents which is a 2.2% decrease in yield
from the prior quarter primarily as a result of the reenactment of the 10%
federal excise tax on August 27, 1996. The Company shows a 2.7% increase in
yield when compared to the prior year's respective quarter resulting from fewer
promotional fares and a larger concentration of bookings in the higher fare
categories.
<TABLE>
<CAPTION>
Passenger Revenue Average Revenue
Operating Period Revenue Passenger Miles Segment Fare Per RPM
- ---------------- --------- --------------- ------------ -------
(000's) (000's) (cents)
<C> <C> <C> <C>
May 1995 $ 2,597 28,287 $ 61.81 9.18
June 1995 4,845 50,238 71.18 9.64
Quarter ended September 30,1995 21,813 216,196 75.81 10.09
Quarter ended December 31, 1995 24,126 257,091 72.36 9.38
Quarter ended March 31, 1996 32,787 332,061 80.36 9.87
Quarter ended June 30, 1996 38,265 351,547 91.89 10.60
Quarter ended September 30, 1996 44,375 428,509 90.98 10.36
</TABLE>
The Company's operating break-even load factor during the seventeen months
of its operations has fallen from a high of 104.8% in May 1995 to 58.7% for
the quarter ended September 30, 1996. Historically, as the Company's fleet
has expanded, the incremental passenger revenue generated from the additional
capacity has covered the incremental costs of the expansion, as well as a
portion of the Company's existing fixed costs, resulting in a steady decline
in the operating break-even load factor. While the Company's cost per ASM
continued to decrease for the quarter ended September 30, 1996 from the prior
quarter, the operating break even load factor increased slightly by 2.3
percentage points based on the reduction in yield quarter over quarter as
explained above. There can be no assurance that any incremental passenger
revenue generated in the future as the Company expands its fleet will be
sufficient to cover incremental costs or that, ultimately, as a result of
these or other factors, the Company's operating break-even load factor will
decrease.
Operating Operating
Cost Per Break-Even
Operating Period ASM Load Factor
- --------------------------------------- --------- -----------
(cents)
May 1995 9.96 104.8%
June 1995 7.69 79.6
Quarter ended September 30,1995 6.91 67.0
Quarter ended December 31, 1995 6.59 68.4
Quarter ended March 31, 1996 6.52 64.2
Quarter ended June 30, 1996 6.31 56.4
Quarter ended September 30, 1996 6.23 58.7
<PAGE>
OPERATING EXPENSES
The following table shows the components of operating cost per available
seat mile, (shown in cents):
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
SEPT. 30, 1996 SEPT. 30,1995 SEPT. 30, 1996 SEPT. 30, 1995
-------------- ------------- -------------- --------------
(cents) (cents) (cents) (cents)
<C> <C> <C> <C>
Salaries, wages and benefits 1.03 1.47 1.13 1.53
Aircraft lease expense 1.57 1.45 1.48 1.45
Aircraft fuel and oil 1.19 .94 1.11 .95
Other rentals, landing, and ground handling fees .57 .81 .65 .87
Advertising and public relation .28 .41 .34 .50
Insurance expense .17 .22 .22 .25
Maintenance materials and repairs .36 .25 .35 .38
Agency and cargo commissions .22 .28 .21 .26
Depreciation and amortization .18 .18 .17 .17
Other operating expenses .66 .90 .68 1.01
---- ---- ---- ----
Total 6.23 6.91 6.34 7.37
==== ==== ==== ====
</TABLE>
Salaries, wages and benefits decreased by .44 cents per ASM or 32% when
comparing the quarter ended September 30, 1996 to the quarter ended September
30, 1995. This decrease can be attributed to a 133% increase in ASMs, with
only a 64% increase in full-time equivalent personnel (FTE). Salaries, wages,
and benefits decreased by .40 cents per ASM or 26% when comparing the nine
months ended September 30, 1996 to the nine months ended September 30, 1995.
This decrease can also be attributed to the increase in ASMs over the period
noted, with a proportionally smaller increase in FTEs.
Aircraft lease expense increased .12 cents per ASM, or 8% for the quarter
ended September 30, 1996 from the quarter ended September 30, 1995. The
increase is due to the wet lease of two Boeing 727 aircraft during the period
of mid-June through September 5, 1996 which increased the Company's cost for
the quarter by .30 cents per ASM, as compared to the quarter ended June 30,
1996. The lease rate for the 727's was inclusive of aircraft rent, in-flight
crews, and insurance. The Company owns a fifteenth aircraft whose costs are
accounted for in depreciation and interest expense. If the Company had leased
this aircraft, the aircraft lease cost for the nine months ended September 30,
1996 would have been 1.54 cents per ASM, or .06 cents higher than reported
above. Aircraft lease expense increased by .03 cents per ASM, or 2% for the
nine months ended September 30, 1996 from the nine months ended September 30,
1995. This increase is due to the wet lease previously noted, and slightly
higher average lease rates for the Company's aircraft taken in to the fleet
since September 1995.
Aircraft fuel and oil expense increased by .25 cents per ASM or 27% when
comparing the quarter ended September 30, 1996 to the quarter ended September
30, 1995. This increase reflects the effect of a 13.8 cent per gallon or 22%
fuel price increase over the period. A portion of the increase in the price
per gallon is due to the assessment of a 4.3 cents per gallon federal excise
tax from which the industry was exempt during the quarter ended September 30,
1995. This tax became effective October 1, 1995. Aircraft fuel and oil
increased by .16 cents per ASM or 17% for the nine months ended September 30,
1996 from the nine months ended September 30, 1995. This increase is the
result of an increase in the average price per gallon for the periods noted of
11.2 cents or 17%. Additionally, the volume of fuel consumed on an hourly
basis for the 727-200 aircraft on wet lease during the quarter, is almost
double that of the Company's 737-300 aircraft.
Other rentals, landing, airport and ground handling fees decreased by .24
cents per ASM or 30% when comparing the quarter ended September 30, 1996 to
the quarter ended September 30, 1995. This decrease was primarily due to a
19% increase in average stage length, which increased from 731 miles for the
quarter ended September 30, 1995 to 873 miles for the quarter ended September
30, 1996. This increase in the average stage length indicates that the
increase in the number of flights was materially less on a percentage basis
than the increase in the number of ASMs. Additionally, airport rents and fees
at the Company's hub in Colorado Springs decreased substantially because of a
substantial increase in the number of passengers enplaned. Lastly, the
Company added flight frequencies in existing markets so the increase in ASMs
did not have a corresponding increase in costs. Other rental, landing,
airport and ground handling fees decreased by .22 cents per ASM or 25% when
comparing the nine months ended September 30, 1996 to the nine months ended
<PAGE>
September 30, 1995. This decrease was due to an 18% increase in average stage
length, from 720 miles for the nine months ended September 30, 1995 to 849
miles for the nine months ended September 30, 1996, in addition to the other
factors discussed previously.
Advertising expense decreased by .13 cents per ASM or 32% when comparing
the quarter ended September 30, 1996 to the quarter ended September 30, 1995.
This decrease is due to the high cost of advertising service to four new
cities (Houston, Indianapolis, San Diego, and Wichita) in the third quarter of
1995, versus only two new cities (Orlando and Ontario) in the third quarter of
1996. Advertising expense decreased by .16 cents per ASM or 32% when
comparing the nine months ended September 30, 1996 to the nine months ended
September 30, 1995. This decrease is due to the high level of introductory
advertising needed in the Company's first five months of operation to generate
service awareness.
Insurance expense decreased by .05 cents per ASM or 23% when comparing
the quarter ended September 30, 1996 to the quarter ended September 30, 1995.
This decrease reflects an overall rate reduction achieved by the Company
because of its favorable risk experience during its initial year of service.
Insurance expense decreased by .03 cents per ASM or 12% when comparing the
nine months ended September 30, 1996 to the nine months ended September 30,
1995. The Company's insurance rates for the initial policy period of March,
1995 through March, 1996 were inordinately high due to the Company's start-up
air carrier status.
Maintenance materials and repairs expense increased by .11 cents per ASM or
44% when comparing the quarter ended September 30, 1996 to the quarter ended
September 30, 1995. This increase reflects the amortization of airframe "C"
maintenance checks and engine overhauls performed on the Company's fleet. As
aircraft are inducted into the Company's fleet, they are usually fresh from a
"C" check and engines usually have a year of useful life remaining, thereby
reducing the Company's maintenance expense in the first year of operations for
each aircraft. The Company uses the deferral method of accounting for "C"
check maintenance and engine overhaul costs. Maintenance materials and
repairs decreased .03 cents per ASM or 8% for the nine months ended September
30, 1996 from the nine months ended September 30, 1995. This decrease is
associated with the reduction in the costs associated with inducting aircraft
into the Company's fleet, because the later aircraft additions are newer in
vintage and required less maintenance program bridging activities. Additionally,
costs for the nine months ended September 30, 1995 reflect some one-time initial
consumables inventory provisioning.
Agency and cargo commissions decreased by .06 cents per ASM or 21% when
comparing the quarter ended September 30, 1996 to the quarter ended September
30, 1995. This decrease reflects a slight decrease in the percentage of sales
booked through travel agencies from 41% for the quarter ended September 30,
1995 to 37% for the quarter ended September 30, 1996. One reason for this
decrease is that as the consumer becomes more aware of the Company's product,
the consumer books directly through the Company instead of the travel agency.
Agency and cargo commissions decreased by .05 cents or 19% when comparing the
nine months ended September 30, 1996 to the nine months ended September 30,1995.
This decrease reflects a similar decrease in the percentage of sales booked
through travel agencies from 40% for the nine months ended September 30, 1995 to
35% for the nine months ended September 30, 1996.
Depreciation and amortization remained flat at .18 cents per ASM when comparing
the quarter ended September 30, 1996 to the quarter ended September 30, 1995;
and at .17 cents per ASM when comparing the nine months ended September 30, 1996
to the nine months ended September 30, 1995. The increase in ASMs was directly
proportional to the increase in assets.
Other operating expenses decreased by .24 cents per ASM or 27% when comparing
the quarter ended September 30, 1996 to the quarter ended September 30, 1995.
Other operating expenses include property taxes, telecommunication and utilities
charges, professional and consulting services, supplies and minor equipment
(excluding aircraft maintenance supplies), credit card processing fees, bad debt
expense, travel and incidental expense, and passenger re-accommodation and
baggage delivery charges. Some of these costs, such as utilities, professional
fees, and travel and incidental are costs which do not vary with the number of
ASMs so the decrease in these costs results from the larger number of ASMs over
which such costs are allocated. Decreases in variable costs such as
telecommunications, supplies, credit card processing fees, etc., resulted from
the Company's continued focus on cost control and an increase in the number of
ASMs over which such costs are allocated. Additionally, through improvements
made to the Company's reservation and telecommunications systems, the Company
has reduced its overall telecommunications costs as measured on a per
enplanement basis. Other operating expenses decreased .33 cents per ASM when
comparing the nine months ended September 30, 1996 to the nine months ended
<PAGE>
September 30, 1995. The reasons for this decrease are the same as those
explained previously for the decrease in other operating costs from the quarter
ended September 30, 1996 to the quarter ended September 30, 1995.
BALANCE SHEET FLUCTUATION ANALYSIS
The Company's prepaid expenses and other current assets account increased
by $11.6 million or 282% during the nine months ended September 30, 1996.
Approximately $9.2 million of this increase is the costs of capitalized "C"
level airframe maintenance checks and engine overhauls which are being
amortized over the period expiring until the next scheduled "C" check or
engine overhaul. Additionally, over $1.6 million of the remaining increase
represents prepaid aviation insurance premiums which are paid ratably over the
policy period, but are expensed as incurred based on revenue passenger miles
flown and the number of aircraft comprising the fleet.
The Company's current and long-term prepaid maintenance reserve accounts
increased by $6.9 million or 178% during the nine months ended September 30,
1996. Aircraft maintenance reserves are paid on a monthly basis, in arrears,
on a cost per flight hour or cycle basis to the lessors of the Company's
airframes and engines. The combined balance at December 31, 1995 was $3.9
million, representing 14,926 flight hours at an average reserve rate of $260
per flight hour. The $6.9 million increase reflects a contribution for the
flight hours produced during the nine month period, net of reserves released
to the Company for the cost of covered maintenance events. Reserve
contributions classified as short term coincide with the reimbursable cost of
anticipated "covered maintenance events" that will occur during the balance of
1996 and the first nine months of 1997.
Aircraft and engine deposits increased by $8.1 million during the nine
months ended September 30, 1996 resulting from $4.6 million in production
deposits paid to Boeing for new 737-300 aircraft, $1.2 million in aircraft
option deposits paid to Boeing, and $2.3 million paid to various lessors as
security deposits on other aircraft. The Company had paid $500,000 in
deposits to potential aircraft lessor which was returned to the Company in
October 1996. (See further discussion of Boeing agreement under "Liquidity
and Capital Resources".)
The Company's property and equipment increased $26.1 million during the
nine months ended September 30, 1996 primarily due to the purchase of a 1989
vintage Boeing 737-300 aircraft. The aircraft was financed with cash equity
from the Company and a $16.6 million note payable to a third party. The
aircraft is being depreciated for book purposes over an estimated useful life
of 20 years.
Other assets increased by $1.3 million during the nine months ended September
30, 1996. The majority of the increase is the Company's advances to Mountain
Air Express (MAX), an affiliated regional carrier scheduled to begin service
to the resort communities of Colorado in December 1996. MAX has its own
management team and the is currently in the process of raising capitalfor the
entity as a stand alone enterprise. If the offering is fully subscribed, it is
anticipated that the Company, its employees, and related persons will own 53%
of MAX.
The Company's air traffic liability account increased by $7.4 million or
67% during the nine months ended September 30, 1996. This increase resulted
primarily from advance reservations made for travel primarily during the last
quarter of 1996 and the first quarter of 1997, and the increase in the number
of flights from December 31, 1995 to September 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
From the Company's inception on April 12, 1994 through September 30, 1996,
the Company's pre-operating and development costs, as well as its operating
costs since the commencement of flight operations, have been funded primarily
with the proceeds from private sales of its equity securities and from the
proceeds of its initial public offering. The Company has received net proceeds
from the sale of equity securities aggregating approximately $76.8 million.
During the nine months ended September 30, 1996, the Company's operating
activities resulted in a cash flow deficit of $12.3 million, which has been
funded primarily with proceeds from the private and public sale of the
Company's equity securities. At September 30, 1996, the Company had cash and
cash equivalents of $30.5 million, including restricted cash and cash
equivalents of $11.2 million. Working capital at September 30, 1996 was
approximately $20.3 million.
<PAGE>
Cash flow used in investing activities totaled $35.1 million during the
nine months ended September 30, 1996 of which $29.3 million was capital
expenditures including $22.2 million related to the acquisition of a 1989
vintage Boeing 737-300 aircraft which was funded in part through a long-term
note payable from a third party. Other capital expenditures consisted of
aircraft modifications and the acquisition of ground equipment,
telecommunications and computer equipment, software, facility leasehold
improvements, office equipment and furniture. The remaining investment
activities were comprised of the Boeing new aircraft deposits described above
(see other assets).
The Company expects to incur approximately $20.0 million for capital
expenditures over the next 12 months of which $14.9 million is expected to be
financed by third parties. These expenditures cover additional production
deposits due Boeing for new B737-300 aircraft, aircraft interior modification
improvements and fleet induction costs, construction of additional passenger
terminal facilities at Colorado Springs, telecommunications and computer
equipment, reservation and information system improvements, aircraft
maintenance facilities tooling and equipment.
At September 30, 1996, the Company operated fourteen aircraft under
operating leases with terms of either five or ten years. The Company's
fifteenth aircraft was purchased, and is described previously. Effective June
10, 1996, the Company entered into a lease agreement with Express One
International for two Boeing 727-200 aircraft. This lease covered the cost of
in-flight crews, maintenance, and insurance for round-trip flights on the
Company's routes between Colorado Springs and Newark, and Colorado Springs and
Washington Dulles. The agreement required the Company to pay rental payments
based on the number of block hours of aircraft utilization. The wet lease
expired on September 5, 1996. The Company does not anticipate any additional
deliveries of used aircraft for the balance of 1996. Additionally, the
Company leases up to five spare engines at any time under operating leases
with terms ranging from several months to three years. Rent expense under all
operating leases is recognized on a straight-line basis over the lease term.
The amount charged to aircraft and engine lease expense was approximately
$28.7 million for the nine months ended September 30, 1996. Over the next 12
months, the Company expects to incur approximately $20.4 million for aircraft
maintenance reserve deposits, aircraft lease security deposits and aircraft
heavy maintenance (net of accumulated reserve deposits and lessor
contributions).
In October 1996 the Company entered into a contract with the Boeing Company
for the acquisition of six new Boeing 737-300 aircraft, firm options for six
new Boeing 737-700 aircraft, and rolling options for up to six additional new
Boeing 737-700 aircraft. Under the terms of the contract, the 737-300
aircraft will be delivered during the period May to December 1997, while the
737-700 aircraft would be delivered beginning in 2000. Upon exercise of the
firm options, earlier delivery dates may be available. The Company has paid
$4.6 million in production deposits and $1.2 million in option deposits for
the acquisition of these aircraft. The total estimated gross delivery
purchase commitment for the Boeing 737-300 aircraft is approximately $230
million, and approximately $265 million for the firm options on the Boeing
737-700 aircraft. Estimated delivery prices and delivery dates for the
rolling options on the 737-700 aircraft have not been determined. The Company
expects to finance these aircraft acquisitions through a combination of long-
term debt, operating and financing/leveraged leases. At present, the Company
has retained the services of a financial advisor to structure the acquisition
financing. In addition to the structuring services specified in the advisory
agreement, the advisor has made a commitment to provide a warehouse credit
facility, permanent credit facility, and liquidity facility in conjunction with
the acquisition financing of up to four of the new Boeing 737-300 aircraft. The
maximum aggregate outstanding amount of the above mentioned facilities would not
exceed $100 million in the aggregate at any point in time and would require
varying amounts of equity for the aircraft by the Company. These facilities are
not intended to be used unless financing from other sources is not available at
the time of acquisition of each aircraft.
The Company is in the process of assisting in the start-up of an affiliated
regional carrier, Mountain Air Express ("MAX"), to carry traffic into and out
of Colorado ski markets from Colorado Springs and other third tier travel
markets. Service is scheduled to begin December 4. MAX is a separate company
from Western Pacific Airlines and is in the process of a private offering to
raise capital with gross proceeds of between $4.0 million and $9.0 million.
MAX is also in the process of obtaining its own operating certificate. The
Company currently leases three Dornier 328 turbo prop aircraft from the
manufacturer and sub-leases these aircraft to MAX. A fourth Dornier 328 turbo
prop aircraft is expected to be delivered during the week of November 11,
1996. Upon MAX's certification, the Company will assign the leases to MAX.
The Company has advanced certain pre-operating expenses to MAX and has also
<PAGE>
guaranteed the difference between the working capital requirements imposed on
MAX by the Department of Transportation ("DOT") and the amount of gross proceeds
raised by MAX. The Company believes that the advances made and the amounts
guaranteed will not, in the aggregate, exceed $4 million. In effect, these
advances will be reduced as additional funds are raised and the guarantee will
be reduced as the net proceeds exceed $3.5 million. The Company can later
recover its working capital advances from MAX.
The Company is currently building a temporary concourse at the Colorado
Springs airport, which will provide five additional gates for jet aircraft,
and accommodations for four commuter aircraft of MAX. It is anticipated that
the temporary concourse will be operational by late November 1996. This
temporary concourse will cost approximately $3.5 million. The Company has
received approval from the City of Colorado Springs to issue Special Facility
Bonds of up to $9.0 million to pay for the temporary terminal and other
related improvements at the airport. The Company has agreed to guarantee the
Special Facility Bonds which would be secured by the Company's lease payment
to the City of Colorado Springs under a fifteen year operating lease.
Cash flow from financing activities totaled $16.7 million during the nine
months ended September 30, 1996, largely resulting from third party financing
for the aircraft purchase described above. Approximately $0.2 million was
generated from the sale of Company stock pursuant to the Company's Employee
Stock Purchase Plan, and $0.7 million was generated from the sale of common
stock in connection with Employee Stock Options.
In May, 1996 the Company entered into an aircraft acquisition facility
agreement with a lender, which provides for up to $20.0 million in a revolving
line of credit reserved for the acquisition of Boeing 737-300 aircraft. This
facility is an interim financing vehicle with an initial term of one (1) year.
Advances under the facility are set at 75% to 80% of the actual aircraft
purchase price and such advances bear interest at the thirty (30) day London
Inter-Bank Offered Rate (LIBOR) plus 350 basis points. During the term the
Company makes interest only payments in arrears. At the end of the facility
term, the Company will repay all outstanding amounts owed the lender by either
arranging for permanent financing on the aircraft covered by the facility or
fund said amounts from the Company's cash reserves. Currently, no amounts are
outstanding under the aircraft facility agreement.
Now that the Company has completed a full year of flight operations, the
Company is working diligently with its primary bank and other financial
institutions to establish working capital lines of credit and letter of credit
agreements to supplement the Company's working capital reserves.
Additionally, the Company is diligently working with various aircraft
financing sources to put in place interim and permanent aircraft financing
facilities that would be reserved for the acquisition of both new and used
Boeing 737 aircraft.
On May 28, 1996, the Company was extended a $5.0 million line of credit by
a technology equipment lessor for financing the acquisition of computer
hardware and software. This facility carries an initial term of one (1) year
and provides financing for 100% of the technology acquisition cost. As
technology purchases are made, advances under the line of credit are evidenced
by the execution of separate operating lease agreements under which the lease
rates are calculated based upon length of lease term, type of equipment
acquired, percentage of soft cost financed, and the corresponding Treasury
Note rate in effect at the time of the advance. The technology line of credit
remains in effect so long as there is not a material adverse change in the
credit rating of the Company during the twelve (12) month term of the credit
line. At September 30, 1996, the Company used $237,000 of this line of
credit, leaving a balance of approximately $4.7 million available.
Though the Company generated positive cash flows in the months of June and
August, 1996, the Company's operations have not generated positive cash flow
on a year-to-date basis. Should positive cash flow from operations be
sustained, such funds will be available to fund ongoing operations and planned
expansion. However, if the Company does not sustain positive cash flow from
operations as expected, the Company believes that its existing working capital
and its borrowing capacity under the credit facilities described above will be
sufficient to meet its operating requirements, liquidity and capital needs for
a period of at least twelve months. Additionally, the Company will continue to
make use of lease financing, especially for the acquisition of aircraft,
telecommunications and computer equipment. Also, the Company could realize
additional capital from the sale of equity through its Employee Stock Purchase
Plan and/or the exercise of any of the Company's outstanding warrants or stock
options. Lastly, the Company could issue debt to provide additional cash
flow.
OUTLOOK: ISSUES AND UNCERTAINTIES
Although the Company does not provide forecasts of projected financial
performance, the business strategy employed by the Company is sound and
<PAGE>
management is optimistic about Western Pacific's long-term prospects. The
Company's strategy avoids some of the mistakes that caused some other start-up
airlines to fail and takes advantage of the inherent inefficiencies that
plague the older, larger carriers by operating at a lower cost structure than
the competition. However, the following issues and uncertainties, among
others, should be considered in evaluating the Company's future performance.
HISTORICAL LOSSES. The Company began scheduled flight operations on
April 28, 1995. During the period from the Company's inception through April
28, 1995 and the period from inception through September 30, 1996, the Company
incurred net losses totaling $6.0 million, and $15.6 million, respectively.
Although the Company generated income of $372,000 for the three months ended
September 30, 1995, the Company reported a net loss of approximately $910,000
for the three months ended September 30, 1996, and a $2.8 million loss for the
nine months ended September 30, 1996. Given the Company's limited operating
history, there can be no assurances that the Company will be profitable in the
future.
CONSUMER CONCERN ABOUT OPERATING SAFETY CONDITIONS AT START-UP CARRIERS.
The highly publicized safety issues that led to the Federal Aviation
Administration (FAA) grounding of ValuJet have caused some consumers to
question the operating safety of all start-up airlines. Though the Company
recently passed a rigorous National Aeronautical Safety Inspection audit
conducted by the FAA and passed an independently commissioned comprehensive
safety audit conducted by the Flight Safety Foundation, there is no assurance
that the FAA will not take more restrictive actions against the Company
because of its start-up status. Such actions by the FAA could increase
operating costs and reduce future earnings potential.
START-UP OF MOUNTAIN AIR EXPRESS (MAX). Western Pacific Airlines will
provide marketing, reservation, and various administrative support services to
MAX. The Company's alliance agreement with MAX defines certain aspects of the
Company's relationship with MAX. The Alliance Agreement entitles MAX to use
the Company's flight designator code to identify its flights and fares in the
Company's reservation system. The Alliance Agreement also provides for
coordinated flight schedules and through-fares that will allow travelers to
book connecting through flights on a single fare basis on the Company's
reservation system as though they were traveling on a single airline. In
addition to coordinated flight schedules, the Alliance Agreement provides for
coordinated marketing and distribution, revenue accounting and arrangements
concerning joint use of airport facilities. There are no assurances that MAX
will actually begin operations, nor what effect its operation will have on the
Company.
START-UP OF THRIFTY CAR RENTAL FRANCHISE (COLORADO SPRINGS CAR RENTAL,
INC.). The Company has formed a wholly-owned subsidiary, Colorado Springs Car
Rental, Inc., for the purpose of operating a Thrifty Rent A Car System, Inc.
car rental franchise in El Paso County which includes Colorado Springs, and
Douglas County, which covers the southern portion of the Denver metropolitan
area. This company will have separate management and will commence operations
on or about November 15, 196.
RISING FUEL COSTS. The Company's average cost per gallon of fuel has
increased from 64 cents for the three months ended September 30, 1995 to 78
cents for the three months ended September 30, 1996. At the Company's current
consumption rate, each one cent increase in the price of fuel increases the
Company's monthly fuel expense by approximately $40,000. Some carriers have
begun to assess a fuel surcharge to be added to their base fares to cover
these increased costs. The Company has considered this alternative, but there
can be no assurance that the Company would be able to pass along any increases
in the price of fuel to its consumers.
UNIONIZATION OF EMPLOYEE GROUPS. The Company's mechanics voted to join
the International Brotherhood of Teamsters union in May 1996. No other work
groups are currently represented by, or have voted to be represented by, a
union. While the mechanics' action has not altered the Company's work rules
or increased the Company's costs, there can be no assurance that such action
will not result in future changes or that other employee groups will not vote
for union representation, nor that labor costs for those groups represented by
a union will not increase.
COMPETITION. The airline industry is highly competitive. Other airlines
that presently serve the Company's routes in competition with the Company are
larger and have greater name recognition and resources than the Company. The
Company may also face competition from other airlines which may begin serving
the markets that the Company currently serves or may serve in the future, and
competition from new low-cost airlines that may be formed to compete in the
low-fare market (including those formed by other major airlines) and from
ground transportation alternatives.
GENERAL STATE OF UNITED STATES ECONOMY. The airline industry is highly
susceptible to general changes in the economic climate, particularly in the
leisure travel segment of the market. Any downturn in the economy of the
United States could have an adverse effect on the Company's business.
<PAGE>
Item 5 - OTHER INFORMATION
The Company issued the following press release on November 4, 1996:
WESTERN PACIFIC AIRLINES ANNOUNCES THE APPOINTMENT OF GEORGE E. LEONARD
AS ITS CHIEF FINANCIAL OFFICER
Colorado Springs, November 4, 1996...Western Pacific Airlines announced today
that George E. Leonard has been appointed Chief Financial Officer of the
airline and will serve on the board for a term expiring in 1998.
George Leonard has been associated with Western Pacific as a financial
consultant for the past several months. He has a substantial financial
professional background with a history of leadership in business development,
commercial lending, and MIS operations. His career includes a position as
Executive Vice President, and board member of a major bank, where he had a 15
year affiliation. He was also the Chief Financial Officer for that institution
for 11 years.
Western Pacific also announced that Martin J. Dugan, Jr. resigned as a director
and an officer to pursue other business and personal interests.
EXHIBITS AND REPORTS ON FORM 8-K.
(a) DOCUMENTS FILED WITH THIS REPORT:
1. Financial Statements. The financial statements filed as a part of this
report are listed in Item 1, "Financial Statements and Supplementary Data,"
herein.
2. Financial Statement Schedules. There are no financial statement
schedules filed as part of this report, since the required information is
included in the financial statements, including notes thereto, or the
circumstances requiring inclusion of such schedules are not present.
3. Exhibits. The following exhibits are filed herewith or incorporated by
reference as indicated. Exhibit numbers refer to Item 601 of Regulation S-K.
As used in the list of Exhibits below, "Registrant" refers to the Company.
EXHIBIT INDEX
Exhibit
No. Description of Exhibit
- ------- ------------------------------------------------------------------
10.66 Purchase Agreement Number 1947 between The Boeing Company and
Western Pacific Airlines, Inc. dated as of August 21, 1996
(CONFIDENTIALITY REQUESTED).
10.66A Letter Agreement No. 1947-1 to the Purchase Agreement - Disclosure
of Confidential Information
10.66B Letter Agreement No. 1947-2 to the Purchase Agreement - Waiver of
Aircraft Demonstration Flights.
10.66C Letter Agreement No. 1947-3 to the Purchase Agreement - Seller
Purchased Equipment (CONFIDENTIALITY REQUESTED).
10.66D Letter Agreement No. 1947-4 to the Purchase Agreement - Spare
Parts Support for Flight Training.
10.66E Exhibit A to the Purchase Agreement: Aircraft Configuration
(CONFIDENTIALITY REQUESTED).
10.66F Exhibit B to the Purchase Agreement: Product Assurance Document
(CONFIDENTIALITY REQUESTED).
10.66G Exhibit C to the Purchase Agreement: Customer Support Document
10.66H Exhibit D to the Purchase Agreement: Airframe and Engine Price
Adjustment (CONFIDENTIALITY REQUESTED).
10.66I Exhibit E to the Purchase Agreement: Buyer Furnished Equipment
Provisions Document.
10.66J Exhibit F to the Purchase Agreement: Defined Terms Document.
10.66K Letter Agreement No. 6-1162-JDR-418 to the Purchase Agreement:
Board of Directors Approval.
10.66L Letter Agreement No. 6-1162-JDR-426 to the Purchase Agreement:
Model 737-700-Option Aircraft (CONFIDENTIALITY REQUESTED).
10.66M Letter Agreement No. 6-1162-JDR-429 to the Purchase Agreement:
Revision to the Purchase Agreement (CONFIDENTIALITY REQUESTED).
10.66N Letter Agreement No. 6-1162-JDR-393 to the Purchase Agreement:
Aircraft Performance Guarantees.
10.66O Letter Agreement No. 6-1162-JDR-394 to the Purchase Agreement:
Certain Contractual Matters (CONFIDENTIALITY REQUESTED).
10.66P Letter Agreement No. 6-1162-JDR-395 to the Purchase Agreement:
Advance Payment Matters (CONFIDENTIALITY REQUESTED).
10.66Q Letter Agreement No. 6-1162-JDR-396 to the Purchase Agreement:
Escalation Matters (CONFIDENTIALITY REQUESTED).
10.66R Letter Agreement No. 6-1162-JDR-397 to the Purchase Agreement:
Promotion Support (CONFIDENTIALITY REQUESTED).
10.66S Letter Agreement No. 6-1162-JDR-398 to the Purchase Agreement:
Customer Support Matters (CONFIDENTIALITY REQUESTED).
10.66T Letter Agreement No. 6-1162-JDR-399 to the Purchase Agreement:
Configuration Matters (CONFIDENTIALITY REQUESTED).
10.66U Letter Agreement No. 6-1162-JDR-400 to the Purchase Agreement:
Miscellaneous Matters.
10.66V Letter Agreement No. 6-1162-JDR-401 to the Purchase Agreement:
Product Assurance Matters.
10.66W Supplemental Agreement No. 1 to Purchase Agreement Number 1947,
dated September 27, 1996 (CONFIDENTIALITY REQUESTED).
27 Financial Data Schedule
_____________________________
(b) The Company has not filed any reports on Form 8-K for the quarter ended
September 30, 1996.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WESTERN PACIFIC AIRLINES, INC.
By: /s/ EDWARD R. BEAUVAIS
--------------------
Edward R. Beauvais
Chairman, President and Chief
Executive Officer
Date: November 13, 1996.
By: /s/ GEORGE E. LEONARD
---------------------
George E. Leonard
Vice President Finance and
Chief Financial Officer
Date: November 13, 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> SEP-30-1996
<CASH> 30,538
<SECURITIES> 0
<RECEIVABLES> 6,010
<ALLOWANCES> (285)
<INVENTORY> 285
<CURRENT-ASSETS> 58,652
<PP&E> 44,119
<DEPRECIATION> (4,657)
<TOTAL-ASSETS> 118,759
<CURRENT-LIABILITIES> 38,386
<BONDS> 0
0
0
<COMMON> 13
<OTHER-SE> 63,628
<TOTAL-LIABILITY-AND-EQUITY> 118,759
<SALES> 118,540
<TOTAL-REVENUES> 120,326
<CGS> 122,670
<TOTAL-COSTS> 122,670
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 489
<INCOME-PRETAX> (2,833)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,833)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,833)
<EPS-PRIMARY> (.21)
<EPS-DILUTED> (.21)
</TABLE>
1947K/WPAWestern Pacific Airline (CONFIDENTIALITY REQUESTED)
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24B-21 AS
INDICATED BY "(XXX)"
PURCHASE AGREEMENT
between
THE BOEING COMPANY
and
WESTERN PACIFIC AIRLINES, INC.
Relating to Boeing Model 737-300 Aircraft
Purchase Agreement Number 1947
P.A. 1947
K/WPA
<PAGE>
TABLE OF CONTENTS
Page SA
Number Number
TABLE OF CONTENTS
Page SA
Number Number
ARTICLES
1. Subject Matter of Sale.........................................1-1 SA-1
2. Delivery, Title and Risk
of Loss........................................................2-1 SA-1
3. Price of Aircraft..............................................3-1 SA-1
4. Taxes..........................................................4-1
5. Payment........................................................5-1
6. Excusable Delay................................................6-1
7. Changes to the Detail
Specification..................................................7-1
8. Federal Aviation Requirements and
Certificates and Export License................................8-1
9. Representatives, Inspection,
Flights and Test Data..........................................9-1
10. Assignment, Resale or Lease...................................10-1
11. Termination for Certain Events................................11-1
12. Product Assurance; Disclaimer and
Release; Exclusion of Liabilities;
Customer Support; Indemnification
and Insurance.................................................12-1
13. Buyer Furnished Equipment and
Spare Parts...................................................13-1
14. Contractual Notices and Requests..............................14-1
15. Miscellaneous.................................................15-1
P.A. 1947 i
K/WPA
<PAGE>
TABLE OF CONTENTS
SA
Number
EXHIBITS
A Aircraft Configuration.............................................
B Product Assurance Document.........................................
C Customer Support Document..........................................
D Price Adjustments Due to
Economic Fluctuations -
Airframe and Engines...............................................
E Buyer Furnished Equipment
Provisions Document................................................
F Defined Terms Document.............................................
LETTER AGREEMENTS
1947-1 Disclosure of Confidential
Information........................................................
1947-2 Waiver of Aircraft Demonstration
Flights............................................................
1947-3 Seller Purchased Equipment.........................................
1947-4 Spare Parts Support for Flight
Training...........................................................
P.A. 1947 ii
K/WPA
<PAGE>
TABLE OF CONTENTS
SA
Number
RESTRICTED LETTER AGREEMENTS
6-1162-JDR-393 Aircraft Performance Guarantees.............................
6-1162-JDR-394 Certain Contractual Matters.................................
6-1162-JDR-395 Advance Payment Matters....................................SA-1
6-1162-JDR-396 Escalation Matters..........................................
6-1162-JDR-397 Promotion Support...........................................
6-1162-JDR-398 Customer Support Matters...................................SA-1
6-1162-JDR-399 Configuration Matters......................................SA-1
6-1162-JDR-400 Miscellaneous Matters.......................................
6-1162-JDR-401 Product Assurance Matters...................................
6-1162-JDR-418 Board of Directors Approval.................................
P.A. 1947 iii
K/WPA
<PAGE>
PURCHASE AGREEMENT NO. 1947
Relating to
BOEING MODEL 737-300 AIRCRAFT
This Agreement is entered into as of August 21, 1996 by and between
The Boeing Company, a Delaware corporation, with its principal office in
Seattle, Washington (Boeing), and Western Pacific Airlines, Inc. a Delaware
corporation, with its principal office in Colorado Springs, Colorado (Buyer).
Accordingly, Boeing and Buyer agree as follows:
P.A. 1947 iv
K/WPA
<PAGE>
ARTICLE 1. Subject Matter of Sale.
1.1 The Aircraft. Boeing will manufacture and deliver to Buyer and
Buyer will purchase and accept delivery from Boeing of six (6) Boeing Model
737-300 aircraft (the Aircraft) manufactured in accordance with Boeing detail
specification D6-38604-28 dated as of even date herewith, as described in
Exhibit A, as modified from time to time in accordance with this Agreement
(Detail Specification).
1.2 Additional Goods and Services. In connection with the sale of
the Aircraft, Boeing will also provide to Buyer certain other things under this
Agreement, including data, documents, training and services, all as described in
this Agreement.
1.3 Performance Guarantees. Any performance guarantees applicable
to the Aircraft will be expressly included in this Agreement. Where performance
guarantees are included in this Agreement other than within the Detail
Specification, such guarantees will be treated as being incorporated in the
Detail Specification by this reference.
1.4 Defined Terms. For ease of use, certain terms are treated as
defined terms in this Agreement. Such terms are identified with a capital letter
and set forth and/or defined in Exhibit F.
P.A. 1947 1-1 SA-1
K/WPA
<PAGE>
ARTICLE 2. Delivery, Title and Risk of Loss.
2.1 Time of Delivery. The Aircraft will be delivered to Buyer by
Boeing, and Buyer will accept delivery of the Aircraft, in accordance with the
following schedule:
Month and Year
of Delivery Quantity of Aircraft
-------------- --------------------
May 1997 Two (2)
June 1997 Two (2)
November 1997 One (1)
December 1997 One (1)
2.2 Notice of Target Delivery Date. Boeing will give Buyer notice
of the Target Delivery Date of the Aircraft approximately 30 days prior to the
scheduled month of delivery.
2.3 Notice of Delivery Date. Boeing will give Buyer at least 7 days
notice of the delivery date of the Aircraft. If an Aircraft delivery is delayed
beyond such delivery date due to the responsibility of Buyer, Buyer will
reimburse Boeing for all costs incurred by Boeing as a result of such delay,
including amounts for storage, insurance, Taxes, preservation or protection of
the Aircraft and interest on payments due.
2.4 Place of Delivery. The Aircraft will be delivered at a facility
selected by Boeing in the State of Washington, unless mutually agreed otherwise.
2.5 Title and Risk of Loss. Title to and risk of loss of an
Aircraft will pass from Boeing to Buyer upon delivery of such Aircraft, but not
prior thereto.
2.6 Bill of Sale. Upon delivery of an Aircraft Boeing will deliver
to Buyer a bill of sale conveying good title to such Aircraft, free of any
encumbrances.
P.A. 1947 2-1 SA-1
K/WPA
<PAGE>
ARTICLE 3. Price of Aircraft.
3.1 Definitions.
3.1.1 Special Features are the features incorporated in Exhibit A
which have been selected by Buyer.
3.1.2 Base Airframe Price is the Aircraft Basic Price excluding the
price of Special Features and Engines.
3.1.3 Engine Price is the price set forth below and in Exhibit D
established by the Engine manufacturer for the Engines installed on the Aircraft
including all accessories, equipment and parts.
3.1.4 Aircraft Basic Price is comprised of the Base Airframe Price,
the Engine Price and the price of the Special Features.
3.1.5 Economic Price Adjustment is the adjustment to the Aircraft
Basic Price (Base Airframe, Engine and Special Features) as calculated pursuant
to Exhibit D.
3.2 Aircraft Basic Price.
The Aircraft Basic Price, expressed in July 1995 dollars, is set
forth below:
Base Airframe Price: [XXXXXXXXX]
Special Features [XXXXXXXXX]
Engine Price [XXXXXXXXX]
Aircraft Basic Price [XXXXXXXXX]
P.A. 1947 3-1
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<PAGE>
3.3 Aircraft Price. The Aircraft Price will be established at the
time of delivery of such Aircraft to Buyer and will be the sum of:
3.3.1 the Aircraft Basic Price, which is [XXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX];
plus
3.3.2 the Economic Price Adjustments for the Aircraft Basic Price,
as calculated pursuant to the formulas set forth in Exhibit D (Price Adjustments
Due to Economic Fluctuations - Airframe and Engine); plus
3.3.3 other price adjustments made pursuant to this Agreement or
other written agreements executed by Boeing and Buyer.
3.4 Advance Payment Base Price.
3.4.1 Advance Payment Base Price. For advance payment purposes, the
following estimated delivery prices of the Aircraft have been established, using
currently available forecasts of the escalation factors used by Boeing as of the
date of signing this Agreement. The Advance Payment Base Price of each Aircraft
is set forth below:
Month and Year of Advance Payment Base
Scheduled Delivery Price per Aircraft
------------------ --------------------
May 1997 [XXXXXXXXX]
June 1997 [XXXXXXXXX]
November 1997 [XXXXXXXXX]
December 1997 [XXXXXXXXX]
P.A. 1947 3-2
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<PAGE>
ARTICLE 4. Taxes.
4.1 Taxes. Buyer will pay all Taxes imposed by any domestic or
foreign taxing authority arising out of or in connection with this Agreement or
performance pursuant to it. In this Agreement, "Taxes" are defined as all taxes,
fees, charges or duties and any interest, penalties, fines, or other additions
to tax, including, but not limited to, sales, use, value added, gross receipts,
stamp, excise, transfer and similar taxes, except U.S. federal income taxes and
Washington State business and occupation tax imposed on Boeing.
4.2 Taxes Relating to Buyer Furnished Equipment. Buyer is
responsible for the proper filing of all tax returns, reports and declarations
and payment of all taxes related to or imposed on Buyer Furnished Equipment.
4.3 Reimbursement of Boeing. Buyer will promptly reimburse Boeing
on demand, net of additional taxes thereon, for any Taxes that are imposed on
and paid by Boeing or for which Boeing is responsible for collecting.
P.A. 1947 4-1
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ARTICLE 5. Payment.
5.1 Advance Payment Schedule. Advance payment for each Aircraft
will be made to Boeing by Buyer as follows:
Due Date of Payment Amount Due per Aircraft
- ------------------ -----------------------
(Percentage times
Advance Payment Base Price)
Upon signing the Agreement 1% (less the
Deposit)
24 months prior to the first 4%
day of the scheduled delivery
month of such Aircraft
21 months prior to the first 5%
day of the scheduled delivery
month of such Aircraft
18 months prior to the first 5%
day of the scheduled delivery
month of such Aircraft
12 months prior to the first 5%
day of the scheduled delivery
month of such Aircraft
9 months prior to the first 5%
day of the scheduled delivery
month of such Aircraft
6 months prior to the first 5%
day of the scheduled delivery
month of such Aircraft
----
Total 30%
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<PAGE>
5.2 Payment at Delivery. The Aircraft Price, less Advance Payments
received by Boeing, is due on delivery of such Aircraft to Buyer.
5.3 Form of Payments. All payments due under this Article 5 will be
made by Buyer to Boeing by unconditional deposit in a bank account in the United
States designated by Boeing or in other immediately available funds. All prices
and payments set forth in this Agreement are in United States Dollars.
5.4 Monetary and Government Regulations. Buyer will be responsible
for complying with all monetary control regulations and for obtaining necessary
governmental authorizations related to payments hereunder.
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<PAGE>
ARTICLE 6. Excusable Delay.
6.1 General. Boeing will not be liable for or be deemed to be in
default under this Agreement on account of any delay in delivery of any Aircraft
or other performance hereunder arising out of causes such as: acts of God; war,
armed hostilities, riots, fires, floods, earthquakes or serious accidents;
governmental acts or failures to act affecting materials, facilities or
Aircraft; strikes or labor troubles causing cessation, slowdown or interruption
of work; damage to an Aircraft; failure of or delay in transportation; or
inability, after due and timely diligence, to procure materials, systems,
accessories, equipment or parts; or arising out of any other cause to the extent
it is beyond Boeing's control or not occasioned by Boeing's fault or negligence.
A delay resulting from such causes is referred to as an "Excusable Delay".
6.2 Excusable Delay of 12 Months.
6.2.1 Anticipated Delay. If Boeing concludes, based on its
appraisal of the facts and normal scheduling procedures, that due to an
Excusable Delay, delivery of an Aircraft will be delayed more than 12 months
beyond the month in which delivery is scheduled, Boeing will promptly so notify
Buyer in writing and either party may then terminate this Agreement with respect
to such Aircraft by giving written notice to the other within 15 days after
receipt by Buyer of Boeing's notice. Failure of a party to terminate the
purchase of an Aircraft for an Excusable Delay pursuant to this paragraph
results in a waiver of that party's right to terminate the purchase of such
Aircraft for any delay in delivery caused by such Excusable Delay.
6.2.2 Actual Delay. If, due to an Excusable Delay, delivery of an
Aircraft is delayed for more than 12 months beyond the month in which delivery
is scheduled, and such right to terminate has not been waived under paragraph
6.2.1, either party may terminate this Agreement with respect to such Aircraft
by giving written notice to the other within 15 days after the expiration of
such 12-month period.
6.3 Aircraft Damaged Beyond Repair. If, prior to delivery, an
Aircraft is destroyed or damaged beyond economic repair due to any cause, Boeing
will promptly notify Buyer in writing and either party may then terminate this
Agreement with respect to such Aircraft. If Boeing does not so terminate this
Agreement with respect to such Aircraft, such notice will specify the earliest
date
P.A. 1947 6-1
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<PAGE>
reasonably possible, consistent with Boeing's other contractual commitments and
production capabilities, by which Boeing will deliver a replacement for such
Aircraft. This Agreement will thereupon terminate as to such Aircraft, unless
Buyer gives Boeing written notice, within 30 days after receipt of Boeing's
notice, that Buyer desires the proposed replacement for such Aircraft.
6.4 Agreement Revision. If an Aircraft is delayed, or destroyed or
damaged beyond economic repair, and this Agreement is not terminated pursuant to
this Article, this Agreement will be appropriately revised.
6.5 Agreement Termination.
6.5.1 Termination under this Article will discharge all obligations
and liabilities of Boeing and Buyer hereunder with respect to terminated
Aircraft and all related undelivered items and services, except that Boeing will
return to Buyer, without interest, all advance payments related to such
Aircraft,
6.5.2 If either party terminates this Agreement as to any Aircraft
pursuant to this Article, Boeing may, upon written notice to Buyer within 30
days after such termination, purchase from Buyer any Buyer Furnished Equipment
related to such Aircraft, at the invoice prices paid, or contracted to be paid,
by Buyer.
6.6 Exclusive Rights. The termination rights set forth in this
Article are in substitution for any and all other rights of termination or
contract lapse or any other claim arising by operation of law by virtue of
delays in performance covered by this Article.
P.A. 1947 6-2
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<PAGE>
ARTICLE 7. Changes to the Detail Specification.
7.1 Development Changes. Boeing may, at its own expense and without
Buyer's consent, incorporate Development Changes in the Detail Specification and
the Aircraft prior to delivery to Buyer. Development Changes are defined as
changes to the basic specification for Model 737-300 aircraft that do not affect
the Aircraft Purchase Price or adversely affect Aircraft delivery, guaranteed
weight, guaranteed performance or compliance with the interchangeability or
replaceability requirements set forth in the Detail Specification. If Boeing
makes changes pursuant to this paragraph, Boeing will promptly notify Buyer of
such changes.
7.2 Change Orders. The Detail Specification and associated
provisions of this Agreement may be amended by mutual agreement by Change Order
or other written agreement executed by the parties, which will state the
particular changes to be made and any effect on design, performance, weight,
balance, time of delivery, Aircraft Basic Price and Advance Payment Base Price.
P.A. 1947 7-1
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<PAGE>
ARTICLE 8. Federal Aviation Requirements and
Certificates.
8.1 FAA Certificates.
8.1.1 Boeing will obtain from the Federal Aviation Administration
(FAA):
8.1.1.1 a Type Certificate (transport category) issued pursuant to
Part 21 of the Federal Aviation Regulations for the type of aircraft covered by
this Agreement, and
8.1.1.2 a Standard Airworthiness Certificate for each Aircraft
issued pursuant to Part 21 of the Federal Aviation Regulations, which will be
provided to Buyer with delivery of the Aircraft.
8.1.2 Boeing will not be obligated to obtain any other certificates
or approvals for the Aircraft.
8.1.3 If the use of either FAA certificate is discontinued prior to
delivery of an Aircraft, references in this Agreement to such discontinued
certificate will be deemed references to its superseding FAA certificate. If the
FAA does not issue a superseding certificate, Boeing's only obligation under
this paragraph will be to comply with the Detail Specification.
8.2 FAA Manufacturer Changes.
8.2.1 If the FAA, or any other governmental agency having
jurisdiction, requires any change to the Aircraft, data relating to the
Aircraft, or testing of the Aircraft in order to obtain the Standard
Airworthiness Certificate (Manufacturer Change), such Manufacturer Change will
be made prior to delivery of such Aircraft.
8.2.2 If prior to Aircraft delivery a Manufacturer Change is
required to be incorporated in an Aircraft, it will be incorporated at no charge
to Buyer, unless the requirement is promulgated subsequent to the date of this
Agreement, in which case Buyer will pay Boeing's
P.A. 1947 8-1
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<PAGE>
charge only for Aircraft scheduled for delivery to Buyer 18 months or more after
the date of this Agreement.
8.3 FAA Operator Changes.
8.3.1 Boeing will deliver each Aircraft with the changes in
equipment incorporated (or, at Boeing's sole discretion, with suitable
provisions for the incorporation of such equipment) that is required by Federal
Aviation Regulations which (i) are generally applicable with respect to
transport category aircraft to be used in United States certified air carriage
and (ii) have to be complied with on or before the date of delivery of such
Aircraft (Operator Changes).
8.3.2 If Operator Changes are incorporated in an Aircraft, Buyer
will pay Boeing's charge applicable to such Aircraft.
8.4 Delays; Changes to this Agreement. If delivery of an Aircraft
is delayed due to the incorporation of a Manufacturer Change or an Operator
Change, the delivery of the Aircraft will be appropriately revised to reflect
such delay. This Agreement will also be revised to reflect appropriate changes
in the Aircraft Price, design, performance, weight and balance due to the
incorporation of a Manufacturer Change or an Operator Change.
P.A. 1947 8-2
K/WPA
<PAGE>
ARTICLE 9. Representatives, Inspection,
Flights and Test Data.
9.1 Office Space at Boeing. From a date 12 months prior to delivery
of the first Aircraft, and until the delivery of the last Aircraft, Boeing will
furnish, without additional charge, suitable office space and equipment in or
conveniently located near its plant in Seattle for the accommodation of up to
three (3) personnel of Buyer.
9.2 Inspection by Buyer. Designated representatives of Buyer may
inspect the manufacturing of the Aircraft at all reasonable times. However, if
access to any part of Boeing's plant is restricted by the United States
Government, Boeing will be allowed a reasonable time to arrange for inspection
elsewhere. All inspections by Buyer's representatives will be performed so as
not to hinder manufacture or performance by Boeing.
9.3 Aircraft Flight. Prior to delivery, each Aircraft will be flown
by Boeing for such periods as may be required to demonstrate to Buyer the
function of the Aircraft and its equipment in accordance with Boeing's
production flight test procedures. The aggregate duration of such flights will
be not less than 1-1/2 hours or more than 4 hours. Five persons designated by
Buyer may participate in such flights as observers.
9.4 Test Data. Boeing will furnish to Buyer, as soon as
practicable, flight test data obtained on an aircraft of the type purchased
hereunder, certified as correct by Boeing, to evidence compliance with any
performance guarantees set forth in this Agreement. Any Performance Guarantee
will be deemed to be met if reasonable engineering interpretations and
calculations based on such flight test data establish that the Aircraft would,
if actually flown, comply with such guarantee.
9.5 Special Aircraft Test Requirements. Boeing may use the Aircraft
for flight and ground tests prior to delivery to Buyer, without reduction in the
Aircraft Purchase Price, if such tests are deemed necessary by Boeing to:
9.5.1 obtain or maintain the Type Certificate or Standard
Airworthiness Certificate for the Aircraft; or
9.5.2 evaluate aircraft improvement changes that may be offered for
production or retrofit incorporation in any aircraft.
P.A. 1947 9-1
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<PAGE>
9.6 Indemnity. Boeing will indemnify and hold harmless Buyer and
Buyer's observers from and against all claims and liabilities, including costs
and expenses (including attorneys' fees) incident thereto, for injury to or
death of any person or persons, including employees of Boeing but excluding
employees, officers or agents of Buyer, or for loss of or damage to any
property, arising out of or in connection with the operation of the Aircraft
during all demonstration and test flights conducted under the provisions of this
Article, whether or not arising in tort or occasioned in whole or in part by the
negligence of Buyer or any of Buyer's observers, whether active, passive or
imputed.
P.A. 1947 9-2
K/WPA
<PAGE>
ARTICLE 10. Assignment, Resale or Lease.
10.1 Assignment. This Agreement will inure to the benefit of and be
binding upon each of the parties hereto and their respective successors and
assigns. Neither the rights nor the duties of either party under this Agreement
may be assigned or delegated, or contracted to be assigned or delegated, in
whole or part, without the prior written consent of the other party, except
that:
10.1.1 Either party may assign its interest to a corporation that
(i) results from any merger or reorganization of such party or (ii) acquires
substantially all the assets of such party;
10.1.2 Boeing may assign its rights to receive money; and
10.1.3 Boeing may assign all or any part of its rights and
obligations under this Agreement to any wholly owned subsidiary of Boeing,
provided that Boeing will remain fully and solely responsible to Buyer for all
obligations and liabilities as the seller of the Aircraft, and Buyer will
continue to deal exclusively with Boeing.
10.2 Transfer by Buyer at Delivery. Buyer may, and at Buyer's
request Boeing will, take any action reasonably required for the purpose of
causing an Aircraft, at time of delivery, to be subjected to an equipment trust,
conditional sale, lien or other arrangement for the financing by Buyer of such
Aircraft. No action taken by either party pursuant to this paragraph, however,
will require Boeing to divest itself of title to or possession of such Aircraft
until delivery and payment therefor pursuant to this Agreement.
10.3 Sale by Buyer After Delivery. If, following delivery of any
Aircraft, Buyer sells such Aircraft (including any sale for financing purposes),
then all of Buyer's rights with respect to such Aircraft under this Agreement
will inure to the benefit of the purchaser of such Aircraft, effective upon
Boeing's receipt of such purchaser's express written agreement, in form
satisfactory to Boeing, to be bound by and to comply with all applicable terms,
conditions and limitations of this Agreement.
10.4 Lease by Buyer After Delivery. If, following delivery of any
Aircraft, Buyer leases such Aircraft, Buyer will not assign to the lessee of
such Aircraft any rights under this Agreement without Boeing's prior written
consent, which consent will not be unreasonably withheld.
P.A. 1947 10-1
K/WPA
<PAGE>
10.5 No Increase in Boeing Liability. No action taken by Buyer or
Boeing relating to the assignment, resale or lease of any Aircraft or this
Agreement will subject Boeing to any liability beyond that in this Agreement or
modify in any way Boeing's obligations under this Agreement.
10.6 Exculpatory or Indemnity Clause in Post-Delivery Sale or
Lease. If, following delivery of an Aircraft, Buyer sells or leases such
Aircraft and obtains from the transferee an exculpatory or indemnity clause
protecting Buyer, Buyer will include the same protection for Boeing.
P.A. 1947 10-2
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<PAGE>
ARTICLE 11. Termination for Certain Events.
11.1 Termination. This Agreement may be terminated at any time with
regard to undelivered Aircraft and items and unperformed services by notice in
writing by either party hereto if the other party:
11.1.1 Ceases doing business as a going concern, suspends all or
substantially all its business operations, makes an assignment for the benefit
of creditors, is insolvent, or generally does not pay its debts, or admits in
writing its inability to pay its debts; or
11.1.2 Petitions for or acquiesces in the appointment of any
receiver, trustee or similar officer to liquidate or conserve its business or
any substantial part of its assets; commences any legal proceeding such as
insolvency, bankruptcy, reorganization, readjustment of debt, dissolution or
liquidation available for the relief of financially distressed debtors; or
becomes the object of any such proceeding, unless such proceeding is dismissed
or stayed within a reasonable period, not to exceed 60 days.
11.2 Repayment of Advance Payments. If this Agreement is terminated
with regard to any Aircraft by Buyer under this Article, Boeing will repay to
Buyer, without interest, any advance payments received by Boeing from Buyer with
respect to such Aircraft.
P.A. 1947 11-1
K/WPA
<PAGE>
ARTICLE 12. Product Assurance; Disclaimer and Release;
Exclusion of Liabilities; Customer Support;
Indemnification and Insurance.
12.1 Product Assurance. Boeing and Buyer are bound by the
provisions of Exhibit B hereto (Product Assurance Document).
12.2 DISCLAIMER AND RELEASE. THE WARRANTIES, OBLIGATIONS AND
LIABILITIES OF BOEING AND THE REMEDIES OF BUYER SET FORTH IN THE PRODUCT
ASSURANCE DOCUMENT ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND BUYER HEREBY
WAIVES, RELEASES AND RENOUNCES, ALL OTHER WARRANTIES, OBLIGATIONS AND
LIABILITIES OF BOEING AND ALL OTHER RIGHTS, CLAIMS AND REMEDIES OF BUYER AGAINST
BOEING, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY
NONCONFORMANCE OR DEFECT IN ANY AIRCRAFT OR OTHER THING PROVIDED UNDER THIS
AGREEMENT, INCLUDING, BUT NOT LIMITED TO:
(A) ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS;
(B) ANY IMPLIED WARRANTY ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE;
(C) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY
IN TORT, WHETHER OR NOT ARISING FROM THE
NEGLIGENCE OF BOEING (WHETHER ACTIVE, PASSIVE OR
IMPUTED); AND
(D) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY
FOR LOSS OF OR DAMAGE TO ANY AIRCRAFT.
12.3 EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES. BOEING WILL HAVE
NO OBLIGATION OR LIABILITY, WHETHER ARISING IN CONTRACT (INCLUDING WARRANTY),
TORT (INCLUDING ACTIVE, PASSIVE OR IMPUTED NEGLIGENCE) OR OTHERWISE, FOR LOSS OF
USE, REVENUE OR PROFIT, OR FOR ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES
WITH RESPECT TO ANY NONCONFORMANCE OR DEFECT IN ANY AIRCRAFT OR OTHER THING
PROVIDED UNDER THIS AGREEMENT.
12.4 Definitions. For the purposes of this Article, the term
"BOEING" means The Boeing Company, its divisions, subsidiaries and affiliates,
the assignees of each, and their directors, officers, employees and agents.
P.A. 1947 12-1
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12.5 Customer Support and Indemnification; Insurance. Boeing and
Buyer are bound by the provisions of Exhibit C hereto (Customer Support
Document), which includes indemnification and insurance requirements related to
the use of Customer Support Services.
P.A. 1947 12-2
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<PAGE>
ARTICLE 13. Buyer Furnished Equipment and Spare Parts.
13.1 Buyer Furnished Equipment. Boeing and Buyer are bound by the
provisions of Exhibit E (Buyer Furnished Equipment Document), which includes
indemnification requirements related to Buyer Furnished Equipment.
13.2 Purchase of Boeing Spare Parts. Boeing will sell to Buyer and
Buyer will purchase from Boeing materials, spare parts, assemblies, tools and
items of equipment relating to the Aircraft pursuant to Customer Services
General Terms Agreement No. 3R, when executed.
P.A. 1947 13-1
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<PAGE>
ARTICLE 14. Contractual Notices and Requests.
All notices and requests relating to this Agreement will be in
English, and may be transmitted by any customary means of written communication
addressed as follows:
Buyer: Western Pacific Airlines, Inc.
2864 South Circle Drive
Suite 1100
Colorado Springs, Colorado 80906
Attention: President
Boeing: Boeing Commercial Airplane Group
P.O. Box 3707
Seattle, Washington 98124-2207
U.S.A.
Attention: Vice President -
Contracts
Mail Stop 75-38
or to such other address as specified elsewhere herein or as otherwise directed
in writing by either party. The effective date of any such notice or request
will be the date on which it is received by the addressee.
P.A. 1947 14-1
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<PAGE>
ARTICLE 15. Miscellaneous.
15.1 Government Approval. Boeing and Buyer will use their best
reasonable efforts to assist each other in obtaining any United States
Governmental agency consents or approvals necessary or appropriate to effect
certification and sale of the Aircraft under this Agreement.
15.2 Headings. Article and paragraph headings used in this
Agreement are for convenient reference only and are not intended to affect the
interpretation of this Agreement.
15.3 Entire Agreement; Amendments. This Agreement contains the
entire agreement between the parties concerning the subject matter hereof and
supersedes all previous proposals, understandings, commitments or
representations whatsoever, oral or written. This Agreement may be changed only
in writing signed by authorized representatives of Boeing and Buyer, except in
the case of certain changes permitted or required by this Agreement.
15.4 GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY THE LAW OF
THE STATE OF WASHINGTON, U.S.A., EXCLUSIVE OF WASHINGTON'S CONFLICTS OF LAWS
RULES.
15.5 Severability. If any of the provisions of this Agreement be
held unlawful or otherwise ineffective by a court of competent jurisdiction, the
remainder of the Agreement will remain in full force.
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15.6 Negotiated Agreement. This Agreement, including the provisions
of Article 12 relating to DISCLAIMER AND RELEASE, the Exclusion of Consequential
and Other Damages, and the provisions relating to indemnification and insurance
set forth in this Agreement, has been the subject of discussion and negotiation
and is fully understood by the parties; the Aircraft Purchase Price and other
agreements of the parties set forth in this Agreement were arrived at in
consideration of such provisions.
*************************
WESTERN PACIFIC AIRLINES, INC. THE BOEING COMPANY
By By
--------------------------- --------------------------
Its Its
--------------------------- --------------------------
P.A. 1947 15-2
K/WPA
<PAGE>
1947-1
Western Pacific Airlines, Inc.
2864 South Circle Drive
Suite 1100
Colorado Springs, CO 80906
Subject: Letter Agreement No. 1947-1 to
Purchase Agreement No. 1947 --
Disclosure of Confidential Information
This Letter Agreement amends Purchase Agreement No. 1947 dated as of even date
herewith (the Agreement) between The Boeing Company (Boeing) and Western Pacific
Airlines, Inc. (Buyer) relating to Model 737-300 aircraft (the Aircraft).
All terms used herein and in the Agreement, and not defined herein, will have
the same meaning as in the Agreement.
1. Buyer understands that certain commercial and financial information contained
in the documents listed below (Confidential Documents) is considered by Boeing
as confidential.
2. Buyer agrees that it will treat the Confidential Documents and the
information contained therein as confidential and will not, without the prior
written consent of Boeing, disclose such Confidential Documents or any
information contained therein to any other person or entity except as may be
required by (i) applicable law or governmental regulations, or (ii) for
financing the Aircraft in accordance with the provisions of Article 10 of the
Agreement.
3. In connection with any such disclosure or filing of the Confidential
Documents, or the information contained therein pursuant to any such applicable
law or governmental regulation, Buyer will request and use its best reasonable
efforts to obtain confidential treatment of such Confidential Documents and the
information contained therein. Boeing agrees to cooperate with Buyer in making
and supporting its request for confidential treatment.
P.A. No. 1947
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
1947-1 Page 2
Schedule of Confidential Documents
1. Letter Agreement No. 6-1162-JDR-393.
2. Letter Agreement No. 6-1162-JDR-394.
3. Letter Agreement No. 6-1162-JDR-395.
4. Letter Agreement No. 6-1162-JDR-396.
5. Letter Agreement No. 6-1162-JDR-397.
6. Letter Agreement No. 6-1162-JDR-398.
7. Letter Agreement No. 6-1162-JDR-399.
8. Letter Agreement No. 6-1162-JDR-400.
9. Letter Agreement No. 6-1162-JDR-401.
10. Letter Agreement No. 6-1162-JDR-418.
Very truly yours,
THE BOEING COMPANY
By
----------------------
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: , 1996
WESTERN PACIFIC AIRLINES, INC.
By --------------------------
Its
P.A. No. 1947
K/WPA
<PAGE>
1947-2
Western Pacific Airlines, Inc.
2864 South Circle Drive
Suite 1100
Colorado Springs, CO 80906
Subject: Letter Agreement No. 1947-2 to
Purchase Agreement No. 1947 --
Waiver of Aircraft Demonstration Flights
This Letter Agreement amends Purchase Agreement No. 1947 dated as of even date
herewith (the Agreement) between The Boeing Company (Boeing) and Western Pacific
Airlines, Inc. (Buyer) relating to Model 737-300 aircraft (the Aircraft).
All terms not defined herein have the same meaning as in the Agreement.
1. Fuel Entitlement at Delivery.
At the time of delivery of the Aircraft, Boeing will provide to Buyer,
at no charge, 1,000 gallons of jet fuel.
2. Waiver of Demonstration Flight.
Notwithstanding the provisions of the Agreement requiring the Aircraft
to be test flown prior to delivery for the purpose of demonstrating to Buyer the
functioning of such Aircraft and its equipment, upon notice to Boeing 90 days
prior to the scheduled date of the Aircraft delivery, or as agreed between the
parties, Buyer may waive such flight. With respect to each waived demonstration
flight, the following provisions will apply:
P.A. No. 1947
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<PAGE>
Western Pacific Airlines, Inc.
1947-2 Page 2
3. Additional Fuel.
Promptly after delivery of the Aircraft, Boeing will load on the
Aircraft an amount of jet fuel which together with the 1,000 gallons provided at
delivery, equals a full tank of jet fuel.
4. Reimbursement for Correction of Flight Discrepancies.
4.1 Ferry Flight.
Except for Aircraft to be used promptly after delivery for
Boeing flight crew training provided to Buyer at or near Seattle, Washington,
Boeing will reimburse Buyer for Buyer's direct labor costs (as defined below)
and the cost of any material (Correction Costs) required to correct any flight
discrepancy detected by Buyer while the Aircraft is being ferried from Seattle,
Washington, to a location chosen by Buyer, to the extent such Correction Costs
and labor costs are not covered under a warranty provided by Boeing or by any of
its suppliers. Within 90 days after the date of such ferry flight Buyer will
submit to Boeing's Director, Product Assurance Contracts, at Renton, Washington,
a written itemized statement describing any such flight discrepancy and
indicating the Correction Costs incurred by Buyer for the correction of such
flight discrepancy.
4.2 Training Flights.
If the Aircraft will be used promptly after its delivery for
Boeing flight crew training at or near Seattle, Washington, Boeing will
reimburse Buyer for any Correction Costs, and for any charges by Boeing to Buyer
for labor (Boeing Labor Charges) required to correct any flight discrepancy
which may be detected by Buyer during such flight crew training to the extent
such Correction Costs and such Boeing Labor Charges are not covered under a
warranty provided by Boeing or by any of its suppliers. Within 90 days after the
completion of such flight crew training, Buyer will submit to Boeing's Director,
Product Assurance Contracts, at Renton, Washington, a written itemized statement
describing any such flight discrepancy and indicating the Correction Costs and
Boeing Labor Charges incurred by Buyer for the correction of such flight
discrepancy.
4.3 Definitions.
For purposes of reimbursement under this paragraph; (i)
Buyer's direct labor costs will be determined using the Warranty Labor Rate in
effect between the parties as of the date such labor is expended, and (ii)
flight discrepancies mean any failure
P.A. No. 1947
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<PAGE>
Western Pacific Airlines, Inc.
1947-2 Page 3
or malfunction of such Aircraft, or the accessories, equipment, systems and
parts installed therein which results from a defect in such Aircraft,
accessories, equipment, systems and parts or a nonconformance to the Detail
Specification for such Aircraft which was present at the time of delivery of the
Aircraft to Buyer and which, if detected during a Boeing predelivery
demonstration flight, would have been reported in the pilot's flight discrepancy
report and would have been corrected by Boeing prior to the delivery of such
Aircraft to Buyer.
5. Return of Aircraft.
If any flight discrepancy as defined above is detected by Buyer during
the ferry flight of any Aircraft, which requires the return of such Aircraft to
Boeing's facilities at Seattle, Washington, for correction by Boeing, title to
and risk of loss of such Aircraft will at all times remain with Buyer and Boeing
will have such responsibility for such Aircraft while it is on the ground at
Boeing's Seattle, Washington, facilities as is chargeable by law to a bailee for
mutual benefit, but Boeing will not be chargeable for loss of use.
Very truly yours,
THE BOEING COMPANY
By
--------------------
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: , 1996
WESTERN PACIFIC AIRLINES, INC.
By
---------------------------
Its
P.A. No. 1947
K/WPA
<PAGE>
1947-3
(CONFIDENTIALITY REQUESTED)
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24B-21 AS
INDICATED BY "(XXX)"
Western Pacific Airlines, Inc.
2864 South Circle Drive
Suite 1100
Colorado Springs, CO 80906
Subject: Letter Agreement No. 1947-3 to
Purchase Agreement No. 1947 -
Seller Purchased Equipment
This Letter Agreement amends Purchase Agreement No. 1947 dated as of even date
herewith (the Agreement) between The Boeing Company (Boeing) and Western Pacific
Airlines, Inc. (Buyer) relating to Model 737-300 aircraft (the Aircraft).
For purposes of this Letter Agreement the following definitions apply:
Seller Purchased Equipment (SPE) is Buyer Furnished Equipment (BFE) that Boeing
purchases for Buyer.
Developmental Buyer Furnished Equipment (DBFE) is all BFE not previously
certified for installation on the same model aircraft.
Developmental Seller Purchased Equipment (DSPE) is DBFE which is converted to
SPE. This Letter Agreement does not include developmental avionics.
Developmental avionics are avionics that have not been previously certified for
installation on the same model aircraft.
All other terms used herein and in the Agreement, and not defined above, will
have the same meaning as in the Agreement.
Buyer has requested that Boeing purchase as SPE the BFE which has been changed
to SPE by Change Request. Accordingly, Boeing and Buyer agree as follows:
1. Price.
Advance Payments. An estimated SPE price will be included in the
Aircraft Advance Payment Base Price for the purpose of establishing the advance
payments for each Aircraft. The estimated price of this SPE is [XXXXXXXX] for
each Aircraft, expressed in 1995 dollars.
P.A. No. 1947
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
1947-3 Page 2
Aircraft Price. The Aircraft Price will be adjusted to reflect (i) the
actual costs charged Boeing by the SPE suppliers, (ii) a handling fee of 10% of
such costs and (iii) transportation charges, if any. If all DBFE, except for
developmental avionics, is converted to SPE, Boeing will waive the handling fee
for all SPE.
2. Responsibilities.
2.1 Buyer is responsible for:
(i) selecting the supplier on or before:
Complete for galleys
Complete for seats
(ii) selecting a FAA certifiable part; and
(iii) providing to Boeing the SPE part
specification/Buyer requirements.
2.2. Boeing is responsible for:
(i) placing and managing the purchase order with the
supplier, such purchase order to include all terms and conditions agreed between
Buyer and supplier and provided to Boeing in a timely manner;
(ii) coordinating with the suppliers on technical
issues;
(iii) ensuring that the delivered SPE complies with
the part specification;
(iv) obtaining certification of the Aircraft with the
SPE installed; and
(v) obtaining for Buyer the supplier's standard or
Buyer negotiated warranty for the SPE. SPE is deemed to be BFE for purposes of
Exhibit B, the Product Assurance Document, of the Agreement.
3. Supplier Selection For SPE Galleys and Seats.
The supplier selection for the SPE galleys and seats is complete.
P.A. No. 1947
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
1947-3 Page 3
4. Changes.
After this Letter Agreement is signed, changes to SPE may only be made
by and between Boeing and the suppliers. Buyer's contacts with SPE suppliers
relating to design (including selection of materials and colors), weights,
prices or schedules are for informational purposes only. If Buyer wants changes
made to any of the above, requests must be made directly to Boeing for
negotiating with the supplier.
5. Proprietary Rights.
Boeing's obligation to purchase SPE will not impose upon Boeing any
obligation to compensate Buyer or any supplier for any proprietary rights Buyer
may have in the design of the SPE.
6. Remedies.
If Buyer does not comply with the obligations above, Boeing may:
(i) delay delivery of the Aircraft;
(ii) deliver the Aircraft without installing the SPE;
(iii) substitute a comparable part and invoice Buyer
for the cost;
(iv) increase the Aircraft Price by the amount of
Boeing's additional costs attributable to such noncompliance.
Boeing agrees to consult with Buyer as to which of the identified remedies
Boeing will invoke. Boeing agrees to work with Buyer to mitigate the damages if
Buyer does not comply with Buyer's obligations.
7. Buyer's Indemnification of Boeing.
Buyer will indemnify and hold harmless Boeing from and against all
claims and liabilities, including costs and expenses (including attorneys' fees)
incident thereto or incident to successfully establishing the right to
indemnification, for injury to or death of any person or persons, including
employees of Buyer but not employees of Boeing, or for loss of or damage to any
property, including Aircraft, arising out of or in any way connected with any
nonconformance or defect in any SPE and whether or not arising in tort or
occasioned in whole or in part by the negligence of Boeing, whether active,
passive or imputed.
P.A. No. 1947
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
1947-3 Page 4
This indemnity will not apply with respect to any nonconformance or defect
caused solely by Boeing's installation of the SPE.
Very truly yours,
THE BOEING COMPANY
By
----------------------
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: , 1996
WESTERN PACIFIC AIRLINES, INC.
By
-----------------------------
Its
P.A. No. 1947
K/WPA
<PAGE>
1947-4
Western Pacific Airlines, Inc.
2864 South Circle Drive
Suite 1100
Colorado Springs, CO 80906
Subject: Letter Agreement No. 1947-4 to
Purchase Agreement No. 1947 --
Spare Parts Support for Flight Training
This Letter Agreement amends Purchase Agreement No. 1947 dated as of even date
herewith (the Agreement) between The Boeing Company (Boeing) and Western Pacific
Airlines, Inc. (Buyer) relating to Model 737-300 aircraft (the Aircraft).
All terms used herein and in the Agreement, and not defined herein, will have
the same meaning as in the Agreement.
For purposes of this Letter Agreement the following definitions apply:
Flight Crew Training is flight training using Boeing facilities.
Removed Parts are parts removed from an Aircraft during Flight Crew Training.
Replacement Parts are parts taken from Boeing inventory and installed in an
Aircraft because no Standby Spare Parts are available.
Standby Spare Parts are spare parts which are owned by Buyer and located at
Buyer's designated storage area at Boeing to support Flight Crew Training.
Training Aircraft are the aircraft used for Flight Crew Training.
If parts fail during Flight Crew Training, Boeing will require spare parts. In
support of this requirement, Buyer will provide to Boeing certain Standby Spare
Parts in accordance with the following terms and conditions:
1. Provision of Spare Parts.
1.1 Boeing will provide normal line maintenance for any
Aircraft used for Flight Crew Training. As part of such normal line maintenance
Boeing will, at no charge, provide expendable spare parts required for the
normal maintenance of any Training
P.A. No. 1947
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
1947-4 Page 2
Aircraft. Such spare parts will include low cost Boeing proprietary items,
nonrepairable items, low cost vendor items and standards.
1.2 Buyer will provide the Standby Spare Parts listed in
the attachment to this Letter Agreement. The attachment sets forth a general
listing of the types and approximate numbers of the Standby Spare Parts
required. This list including part numbers, exact quantities and on-dock dates
will be established during the provisioning meeting described in the General
Terms Agreement (GTA) Supplement.
1.3 In order to prevent extended down time on the Training
Aircraft, if parts other than those discussed above fail, Boeing will attempt to
provide Replacement Parts for any such failed parts. If Boeing is unable to
provide Replacement Parts, Buyer will be responsible for providing replacement
parts. Delivery to Buyer of Replacement Parts will occur when the Replacement
Parts are installed on the Aircraft. All terms and conditions of the GTA,
including those related to price and payment which are not inconsistent with the
provisions of this Letter Agreement, will apply to Boeing's sale of any
Replacement Part to Buyer.
2. Disposition of Parts.
2.1 With respect to Removed Parts, Boeing may:
(i) repair such Removed Parts, at no charge to Buyer, and
either retain such Removed Parts as Standby Spare Parts or return such Removed
Parts to Buyer, at Buyer's expense;
(ii) return the Removed Parts to Buyer at Buyer's expense;
or
(iii) return the Removed Parts to the manufacturer for repair
or replacement under such manufacturer's warranty. (Upon Boeing's receipt of the
repaired Removed Parts or their replacements, Boeing may retain such Removed
Parts or their replacements as Standby Spare Parts or return such Removed Parts
or their replacements to Buyer, at Buyer's expense).
2.2 Any return to Buyer of Removed Parts, or replacements,
will be accomplished in accordance with any written instructions from Buyer
received by Boeing prior to such return.
3. Redelivery of Standby Spare Parts. Standby Spare Parts not installed in
an Aircraft during Flight Crew Training will be
P.A. No. 1947
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
1947-4 Page 3
redelivered to Buyer on board the last Aircraft delivered to Buyer under the
Agreement or, upon mutual agreement, at an earlier time.
4. Non-performance by Buyer. If Buyer's nonperformance of obligations in this
Letter Agreement causes a delay in the Flight Crew Training, Buyer will
reimburse Boeing for all resulting expenses and be deemed to have agreed to any
such delay in Flight Crew Training. In addition Boeing will have the right to:
(i) purchase Standby Spare Parts and invoice Buyer for the
price of such Parts and for any necessary adjustment and calibration of such
Parts;
(ii) cancel or reschedule the Flight Crew Training.
5. Buyer Warranty. Buyer warrants that the Standby Spare Parts will meet
the requirements of the Detail Specification and be in a condition to pass
Boeing's receival inspection and functional test and if not in a new condition,
will have an attached FAA Serviceable Parts Tag.
6. Title and Risk of Loss. Title to and risk of loss of any Standby Spare
Parts or Removed Parts will remain with Buyer. Boeing will have only such
liability for Standby Spare Parts and Removed Parts as a bailee for mutual
benefit would have, but will
P.A. No. 1947
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
1947-4 Page 4
not be liable for loss of use. For Replacement Parts, title will transfer to
Buyer at the time such part is installed in the Aircraft.
Very truly yours,
THE BOEING COMPANY
By
--------------------------------
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: , 1996
WESTERN PACIFIC AIRLINES, INC.
By
--------------------------------
Its
Attachment
P.A. No. 1947
K/WPA
<PAGE>
Attachment to
Letter Agreement No. 1947-4
Page 1
STANDBY SPARE PARTS
The following notations, used in the list of Standby Spare Parts set forth in
this Attachment, will have the meanings indicated below:
(1) Training Spare Parts, in the indicated amounts, are required only if
Flight Crew Training will be provided at Boeing's facilities at or near
Seattle, Washington.
(2) Part numbers and/or dash numbers may vary with configuration of the
Aircraft and/or Buyer's choice of vendor.
(3) Quantity of wheels, tires and brakes required as Training Spare Parts
may vary with configuration of the Aircraft and/or Buyer's choice of
vendors.
AR As Required: The number required will depend upon the amount of
training involved.
P.A. No. 1947
K/WPA
<PAGE>
Attachment to
Letter Agreement No. 1947-4
Page 2
Standby Spare Parts
Training
Part Number(2) Nomenclature Total Quantity Required
- -------------- ------------ -----------------------
Electronics
Flight Management Computer 1
Fuel Summation Unit 1
DADC 1
HSI/EHSI 1
ADI/EADI 1
DME Interrogator Unit 1
VHF Comm Transceiver 1
VHF Nav Unit 1
ATC Transponder 1
VHF Comm Cont. Panel 1
VHF Nav. Cont. Panel 1
ATC Control Panel 1
Radio Alt. R/T Unit 1
Radio Alt. Indicator 1
Weather Radar R/T Unit 1
Interphone Cont. Panel 1
HF Comm Transceiver 1
HF Comm Control Panel 1
INS Nav Unit 1
INS Mode Select Panel 1
INS Control/Display Unit 1
Systems
Indicator Pressure Ratio 1
TAT Indicator 1
Tach N2 Indicator 1
Indicator Tach No. 1 1
E.G.T. Indicator 1
Wheels, Tires and Brakes(3)
Main Wheel AR
Nose Wheel AR
Brakes AR
Nose Tires AR
Main Tires AR
Engines (CFM56-3)
Ignition Exciter 1
Igniter Plug 2
P.A. No. 1947
K/WPA
<PAGE>
1947K/WPAWestern Pacific Airlines
(CONFIDENTIALITY REQUESTED)
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24B-21 AS
INDICATED BY "(XXX)"
AIRCRAFT CONFIGURATION
between
THE BOEING COMPANY
and
WESTERN PACIFIC AIRLINES, INC.
Exhibit A to Purchase Agreement Number 1947
P.A. No. 1947 A
K/WPA
<PAGE>
AIRCRAFT CONFIGURATION
Dated
relating to
BOEING MODEL 737-300 AIRCRAFT
The Detail Specification is Boeing Detail Specification D6-38604-28
dated as of even date herewith. Such Detail Specification will be comprised of
Boeing Configuration Specification D6-38604, Revision J, dated October 17, 1994,
as amended to incorporate the applicable specification language to reflect the
effect of the changes set forth in the Change Requests listed below, including
the effects of such changes on Manufacturer's Empty Weight (MEW) and Operating
Empty Weight (OEW). Such Change Requests are set forth in Boeing Document
D6-77124. As soon as practicable, Boeing will furnish to Buyer copies of the
Detail Specification, which copies will reflect the effect of such changes. The
Aircraft Basic Price reflects and includes all effects of such changes of price,
except such Aircraft Basic Price does not include the price effects of Change
Requests changing Buyer Furnished Equipment to Seller Purchased Equipment.
P.A. No. 1947 A-1
K/WPA
<PAGE>
Exhibit A to
Purchase Agreement No. 1947
Page 2
PRICE
PER A/P
1995$ PER
CR / TITLE A/P PRICE
======================================================= ===========
0000DC3208 NC
MISCELLANEOUS DEVELOPMENT CHANGES: 737-300
STATUS: ACCEPT
0222CG3001 NC
ICAO NOISE STANDARDS
STATUS: ACCEPT
0253CH3092 NC
CHANGE SELECTED BUYER FURNISHED EQUIPMENT
(BFE) TO SELLER PURCHASED EQUIPMENT (SPE)
STATUS: ACCEPT
0310CH3478 [XXXXXX]
WEIGHT COLLECTOR: MAXIMUM TAXI WEIGHT OF
139,000 POUNDS, MAXIMUM LANDING WEIGHT OF
114,000 POUNDS, AND MAXIMUM ZERO FUEL
WEIGHT OF
STATUS: ACCEPT
1110CG3025 NC
ENGINE WARNING STRIPES AND DECALS -
FUSELAGE LOCATIONS
STATUS: ACCEPT
2160CG3001 NC
CABIN TEMPERATURE INDICATOR - DEGREES
FAHRENHEIT IN LIEU OF CELSIUS
STATUS: ACCEPT
2210CG3009 NC
DIGITAL FLIGHT CONTROL SYSTEM (DFCS) -
DEACTIVATION OF CONTROL WHEEL STEERING
REVERSION IN APPROACH MODE
STATUS: ACCEPT
2210CG3010 NC
DIGITAL FLIGHT CONTROL SYSTEM (DFCS) -
FLIGHT DIRECTOR TAKEOFF MODE (HEADING
SELECT)
STATUS: ACCEPT
P.A. No. 1947 A-2
K/WPA
<PAGE>
Exhibit A to
Purchase Agreement No. 1947
Page 3
PRICE
PER A/P
1995$ PER
CR / TITLE A/P PRICE
======================================================= ===========
2210CG3022 NC
DIGITAL FLIGHT CONTROL SYSTEM (DFCS) -
GLIDE SLOPE CAPTURE INHIBIT BEFORE
LOCALIZER CAPTURE
STATUS: ACCEPT
2210CG3031 NC
DIGITAL FLIGHT CONTROL SYSTEM (DFCS) -
CONTROL WHEEL STEERING WARNING
STATUS: ACCEPT
2210CG3082 [XXXXX]
DIGITAL FLIGHT CONTROL SYSTEM (DFCS) -
SPEED AND ALTITUDE INTERVENTION - PUSH
BUTTON AUTOPILOT ENGAGE MODE CONTROL PANEL
STATUS: ACCEPT
2312CH3407 NC
VHF COMMUNICATIONS SYSTEM CONTROL PANELS -
INSTALLATION OF BFE GABLES DEDICATED
CONTROL PANELS P/N G7400-04
STATUS: ACCEPT
2312CH3408 NC
VHF COMMUNICATIONS SYSTEM THIRD CONTROL
PANEL - INSTALLATION OF BFE GABLES
DEDICATED CONTROL PANEL P/N G7400-04
STATUS: ACCEPT
2312CH3427 NC
DUAL VHF DATA RADIO COMMUNICATIONS SYSTEM -
INSTALLATION - BFE ROCKWELL INTERNATIONAL
CORP
STATUS: ACCEPT
2312CH3428 [XXXXX]
THIRD VHF DATA RADIO COMMUNICATIONS SYSTEM
- INSTALLATION - BFE ROCKWELL INTERNATIONAL
CORP
STATUS: ACCEPT
2321CG3417 NC
SELCAL - INSTALLATION - BFE MOTOROLA/GABLES
STATUS: ACCEPT
P.A. No. 1947 A-3
K/WPA
<PAGE>
Exhibit A to
Purchase Agreement No. 1947
Page 4
PRICE
PER A/P
1995$ PER
CR / TITLE A/P PRICE
======================================================= ===========
2322CH3413 [XXXXX]
AIRCRAFT COMMUNICATIONS ADDRESSING AND
REPORTING SYSTEM (ACARS) - INSTALLATION -
PARTIAL PROVISIONS (VHF
COMM/DFDAU/FMC/PRINTER
STATUS: ACCEPT
2370CG3030 NC
SOLID STATE VOICE RECORDER - INSTALLATION -
BFE LORAL FAIRCHILD
STATUS: ACCEPT
2410CG3009 NC
CONSTANT SPEED DRIVE (CSD) AND GENERATOR -
INSTALLATION - SUNDSTRAND
STATUS: ACCEPT
2433CG3126 [XXXXX]
STANDBY POWER - CAPACITY INCREASE AND LOAD
ADDITION
STATUS: ACCEPT
2450CG3V02
GALLEY G4B POWER - 17.25 KVA IN LIEU OF 12
KVA
STATUS: ACCEPT
2450CG3V04
GALLEY G1 POWER - 17.25 KVA IN LIEU OF 12
KVA
STATUS: ACCEPT
2511CG3003 NC
ADJUSTABLE HEAD RESTS CAPTAIN AND FIRST
OFFICER CREW SEATS - ADDITION
STATUS: ACCEPT
2511CG3024 NC
FIRST OBSERVER SEAT INERTIA REEL HARNESS
INSTALLATION - INERTIA TYPE IN LIEU OF
NON-INERTIA TYPE
STATUS: ACCEPT
P.A. No. 1947 A-4
K/WPA
<PAGE>
Exhibit A to
Purchase Agreement No. 1947
Page 5
PRICE
PER A/P
1995$ PER
CR / TITLE A/P PRICE
======================================================= ===========
2511CG3025 [XXXXX]
SECOND OBSERVER'S STATION
STATUS: ACCEPT
2520CH3823 [XXXXX]
INTERIOR ARRANGEMENT - 138 ALL TOURIST
CLASS, GALLEYS G1, G2, AND G4B AND
LAVATORIES LA, LD AND LE
STATUS: ACCEPT
2523CG3066 NC
STAINLESS STEEL IDENTIFICATION PLATE
STATUS: ACCEPT
2541CH3042 NC
LIQUID SOAP DISPENSER - LAVATORY
STATUS: ACCEPT
2550CG3006 NC
FWD AND AFT CARGO COMPARTMENT FLOOR PANEL
REVISION - ALL ALUMINUM PANELS IN LIEU OF
FIBERGLASS
STATUS: ACCEPT
2564CH3094 [XXXX]
EMERGENCY EQUIPMENT STOWAGE BOXES -
LAVATORY LE MOUNTED
STATUS: ACCEPT
2611CG3001 [XXXX]
MAIN ENGINE AND APU (GARRETT GTCP85-129)
FIRE/OVERHEAT DETECTION SYSTEM - SYSTRON
DONNER IN LIEU OF KIDDE
STATUS: ACCEPT
2622CG3009 [XXXX]
APU FIRE EXTINGUISHER BOTTLE - INSTALLATION
- WITH PRESSURE GAUGE
STATUS: ACCEPT
2811CG3001 [XXXXX]
FUEL TANK WATER SCAVENGING SYSTEM -
INSTALLATION - 737-300 AND 737-500
STATUS: ACCEPT
P.A. No. 1947 A-5
K/WPA
<PAGE>
Exhibit A to
Purchase Agreement No. 1947
Page 6
PRICE
PER A/P
1995$ PER
CR / TITLE A/P PRICE
======================================================= ===========
2844CG3015 NC
FUEL MEASUREMENT STICKS IN POUNDS WITH
CONVERSION TABLES IN U.S. GALLONS
STATUS: ACCEPT
3030CG3001 [XXXXX]
PITOT AND TEMPERATURE PROBES -REDUCED
VOLTAGE DURING GROUND OPERATIONS
STATUS: ACCEPT
3131CG3112 NC
ACCELEROMETER - INSTALLATION - BFE BENDIX
STATUS: ACCEPT
3131CG3569 NC
SOLID STATE DIGITAL FLIGHT DATA RECORDER -
INSTALLATION - BFE SUNDSTRAND - 64 WPS
STATUS: ACCEPT
3131CH3588 [XXXXX]
DIGITAL FLIGHT DATA ACQUISITION UNIT
(737/57/67) WITH ACMS PROVISIONS AND
INTERNAL OPTICAL DISK DRIVE - BFE TELEDYNE
- P/N
STATUS: ACCEPT
3135CH3075 [XXXX]
ARINC 740 MULTIPORT PRINTER PROVISIONS, AND
PROVISIONS FOR EVENT/PRINT MODULE
STATUS: ACCEPT
3200CG3003 [XXXX]
LANDING GEAR CARD FILE REPLACEMENT
SELF-TEST FEATURE
STATUS: ACCEPT
3260CG3001 [XXXXX]
ADDITION OF SECONDARY MAIN AND NOSE LANDING
GEAR DOWN AND LOCKED CONDITION INDICATOR
STATUS: ACCEPT
P.A. No. 1947 A-6
K/WPA
<PAGE>
Exhibit A to
Purchase Agreement No. 1947
Page 7
PRICE
PER A/P
1995$ PER
CR / TITLE A/P PRICE
======================================================= ===========
3260CG3002 NC
ADDITION OF SECONDARY GEAR INDICATION INPUT
SENSOR SWITCHING IN THE E/E COMPARTMENT
STATUS: ACCEPT
3351CH3029 [XXXX]
FLOOR PROXIMITY EMERGENCY ESCAPE PATH
MARKING SYSTEM INSTALLATION - SFE SEAT
MOUNTED SYSTEM
STATUS: ACCEPT
3422CG3007 NC
FILLED INTEGRATED CUE - FLIGHT DIRECTOR
COMMAND
STATUS: ACCEPT
3422CG3013 NC
RADIO ALTITUDE ON EADI - RISING RUNWAY
STATUS: ACCEPT
3422CG3015 NC
FMA DISPLAY LOCATION - TOP
STATUS: ACCEPT
3422CG3016 NC
RANGE ARCS SUPPRESSED
STATUS: ACCEPT
3422CG3021 NC
SINGLE CHANNEL AUTOPILOT ANNUNCIATION
STATUS: ACCEPT
3422CG3022 [XXXXX]
AIRSPEED TAPE ON EADI
STATUS: ACCEPT
3422CG3040 NC
AIRSPEED TREND ON SPEED TAPE
STATUS: ACCEPT
3422CG3049 NC
NAVAID DISPLAY SUPPRESSION ON EFIS
STATUS: ACCEPT
P.A. No. 1947 A-7
K/WPA
<PAGE>
Exhibit A to
Purchase Agreement No. 1947
Page 8
PRICE
PER A/P
1995$ PER
CR / TITLE A/P PRICE
====================================================== ===========
3422CG3084 NC
EFIS PIN SELECTABLE FEATURE - ADF
POINTER(S) DISPLAY ON EFIS MAP MODE
STATUS: ACCEPT
3422CG3091 NC
RADIO ALTITUDE ALERT ON EADI - 2500 FEET
STATUS: ACCEPT
3422CG3144 [XXXX]
INSTALLATION OF EFIS/IRS INSTRUMENT
SWITCHING INDICATION LIGHT ADJACENT TO EACH
EADI
STATUS: ACCEPT
3422CG3241 NC
ANALOG ILS FAILURE FLAGS DISPLAY ON EADI
AND EHSI
STATUS: ACCEPT
3422CG3244 NC
TCAS 3NM RANGE RING ON EHSI
STATUS: ACCEPT
3431CG3020 NC
DUAL VHF NAVIGATION - INSTALLATION - BFE
ROCKWELL INTERNATIONAL CORP
STATUS: ACCEPT
3432CG3017 NC
MARKER BEACON - INSTALLATION - BFE ROCKWELL
INTERNATIONAL CORP
STATUS: ACCEPT
3433CG3036 NC
LOW RANGE RADIO ALTIMETER (LRRA) -
INSTALLATION - BFE ROCKWELL INTERNATIONAL
CORP
STATUS: ACCEPT
P.A. No. 1947 A-8
K/WPA
<PAGE>
Exhibit A to
Purchase Agreement No. 1947
Page 9
PRICE
PER A/P
1995$ PER
CR / TITLE A/P PRICE
======================================================= ===========
3435CH3034 [XXXXX]
FLIGHT DYNAMICS CAPTAIN ONLY HEAD UP
GUIDANCE SYSTEM - COMPLETE BFE INSTALLATION
- EFIS EQUIPPED AIRPLANES
STATUS: ACCEPT
3443CH3099 [XXXXX]
WEATHER RADAR SYSTEM - ARINC 708A SINGLE
WEATHER RADAR SYSTEM WITH PREDICTIVE
WINDSHEAR - PARTIAL PROVISIONS
STATUS: ACCEPT
3443CH3187 NC
WEATHER RADAR - INSTALLATION - BFE -
ROCKWELL (WITH DEACTIVATED PREDICTIVE
WINDSHEAR) - 737-400
STATUS: ACCEPT
3445CG3163 NC
TCAS II - INSTALLATION - BFE ROCKWELL
INTERNATIONAL CORP/GABLES ENGINEERING INC
STATUS: ACCEPT
3446CH3161 NC
ACTIVATION OF DESCENT BELOW MINIMUMS (MODE
6) FEATURE - GROUND PROXIMITY WARNING
SYSTEM
STATUS: ACCEPT
3455CG3003 NC
DISTANCE MEASURING EQUIPMENT (DME) -
INSTALLATION - BFE ROCKWELL INTERNATIONAL
CORP WITH AGILITY MODE
STATUS: ACCEPT
3457CG3036 NC
AUTOMATIC DIRECTION FINDER (ADF) -
INSTALLATION - BFE ROCKWELL INTERNATIONAL
CORP
STATUS: ACCEPT
P.A. No. 1947 A-9
K/WPA
<PAGE>
Exhibit A to
Purchase Agreement No. 1947
Page 10
PRICE
PER A/P
1995$ PER
CR / TITLE A/P PRICE
======================================================= ===========
3458CG3029 [XXXXX]
GLOBAL POSITIONING SYSTEM (GPS) -
INSTALLATION - PARTIAL PROVISIONS
STATUS: ACCEPT
3458CG3034 [XXXXX]
GLOBAL POSITIONING SYSTEM (GPS) -
INSTALLATION - HONEYWELL INC
STATUS: ACCEPT
3461CG3004 NC
BUYER FURNISHED NAVIGATION DATA BASE
STATUS: ACCEPT
3461CG3009 NC
FMC FLIGHT NUMBER ENTRY
STATUS: ACCEPT
3461CG3013 NC
FMC TEMPERATURE SELECTION - DEGREES F
DEFAULT
STATUS: ACCEPT
3461CG3042 NC
FMS BUILT-IN TEST EQUIPMENT PRINTER
RECEPTACLES
STATUS: ACCEPT
3461CH3188 NC
AIRBORNE DATA LOADER - ARINC 615 - BFE
TELEDYNE, P/N 2230666-01-A INSTALLATION -
FMC, ACARS AND DFDAU INTERFACE
STATUS: ACCEPT
3461CG3226 [XXXXXX]
FMC REVISION - SINGLE U8, 1MEG IN LIEU OF
SINGLE U7, 256K
STATUS: ACCEPT
3461CG3313 NC
FMC OPTIONAL FEATURE - SELECTED COURSE LINE
DISPLAY DELETION ON EFIS MAP
STATUS: ACCEPT
P.A. No. 1947 A-10
K/WPA
<PAGE>
Exhibit A to
Purchase Agreement No. 1947
Page 11
PRICE
PER A/P
1995$ PER
CR / TITLE A/P PRICE
====================================================== ===========
3500CG3011 NC
OXYGEN SYSTEM - ALL TUBING AND FITTINGS
WITH STAINLESS STEEL IN LIEU OF ALUMINUM
STATUS: ACCEPT
3530CH3026 [XX]
SMOKEHOOD ADDITION IN FLIGHT COMPARTMENT -
BFE - PURITAN BENNETT P/N 119003
STATUS: ACCEPT
3810CG3V04
POTABLE WATER FILL PORT - REPLACE EXISTING
CAP WITH HINGED CAP
STATUS: ACCEPT
3832CG3V01
TOILET BOWL PUMP AND DRAIN VALVE QUICK
DISCONNECT - MONOGRAM TOILET TANK
STATUS: ACCEPT
3832CG3V05
HEATER COLLAR - INSTALLATION - LAVATORY
SERVICE LINES
STATUS: ACCEPT
3832CG3V13
VACUUM BREAKER CHECK VALVE - INSTALLATION -
TOILET FILL AND FLUSH LINE
STATUS: ACCEPT
4930CG3012 [XXXXX]
APU FUEL BOOST PUMP - INSTALLATION
STATUS: ACCEPT
5121CG3067 [XXXX]
ADDITIONAL CORROSION PROTECTION FOR
INTEGRAL FUEL TANKS - EXTREME ENVIRONMENT
STATUS: ACCEPT
5531CG3001 NC
VERTICAL STABILIZER RUDDER SEAL REVISION
STATUS: ACCEPT
P.A. No. 1947 A-11
K/WPA
<PAGE>
Exhibit A to
Purchase Agreement No. 1947
Page 12
PRICE
PER A/P
1995$ PER
CR / TITLE A/P PRICE
======================================================= ===========
5752CG3001 [XXXXX]
WING TRAILING EDGE FLAPS - KARON
SELF-LUBRICATED BEARINGS IN LIEU OF GREASED
BEARINGS
STATUS: ACCEPT
5753CG3006 [XXXX]
WING LEADING EDGE SLATS - KARON
SELF-LUBRICATED BEARINGS IN LIEU OF GREASED
BEARINGS
STATUS: ACCEPT
5754CG3001 [XXXX]
WING TRAILING EDGE SPOILERS - KARON
SELF-LUBRICATED BEARINGS IN LIEU OF GREASED
BEARINGS
STATUS: ACCEPT
7200MK3120 NC
INTERMIX SUBSTITUTION OF CFM56-3C-1
BASELINE ENGINES OPERATED AT 22,000 POUNDS
THRUST WITH CFM56-3-B1 ENGINES
STATUS: ACCEPT
7200CG3191 IB
CFM56-3C-1 ENGINES OPERATIONAL THRUST
INCREASE FROM 20,000 LBS TO 22,000 LBS -
DERATE/INTERMIX/SUBSTITUTION WITH
CFM56-3B-2 FOR
STATUS: ACCEPT
7740CH3047 [XXXX]
MAIN ENGINE EGT INDICATION REVISION FOR
TRANSITORY EXCURSIONS ABOVE 930 DEGREES C
REDLINE - EIS AIRPLANES
STATUS: ACCEPT
7910CG3001 NC
ENGINE OIL TANK PRESSURE FILL, QUICK
DISCONNECT ADDITION
STATUS: ACCEPT
CR'S 91 TOTAL [XXXXXXXX]
P.A. No. 1947 A-12
K/WPA
<PAGE>
1947K/WPAWestern Pacific Airlines
(CONFIDENTIALITY REQUESTED)
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24B-21 AS
INDICATED BY "(XXX)"
PRODUCT ASSURANCE DOCUMENT
between
THE BOEING COMPANY
and
WESTERN PACIFIC AIRLINES, INC.
Exhibit B to Purchase Agreement Number 1947
P.A. No. 1947 B
K/WPA
<PAGE>
P.A. No. 1947
K/WPA
PRODUCT ASSURANCE DOCUMENT NO. 1947
Dated
Relating to
BOEING MODEL 737-300 AIRCRAFT
This Product Assurance Document is Exhibit B to and forms a part of
Purchase Agreement No. 1947 between The Boeing Company (Boeing) and Western
Pacific Airlines, Inc. (Buyer) relating to the purchase of Boeing Model 737-300
aircraft. This Product Assurance Document consists of the following parts:
PART A Boeing Warranty
PART B Warranty Repairs and Modifications by
Buyer
PART C Boeing Service Life Policy
PART D Boeing Indemnity Against Patent
Infringement
PART D-1 Boeing Indemnity Against Copyright
Infringement
PART E Supplier Warranties and Patent
Indemnities
PART F Engine Manufacturer Warranties
PART G Boeing Interface Commitment
PART H General
P.A. No. 1947 B
K/WPA
<PAGE>
PART A
BOEING WARRANTY
1. Warranties.
Subject to the exceptions set forth herein, Boeing warrants that,
at the time of delivery, each Aircraft, including all installed systems,
accessories, equipment and parts, will:
1.1 conform to the Detail Specification, as it may be changed
pursuant to this Agreement, except such portions stated to be estimates,
approximations, design objectives, or design criteria, or described as not
guaranteed;
1.2 be free from defects in material and workmanship, including
process of manufacture; and
1.3 be free from defects in design, including selection of (i)
materials and (ii) process of manufacture, in view of the state of the art at
the time of design.
For purposes of this Boeing Warranty, nonconformance with the
Detail Specification, defects in material or workmanship and defects in design
may hereinafter be called "defects" or a "defect", and the term "system",
"accessory", "equipment" or "part" may hereinafter be called "item" or "items."
2. Exceptions.
The warranties above will not apply to BFE. The warranty above
covering material and workmanship and the warranty above covering design will
not apply to Engines or to any other item purchased by Boeing but not
manufactured to Boeing's detailed design. However, any defect in the Boeing
workmanship installing such BFE, Engines or other items in an Aircraft will
constitute a defect in workmanship.
3. Survival of Warranties.
Neither the warranty of conformance to the Detail Specification
applicable to Engines and other items purchased by Boeing but not manufactured
to Boeing's detailed design, nor any Performance Guarantees, will
P.A. No. 1947 B
K/WPA A-1
<PAGE>
survive delivery of the Aircraft. The remaining warranties set forth herein will
survive delivery of the Aircraft, subject to the limitations and conditions set
forth herein.
4. Warranty Periods and Claims.
4.1 The warranty periods are:
4.1.1 As to a defect in conformance to the
Detail Specification, [XX] months after delivery of each Aircraft, and
4.1.2 As to a defect in material, workmanship
or design in any item, [XX] months after delivery of each Aircraft in which such
item was initially installed.
4.2 Boeing's Product Assurance Regional Manager at Renton,
Washington must receive the warranty claim in writing at the earliest
practicable time after the defect becomes apparent but in no event later than 90
days after expiration of the applicable warranty period.
4.3 Such warranty claim must include the data set forth below and,
if reasonably requested by Boeing, reasonable evidence that the claimed defect
did not result from any act or omission of Buyer.
4.3.1 Identity of the item or Aircraft involved,
including Boeing part number, serial number if applicable, nomenclature and the
quantity claimed to be defective;
4.3.2 Identity of the Aircraft on which the
claimed item was installed as original equipment;
4.3.3 Date the claimed defect became apparent
which will be the date such defect was discovered by Buyer or the warranty date
set forth in a Boeing service bulletin or service letter, whichever date occurs
first; and
4.3.4 Description of the claimed defect and
circumstances, including Boeing service bulletin or Boeing service letter number
if claim involves a service bulletin or letter.
4.4 Upon completion of Boeing's warranty claim investigation,
including examination of any item or Aircraft returned to Boeing, Boeing will
provide a written disposition of its warranty claim findings to Buyer. In the
event Boeing must reject Buyer's warranty claim, Boeing will
P.A. No. 1947 B
K/WPA A-2
<PAGE>
provide reasonable substantiation of such rejection in its disposition.
5. Remedies.
Buyer's remedies under this Boeing Warranty are as follows:
5.1 As to a defect in conformance to the Detail Specification, the
correction at Boeing's expense of such defect; provided, however, that Boeing
will not be obligated to correct any defect that has no material adverse effect
on the maintenance, use or operation of the Aircraft. The warranty period for
the corrected item will be the unexpired warranty period for the defective item.
5.2 As to a defect in material or workmanship, (i) the repair at
Boeing's expense of such defect or, (ii) at Boeing's option, the replacement of
such item with a similar item free from defect or the issuance of a credit
memorandum to reimburse Buyer for a spare part previously purchased from Boeing
as the replacement for such defective item. The warranty period for either
correction will be the unexpired warranty period for the defective item.
5.3 As to a defect in design, the correction at Boeing's expense of
such defect. The warranty period for such correction is 18 months from receipt
by Buyer of corrective material or the end of the original design warranty
period for the defective item, whichever is later.
5.4 Boeing will issue a credit memorandum to reimburse Buyer at the
Warranty Labor Rate for the direct labor hours required for removal from the
Aircraft of a defective item and the reinstallation in the Aircraft of the
corrected item.
6. Returned Items.
Unless otherwise provided in this Agreement, the Aircraft or item
claimed to be defective must be returned to Boeing as soon as practicable. Buyer
may also provide specific technical repair or correction instructions with such
return. The absence of such instructions will evidence Buyer's authorization for
Boeing to proceed using Boeing information and data. The following criteria will
apply with respect to return of Aircraft or items to Boeing:
6.1 As to Aircraft:
P.A. No. 1947 B
K/WPA A-3
<PAGE>
6.1.1 An Aircraft may be returned only if
6.1.1.1 substantially all the work to be
performed by Boeing is covered by this Boeing Warranty, and
6.1.1.2 Buyer does not have the capability
to perform, nor is it practical for Boeing personnel to perform, the warranty
work away from Boeing's facilities.
6.1.2 All warranty work will be performed at
Boeing's expense, with reasonable efforts to minimize Aircraft out-of-service
time. In addition, Boeing will reimburse Buyer by issuing a credit memorandum
for the cost of fuel, oil and landing fees incurred in ferrying the Aircraft to
Boeing's facilities and in ferrying the Aircraft back to Buyer's facilities.
Buyer will minimize the length of both ferry flights.
6.1.3 Any nonwarranty work performed by Boeing
will be paid for by Buyer at Boeing's then-standard rates.
6.1.4 A separate agreement based on Boeing's
then-standard form will be entered into to cover the return of and work on such
Aircraft.
6.2 As to any system, accessory, equipment or part:
6.2.1 All warranty work will be performed at
Boeing's expense, with reasonable efforts to minimize out-of-service time for
items returned.
6.2.2 Boeing's turnaround-time objectives for
repair or replacement are: 10 working days for avionic and electronic items and
30 working days for other items when corrected at Boeing's facilities, or 40
working days when corrected at the facilities of a Boeing subcontractor.
Turnaround time starts the date Boeing receives the returned item, together with
Buyer's warranty claim describing the work, and ends the date of shipment by
Boeing of such item. If a turnaround-time objective is not achieved and a
resultant critical parts shortage is experienced by Buyer, and Buyer has
procured spare parts for such item in accordance with the Boeing Recommended
Spare Parts List, Boeing will, upon request from Buyer, either:
P.A. No. 1947 B
K/WPA A-4
<PAGE>
6.2.2.1 expedite repair or replacement of
the item or
6.2.2.2 provide a similar item on a
no-charge loan or no-charge lease basis until the repaired or replaced item is
provided to Buyer.
6.2.3 The freight charge for shipment to Boeing
Boeing of any item will be paid by Buyer; however, Boeing will reimburse Buyer
by issuing a credit memorandum for such charge for any item determined to be
defective under this Boeing Warranty. The freight charge for the return shipment
to Buyer of any such defective item which has been repaired, replaced or
corrected pursuant to this Boeing Warranty will be paid by Boeing.
6.3 Title to and risk of loss of any Aircraft or item returned to
Boeing will at all times remain with Buyer and/or any other owner of such
Aircraft or item, except that at the time Boeing ships a replacement item to
Buyer, title to and risk of loss (i) for the returned item will pass to Boeing
and (ii) for the replacement item will pass to Buyer. While Boeing has care,
custody and control of an Aircraft or item, Boeing will have only such
liabilities as a bailee for mutual benefit would have, but will not be liable
for loss of use.
7. Nonrepairable Items.
Buyer may scrap any defective nonrepairable item having a
then-current Boeing spare part selling price of [XXXX] or less and make a claim
for a replacement item. For a defective nonrepairable item having a then-current
Boeing spare part selling price greater than [XXXX], an authorized Boeing
representative must confirm the nonrepairability of any such item. Buyer's claim
for an item with a spare part selling price exceeding [XXXX] must include such
confirmation.
8. Reimbursement for Certain Inspection Labor Costs.
8.1 In addition to the remedies set forth in this Boeing Warranty,
Boeing will reimburse Buyer by issuing a credit memorandum at the Warranty Labor
Rate for the direct labor hours expended by Buyer in performing inspections of
the Aircraft to determine whether or not a covered defect exists in any system,
accessory, equipment or part manufactured to Boeing's detailed design, provided
that:
P.A. No. 1947 B
K/WPA A-5
<PAGE>
8.1.1 such inspections are recommended by a
Boeing service bulletin or service letter issued by Boeing within 36 months
after delivery of such Aircraft, and
8.1.2 such reimbursement will not apply to any
inspections performed as an alternative to accomplishing corrective action when
such corrective action is available to Buyer at the time such inspections are
performed.
8.2 If a covered defect is determined to exist as a result of the
foregoing inspections, the remedies under this Boeing warranty will apply to
Aircraft or items in warranty as of the warranty date set forth in the
applicable Boeing service bulletin or service letter or the date the defect was
discovered by Buyer, whichever date occurs first.
9. Wear and Tear.
Normal wear and tear and the need for regular maintenance and
overhaul will not constitute a defect.
10. Disclaimer and Release; Exclusion of Liabilities.
This Part A and the rights and remedies of Buyer and obligations of
Boeing herein are subject to the Disclaimer and Release and Exclusion of
Consequential and Other Damages provisions of Article 12 of this Agreement.
11. Buyer's Indemnification of Boeing.
The provisions of Part E, "Buyer's Indemnification of Boeing and
Insurance" of Exhibit C, will apply to all warranty work performed by Boeing
hereunder in accordance with Buyer's specific technical repair or correction
instructions, to the extent any legal liability of Boeing is based upon the
content of such instructions.
P.A. No. 1947 B
K/WPA A-6
<PAGE>
PART B
WARRANTY REPAIRS AND MODIFICATIONS BY BUYER
1. General.
To expedite the return to service of any defective Aircraft or
systems, accessories, equipment and parts (items) that Boeing is obligated to
correct under the Boeing Warranty, repairs and modifications may, at Buyer's
option, be performed by Buyer (work) and charged to Boeing, subject to the
following:
2. Scope.
This option applies only to items manufactured to Boeing's detailed
design. The warranty and notice periods and all other conditions and limitations
applicable to the Boeing Warranty apply to this option.
3. Repairs and Modifications.
All work will be performed in accordance with Boeing's written
instructions, using parts and materials as may be furnished by Boeing and/or
Boeing approved parts and materials as may be furnished by Buyer.
4. Claims for Reimbursement.
Buyer's claim for reimbursement must be submitted in writing to
Boeing promptly after completion of the work. Such claim must include the data
set forth in paragraph 4.3 of Part A of this Exhibit B and the following:
4.1 Description of the work performed by Buyer;
4.2 Date work was completed by Buyer;
4.3 Itemized account of the direct labor hours
expended in performing the work; and
4.4 Itemized account of the direct materials
incorporated in the work.
P.A. No. 1947 B
K/WPA B-1
<PAGE>
5. Reimbursement.
Upon approval of Buyer's claim for reimbursement, Boeing will
reimburse Buyer by issuing a credit memorandum as follows:
5.1 Direct Labor.
At the Warranty Labor Rate specified herein for labor
hours expended by Buyer's direct labor employees in performing the work,
including removal, disassembly, inspection, bench testing, reassembly, final
inspection, and reinstallation, but not to exceed Boeing's estimate of required
labor hours, and excluding time for overhaul.
5.2 Direct Materials.
At the invoice cost to Buyer for all direct materials
incorporated in the work, excluding (i) materials used for overhaul, (ii)
materials furnished by Boeing at no charge, (iii) materials which exceed
Boeing's estimate of required materials, and (iv) allowances for handling,
overhead, taxes, customs duties and the like.
5.3 Warranty Labor Rate.
The Warranty Labor Rate is [XXXX] per hour or [X]% of
Buyer's average direct hourly labor rate, whichever is greater. For this
purpose, "average direct hourly labor rate" is defined as the average hourly
rate (excluding all fringe benefits, premium-time allowances, social charges,
business taxes and the like) paid by Buyer to Buyer's employees whose jobs are
directly related to the performance of the work. Prior to or concurrently with
submittal of Buyer's first claim for labor reimbursement, Buyer will notify
Boeing of Buyer's then-current average direct hourly labor rate, and thereafter
notify Boeing of any material change in such rate. Boeing may require data from
Buyer to substantiate such rates.
5.4 Limitation.
The total reimbursement with respect to the direct
labor and direct materials incorporated in the work, will not exceed 65% of
Boeing's then-current sales price for the item unless a greater percentage is
established for a particular item by written agreement between Boeing and Buyer.
P.A. No. 1947 B
K/WPA B-2
<PAGE>
All claims for reimbursement will be subject to audit by Boeing. Boeing will
promptly notify Buyer of Boeing's disposition of each claim submitted hereunder.
6. Replaced Parts.
If component parts of any assembly are replaced by Buyer, the
replaced parts will be tagged with the assembly part number, the serial number
and the warranty claim number and retained for a period of 60 days following the
date of submittal of Buyer's claim, so as to be made available for Boeing's
inspection. Such parts may be scrapped after such 60-day period.
P.A. No. 1947 B
K/WPA B-3
<PAGE>
PART C
BOEING SERVICE LIFE POLICY
1. Definitions.
1.1 "Airframe Component" means any of the primary structural
elements of the wing, fuselage, or vertical or horizontal stabilizer set forth
in Attachment A hereto and installed in an Aircraft at the time of delivery.
1.2 "Landing Gear Component" means any of the primary structural
elements of the landing gear set forth in Attachment A and installed in an
Aircraft at the time of delivery.
1.3 "Spare Component" means any component set forth in Attachment A
that was furnished to Buyer pursuant to this Policy or purchased by Buyer from
Boeing as a spare part.
1.4 "Covered Component" means an Airframe Component, a
Landing Gear Component or a Spare Component.
1.5 "Failure" means any breakage or defect in a Covered
Component.
1.6 "Failed Component" means a Covered Component in which a
Failure has occurred.
2. Service Life Policy.
If a Failure occurs in any Covered Component within the following
periods, Boeing will promptly, at a price calculated pursuant to this Policy,
either (i) design and furnish to Buyer materials required to correct the Failed
Component (excluding industry standard parts) or (ii) furnish to Buyer a
replacement Covered Component:
2.1 As to any Airframe Component or Landing Gear Component, within
12 years after delivery of the Aircraft in which such component was initially
installed; or
2.2 As to any Spare Component, within 12 years after delivery of
such Spare Component, or within 12 years after delivery by Boeing of the last
new Model 737 aircraft to Buyer, whichever first expires.
P.A. No. 1947 B
K/WPA C-1
<PAGE>
3. Price.
The price that Buyer will pay for the correction or replacement of
a Failed Component will be calculated pursuant to the following formula:
P = CT
--
144
where:
P = price to Buyer
C = Boeing spare parts sales price at time of correction or
replacement
T = total age in months of the Failed Component from the
date of delivery to Buyer to the date of Failure.
4. Conditions and Limitations.
Boeing's obligations under this Policy are conditioned upon the
following:
4.1 Buyer must notify Boeing of the Failure within three months
after it becomes apparent to Buyer.
4.2 Buyer must provide reasonable evidence that the claimed Failure
is covered by this Policy and if requested by Boeing, that such Failure was not
the result of (i) the breakage of or a defect in a component not covered by this
Policy, (ii) an extrinsic force, (iii) an act or omission of Buyer, or (iv)
operation or maintenance contrary to applicable regulations or Boeing's
instructions.
4.3 If return of a Failed Component is practicable and requested by
Boeing, Buyer will return such Failed Component to Boeing at Boeing's expense.
4.4 Buyer's rights and remedies under this Policy are limited to
the receipt of corrective materials or replacement components at prices
calculated in accordance with this Policy.
P.A. No. 1947 B
K/WPA C-2
<PAGE>
5. Disclaimer and Release; Exclusion of Liabilities.
This Part C and the rights and remedies of Buyer and the
obligations of Boeing herein are subject to the Disclaimer and Release and
Exclusion of Consequential and Other Damages provisions of Article 12 of this
Agreement.
P.A. No. 1947 B
K/WPA C-3
<PAGE>
Attachment A to
Part C
COVERED AIRFRAME AND LANDING GEAR COMPONENTS
1. Wing.
(a) Upper and lower skins and stiffeners between the
forward and rear wing spars.
(b) Wing spar webs, chords and stiffeners.
(c) Inspar wing ribs.
(d) Inspar splice plates and fittings.
(e) Main landing gear support structure.
(f) Wing center section floor beams, lower beams and
spanwise beams, but not the seat tracks attached to
floor beams.
(g) Engine strut support fittings attached directly to wing
primary structure.
(h) Wing-to-body structural attachments.
(i) Support structure in the wing for spoilers and spoiler
actuators; for aileron hinges and reaction links; and
for leading edge devices and trailing edge flaps.
(j) Trailing edge flap tracks and carriages.
(k) Aileron, leading edge device and trailing edge flap
internal, fixed attachment and actuator support
structure.
2. Body.
(a) External surface skins and doublers, longitudinal
stiffeners, longerons and circumferential rings and
frames between the forward pressure bulkhead and the
vertical stabilizer rear spar bulkhead and structural
support and enclosure for the APU but excluding all
system components and related installation and
connecting devices, insulation, lining, and decorative
panels and related installation and connecting devices.
P.A. No. 1947 B
K/WPA C-A-1
<PAGE>
Attachment A to
Part C
(b) Window and windshield structure but excluding the
windows and windshields.
(c) Fixed attachment structure of the passenger doors,
cargo doors and emergency exits, excluding door
mechanisms and movable hinge components. Sills and
frames around the body openings for the passenger
doors, cargo doors and emergency exits, excluding scuff
plates and pressure seals.
(d) Nose wheel well structure, including the wheel well
walls, pressure deck, bulkheads, and gear support
structure.
(e) Main gear wheel well structure including pressure deck
and landing gear beam support structure.
(f) Floor beams and support posts in the control cab and
passenger cabin area, but excluding seat tracks.
(g) Forward and aft pressure bulkheads.
(h) Keel structure between the wing front spar bulkhead and
the main gear wheel well aft bulkhead including
splices.
(i) Wing front and rear spar support bulkheads, and
vertical and horizontal stabilizer front and rear spar
support bulkheads including terminal fittings but
excluding all system components and related
installation and connecting devices, insulation,
lining, decorative panels and related installation and
connecting devices.
(j) Support structure in the body for the stabilizer pivot
and stabilizer screw.
3. Vertical Stabilizer.
(a) External skins between front and rear spars.
(b) Front, rear and auxiliary spar chords, webs and
stiffeners and attachment fittings.
P.A. No. 1947 B
K/WPA C-A-2
<PAGE>
Attachment A to
Part C
(c) Inspar ribs.
(d) Rudder hinges and supporting ribs, excluding bearings.
(e) Support structure in the vertical stabilizer for rudder
hinges, reaction links and actuators.
(f) Rudder internal, fixed attachment and actuator support
structure.
4. Horizontal Stabilizer.
(a) External skins between front and rear spars.
(b) Front and rear spar chords, webs and stiffeners.
(c) Inspar ribs.
(d) Stabilizer center section including hinge and screw
support structure.
(e) Support structure in the horizontal stabilizer for the
elevator hinges, reaction links and actuators.
(f) Elevator internal, fixed attachment and actuator
support structure.
5. Engine Strut.
(a) Strut external surface skin and doublers and
stiffeners.
(b) Internal strut chords, frames and bulkheads.
(c) Strut to wing fittings and diagonal brace.
(d) Engine mount support fittings attached directly to
strut structure and including the engine-mounted
support fittings.
P.A. No. 1947 B
K/WPA C-A-3
<PAGE>
Attachment A to
Part C
6. Main Landing Gear.
(a) Outer cylinder.
(b) Inner cylinder, including axles.
(c) Upper and lower side struts, including spindles,
universals and reaction links.
(d) Drag strut.
(e) Bell crank.
(f) Orifice support tube.
(g) Trunnion link.
(h) Downlock links including spindles and universals.
(i) Torsion links.
(j) Actuator beam, support link and beam arm.
7. Nose Landing Gear.
(a) Outer cylinder.
(b) Inner cylinder, including axles.
(c) Orifice support tube.
(d) Upper and lower drag strut, including lock links.
(e) Steering plates and steering collars.
(f) Torsion links.
NOTE: The Service Life Policy does not cover any bearings, bolts,
bushings, clamps, brackets, actuating mechanisms or latching
mechanisms used in or on the Covered Components.
P.A. No. 1947 B
K/WPA C-A-4
<PAGE>
PART D
BOEING INDEMNITY AGAINST PATENT INFRINGEMENT
1. Indemnity.
Subject to the provisions of this Part D, Boeing will indemnify and
hold harmless Buyer from and against all claims, suits, actions, liabilities,
damages and costs arising out of actual or alleged infringement, by any Aircraft
or any system, accessory, equipment or part (item) installed thereon at the time
of Aircraft delivery, of any patent issued under the laws of any country in
which Buyer lawfully operates the Aircraft (Country).
2. Exceptions.
2.1 This indemnity will not apply unless, from the time of design
of the allegedly infringing Aircraft or item until the resolution of the
infringement claim, the Country and flag country of the Aircraft: (i) are fully
bound by the Chicago Convention on International Civil Aviation of December 7,
1944, and are fully entitled to all benefits of Article 27 thereof, or (ii) have
been parties to the International Convention for the Protection of Industrial
Property (Paris Convention).
2.2 This indemnity will not apply to Buyer Furnished Equipment,
Engines, any system, accessory, equipment or part that was not manufactured to
Boeing's detailed design, or to any system, accessory, equipment or part
manufactured to Boeing's detailed design without Boeing's authorization.
3. Conditions and Limitations.
Buyer's remedy and Boeing's obligations hereunder are subject to
the following:
3.1 Buyer must give Boeing written notice within 10 days after
Buyer receives notice of a suit or action against Buyer alleging infringement or
within 20 days after Buyer receives a written claim of infringement.
P.A. No. 1947 B
K/WPA D-1
<PAGE>
3.2 Following receipt of such notice Boeing may conduct
negotiations with any party claiming infringement and may intervene in any suit
or action. Whether or not Boeing intervenes, Boeing will be entitled at any
stage of the proceedings to assume or control the defense.
3.3 Buyer will (i) promptly furnish to Boeing all data, records and
assistance within Buyer's control which are material to any such claim, suit or
action and (ii) (except as to amounts mandated by a judgment) obtain Boeing's
prior approval to pay or assume any liabilities, damages, royalties or costs.
3.4 Boeing's obligations and Buyer's remedies herein exclude
Buyer's incidental or consequential damages and liabilities, costs, loss of
revenue or loss of profit resulting from loss of use, but include, at Boeing's
option, replacing the infringing item or otherwise curing any infringement on
account of which use of the Aircraft by Buyer is prevented.
3.5 Boeing's obligations and Buyer's remedies herein are exclusive
and in substitution for, and Buyer hereby waives, releases and renounces, all
other indemnities, obligations and liabilities of Boeing and any assignee of
Boeing, and all other rights, remedies and claims, including claims for damages,
direct, incidental or consequential, of Buyer against Boeing or any assignee of
Boeing, express or implied, arising by law or otherwise, with respect to any
actual or alleged patent infringement or the like by any Aircraft or any item
installed therein.
P.A. No. 1947 B
K/WPA D-2
<PAGE>
PART D-1
BOEING INDEMNITY AGAINST COPYRIGHT INFRINGEMENT
1. Indemnity.
Subject to the following, Boeing will indemnify Buyer with respect
to claims, suits, damages and costs arising out of copyright infringement by any
computer software included with the Aircraft when the Aircraft is first
delivered by Boeing (Aircraft Software).
2. Exceptions, Limitations and Conditions.
2.1 Boeing will have no obligation to indemnify Buyer relative to
Buyer Furnished Equipment, engines, software not manufactured to Boeing's
detailed design, or software manufactured to Boeing's detailed design without
Boeing's written authorization.
2.2 Boeing's obligation to indemnify Buyer is limited to
infringements (a) in countries where Buyer lawfully operates the Aircraft
(Countries) and (b) where, from the time of creation of the allegedly infringing
software until the resolution of the infringement claim, the Countries and flag
country of the Aircraft are members of The Berne Union and recognize computer
software as a "work" under The Berne Convention.
2.3 Boeing will have no obligation or liability for loss of
use, revenue or profit, or for any other incidental or consequential damages.
2.4 Boeing may, at its option, replace any infringing or allegedly
infringing Aircraft Software (or item containing Aircraft Software) with a
noninfringing equivalent.
2.5 Buyer must inform Boeing in writing (a) within 10 days after
Buyer receives notice of a suit or other formal action against Buyer alleging
copyright infringement involving Aircraft Software and (b) within 30 days after
Buyer receives any allegation or claim in the nature of copyright infringement
involving Aircraft Software.
2.6 Boeing may negotiate with any party claiming infringement and
may intervene or assume control of the defense at any stage in any infringement
suit or action.
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2.7 Buyer will promptly furnish to Boeing all data, records and
assistance within Buyer's possession or control which may be material to any
copyright infringement claim, suit or action relating to Aircraft Software.
2.8 Other than as required by a final judgment entered by a court
of competent jurisdiction, Buyer will not make any payment or commitment to pay,
assume any obligation, or make any material concession relative to any copyright
infringement for which Boeing may otherwise be obligated.
2.9 The obligations of Boeing and remedies of Buyer set forth in
this Part are exclusive and in substitution for, and Buyer hereby waives,
releases and renounces, all other indemnities, obligations, and liabilities of
Boeing and all other rights, claims and remedies of Buyer against Boeing,
express or implied, arising by law or otherwise, with respect to any actual or
alleged copyright infringement or the like by any Aircraft or any item included
in any Aircraft.
P.A. No. 1947 B
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PART E
SUPPLIER WARRANTIES AND PATENT INDEMNITIES
1. Supplier Warranties and Supplier Patent Indemnities.
Boeing will use diligent efforts to obtain adequate warranties and
indemnities against patent infringement enforceable by Buyer from manufacturers
(Suppliers) of systems, accessories, equipment or parts installed on the
Aircraft at the time of delivery that were selected and purchased by Boeing, but
not manufactured to Boeing's detailed design. Boeing will furnish copies of such
warranties and patent indemnities to Buyer prior to delivery of the first
Aircraft.
2. Boeing Assistance in Administration of Supplier Warranties.
Buyer will be responsible for submitting warranty claims directly
to Suppliers; however, if Buyer experiences problems enforcing any Supplier
warranty obtained by Boeing for Buyer, Boeing will conduct an investigation of
such problems and assist Buyer in the resolution of such claims.
3. Boeing Support in Event of Supplier Default.
3.1 If any Supplier defaults in the performance of a material
obligation under a design, material or workmanship warranty obtained by Boeing
for Buyer, and Buyer provides evidence to Boeing that such default has occurred,
then the equivalent warranty and related provisions set forth in this Product
Assurance Document will apply to the claimed defect.
3.2 At Boeing's request, Buyer will assign to Boeing, and Boeing
will be subrogated to, Buyer's rights against the manufacturer providing such
Supplier warranty.
P.A. No. 1947 B
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PART F
ENGINE MANUFACTURER'S WARRANTY
AND PRODUCT SUPPORT PLAN
Boeing has obtained from CFM International, Inc. (CFM) the right to extend to
Buyer the provisions of CFM's New Engine Warranty set forth in CFM's "CFM56
Product Support Plan"; subject, however, to Buyer's acceptance of the conditions
set forth herein and in such product support plan. Accordingly, Boeing hereby
extends to Buyer, and Buyer hereby accepts, the provisions of such CFM warranty
and such provisions shall apply to CFM56 turbo-fan engines installed in the
Aircraft at the time of delivery to Buyer except that, if Buyer and CFM have
executed a General Terms Agreement, then the terms of that Agreement shall be
substituted for and supersede the below-stated provisions and such provisions
shall be of no force or effect and neither Boeing nor CFM shall have any
obligation arising therefrom. In consideration for such extension, Buyer hereby
releases and discharges Boeing from any and all claims, obligations and
liabilities whatsoever arising out of the purchase or use of said installed
CFM56 engines and releases and discharges CFM from any and all claims,
obligations and liabilities whatsoever arising out of the purchase or use of
said installed CFM56 engines except as expressly assumed by CFM in such Product
Support Plan or in such General Terms Agreement between Buyer and CFM.
P.A. No. 1947 B
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CFM INTERNATIONAL, INC. WARRANTY
1. Title.
CFM International (CFM) warrants that at the date of delivery, CFM
has legal title to and good and lawful right to sell its CFM56 turbo-fan engines
(Engines, including all Modules and Parts thereof) and related engine products,
and furthermore warrants that such title is free and clear of all claims, liens
and encumbrances of any nature whatsoever.
2. Patents.
A. CFM shall handle all claims and defend any suit or proceeding
brought against Buyer insofar as based on a claim that any product or part
furnished under this Agreement constitutes an infringement of any patent of the
United States, and shall pay all damages and costs awarded therein against
Buyer. This paragraph shall not apply to any product or any part manufactured to
Buyer's design or to the aircraft manufacturer's design. As to such product or
part, CFM assumes no liability for patent infringement.
B. CFM's liability hereunder is conditioned upon Buyer promptly
notifying CFM in writing and giving CFM authority, information and assistance
(at CFM's expense) for the defense of any suit. In case said equipment or part
is held in such suit to constitute infringement and the use of said equipment or
part is enjoined, CFM shall expeditiously, at its own expense and at its option,
either (1) procure for Buyer the rights to continue using said product or part;
(2) replace the same with satisfactory and noninfringing product or part; (3)
modify the same so it becomes satisfactory and noninfringing. CFM shall not be
responsible to Buyer for consequential damages including costs, expenses,
liabilities, and/or loss resulting from loss of use of an allegedly infringing
product or part hereunder. The foregoing shall constitute the sole remedy of
Buyer and the sole liability of CFM for patent infringement.
C. The above provisions also apply to products which are the same
as those covered by this Agreement and are delivered to Buyer as part of the
installed equipment on CFM56 powered Aircraft.
P.A. No. 1947 B
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3. Initial Warranty.
CFM warrants that CFM56 turbo-fan engines and related engine
products will conform to CFM's applicable specifications and will be free from
defects in material and workmanship prior to Buyer's initial use of such
products. The provisions of CFM's "CFM56 Product Support Plan" will
apply.
4. Product Support Plan.
CFM has agreed to offer to Buyer, for application to each CFM56-3
engine delivered on an Aircraft, the CFM "CFM56 Product Support Plan" which is
in effect on the date of delivery of such engine to Buyer.
5. LIMITATIONS.
THE PROVISIONS SET FORTH HEREIN ARE EXCLUSIVE AND ARE IN LIEU OF
ALL OTHER WARRANTIES WHETHER WRITTEN, ORAL OR IMPLIED. THERE ARE NO IMPLIED
WARRANTIES OF FITNESS OR MERCHANTABILITY. SAID PROVISIONS SET FORTH THE MAXIMUM
LIABILITY OF CFM WITH RESPECT TO CLAIMS OF ANY KIND, INCLUDING NEGLIGENCE,
ARISING OUT OF MANUFACTURE, SALE, POSSESSION, USE OR HANDLING OF THE PRODUCTS OR
PARTS THEREOF OR THEREFOR, AND IN NO EVENT SHALL CFM'S LIABILITY TO BUYER EXCEED
THE PURCHASE PRICE OF THE PRODUCT GIVING RISE TO BUYER'S CLAIM OR INCLUDE
INCIDENTAL OR CONSEQUENTIAL DAMAGES. AS USED HEREIN, THE TERM "CFM" SHALL
INCLUDE CFM INTERNATIONAL, INC. AND CFM INTERNATIONAL, S.A. THE LIMITS OF
LIABILITY SET FORTH ABOVE SHALL APPLY TO ANY AND ALL CLAIMS, AS ABOVE DEFINED,
AGAINST CFM INTERNATIONAL, INC., CFM INTERNATIONAL, S.A., GENERAL ELECTRIC
COMPANY (GE), AND SOCIETE NATIONALE D'ETUDE ET DE CONSTRUCTION DE MOTEURS
D'AVIATION (SNECMA) AND IN NO EVENT SHALL SUCH CLAIMS EXCEED IN THE AGGREGATE
THE PRICE OF THE PRODUCT GIVING RISE TO THE CLAIM.
P.A. No. 1947 B
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PART G
BOEING INTERFACE COMMITMENT
1. Interface Problems.
If Buyer experiences technical problems in the operation of an
Aircraft or its systems, the cause of which is not readily identifiable by Buyer
but which Buyer believes to be attributable to the design characteristics of the
Aircraft or its systems (Interface Problem), Boeing will, without additional
charge to Buyer, promptly conduct an investigation and analysis to determine the
cause or causes of the Interface Problem and to recommend such corrective action
as may be feasible. Buyer will furnish to Boeing all data and information in
Buyer's possession relevant to the Interface Problem, and will cooperate with
Boeing in the conduct of investigations and tests. Boeing will promptly advise
Buyer at the conclusion of its investigation of Boeing's opinion as to the
causes of the Interface Problem and Boeing's recommendation as to corrective
action.
2. Boeing Responsibility.
If Boeing determines that the Interface Problem is primarily
attributable to the design of any item manufactured to Boeing's detailed design,
Boeing will correct the design of such item to the extent of any then-existing
obligations of Boeing under the provisions of the applicable Boeing Warranty or
Boeing Service Life Policy.
3. Manufacturer Responsibility.
If Boeing determines that the Interface Problem is primarily
attributable to the design of an item not manufactured to Boeing's detailed
design, Boeing will assist Buyer in processing a warranty claim against the
manufacturer of such item.
4. Joint Responsibility.
If Boeing determines that the Interface Problem is partially
attributable to the design of an item manufactured to Boeing's detailed design
and partially to the design of an item not manufactured to Boeing's detailed
design, Boeing will seek a solution to the Interface Problem through the
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cooperative efforts of Boeing and the manufacturer of the other item and will
promptly advise Buyer of resulting corrective actions and recommendations.
5. General.
Buyer will, if requested by Boeing, assign to Boeing any of Buyer's
rights against any manufacturer as Boeing may require to fulfill its obligations
hereunder.
6. Disclaimer and Release; Exclusion of Liabilities.
This Part G and the rights and remedies of Buyer and the
obligations of Boeing herein are subject to the Disclaimer And Release and
Exclusion of Consequential and Other Damages provisions of Article 12 of this
Agreement.
P.A. No. 1947 B
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PART H
GENERAL
1. Duplicate Product Assurance Remedies.
Boeing will not provide or be requested to provide multiple
remedies for any claim made pursuant to the provisions of this Product Assurance
Document.
2. Notices.
References to "Boeing" in connection with notices or communications
throughout this Product Assurance Document mean Boeing's Product Assurance
Regional Manager at Renton,
Washington.
P.A. No. 1947 B
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1947K/WPAWestern Pacific Airlines
CUSTOMER SUPPORT DOCUMENT
between
THE BOEING COMPANY
and
WESTERN PACIFIC AIRLINES, INC.
Exhibit C to Purchase Agreement Number 1947
P.A. No. 1947 C
K/WPA
<PAGE>
CUSTOMER SUPPORT DOCUMENT NO. 1947
Dated
Relating to
BOEING MODEL 737-300 AIRCRAFT
This Customer Support Document is Exhibit C to and forms a part of
Purchase Agreement No. 1947 between The Boeing Company (Boeing) and Western
Pacific Airlines, Inc. (Buyer) relating to the purchase of Boeing Model 737-300
aircraft. This Customer Support Document consists of the following parts:
PART A Boeing Maintenance Training Program
PART B Boeing Customer Support Services
PART C Boeing Flight Training Program
PART D Technical Data and Documents
PART E Buyer's Indemnification of Boeing and Insurance
PART F Alleviation or Cessation of Performance
P.A. No. 1947 C-1
K/WPA
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PART A
BOEING MAINTENANCE TRAINING PROGRAM
1. General.
This Part describes the maintenance training to be provided by
Boeing (Maintenance Training) at Boeing's training facility at or near Seattle.
The Maintenance Training will be provided at no additional charge to Buyer,
except as otherwise provided herein. If any part of the Maintenance Training is
not used by Buyer prior to delivery of the first Aircraft, Boeing will not be
obligated to provide such Maintenance Training at a later date, unless the
parties have otherwise agreed in writing.
All instruction, examinations and materials shall be prepared and presented in
the English language and in the units of measure used by Boeing.
Buyer will be responsible for the living expenses of Buyer's personnel during
Maintenance Training. For Maintenance Training provided at or near Seattle,
Boeing will transport Buyer's personnel between their local lodging and the
training facility.
2. Maintenance Training Planning Conference.
Within 30 days after execution of the Agreement, Boeing and Buyer
will conduct a planning conference in order to schedule and discuss the
Maintenance Training.
3. Maintenance Training Program.
The Maintenance Training Program will (i) consist of classroom
presentations supported by training materials and aids and (ii), if practicable,
include an escorted tour of aircraft production areas and/or flight lines. The
Maintenance Training will include the following courses:
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3.1 General Familiarization Course.
This course provides general systems information for
Buyer's upper management personnel; it does not address the maintenance of the
Aircraft and its systems in the detail required by maintenance personnel.
One class; up to 24 students.
3.2 Mechanical/Power Plant Systems Course.
This course provides mechanical instruction on the
maintenance of the Aircraft and its systems, including engine systems.
Electrical instruction, where necessary, will be provided in order to clarify
mechanical system operation.
Two classes; up to 15 students per class.
3.3 Electrical Systems Course.
This course provides electrical instruction on
the maintenance of the Aircraft and its systems, including engine systems.
Mechanical instruction, where necessary, will be provided in order to clarify
electrical system operation.
Two classes; up to 15 students per class.
3.4 Avionics Systems Course.
This course provides instruction on the
maintenance of the Aircraft automatic flight control systems, communications and
navigation systems. It is oriented to those personnel who specialize in trouble
analysis and line maintenance on avionics systems.
Two classes; up to 15 students per class.
3.5 Corrosion Prevention and Control Course.
This course provides instruction on aircraft
corrosion prevention and control.
One class; up to 10 students.
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3.6 Aircraft Rigging Course.
This course provides instruction on aircraft rigging to
provide Buyer's specialist personnel with the necessary information to rig all
flight control surfaces, landing gear components, aircraft doors and engines.
One class; up to 6 students at a mutually acceptable alternate facility. The
conditions set forth in paragraph 5 below will be applicable with respect to
Boeing providing such course.
3.7 Advanced Composite Repair Course.
This course provides instruction for Buyer's structural
repair personnel and promotes understanding of the design philosophy, inspection
and repair of advanced composite components.
One class; up to 8 students.
4. Post-Delivery Practical Observation.
If requested by Buyer prior to the conclusion of the Maintenance
Training Planning Conference, Boeing will coordinate the assignment of up to 8
of Buyer's maintenance personnel to observe the routine maintenance practices
Boeing performs on the Aircraft during Buyer's flight
training in the Seattle area.
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5. Training at a Facility Other Than Boeing's.
If requested prior to the conclusion of the Maintenance Training
Planning Conference, Boeing will conduct the classroom training described above
(except for the Advanced Composite Repair Course at a mutually acceptable
alternate training site, subject to the following
conditions:
5.1 Buyer will be responsible for providing acceptable
classroom space and training equipment required to present the Boeing
courseware.
5.2 Buyer will pay Boeing's then-current per diem charge
for each Boeing instructor for each day, or fraction thereof, such instructor is
away from Seattle, including travel time.
5.3 Buyer will reimburse Boeing for round-trip
transportation for Boeing's instructors and training materials between Seattle
and such alternate training site.
5.4 Buyer will pay, or reimburse Boeing for, all taxes,
fees, duties, licenses, permits and similar expenses incurred by Boeing or its
employees as a result of Boeing's providing the training at such alternate site.
5.5 Those portions of the training that require the use of
Boeing's training devices shall be conducted at Boeing-designated facilities.
6. Supplier Training.
The Maintenance Training includes sufficient information on the
location, operation and servicing of Aircraft equipment, accessories and parts
provided by suppliers to support line maintenance functions.
If Buyer requires additional maintenance training with respect to any
supplier-provided equipment, accessories or parts, Buyer will schedule such
training directly with the supplier. If Buyer experiences difficulty in
scheduling such training, Boeing will, if requested, assist Buyer in
coordinating and scheduling such training.
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7. Student Training Material.
No revision service will be provided for the material provided
hereunder.
7.1 Manuals.
Boeing will provide at the beginning of each
Maintenance Training course one copy of a training manual or equivalent for each
student attending such course.
7.2 Panel Description/Component Locator/Field Trip
Checklist Manual.
Boeing will provide 1 copy of a Panel
Description/Component Locator/Field Trip Checklist Manual for each student in
the applicable Maintenance Training course.
8. Other Training Material.
Boeing will provide to Buyer 1 set of the following training
materials, as used in the General Familiarization and Aircraft systems courses
/and Conversion course/.
Revision service will not be provided.
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8.1 Visual Aids.
8.1.1 8-1/2 x 11-inch blackline projection
transparencies.
8.1.2 Full-scale instrument panel wall charts in
the form of black and white copies and mylar reproducible copies.
8.1.3 Training slides.
8.2 Reproducible Masters.
8-1/2 x 11-inch prints suitable for black and white
reproduction of all graphics and applicable text.
8.3 Video Programs.
Video programs on 3/4-inch U-matic or 1/2-inch VHS
cassette formats in NTSC, PAL or SECAM standards, as selected by Buyer.
8.4 Courseware.
Boeing will provide one (1) set of Micro-PLATO
courseware, as used in the maintenance training courses described in paragraphs
3.2, 3.3 and 3.4, and instructions for courseware installation and operation.
These lessons run on DOS based platforms.
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8.5 Shipment of Materials.
The training materials described above will be shipped
to Buyer 30 days after completion of the first class of each applicable
Maintenance Training course.
8.6 Training Material - Aircraft Configuration.
The visual aids and reproducible masters described
above will, at the conclusion of the shipments thereof, reflect the
configuration of the first Aircraft as delivered to Buyer.
9. Course Completion Records.
At the completion of the Maintenance Training, Boeing will provide
Buyer with course completion records consisting of the following:
9.1 Master copies of all examinations given.
9.2 Attendance and examination records for each student.
9.3 Certificate of Completion for each course each student
successfully completes.
P.A. No. 1947 C
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PART B
BOEING CUSTOMER SUPPORT SERVICES
1. General.
This Part describes the support services to be provided by Boeing
at no additional charge to Buyer, unless otherwise specified herein. Except with
respect to Field Services the services described in this Part will be provided
by Boeing during a period commencing with delivery of the first Aircraft and
continuing so long as one Aircraft is regularly operated by Buyer in commercial
air transport service.
2. Field Service Engineering.
Boeing will furnish field service representation to advise Buyer on
maintenance and operation of the Aircraft (Field Services) as follows:
2.1 Field Services will be available to Buyer at or near Buyer's
main maintenance or engineering facility for periods beginning prior to delivery
of each Aircraft and terminating 12 months after delivery of each such Aircraft
(Field Service Period(s)). If such Field Service Periods overlap, the Field
Services will be provided concurrently.
2.2 Buyer will furnish at no charge to Boeing suitable office space
and equipment that will include desks, chairs, file cabinets and an electrical
power source in, or convenient to, Buyer's facility where Boeing is providing
Field Services. As required, Buyer will assist each representative providing
Field Services with visas, work permits, customs, mail handling, identification
passes, and local airport authorities.
2.3 In addition to the Field Services referred to above, the
services of any Boeing field service representative will also be available to
Buyer anywhere Buyer may land the Aircraft.
2.4 Boeing may, from time to time, provide additional support
services in the form of Boeing personnel visiting Buyer's facilities to work
with Buyer's personnel in an advisory capacity.
3. Additional Engineering Support Services.
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Boeing will, if requested by Buyer in writing, provide technical
advisory assistance with respect to the Aircraft and accessories, equipment and
parts manufactured to Boeing's detailed design and installed in the Aircraft at
the time of delivery. Such technical advisory assistance, which will be provided
from Seattle, will include:
3.1 analysis of and comment on any Aircraft service or
operational problem experienced by Buyer, in order to determine the nature of
the problem and its cause and to suggest possible solutions;
3.2 analysis of and comment on Buyer's engineering releases
relating to structural repairs of the Aircraft not covered by Boeing's
Structural Repair Manual; and
3.3 analysis of and comment on Buyer's engineering
proposals for changes in, or replacement of, parts, accessories or equipment
manufactured to Boeing's detailed design (excluding computer software embedded
or included therein); provided that Boeing will not analyze or comment on any
such change or replacement which constitutes a major structural change, or on
any engineering release related thereto, unless Buyer's request for such
analysis and comment is accompanied by complete detailed drawings,
substantiating data (including data, if any, required by applicable government
agencies), all stress or other appropriate analysis, and a specific statement
from Buyer of the kind of review and response desired by Buyer.
4. Special Services.
4.1 Facilities, Ground Equipment and Maintenance Planning
Assistance.
Boeing will, at Buyer's request, send qualified Boeing
engineering representatives to Buyer's main base to evaluate Buyer's technical
facilities, tools and equipment for servicing and maintaining the Aircraft, to
recommend changes where necessary and to assist in the formulation of Buyer's
overall maintenance plan.
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4.2 Additional Services.
Boeing may, at Buyer's request, provide additional
special services with respect to the Aircraft after delivery, which may include
such items as Master Changes (Kits and/or Data), training and maintenance and
repair of the Aircraft. Providing such additional services will be subject to
(i) mutually acceptable price, schedule and scope of work and (ii) Boeing's
then-current standard contract therefor, including disclaimer and release,
exclusion of consequential and other damages and indemnification and insurance
requirements.
4.3 Post-Delivery Aircraft Services.
If Boeing performs unanticipated work on an Aircraft
after delivery of such Aircraft, but prior to its initial departure flight, or
upon its return to Boeing's facilities prior to completion of such flight, the
following provisions will apply:
4.3.1 Title to and risk of loss of any such
Aircraft will at all times remain with Buyer.
4.3.2 The provisions of the Boeing Warranty set
forth in Exhibit B of this Agreement will apply to such work.
4.3.3 Buyer will reimburse Boeing for such work
to the extent that it is not covered by the Boeing Warranty applicable to the
Aircraft.
4.3.4 The disclaimer and Release and Exclusion of
Consequential and Other Damages provisions set forth in Article 12 of this
Agreement and the indemnification and insurance provisions set forth in this
Exhibit C will apply to such Boeing work.
4.3.5 In performing such work, Boeing may rely
upon the commitment authority of Buyer's personnel requesting such work.
5. Additional Informational Services.
Boeing may, from time to time, provide Buyer with additional
services in the form of information about the Aircraft or other aircraft of the
same type, including information concerning design, manufacture, operation,
maintenance, modification, repair and in-service experience.
P.A. No. 1947 C
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PART C
BOEING FLIGHT TRAINING PROGRAM
1. General.
This Part describes the flight training to be provided by Boeing
(Flight Training) at or near Seattle, or at some other location to be determined
pursuant to this Part. The Flight Training will be provided at no additional
charge to Buyer, unless otherwise specified herein. If any part of the Flight
Training is not used by Buyer within 6 months after delivery of the first
Aircraft, Boeing will not be obligated to provide such Flight Training at a
later date unless the parties have otherwise agreed in writing.
All instruction, examinations and materials will be prepared and presented in
the English language and in the units of measure used by Boeing.
Buyer will be responsible for living expenses of Buyer's personnel during the
Flight Training Program. For Flight Training provided at or near Seattle, Boeing
will transport Buyer's personnel between their local lodging and the training
facility.
2. Flight Training Planning Conference.
Within 30 days after execution of the Agreement, Boeing and Buyer
will conduct a planning conference in order to schedule and discuss the Flight
Training.
3. Flight Training Program.
The Flight Training Program will consist of the following
transition training:
3.1 Flight Crew Training Course.
This FAA-approved course is designed to train flight
crews to operate the Aircraft safely and efficiently under both normal and
nonnormal conditions. The course includes systems and procedures training,
flight simulator
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training and actual flight training utilizing an Aircraft delivered to Buyer.
The flight crew training may include instructor training of an agreed upon
number of Buyer's personnel.
Two classes; up to 4 cockpit crews in each class.
3.2 Flight Dispatcher Training Course.
This course provides familiarization training on the
Aircraft's systems, operation, performance capabilities and a brief description
of the Aircraft's limitations, followed by in-depth coverage of basic
performance, flight analysis, performance for nonstandard operation and flight
planning.
Two classes; up to 6 students per class.
3.3 Flight Attendant Training Course.
This course provides familiarization training
for airline passenger service personnel. It includes a description of the
Aircraft and its features. Emphasis is placed on the equipment and furnishings
with which the flight attendant is concerned. Particular attention is given to
the attendant's functions related to communications, lighting and emergency
equipment. When practicable, a field trip to an aircraft is arranged to observe
operation, location and arrangement of equipment.
Two classes; up to 12 students per class.
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3.4 Performance Engineer Training Courses.
Three types of courses are offered. A schedule for the
courses is published and mailed to all Boeing aircraft operators semiannually
and an agreed upon number of Buyer's personnel may attend.
3.4.1 General Performance Engineer Course.
This course provides detailed aircraft
performance information for personnel involved in route planning, performance
analysis and evaluation and engineering flight testing. The course includes a
review of basic high-speed aerodynamics and engine performance and operation.
Students will make calculations to help them recognize and understand the
variables which influence turbojet aircraft performance.
3.4.2 Model-Specific Performance Engineer Course.
This course relates to a specific model
aircraft. It covers a brief review of basic aerodynamics and basic jet engine
performance, followed by detailed coverage of specific performance for the
aircraft model type. Detailed flight planning, including emergency conditions,
is covered.
3.4.3 Operational Performance Engineer Course.
This course is directed toward personnel
who have completed the performance engineer general and specific courses and
have several years' related experience. The course includes expanded coverage of
aircraft noise, runway loading, and various operational, safety and economic
considerations.
4. Training at a Facility Other Than Boeing's.
If requested prior to the conclusion of the Flight Training
Planning Conference, Boeing will conduct the Flight Crew, Flight Dispatcher and
Flight Attendant training at a mutually acceptable alternate training site,
subject to the
following conditions:
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4.1 Buyer will be responsible for providing classroom space
acceptable to Boeing, a flight simulator and training equipment required to
present the Boeing courseware.
4.2 Buyer will pay Boeing's then-current per diem charge
for each Boeing instructor for each day, or fraction thereof, such instructor is
away from Seattle, including travel time.
4.3 Buyer will reimburse Boeing for round-trip
transportation for Boeing's flight training instructors and materials between
Seattle and such alternate site.
4.4 Buyer will pay, or reimburse Boeing for, all taxes,
fees, duties, licenses, permits and similar expenses incurred by Boeing and its
employees as a result of Boeing's providing the training at such alternate site.
4.5 Those portions of the training that require the use of
Boeing's training devices will be conducted at Boeing-designated facilities.
5. Student Training Material.
Student training material, in Boeing's then-standard format, will
be provided to Buyer's personnel (1 set per student) as listed below. No
revision service will be provided for the material provided hereunder.
5.1 Flight Crew Course.
Operations Manual
Quick Reference Handbook
Student Training Manual
Flight Crew Training Manual
Instrument Training Manual - as required
5.2 Flight Dispatcher Course.
Flight Dispatcher Training Manual
5.3 Flight Attendant Course.
Flight Attendant Training Manual
P.A. No. 1947 C
K/WPA C-4
<PAGE>
5.4 Performance Engineer Courses.
Assorted documents, excerpts and handouts.
6. Other Training Materials.
At the conclusion of the Flight Training, Boeing will provide one
set of the following material, as used in the Flight Training Program. Revision
service will not be provided for these materials.
6.1 Computer Based Training (CBT).
Boeing will provide a copy of Boeing developed
CBT materials used in the Flight Training Program. This CBT courseware will
reflect major configuration options delivered on Buyer's first Aircraft. Buyer
will require certain equipment and materials in order to use the CBT Program.
Equipment and materials required to run the CBT Program will be procured by
Buyer at Buyer's expense. The CBT materials provided include the following:
6.1.1 1 copy of lesson files supplied on
CD-ROM disc.
6.1.2 1 paper copy of loading and operation
instructions for installing the lessons on an MS-DOS compatible Personal
computer or File Server.
6.1.3 1 copy of the runtime software required to
run the CBT lessons.
6.2 Full-Scale Color Instrument Panel Wall Charts.
6.3 Flight Crew Training Record.
6.4 Examinations Questions.
6.5 Student Training Manual.
6.6 Video programs on 3/4-inch U-matic or 1/2 inch VHS cassette
format in NTSB, PAL or SECAM standards as selected by Buyer.
P.A. No. 1947 C
K/WPA C-5
<PAGE>
6.7 Flight Attendant Manual (50 copies).
6.8 Flight Attendant Training Course (script, slides and
video tapes on 3/4-inch u-matic or 1/2 inch VHS cassette format in NTBC, PAL or
SECAM standards as selected by Buyer).
7. Ferry Assistance.
7.1 Subject to availability and if requested by Buyer,
Boeing will provide flight crew personnel to ferry, or assist in ferrying,
Buyer's first Aircraft to a Buyer-designated base.
7.2 If requested by Buyer and subject to availability,
Boeing will provide a Boeing navigator and a navigational aid ferry kit for the
ferry flight of Buyer's first Aircraft, subject to the following:
7.2.1 timely receipt by Boeing of Buyer's
purchase order to cover the payments referred to herein;
7.2.2 acceptance by Buyer of Boeing's
then-standard agreement related to the provision of the navigational aid ferry
kit;
7.2.3 payment by Buyer of Boeing's then-current
per diem charge for the Boeing navigator for each day, or fraction thereof, such
navigator is away from Seattle, including travel time;
7.2.4 reimbursement of Boeing by Buyer for the
cost of return-trip transportation for such navigator to Seattle;
7.2.5 payment by Buyer, or reimbursement of
Boeing for, all taxes, fees, duties, licenses, permits and similar expenses
incurred by Boeing and its employees hereunder.
7.2.6 Buyer will also comply with the insurance
requirements set forth in Part E of this Exhibit C.
P.A. No. 1947 C
K/WPA C-6
<PAGE>
8. Revenue Service Training.
Boeing will provide revenue service training (Revenue Service
Training) for Buyer's flight crews for up to 90 calendar days of instructor
pilot services at a base designated by Buyer. Such training will be conducted by
the Boeing instructor pilot(s) on Buyer's Aircraft during revenue service. The
training period will commence upon departure of such instructor pilot(s) from
Seattle via the ferry flight referred to above, or via commercial
transportation, and will terminate upon the return of such instructor pilot(s)
to Seattle. Buyer will reimburse Boeing for round-trip or return-trip
transportation, as applicable, for such instructor pilot(s).
9. Flight Operations Support.
9.1 Approximately 6 months after completion of the Revenue
Service Training, Boeing will, if requested by Buyer, provide at a
Buyer-designated base the services of 1 instructor pilot for a period of
approximately 2 weeks to review Buyer's flight crew operations, and/or to assist
Buyer's instructor personnel in conducting proficiency checks. Such review or
assistance will be during flight operations on Buyer's Aircraft by the Boeing
instructor pilot and will be limited to observations of Buyer's cockpit crew.
Buyer will reimburse Boeing for round-trip transportation for such instructor
pilot between Seattle and Buyer's designated base.
P.A. No. 1947 C
K/WPA C-7
<PAGE>
9.2 Subject to availability of instructor personnel, Boeing
will, from time to time, provide at a Buyer-designated base 1 instructor pilot
for brief periods for the purpose of providing information regarding current
operational procedures and flight observations by such instructor pilot on
Buyer's Aircraft when appropriate.
10. Operations Engineering Support.
If requested by Buyer, Boeing will provide operations engineering
support during the ferry flight referred to above. Thereafter, for so long as
any Aircraft is operated by Buyer in scheduled revenue service, Boeing will
provide, from time to time, operations engineering support in Seattle or at a
Buyer-designated base, as the parties may agree. Such support will include: (i)
assisting Buyer in analyzing and preparing performance data to be used in the
establishment of operating practices and policies for Buyer's efficient
operation of the Aircraft; (ii) assisting Buyer in interpreting the minimum
equipment list, the definition of the configuration deviation list and the
analysis of individual Aircraft performance through in-service audits; (iii)
assisting Buyer in solving operational problems associated with delivery and
route-proving flights; and (iv) providing information regarding significant
service items relating to Aircraft performance or flight operations.
11. General Terms and Conditions and Indemnification.
11.1 Boeing flight instructor personnel will not be required
to work in excess of 5 days per week, nor in excess of 8-hours in any one
24-hour period, of which not more than 5 hours per 8-hour workday will be spent
in actual flying; provided, however, that the foregoing restrictions will not
apply with respect to ferry assistance or Revenue Service Training services,
which will be in accordance with FAA rules and regulations, unless otherwise
agreed during the Flight Training Planning Conference.
11.2 Buyer will pay or reimburse Boeing for all taxes, fees,
duties, licenses, permits and similar expenses incurred by Boeing and its
employees as a result of Boeing's providing Revenue Service Training.
11.3 Boeing will provide normal line maintenance services
for any Aircraft delivered to Buyer while such Aircraft is used for a Flight
Crew Training Course at or near Seattle. Buyer will provide such services if a
Flight Crew Training Course is conducted elsewhere. Normal line
P.A. No. 1947 C
K/WPA C-8
<PAGE>
maintenance is defined as that standard of line maintenance that Boeing might
reasonably be expected to furnish to its flight crew training customers at
Boeing Field, Seattle, and will include ground support and Aircraft storage in
the open, but will not include provision of spare parts. Regardless of the
location of such training, Buyer will be responsible for the acquisition and
supply of, and the charges for, all maintenance items (other than those included
in normal line maintenance) required during such training, including, but not
limited to, fuel, oil, landing fees and spare parts. In addition, if such
training is conducted at or near Seattle, and if the training Aircraft is
damaged during such training, except for Major Damage (as hereinafter defined)
Boeing will make all necessary repairs to the damaged Aircraft. Such repairs
will be performed by Boeing as promptly as possible. Buyer will pay Boeing's
reasonable charge, including the price of parts and materials, for making such
repairs. At Buyer's request Boeing will also repair Major Damage to such
Aircraft, provided Boeing and Buyer enter into an agreement for additional
services as provided for in this Customer Support Document. Major Damage is
defined as damage for which Boeing's charge for labor is estimated by Boeing to
exceed $25,000.
11.4 During the Flight Training contemplated hereunder,
several airports in the states of Washington, Montana and Oregon, as well as the
services of the fixed base operator at Grant County Airport at Moses Lake,
Washington, may be used. Unless otherwise agreed during the Flight Training
Planning Conference, it will be Buyer's responsibility to make arrangements for
the use of such airports.
11.5 If Boeing makes arrangements on behalf of Buyer for the
use of airports for flight training hereunder, Boeing will pay on Buyer's behalf
any landing fee charged to Buyer by any airport used in conjunction with the
Flight Training provided in the Seattle area. Not later than 30 days prior to
the start of such Flight Training, Buyer will provide to Boeing an open purchase
order against which Boeing will invoice Buyer for any such landing fee paid by
Boeing on Buyer's behalf. Such invoice will be submitted to Buyer approximately
60 days after completion of such Flight Training when all landing fee charges
have been received and verified. Payment by Buyer to Boeing will be made within
30 days of the date of such invoice.
P.A. No. 1947 C
K/WPA C-9
<PAGE>
11.6 If requested by Boeing, Buyer will make available to
Boeing a delivered Aircraft for the purpose of familiarizing Boeing instructor
or ferry flight crew personnel with operating special equipment or systems
installed in such Aircraft. If flight of the Aircraft is required for any Boeing
instructor or ferry flight crew member to maintain such instructor's or flight
crew member's FAA license for flight proficiency or landing currency for
aircraft of the same model type as the Aircraft, Boeing will be responsible for
the cost of fuel, oil, landing fees and spare parts attributable to that portion
of any flight. Buyer's authorization of the use of its Aircraft pursuant to this
paragraph applies only to Boeing instructors assigned to conduct Flight Training
and a reasonable number of alternate instructors and to members of any flight
crew (including navigator, if needed) who will participate in the ferry flight
of an Aircraft hereunder.
P.A. No. 1947 C
K/WPA C-10
<PAGE>
PART D
TECHNICAL DATA AND DOCUMENTS
1. General.
Boeing will furnish to Buyer the data and documents set forth
herein at no additional charge to Buyer, unless otherwise specified herein. Such
data and documents will, where applicable, be prepared essentially in accordance
with the provisions of Revision 29 excluding FRM/FIM to Air Transport
Association of America (ATA) Specification No. 100, dated June 1, 1956, entitled
"Specification for Manufacturers' Technical Data", with the following specific
exceptions: The Illustrated Parts Catalog, will be prepared essentially in
accordance with the provisions of Revision 28. The Overhaul and Component
Maintenance Manuals will be written to the ATA Revision level established for
the airplane model the component was originally used on. Such data and documents
are only intended to provide Buyer with pertinent information on components,
equipment and installations designed by Boeing for aircraft of the same model
type as the Aircraft. Such data and documents will be in English and in the
units of measure used by Boeing, except as otherwise specified herein or as may
be required to reflect Aircraft instrumentation.
2. Treatment of Data and Documents.
2.1 The data and documents provided by Boeing under this
Agreement ("Documents") are licensed to Buyer. They contain confidential,
proprietary and/or trade secret information belonging to Boeing; and Buyer will
treat them in confidence and use and disclose them only for Buyer's own internal
purposes as specifically authorized herein. If Buyer makes copies of any
Documents, the copies will also
P.A. No. 1947 C
K/WPA D-1
<PAGE>
belong to Boeing and be treated as Documents under this Agreement. Buyer will
preserve all restrictive legends and proprietary notices on all Documents and
copies.
2.2 All Documents will only be used: (a) for the purpose of
maintenance, repair, or modification of an Aircraft or spare part as permitted
in the Spare Parts GTA or Customer Services GTA between Buyer and Boeing, and
then only in connection with an Aircraft or spare part for which the Document in
question is tabulated or identified by Boeing serial number, and (b) for the
purpose of Buyer's own development and manufacture of training devices for use
by Buyer, in connection with the Aircraft.
2.3 Any Document may be provided to Buyer's contractors for
maintenance, repair, or modification of the Aircraft; and Airplane Flight
Manuals, Operations Manuals, Aircraft Maintenance Manuals, Wiring Diagram
Manuals, System Schematics Manuals, Component Maintenance/Overhaul Manuals and
assembly and installation drawings may be provided to Buyer's contractors for
development and manufacture of training devices for use by Buyer, but in both
cases, only if Buyer's contractor is, at the time of transfer of Documents,
bound by a Boeing Customer Services GTA, or other appropriate proprietary
information protection agreement with Boeing, applicable to the Documents.
3. Document Formats and Quantities.
The Documents set forth in the Attachment will be provided by
Boeing to Buyer in the quantities and formats specified therein. Where
available, Buyer may select Boeing standard digital format as the delivery
medium or, alternatively, Buyer may select a reasonable quantity of printed
(one-side or two-side) and 16mm microfilm (diazo or silver halide) formats. When
Boeing standard digital format is selected, Buyer may also select no more than 5
copies of printed and microfilm format copies, with the exception of the
Illustrated Parts Catalog, which will be provided in one selected format only.
The standard digital format used to deliver data and documents furnished by
Boeing is structured essentially in accordance with the Digital Data Standards
portion of ATA Specification No. 100, revision 28 or later for text and
graphics. The text is delivered in SGML or print file format. The graphics are
delivered in Computer Graphics Metafile (CGM) vector format and Tagged Image
File Format (TIFF) raster format. The following is a list of exceptions to these
formats. The Illustrated Parts Catalog (IPC) text is delivered in a fixed field
format and graphics are delivered in TIFF. The Wiring Diagram Manual (WDM)
P.A. No. 1947 C
K/WPA D-2
<PAGE>
and System Schematics Manual (SSM) can be delivered in ATA compliant formats
(SGML text and CGM graphics) in accordance to a Boeing Document Type Definition
(DTD). Data will be provided on standard magnetic tape unless otherwise shown in
details of Part D.
4. Data and Documents - Incremental Increase.
-----------------------------------------
Until one year after delivery of the last Aircraft, Buyer may
annually request in writing a reasonable increase in the quantity of the
technical Documents identified in the Attachment with the exception of microfilm
master copies, digital formats, and all others for which a specified number of
copies are provided. Boeing will provide the additional quantity at no
additional charge to Buyer beginning with the next normal revision cycle. Buyer
may request a decrease in revision quantities at any time.
5. Advance Representative Copies.
All advance representative copies referred to in the Attachment
will be selected by Boeing from available documents and will be reasonably
representative of the Aircraft. Such advance copies will be for advance planning
purposes only and may reflect another buyer's aircraft configuration which is
similar to Buyer's Aircraft configuration.
6. Customized Documents.
All customized Documents referred to in the Attachment will reflect
the configuration of the Aircraft as delivered by Boeing to Buyer and any Boeing
standard format, instructions or procedures applicable thereto.
7. Revisions.
7.1 Revision Service.
Boeing will provide revisions to those Documents so
identified in the Attachment, reflecting changes as developed by Boeing. Such
revisions will be provided in the quantities and formats set forth in the
Attachment, and will be provided for so long as Buyer operates an Aircraft,
unless otherwise specified therein.
P.A. No. 1947 C
K/WPA D-3
<PAGE>
7.2 Revisions Based on Boeing Service Bulletin
Incorporation.
If Boeing receives written notice from Buyer that Buyer
intends to incorporate, or has incorporated, any Boeing service bulletin in the
Aircraft, Boeing will at no charge issue revisions to the Documents so
identified in the Attachment, reflecting the effects of such incorporation into
the Aircraft. Such revisions will be issued in the same format and quantity as
the original publication to which the revisions pertain, for the period
specified in the Attachment and, thereafter, in printed form.
8. COMPUTER SOFTWARE DOCUMENTATION FOR BOEING
MANUFACTURED AIRBORNE COMPONENTS AND EQUIPMENT.
Boeing will provide to Buyer a Computer Software Index containing a
listing of (i) all programmed airborne avionics components and equipment
manufactured by Boeing or a Boeing subsidiary, designed and developed in
accordance with Radio Technical Commission for Aeronautics Document No.
RTCA/DO-178 dated January 1982, No. RTCA/DO-178A dated March 1985, or later as
available, and installed in the Aircraft by Boeing and (ii) specific software
documents (Software Documentation) available to Buyer from Boeing for the listed
components and equipment.
Two copies (printed both sides) of the Computer Software Index will be furnished
to Buyer with the Aircraft. Revisions to the Computer Software Index applicable
to the Aircraft will be issued to Buyer as such revisions are developed by
Boeing for so long as Buyer operates the Aircraft.
Software Documentation will be provided to Buyer upon Buyer's written request
therefor after delivery of the Aircraft. The charge to Buyer for Software
Documentation shall be Boeing's price to reproduce the Software Documentation so
requested. Software Documentation will be prepared essentially in accordance
with the provisions of Air Transport Association of America (ATA) Specification
No. 102, entitled "Specification for Computer Software Manual," as revised April
20, 1983; but Software Documentation will not include, and Boeing will not be
obligated to provide, any code (including, but not limited to, original source
code, assembled source code, or object code) on computer sensible media.
P.A. No. 1947 C
K/WPA D-4
<PAGE>
9. Supplier Technical Data.
9.1 For supplier-manufactured programmed airborne avionics
components and equipment classified as Seller Furnished Equipment (SFE) or
Seller Purchased Equipment (SPE) which contain computer software designed and
developed in accordance with Radio Technical Commission for Aeronautics Document
No. RTCA/DO-178 dated January 1982, No. RTCA/DO-178A dated March 1985, or later
as available, Boeing will request that each supplier of such components and
equipment make software documentation for such components and equipment
available to Buyer in manner similar to that described in paragraph 8 of this
Part.
9.2 The provisions of this paragraph will not be applicable
to items of Buyer Furnished Equipment (BFE).
9.3 Boeing will furnish to Buyer Document "Customer Service
and Product Support Agreements for Supplier Designed Equipment." This document
contains the terms and conditions of the product support agreements between
Boeing and its suppliers, covering suppliers' responsibilities to support
Buyer's requirements for data and services in support of the Aircraft.
10. Buyer Furnished Equipment Data.
Boeing will incorporate Buyer Furnished Equipment Data into the
customized publications and data addressed herein providing Buyer makes the data
available to Boeing within 30 days after execution of the Agreement.
11. Additional Data and Documents.
If Boeing provides data or documents other than Documents which are
not covered by a Boeing Customer Services GTA or other proprietary information
protection agreement between Boeing and Buyer, all such data and documents will
be considered things delivered under this Agreement and treated as Documents.
12. Technical Data and Documents Shipping Charges.
Boeing pays the reasonable transportation costs of the Documents.
Buyer is responsible for any customs clearance charges, duties, and value added
tax.
P.A. No. 1947 C
K/WPA D-5
<PAGE>
13. Buyer's Shipping Address.
The Documents furnished to Buyer hereunder are to be sent to the
address set forth below. Buyer will promptly notify Boeing of any change to such
address:
Western Pacific Airlines, Inc.
5750 E. Fountain Blvd.
Colorado Springs, Colorado 80916
Attention: Technical Publications
P.A. No. 1947 C
K/WPA D-6
<PAGE>
Attachment to
Part D of Exhibit C to
Purchase Agreement No. 1947
Page 1
Item Description Quantity
- ---- ----------- --------
A. FLIGHT OPERATIONS
1. Airplane Flight Manual
a. Advance Representativ Format: 1 Printed One Side
Copy Revisions: No
Delivery: 90 days after signing
Purchase Agreement
b. Customized Manual Format: 1 Printed One Side
Revisions: Yes
Delivery: On-board each
Aircraft
Format: __ Printed One Side
Revisions: Yes
Delivery: 30 days after
delivery of first
Aircraft
2. Operations Manual and
Quick Reference Handbook
a. Advance Representative Format: __ Printed Two Sides
Copy Revisions: No
Delivery: 90 days after signing
Purchase Agreement
b. Customized Manual Format: __ Printed Two Sides
Revisions: Yes
Delivery: Concurrent with
delivery of first
Aircraft
3. Weight and Balance Manual
a. Chapter 1 "Control"
1. Advance Representative Format: __ Printed Two Sides
Copy Revisions: No
Delivery: 90 days after signing
Purchase Agreement
2. Customized Manual Format: __ Printed Two Sides
Revisions: Yes
Delivery: Concurrent with
delivery of first
Aircraft
P.A. No. 1947
K/WPA
<PAGE>
Attachment to
Part D of Exhibit C to
Purchase Agreement No. 1947
Page 2
Item Description Quantity
- ---- ----------- --------
b. Chapter 2 "Aircraft Format: __ Printed One Side
Reports" Revisions: No
Delivery: On board each
Aircraft
4. Dispatch Deviation Format: __ Printed Two Sides
Procedures Guide Revisions: Yes
Delivery: Concurrent with
delivery of first
Aircraft
5. Flight Crew Training Manual Format: __ Printed Two Sides
Revisions: Yes
Delivery: Concurrent with
delivery of first
Aircraft
6. Performance Engineer's Format: 2 Printed Two Sides
Manual Revisions: Yes
Delivery: Concurrent with
delivery of first
Aircraft
P.A. No. 1947
K/WPA
<PAGE>
Attachment to
Part D of Exhibit C to
Purchase Agreement No. 1947
Page 3
Item Description Quantity
- ---- ----------- --------
7. Jet Transport Format: 2 Printed Two Sides
Performance Methods Revisions: Yes
(Common to other models, Delivery: 90 days prior to
quantity indicates total delivery of First
requested) Aircraft
8. FMC Supplemental Format: 2 Printed Two Sides
Data Document Revisions: Yes
Delivery: 90 days prior to
delivery of first
Aircraft
9. Operational Performance
Software (OPS)
a. Inflight and Report Format: 1 9 Track Magnetic
(INFLT/REPORT) Software Tape in ASCII
Format
1 3.5 Inch (1.44MB)
IBM Compatible
Diskette
1 3.5 Inch (1.4MB)
Macintosh Diskette
Revisions: Yes
Delivery: Concurrent with
delivery of first
Aircraft
b. Airplane Performance Format: 1 9 Track Magnetic
Monitoring (APM/HISTRY) Tape in ASCII
Software Format
1 3.5 Inch (1.44MB)
IBM Compatible
Diskette
1 5.25 Inch (1.2MB)
IBM Compatible
Diskette
1 3.5 Inch (1.4MB)
Macintosh Diskette
Revisions: Yes
Delivery: Concurrent with
delivery of first
Aircraft
P.A. No. 1947
K/WPA
<PAGE>
Attachment to
Part D of Exhibit C to
Purchase Agreement No. 1947
Page 4
Item Description Quantity
- ---- ----------- --------
c. Takeoff Analysis Software Format: 1 9 Track Magnetic
Tape in ASCII
Format
1 3.5 Inch (1.44MB)
IBM Compatible
Diskette
1 5.25 Inch (1.2MB)
IBM Compatible
Diskette
1 3.5 Inch (1.4MB)
Macintosh Diskette
Revisions: Yes
Delivery: Concurrent with
delivery of first
Aircraft
d. Landing Analysis Software Format: 1 9 Track Magnetic
Tape in ASCII
Format
1 3.5 Inch (1.44MB)
IBM Compatible
Diskette
1 5.25 Inch (1.2MB)
IBM Compatible
Diskette
1 3.5 Inch (1.4MB)
Macintosh Diskette
Revisions: Yes
Delivery: Concurrent with
delivery of first
Aircraft
10. ETOPS Guide Vol. III Format: Printed Two Sides
(Operational Guidelines Revisions: No
and Methods) Delivery: 90 days after signing
Purchase Agreement
B. MAINTENANCE
1. Aircraft Maintenance Manual
a. Advance Representative Format: __ Printed
Copy (Check One) __ Microfilm, 16mm
__ duplicate
__ Digital Format
Revisions: No
Delivery: 90 days after signing
Purchase Agreement
P.A. No. 1947
K/WPA
<PAGE>
Attachment to
Part D of Exhibit C to
Purchase Agreement No. 1947
Page 5
Item Description Quantity
- ---- ----------- --------
b. Customized Master
Check if required: __ 1 Microfilm, 16mm
Master
Check if required: __ 1 Digital Format
Revisions: Yes
Delivery: 90 days prior to
delivery first
Aircraft
c. Customized Manual Format: __ Printed Two Sides
__ Printed One Side
__ Microfilm, 16mm
Duplicate
Revisions: Yes
Delivery: 90 days prior to
delivery first
Aircraft
2. Wiring Diagram Manual
a. Advance Representative Format: __ Printed
Copy Revisions: No
Delivery: 90 days after signing
Purchase Agreement
b. Customized Master
Check if required:__ 1 35mm Aperture
Cards of All
Wiring Diagrams
and Charts
Check if required:__ 1 EDP Portion, 16mm
Microfilm Master
Check if required:__ 1 Entire Manual,
16mm Microfilm
Master
Check if required:__ 1 Digital Format
Revisions: Yes, until 90 days
after delivery of
last Aircraft
Delivery: Concurrent with
delivery of first
Aircraft
P.A. No. 1947
K/WPA
<PAGE>
Attachment to
Part D of Exhibit C to
Purchase Agreement No. 1947
Page 6
Item Description Quantity
- ---- ----------- --------
c. Customized Manual Format: __ Standard Printed
Copies of Entire
Manual
__ Standard Printed
Copies of all
Sections
Except EDP Portion
__ EDP Portion, 16mm
Microfilm
Duplicate
__ Entire Manual,
16mm Microfilm
Duplicate
Revisions: Yes, until 90 days
after delivery of
last Aircraft
Delivery: Concurrent with
delivery of first
Aircraft
3. System Schematics Manual
a. Advance Representative Format: __ Printed
Copy Revisions: No
Delivery: 90 days after signing
Purchase Agreement
b. Customized Master
Check if required:__ 1 35mm Aperture
Cards
of all Schematics
Check if required:__ 1 Digital Format
Revisions: Yes, until 90 days
after delivery of
last Aircraft only
Delivery: Concurrent with
delivery of first
Aircraft
c. Customized Manual Format: Printed Two Sides
Revisions: Yes, until 90 days
after delivery of
last Aircraft only
__ Microfilm, 16mm
Duplicate
__ Microfilm, 16mm
Master
Delivery: Concurrent with
delivery of first
Aircraft
P.A. No. 1947
K/WPA
<PAGE>
Attachment to
Part D of Exhibit C to
Purchase Agreement No. 1947
Page 7
Item Description Quantity
- ---- ----------- --------
4. Connector Part Number Format: __ Printed Two Sides
Options Document Revisions: Yes
Delivery: 90 days prior to
delivery of first
Aircraft
5. Structural Repair Manual Format: __ Printed Two Sides
__ Printed One Side
__ Microfilm, 16mm
__ Duplicate
Check if required: 1 Microfilm, 16mm
Master
Check if required: 1 Magnetic Tape
__ Text (Print File
Format)
__ Illustrations (CGM
Format)
Revisions: Yes
Delivery: 90 days prior to
delivery of first
Aircraft
P.A. No. 1947
K/WPA
<PAGE>
Attachment to
Part D of Exhibit C to
Purchase Agreement No. 1947
Page 8
Item Description Quantity
- ---- ----------- --------
6. Component Maintenance/ Format: __ Printed Two Sides
Overhaul Manual __ Microfilm, 16mm
Duplicate
1 Microfilm, 16mm
Master
Revisions: Yes
Delivery: 90 days prior to
delivery of firs
Aircraft
7. Chapter 20 Standard Format: __ Printed Two Sides
Overhaul Practices __ Printed One Side
Manual (Common to other __ Microfilm, 16mm
models, quantity indicates Duplicate
total requested)
Check if required:__ 1 Microfilm, 16mm
Master
Revisions: Yes
Delivery: 90 days prior to
delivery of first
Aircraft
8. Chapter 20 Standard Format: __ Printed Two Sides
Wiring Practices Manual __ Microfilm, 16mm
(Common to other models, __ Duplicate
quantity indicates total
requested)
Check if required: __ 1 Microfilm, 16mm
Master
Revisions: Yes
Delivery: 90 days prior to
delivery of first
Aircraft
P.A. No. 1947
K/WPA
<PAGE>
Attachment to
Part D of Exhibit C to
Purchase Agreement No. 1947
Page 9
Item Description Quantity
- ---- ----------- --------
9. Nondestructive Test Manual Format: __ Printed Two Sides
__ Printed One Side
__ Microfilm, 16mm
Duplicate
Check if required:__ 1 Microfilm, 16mm
Master
Check if required:__ 1 Magnetic Tape
Text (Print File
Format)
__ Illustrations (CGM
Format)
Revisions: Yes
Delivery: 90 days prior to
delivery of first
Aircraft
10. Service Bulletins Format: __ Printed Two Sides
__ Digital Format
Revisions: Yes
Delivery: As developed by
Boeing
11. Service Bulletin Index Format: __ Printed Two Sides
Revisions: Yes
Delivery: 90 days prior to
delivery of first
Aircraft
12. Corrosion Prevention Manual Format: __ Printed Two Sides
__ Printed One Side
__ Microfilm, 16mm
Duplicate
Check if required:__ 1 Microfilm, 16mm
Master
Check if required:__ 1 Magnetic Tape
__ Text (Print File
Format)
__ Illustrations (CGM
Format)
Revisions: Yes
Delivery: 90 days prior to
delivery of first
Aircraft
13. Fuel Measuring Stick Format: __ Printed One Side
Calibration Document Revisions: Yes
Delivery: Concurrent with
delivery of first
Aircraft.
Check One:
US Gallons __
P.A. No. 1947
K/WPA
<PAGE>
Attachment to
Part D of Exhibit C to
Purchase Agreement No. 1947
Page 10
Item Description Quantity
- ---- ----------- --------
Imperial Gallons __
Pounds __
Kilograms __
Liters __
14. Power Plant Buildup Manual Format: __ Printed Two Sides
__ Printed One Side
__ Microfilm, 16mm
Duplicate
Check if required: 1 Microfilm, 16mm
Master
Check if required: 1 Digital Format
Revisions: Yes
Delivery: 90 days prior to
delivery of first
Aircraft
15. FMS BITE Manual
a. Advance Representative Format: __ Printed Two Sides
Copy Revisions: No
Delivery: 90 days after signing
Purchase Agreement
b. Customized Manual Format: __ Printed Two Sides
__ Microfilm,
16mm Duplicate
__ Microfilm, 16mm
Master
Delivery: 90 days prior to
delivery first
Aircraft
16. In Service Activities Format: Printed Two Sides
Report Revisions: No
Delivery: Issued Quarterly
17. All Operator Letter Format: Printed One or Two
Sides
Revisions: Yes
Delivery: As developed by
Boeing
18. Service Letters Format: __ Printed One or Two
Sides
Revisions: Yes
Delivery: As developed by
Boeing
19. Structural Item Format: __ Printed One or Two
Sides
P.A. No. 1947
K/WPA
<PAGE>
Attachment to
Part D of Exhibit C to
Purchase Agreement No. 1947
Page 11
Item Description Quantity
- ---- ----------- --------
Interim Advisory Revisions: Yes
Delivery: As developed by
Boeing
20. Maintenance Tips Format: 2 Printed One or Two
Sides
Revisions: Yes
Delivery: As developed by
Boeing
21. Combined Index Format: __ Printed 2 Sides
__ Digital Format
C. MAINTENANCE PLANNING
1. Maintenance Planning Format: __ Printed Two Sides
Data (MPD) Documents __ Microfilm, 16mm
Duplicate
Revisions: Yes
Delivery: 90 days after signing
Purchase Agreement
2. Maintenance Planning Data Format: 1 Digital Format
Tasks Masterfile Revisions: Yes
Delivery: 90 days after
signing Purchase
Agreement
3. Maintenance Task Cards
a. Advance Format: __ Printed One Side
Representative Copy
Revisions: No
Delivery: 90 days after signing
Purchase Agreement
b. Customized Masters
Check if required:__ Format: 1 Microfilm, 16mm
Master
Check if required:__ 1 Digital Format
c. Customized Cards Format: __ Printed One Side
__ Microfilm, 16mm
Duplicate
Revisions: Yes
Delivery: 90 days prior to
delivery of first
Aircraft
P.A. No. 1947
K/WPA
<PAGE>
Attachment to
Part D of Exhibit C to
Purchase Agreement No. 1947
Page 12
Item Description Quantity
- ---- ----------- --------
4. Maintenance Task Card Format: 1 Printed Two Sides
Index Revisions: First Revision Only
Delivery: 90 days prior to
delivery of first
Aircraft
5. Maintenance Inspection Format: __ Printed Two Sides
Interval Reports Revisions: Yes
(Common with other models Delivery: 90 days prior to
quantity indicates total delivery of first
requested) Aircraft
D. SPARES
1. Illustrated Parts Catalog Format: __ Printed Two Sides
(Select one format only) Printed One Side
__ Microfilm, 16mm
Duplicate
Check if required: 1 Microfilm, 16mm
Master
Revisions: Yes, until 90 days
after delivery of
last Aircraft only
Delivery: 90 days prior to
delivery of first
Aircraft
2. Standards Books Format: __ Printed Two Sides
(Unless previously provided __ Microfilm, 16mm
pursuant to other Duplicate
agreements, in which case
applicable supplements
will be provided) Revisions: Yes
(Select one format only) Delivery: 90 days prior to
delivery of first
Aircraft
P.A. No. 1947
K/WPA
<PAGE>
Attachment to
Part D of Exhibit C to
Purchase Agreement No. 1947
Page 13
Item Description Quantity
- ---- ----------- --------
E. FACILITIES AND EQUIPMENT PLANNING
1. Facilities and Equipment Format: __ Printed Two Sides
Planning documents Revisions: Yes
Delivery: 90 days after signing
Purchase Agreement
2. Special Tool and Ground Format: __ Microfilm, 35 mm
Handling Equipment Drawings Duplicate in
Aperture Card
Format
Revisions: Yes
Delivery: 90 days prior to
delivery of first
Aircraft
3. Special Tool and Ground Format: __ Printed Two Sides
Handling Equipment Revisions: Yes
Drawing Index Delivery: 90 days prior to
delivery of first
Aircraft
4. Supplementary Tooling Format: __ Printed Two Sides
Documentation (Common Revisions: Yes
to other models, Delivery: 90 days prior to
quantity indicates delivery of first
total requested) Aircraft
5. System Test Equipment Format: __ Printed One Side
Document Revisions: Yes
Delivery: 90 days after signing
Purchase Agreement
6. Illustrated Tool and Format: __ Printed One Side
Equipment List/Manual __ Printed Two Sides
__ Microfilm, 16mm
Duplicate
Check if Required __ 1 Microfilm,
16mm Master
Revisions: Yes
Delivery: 90 days prior to
delivery of first
Aircraft
7. Aircraft Recovery Document Format: __ Printed Two Sides
Revisions: Yes
Delivery: 90 days prior to
delivery of first
Aircraft
P.A. No. 1947
K/WPA
<PAGE>
Attachment to
Part D of Exhibit C to
Purchase Agreement No. 1947
Page 14
Item Description Quantity
- ---- ----------- --------
8. Airplane Characteristics Format: __ Printed Two Sides
for Airport Planning Revisions: Yes
Delivery: 90 days prior to
delivery of first
Aircraft
9. Airplane Rescue and Format: __ Printed Two Sides
Fire Fighting Document Revisions: Yes
(Common to other models, Delivery: 90 days prior to
quantity indicates delivery of first
total required) Aircraft
10. Engine Handling Document Format: __ Printed Two Sides
Revisions: Yes
Delivery: 90 days after signing
Purchase Agreement
F. CONFIGURATION, MAINTENANCE Format: __ Printed Two Sides
AND PROCEDURES FOR Revisions: Yes
EXTENDED RANGE OPERATION Delivery: 90 days prior to
delivery of first
Aircraft
G. ETOPS Guide Vol. I Format: __ Printed Two Sides
(Configuration, Maintenance Revisions: No
and Procedures Supplement) Delivery: 90 days after signing
Purchase Agreement
H. ETOPS Guide Vol. II Format: __ Printed Two Sides
(Maintenance Programs Revisions: No
Guidelines) (Common Delivery: 90 days after signing
to other models, Purchase Agreement
quantity indicates
total required)
I. COMPUTER SOFTWARE INDEX Format: __ Printed Two Sides
(Common to other models, Revisions: Yes
quantity indicates Delivery: Concurrent with
total required) delivery of first
Aircraft
P.A. No. 1947
K/WPA
<PAGE>
Attachment to
Part D of Exhibit C to
Purchase Agreement No. 1947
Page 15
Item Description Quantity
- ---- ----------- --------
J. SUPPLIER TECHNICAL DATA
1. Service Bulletins
2. Ground Support Equipment
Data
3. Provisioning Information
4. Component Maintenance/
Overhaul Manuals
5. Component Maintenance/
Overhaul Manuals Index
(Common to other models,
quantity indicates
total required)
6. Publications Index
7. Product Support
Supplier Directory
(Common to other models,
quantity indicates
total required)
P.A. No. 1947
K/WPA
<PAGE>
PART E
BUYER'S INDEMNIFICATION OF BOEING AND INSURANCE
1. Buyer's Indemnification Of Boeing.
Buyer hereby indemnifies and holds harmless Boeing from and against
all claims and liabilities, including costs and expenses (including attorneys'
fees) incident thereto or incident to successfully establishing the right to
indemnification, for injury to or death of any person or persons, including
employees of Buyer but not employees of Boeing, or for loss of or damage to any
property, including Aircraft, arising out of or in any way related to the
performance by Boeing of training, services or other obligations pursuant to
this Exhibit C, whether or not arising in tort or occasioned in whole or in part
by the negligence of Boeing, whether active, passive or imputed.
1.1 With regard to training, services and obligations, the
foregoing indemnification will not apply to the legal liability to persons or
parties other than Buyer or Buyer's assignees arising out of an accident caused
solely by a product defect in an Aircraft.
2. Buyer's Insurance.
Evidence of insurance will be required 30 days prior to the
scheduled delivery of the first Aircraft. Accordingly, Buyer will provide
certificates of insurance specifically referencing the Agreement and paragraph 1
of this Part E. In addition to showing policy number, limits of liability, and
effective dates of coverage, such certificates will contain but not be limited
to the following provisions:
P.A. No. 1947 C
K/WPA E-1
<PAGE>
2.1 Hull All Risk; Hull War & Allied Perils Insurance.
Insurers and/or reinsurers will hold harmless and waive
all rights of subrogation against Boeing for any damages or claims arising out
of these Exhibit C services.
2.2 Aircraft Liability Insurance.
(a) To name Boeing as an additional insured in
connection with the performance by Boeing of training, services, or other
obligations provided under this Exhibit C.
(b) To provide that the insurance arranged
herein will be primary and without right of contribution with respect to any
other insurance which may be available for the protection of Boeing.
(c) To provide that all provisions of the
insurance, except the limits of liability, will operate to give each insured or
additional insured the same protection as if there were a separate policy issued
covering each insured or additional insured.
(d) To provide that no act, omission, breach of
any warranty or condition, or misrepresentation on the part of the Insured or
any other person or party (other than by Boeing) will void, exclude, minimize,
or adversely change this coverage as it applies to Boeing.
2.3 For Coverages Specified in 2.1 and 2.2.
(a) Acknowledgment that the insurers and/or
reinsurers are aware of and have seen a copy of the Agreement and accept and
insure the risks and indemnity herein to the extent of the coverage and
endorsements as described in this certificate.
(b) To give 30 day written notice of
cancellation, termination or adverse material alteration of the policies (7 day
written notice in the event of War Risk or such lesser period as may be in
effect with prior notice).
(c) That Boeing will not be responsible for
payment, set off, or assessment of any kind of any premiums in connection with
the policies, endorsements or coverages described herein.
P.A. No. 1947 C
K/WPA E-2
<PAGE>
(d) For the purpose of this Part E, "Boeing" is
defined as The Boeing Company, its divisions, subsidiaries, affiliates, the
assignees of each and their respective directors, officers, employees and
agents.
If more than one Aircraft is to be delivered under the Purchase Agreement, the
insurance certificates must reference all Aircraft when delivered or separate
certificates must be supplied for each Aircraft. The certificates of insurance
will be kept current and valid.
P.A. No. 1947 C
K/WPA E-3
<PAGE>
PART F
Alleviation or Cessation of Performance
Boeing will not be required to provide any services, training, data or goods at
a facility while:
1. a labor stoppage or dispute in progress involving Buyer
exists;
2. wars or warlike operations, riots or insurrections in
the country where such facility is located exist;
3. conditions at such facility which, in the opinion of
Boeing, are detrimental to the general health, welfare or safety of its
personnel and/or their families exist;
4. the United States Government refuses permission to any
Boeing personnel or their families to enter the country where such facility is
located, or recommends that any Boeing personnel or their families leave such
country; or
5. the United States Government refuses Boeing permission
to deliver goods or services to the country where such facility is located.
Boeing further reserves the right, upon the occurrence of any of such events,
subsequent to the location of Boeing personnel at Buyer's facility, to
immediately and without prior notice relocate its personnel and their families
to a place of Boeing's choosing. Any delay resulting therefrom will be deemed a
delay by mutual agreement.
P.A. No. 1947 C
K/WPA F-1
<PAGE>
(CONFIDENTIALITY REQUESTED)
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24B-21 AS
INDICATED BY "(XXX)"
AIRFRAME AND ENGINE PRICE ADJUSTMENT
between
THE BOEING COMPANY
and
WESTERN PACIFIC AIRLINES, INC.
Exhibit D to Purchase Agreement Number 1947
P.A. No. 1947 D
K/WPA
<PAGE>
Exhibit D
Page 1
PRICE ADJUSTMENT DUE TO
ECONOMIC FLUCTUATIONS
AIRFRAME PRICE ADJUSTMENT
(1995 Base Price)
1. Formula.
The Airframe Price Adjustment will be determined at the time of
Aircraft delivery in accordance with the following formula:
Pa = (P)(L + M - 1)
Where:
Pa = Airframe Price Adjustment.
L = .65 x ECI
-----
130.1
M = .35 x ICI
-----
123.6
P = Aircraft Basic Price (as set forth in Article 3.2 of this
Agreement) less the base price of Engines (as defined in this
Exhibit D) in the amount of [XXXXXXXX].
ECI = A value using the "Employment Cost Index for workers in
aerospace manufacturing" (aircraft manufacturing, standard
industrial classification code 3721, compensation, base month
and year June 1989 = 100), as released by the Bureau of Labor
Statistics, U.S. Department of Labor on a quarterly basis for
the months of March, June, September and December, calculated
as follows: A three-month arithmetic average value (expressed
as a decimal and rounded to the nearest tenth) will be
determined using the months set forth in the table below for
the applicable Aircraft, with the released Employment Cost
Index value described above for the month of March also being
used for the months of January and February; the value for
June also used for April and May; the value for September also
used for July and August; and the value for December also used
for October and November.
P.A. No. 1947 D-1
K/WPA
<PAGE>
Exhibit D
Page 2
ICI = The three-month arithmetic average of the released monthly
values for the Industrial Commodities Index as set forth in
the "Producer Prices and Price Index" (Base Year 1982 = 100)
as released by the Bureau of Labor Statistics, U.S. Department
of Labor values (expressed as a decimal and rounded to the
nearest tenth) for the months set forth in the table below for
the applicable Aircraft.
In determining the value of L, the ratio of ECI divided by 130.1 will
be expressed as a decimal rounded to the nearest ten-thousandth and then
multiplied by .65 with the resulting value also expressed as a decimal and
rounded to the nearest ten-thousandth.
In determining the value of M, the ratio of ICI divided by 123.6 will
be expressed as a decimal rounded to the nearest ten-thousandth and then
multiplied by .35 with the resulting value also expressed as a decimal and
rounded to the nearest ten-thousandth.
Months to be Utilized
Month of Scheduled in Determining the
Aircraft Delivery Value of ECI and ICI
January June B, July B, Aug. B
February July B, Aug. B, Sept. B
March Aug. B, Sept. B, Oct. B
April Sept. B, Oct. B, Nov. B
May Oct. B, Nov. B, Dec. B
June Nov. B, Dec. B, Jan. D
July Dec. B, Jan. D, Feb. D
August Jan. D, Feb. D, Mar. D
September Feb. D, Mar. D, Apr. D
October Mar. D, Apr. D, May D
November Apr. D, May D, June D
December May D, June D, July D
The following definitions of B and D will apply:
B = The calendar year before the year in which the
scheduled month of delivery as set forth in Article
2.1 occurs.
D = The calendar year during which the scheduled
month of delivery as set forth in Article 2.1
occurs.
P.A. No. 1947 D-2
K/WPA
<PAGE>
Exhibit D
Page 3
2. If at the time of delivery of an Aircraft Boeing is unable to determine the
Airframe Price Adjustment because the applicable values to be used to determine
the ECI and ICI have not been released by the Bureau of Labor Statistics, then:
2.1 The Airframe Price Adjustment, to be used at the time of delivery
of each of the Aircraft, will be determined by utilizing the escalation
provisions set forth above. The values released by the Bureau of Labor
Statistics and available to Boeing 30 days prior to scheduled Aircraft delivery
will be used to determine the ECI and ICI values for the applicable months
(including those noted as preliminary by the Bureau of Labor Statistics) to
calculate the Airframe Price Adjustment. If no values have been released for an
applicable month, the provisions set forth in Paragraph 2.2 below will apply. If
prior to delivery of an Aircraft the U.S. Department of Labor changes the base
year for determination of the ECI or ICI values as defined above, such rebased
values will be incorporated in the Airframe Price Adjustment calculation. The
payment by Buyer to Boeing of the amount of the Purchase Price for such
Aircraft, as determined at the time of Aircraft delivery, will be deemed to be
the payment for such Aircraft required at the delivery thereof.
2.2 If prior to delivery of an Aircraft the U.S. Department of Labor
substantially revises the methodology used for the determination of the values
to be used to determine the ECI and ICI values (in contrast to benchmark
adjustments or other corrections of previously released values), or for any
reason has not released values needed to determine the applicable Aircraft
Airframe Price Adjustment, the parties will, prior to delivery of any such
Aircraft, select a substitute for such values from data published by the Bureau
of Labor Statistics or other similar data reported by non-governmental United
States organizations, such substitute to lead in application to the same
adjustment result, insofar as possible, as would have been achieved by
continuing the use of the original values as they may have fluctuated during the
applicable time period. Appropriate revision of the formula will be made as
required to reflect any substitute values. However, if within 24 months from
delivery of the Aircraft the Bureau of Labor Statistics should resume releasing
values for the months needed to determine the Airframe Price Adjustment, such
values will be used to determine any increase or decrease in the Airframe Price
Adjustment for the Aircraft from that determined at the time of delivery of such
Aircraft. Boeing will provide Buyer a supplemental invoice to reflect such
increase in the Airframe Price Adjustment or a supplemental credit invoice to
reflect such decrease in the Airframe Price Adjustment.
P.A. No. 1947 D-3
K/WPA
<PAGE>
Exhibit D
Page 4
2.3 In the event escalation provisions are made non-enforceable or
otherwise rendered null and void by any agency of the United States Government,
the parties agree, to the extent they may lawfully do so, to equitably adjust
the Purchase Price of any affected Aircraft to reflect an allowance for
increases or decreases in labor compensation and material costs occurring since
February, 1995, which is consistent with the applicable provisions of paragraph
1 of this Exhibit D.
3. For the calculations herein, the values released by the Bureau of Labor
Statistics and available to Boeing 30 days prior to scheduled Aircraft delivery
will be used to determine the ECI and ICI values for the applicable months
(including those noted as preliminary by the Bureau of Labor Statistics) to
calculate the Airframe Price Adjustment.
Note: Any rounding of a number, as required under this Exhibit D
with respect to escalation of the airframe price, will be
accomplished as follows: if the first digit of the portion to
be dropped from the number to be rounded is five or greater,
the preceding digit will be raised to the next higher number.
P.A. No. 1947 D-4
K/WPA
<PAGE>
Exhibit D
Page 5
ENGINE PRICE ADJUSTMENT - CFM INTERNATIONAL, INC.
(1995 BASE PRICE)
(a) The Aircraft Basic Price of each Aircraft set forth in Article 3 of this
Agreement includes an aggregate price for CFM56-3C-1 engines and all
accessories, equipment and parts therefor provided by the engine manufacturer
(collectively in this Exhibit D called "Engines") of [XXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]. The adjustment
in Engine price applicable to each Aircraft ("Engine Price Adjustment" herein)
will be determined at the time of Aircraft delivery in accordance with the
following formula:
D1 = (Pb x CPI ) - Pb
------
138.27
(b) The following definitions will apply herein:
D1 = Engine Price Adjustment
Pb = Aggregate Engine Base Price as set forth in
Paragraph (a) above.
CPI = The Composite Price Index as determined in
accordance with the formula set forth below. The
Index values referred to below, to be used in
determining the CPI, will be for the ninth month
prior to the month of scheduled Aircraft delivery.
Such Index values will be those prepared by the
Bureau of Labor Statistics, U.S.
Department of Labor.
CPI = L + M1 + M2 + M3
L = The Labor Index for such month will
be the quotient, expressed as a
decimal and rounded to the nearest
thousandth, of the "Hourly Earnings
of Aircraft Engines and Engine Parts
Production Workers" SIC 3724, for
such month divided by [XXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXX]. Such
quotient will be multiplied by 100
and then by fifty-five percent (55%)
with the value resulting from the
latter multiplication expressed as a
decimal and rounded to the nearest
hundredth.
P.A. No. 1947 D-5
K/WPA
<PAGE>
Exhibit D
Page 6
M1 = The Industrial Commodities Index
for such month will be equal to ten
percent (10%) of the Producer Price
Index for "all commodities other than
Farm and Foods," Code 3-15, (Base
Year 1982 = 100) for such month,
expressed as a decimal and rounded to
the nearest hundredth.
M2 = The Metals and Metal Products Index
for such month will be equal to
twenty-five percent (25%) of the
Producer Price Index for "Metals and
Metal Products," Code 10, (Base Year
1982 = 100) for such month expressed
as a decimal and rounded to the
nearest hundredth.
M3 = The Fuel Index for such month will
be equal to ten percent (10%) of the
Producer Price Index for "Fuel and
Related Products and Power," Code 5,
(Base Year 1982 = 100) for such month
expressed as a decimal and rounded to
the nearest hundredth.
138.27 = Composite Price Index for October, 1994.
The factor (CPI divided by 138.27) by which the Aggregate Engine Base Price is
to be multiplied will be expressed as a decimal and rounded to the nearest
thousandth.
The Engine Price Adjustment will not be made if it would result in a decrease in
the aggregate Engine base price.
(c) The values of the Average Hourly Earnings and Producer Price Indices used in
determining the Engine Price Adjustment will be those published by the Bureau of
Labor Statistics, U.S. Department of Labor as of a date 30 days prior to the
scheduled Aircraft delivery to Buyer. Such values will be considered final and
no Engine Price Adjustment will be made after Aircraft delivery for any
subsequent changes in published Index values.
(d) If the U.S. Department of Labor, Bureau of Labor Statistics (i)
substantially revises the methodology (in contrast to benchmark adjustments or
other corrections of previously published data) or (ii) discontinues publication
of any of the data referred to above, CFMI agrees to meet jointly with Boeing
and Buyer to jointly select a substitute for the revised or discontinued data;
such substitute data to lead in application to
P.A. No. 1947 D-6
K/WPA
<PAGE>
Exhibit D
Page 7
the same adjustment result, insofar as possible, as would have been achieved by
continuing the use of the original data as it may have fluctuated had it not
been revised or discontinued.
Appropriate revision of the Engine Price Adjustment provisions set forth above
will be made to accomplish this result for the affected Engines.
In the event the Engine price escalation provisions are made non-enforceable or
otherwise rendered null and void by any agency of the United States Government,
CFMI agrees to meet with Boeing and Buyer to jointly agree, to the extent such
parties may lawfully do so, to adjust equitably the purchase price of any
affected Engine(s) to reflect an allowance for increases in labor, material and
fuel costs that have occurred from the period represented by the CPI to the
ninth month preceding the month of scheduled delivery of the applicable
aircraft.
NOTE: Any rounding of a number, as required under this Exhibit D with
respect to escalation of the Engine price, will be accomplished as
follows: if the first digit of the portion to be dropped from the
number to be rounded is five or greater, the preceding digit will
be raised to the next higher number.
P.A. No. 1947 D-7
K/WPA
<PAGE>
BUYER FURNISHED EQUIPMENT PROVISIONS DOCUMENT
between
THE BOEING COMPANY
and
WESTERN PACIFIC AIRLINES, INC.
Exhibit E to Purchase Agreement Number 1947
P.A. No. 1947 E
K/WPA
<PAGE>
BUYER FURNISHED EQUIPMENT PROVISIONS DOCUMENT
Dated
Relating to
BOEING MODEL 737 AIRCRAFT
This Buyer Furnished Equipment Provisions Document is Exhibit
E to and forms a part of Purchase Agreement No. 1947, between The Boeing Company
(Boeing) and Western Pacific Airlines, Inc. (Buyer) relating to the purchase of
Boeing Model 737-300 aircraft.
P.A. No. 1947 E
K/WPA (I)
<PAGE>
BUYER FURNISHED EQUIPMENT PROVISIONS DOCUMENT
1. General.
Certain equipment to be installed in the Aircraft is furnished to
Boeing by Buyer at Buyer's expense. This equipment is designated "Buyer
Furnished Equipment" (BFE) and is listed in the Detail Specification. On or
before October 1, 1996, Boeing will provide to Buyer a BFE Requirements
On-Dock/Inventory Document (BFE Document) or an electronically transmitted BFE
Report which may be periodically revised, setting forth the items, quantities,
on-dock dates and shipping instructions relating to the in sequence installation
of BFE. For planning purposes, a preliminary BFE on-dock schedule is set forth
in the attachment to this Exhibit.
2. Supplier Selection.
Buyer will:
2.1 Select and notify Boeing of the suppliers of the
following BFE items by the following dates:
Galley System
Complete
Seats (passenger)
Complete
2.2 Meet with Boeing and such selected BFE suppliers promptly after
such selection to:
2.2.1 complete BFE configuration design requirements for such
BFE; and
2.2.2 confirm technical data submittal dates for BFE
certification.
3. Buyer's Obligations.
Buyer will:
3.1 comply with and cause the supplier to comply with the
provisions of the BFE Document or BFE Report;
3.1.1 deliver technical data (in English) to Boeing as
required to support installation and FAA certification in accordance with the
schedule provided by Boeing or as mutually agreed upon during the BFE meeting
referred to above;
P.A. No. 1947 E-1
K/WPA
<PAGE>
3.1.2 deliver BFE including production and/or flight training
spares to Boeing in accordance with the quantities and schedule provided
therein; and
3.1.3 deliver appropriate quality assurance documentation to
Boeing as required with each BFE part (D6-56586, "BFE Product Acceptance
Requirements");
3.2 authorize Boeing to discuss all details of the BFE directly
with the BFE suppliers;
3.3 authorize Boeing to conduct or delegate to the supplier quality
source inspection and supplier hardware acceptance of BFE at the supplier
location;
3.3.1 require supplier's contractual compliance to Boeing
defined source inspection and supplier delegation programs, including
availability of adequate facilities for Boeing resident personnel; and
3.3.2 assure that Boeing identified supplier's quality
systems be approved to Boeing document D1-9000;
3.4 rovide necessary field service representation at Boeing's
facilities to support Boeing on all issues related to the installation and
certification of BFE;
3.5 deal directly with all BFE suppliers to obtain overhaul data,
provisioning data, related product support documentation and any warranty
provisions applicable to the BFE;
3.6 work closely with Boeing and the BFE suppliers to resolve any
difficulties, including defective equipment, that arise;
3.7 be responsible for modifying, adjusting and/or calibrating BFE
as required for FAA approval and for all related expenses;
3.8 warrant that the BFE will meet the requirements of the Detail
Specification; and
3.9 be responsible for providing equipment which is FAA certifiable
at time of Aircraft delivery, or for obtaining waivers from the applicable
regulatory agency for non-FAA certifiable equipment.
4. Boeing's Obligations.
Other than as set forth below, Boeing will provide for the installation
of and install the BFE and obtain certification of the Aircraft with the BFE
installed.
P.A. No. 1947 E-2
K/WPA
<PAGE>
5. Nonperformance by Buyer.
If Buyer's nonperformance of obligations in this Exhibit or in the BFE
Document causes a delay in the delivery of the Aircraft or causes Boeing to
perform out-of-sequence or additional work, Buyer will reimburse Boeing for all
resulting expenses and be deemed to have agreed to any such delay in Aircraft
delivery. In addition Boeing will have the right to:
5.1 rovide and install specified equipment or suitable alternate
equipment and increase the price of the Aircraft accordingly; and/or
5.2 deliver the Aircraft to Buyer without the BFE installed.
6. Return of Equipment.
BFE not installed in the Aircraft will be returned to Buyer in
accordance with Buyer's instructions and at Buyer's expense.
7. Title and Risk of Loss.
Title to and risk of loss of BFE will at all times remain with Buyer or
other owner. Boeing will have only such liability for BFE as a bailee for mutual
benefit would have, but will not be liable for loss of use.
8. Indemnification of Boeing.
Buyer hereby indemnifies and holds harmless Boeing from and against all
claims and liabilities, including costs and expenses (including attorneys' fees)
incident thereto or incident to successfully establishing the right to
indemnification, for injury to or death of any person or persons, including
employees of Buyer but not employees of Boeing, or for loss of or damage to any
property, including any Aircraft, arising out of or in any way connected with
any nonconformance or defect in any BFE and whether or not arising in tort or
occasioned in whole or in part by the active, passive or imputed negligence of
Boeing. This indemnity will not apply with respect to any nonconformance or
defect caused solely by Boeing's installation of the BFE.
9. Patent Indemnity.
Buyer hereby indemnifies and holds harmless Boeing from and against all
claims, suits, actions, liabilities, damages and costs arising out of any actual
or alleged infringement of any patent or other intellectual property rights by
BFE or arising out of the installation, sale or use of BFE by Boeing.
P.A. No. 1947 E-3
K/WPA
<PAGE>
10. Definitions.
For the purposes of the above indemnities, the term "Boeing" includes
The Boeing Company, its divisions, subsidiaries and affiliates, the assignees of
each, and their directors, officers, employees and agents.
P.A. No. 1947 E-4
K/WPA
<PAGE>
Attachment A to
Exhibit E
BOEING MODEL + AIRCRAFT
Item Preliminary On-Dock Dates
May 1997 May 1997
Aircraft Aircraft
-------- --------
Seats 3/14/97 3/18/97
Galleys 3/10/97 3/12/97
Electronics 3/ 5/97 3/ 5/97
Furnishings 3/ 3/97 3/ 7/97
P.A. No. 1947 E
K/WPA A-1
<PAGE>
DEFINED TERMS DOCUMENT
between
THE BOEING COMPANY
and
WESTERN PACIFIC AIRLINES, INC.
Exhibit F to Purchase Agreement Number 1947
P.A. No. 1947
K/WPA
<PAGE>
DEFINED TERMS DOCUMENT
Dated
Relating to
BOEING MODEL 737 AIRCRAFT
This Document is Exhibit F to and forms a part of Purchase
Agreement No. 1947 (Agreement) between The Boeing Company (Boeing) and Western
Pacific Airlines, Inc. (Buyer) relating to the purchase of Boeing Model 737-300
aircraft.
The following is a list of those terms and their definitions
as used and not otherwise defined in this Agreement. Such terms are identified
in the Agreement by the use of an initial capital letter.
P.A. No. 1947
K/WPA
<PAGE>
DEFINED TERMS DOCUMENT
EXHIBIT F TO AGREEMENT NO. 1947
TERM DEFINITION FIRST REFERENCE
- --------------------------------------------------------------------------------
Advance Payment Boeing's estimate of the Article 3
Base Price Aircraft Price is set forth
in Article 3.
Agreement Purchase Agreement Opening paragraph
No. 1947, including all of the Agreement
Exhibits, the Detail
Specification, attachments,
letter agreements and other
written modifications and
amendments thereto.
Aircraft (includes The aircraft described in Article 1,
"the," "all," Article 1, Para. 1.1. Para. 1.1
"first," "last,"
"such," /the
"Block A
Aircraft"/ the
"Block B
Aircraft"/ etc.)
Aircraft Basic The amount set forth in Article 3, Para.
Price Article 3, Para. 3.1.4. 3.1.4
Aircraft Price The total amount Buyer is Article 3, Para.
to pay for an Aircraft 3.1.6
which is described in
Article 3, Para. 3.1.6.
Aircraft Software The computer software Exhibit B,
included with the Aircraft Part D-1, Para 1
when the Aircraft is
delivered by Boeing,
described in Exhibit B,
Part D-1, Para. 1.
Airframe Component A component described in Exhibit B, Part C,
Exhibit B, Part C, Para. Para. 1.1
1.1
Article An Article of the Article 6, Para.
Agreement. 6.4
Base Airframe The airframe price Article 3, Para.
Price described in Article 3, 3.1.2
Para. 3.1.2.
Boeing The Seller of the Aircraft Opening paragraph
identified in the opening of the Agreement
paragraph of the Agreement.
P.A. No. 1947
K/WPA
F-1
<PAGE>
TERM DEFINITION FIRST REFERENCE
- --------------------------------------------------------------------------------
Boeing Warranty Part A of Exhibit B to the Exhibit B, Part A,
Agreement. Para. 1
Buyer The purchaser of the Opening paragraph
Aircraft identified in the of the Agreement
opening paragraph of the
Agreement.
Buyer Furnished Equipment provided by Buyer Article 4.1
Equipment or BFE pursuant to Exhibit E for
installation by Boeing on
the Aircraft.
Buyer Furnished Document provided by Boeing Article 13, Para.
Equipment Document to Buyer defining 13.1
requirements for BFE.
Exhibit E, Para. 1.
Change Order A change to the Detail Article 7, Para.
Specification, as described 7.2
in Article 7, Para. 7.2.
Covered Component An Airframe Component as Exhibit B, Part C,
described in Exhibit B, Para. 1.4
Part C, Para. 1.4.
Customer Support Exhibit C to the Agreement. Article 12, Para.
Document 12.5
P.A. No. 1947
K/WPA
F-2
<PAGE>
DEFINED TERMS DOCUMENT
EXHIBIT F TO AGREEMENT NO. 1947
TERM DEFINITION FIRST REFERENCE
- --------------------------------------------------------------------------------
Customer Support The Boeing services, Article 12, Para.
Services training and other 12.5
obligations described in
Exhibit C to the Agreement.
Deposit The money paid by Buyer to Article 5, Para.
Boeing as part of the 5.1
acceptance of the Aircraft
proposal.
Detail The Boeing document that Article 1, Para.
Specification describes the specifications 1.1
of the Aircraft modified
from time to time to
include developmental and
Buyer requested changes.
Development Changes to the basic Article 7, Para.
Change(s) specification that do not 7.1
affect price, delivery,
guaranteed weight,
performance or
interchangeability as
described in Article 7,
Para. 7.1.
Disclaimer and The disclaimer and Release Article 12,
Release set forth in Article 12, Para. 12.2
Para. 12.2.
Documents The data and documents Exhibit C, Part D,
provided by Boeing under the Para. 2
Agreement.
Economic Price Article 3, Para. 3.1.5. Article 3, Para.
Adjustment 3.1.5
Engine(s) The engines installed on the Article 3,
Aircraft as described in the Para. 3.1.2
Detail Specification.
Engine Price The price of the Engines Article 3, Para.
installed on the Aircraft 3.1.3
set forth in Exhibit D,
including all accessories,
equipment and parts therefor
provided by the Engine
manufacturer.
P.A. No. 1947
K/WPA
F-3
<PAGE>
TERM DEFINITION FIRST REFERENCE
- --------------------------------------------------------------------------------
Engine Price The adjustment to the Engine Article 3, Para.
Adjustment Price as required by 3.1.2
Article 3, Para. 3.1.2, and
as calculated pursuant to
Exhibit D.
Excusable Delay A delay resulting from any Article 6, Para.
of the causes described in 6.1
Article 6, Para. 6.1.
FAA The Federal Aviation Article 8, Para.
Administration of the 8.1.1
Department of Transportation
of the United States,
including the Administrator
of the Federal Aviation
Administration, the National
Transportation Safety Board
and any other authority or
agency of the Federal
Government of the United
States having like
jurisdiction.
Failed Component A component as described in Exhibit B, Part C,
Exhibit B, Part C, Para. Para. 1.6
1.6.
Failure Any breakage or defect as Exhibit B, Part C,
described in Exhibit B, Part Para. 1.5
C, Para. 5.
Federal Aviation The United States Federal Article 8, Para.
Regulations Aviation Regulations and, if 8.1.1.1
they are redesignated or
discontinued, any comparable
regulations or parts thereof
issued by the FAA.
Field Service(s) Boeing-provided services as Exhibit C, Part B,
described in Exhibit C, Part Para. 2
B, Para. 2.
Field Service The length of time Boeing Exhibit C, Part B,
Period provides Field Service to Para. 2.1
Buyer as described in
Exhibit C, Part B, Para.
2.1.
P.A. No. 1947
K/WPA
F-4
<PAGE>
TERM DEFINITION FIRST REFERENCE
- --------------------------------------------------------------------------------
Flight Training A planning conference as Exhibit C, Part C,
Planning described in Exhibit C, Part Para. 2
Conference C, Para. 2.
Flight Training The program of flight Exhibit C, Part C,
Program training described in Para. 3
Exhibit C, Part C, Para. 3.
Interface Problem A technical problem Exhibit B, Part G,
attributed to the design Para. 1
characteristics of the
Aircraft or its systems, as
described in Exhibit B,
Part G, Para. 1.
Landing Gear A component as described in Exhibit B, Part C,
Component Exhibit B, Part C, Para. Para. 1.2
1.2.
Maintenance A planning conference as Exhibit C, Part A,
Training Planning described in Exhibit C, Part Para. 2
Conference A, Para. 2.
Maintenance The program of training Exhibit C, Part A,
Training Program described in Exhibit C, Part Para. 3
A, Para. 3.
Major Damage Damage described in Exhibit Exhibit C, Part C,
C, Part C, Para. 11.3. Para. 11.3
Manufacturer A change to the Aircraft or Article 8, Para.
Change(s) performance required of 8.2.1
Boeing as described in
Article 8, Para. 8.2.1.
Operator Change(s) A change to the Aircraft Article 8, Para.
described in Article 8, 8.3.1
Para. 8.3.1.
Performance The written guarantees Article 1, Para.
Guarantees regarding the operational 1.3
performance of the Aircraft
set forth in the Agreement
or the Detail Specification.
Policy (Boeing Exhibit B, Part C, Para. 2. Exhibit B, Part C,
Service Life Para. 2
Policy)
Product Assurance Exhibit B of the Agreement. Article 12, Para.
Document 12.1
P.A. No. 1947
K/WPA
F-5
<PAGE>
TERM DEFINITION FIRST REFERENCE
- --------------------------------------------------------------------------------
Revenue Service Flight Training conducted on Exhibit C, Part C,
Training the Aircraft during revenue Para. 8
service with cargo and/or
passengers on board, as
described in Exhibit C, Part
C, Para. 8.
Software A listing of components and Exhibit C, Part D,
Documentation equipment referred to in Para. 3.3.6
Exhibit C, Part D, Para.
3.3.6.
Spare Component A component as described in Exhibit B, Part C,
Exhibit B, Part C, Para. Para. 1.3
1.3.
Special Features Article 3, Para. 3.1.1. Article 3, Para.
3.1.1
Standard A certificate issued by the Article 8, Para.
Airworthiness FAA, pursuant to Part 21 of 8.1.1.2
Certificate the Federal Aviation
Regulations as described
in Article 8, Para. 8.1.1.2.
Target Delivery A non binding estimated Article 2,
Date delivery date provided for Para. 2.2
Buyer's planning purposes,
described in Article 2.
Taxes The term "Taxes" defined in Article 2, Para.
Article 4, Para. 4.1. 2.3
Type Certificate A certificate issued by the Article 8,
FAA pursuant to Part 21 of Para. 8.1.1.1
the Federal Aviation
Regulations described in
Article 8, Para. 8.1.1.1.
Warranty Labor The hourly labor rate Exhibit B, Part B,
Rate defined in Exhibit B, Part Para. 5.3
B, Para. 5.3.
P.A. No. 1947
K/WPA
F-6
<PAGE>
6-1162-JDR-418
Western Pacific Airlines, Inc.
2864 South Circle Drive
Suite 1100
Colorado Springs, CO 80906
Subject: Letter Agreement No. 6-1162-JDR-418 to
Purchase Agreement No. 1947 --
Board of Directors Approval
This Letter Agreement amends Purchase Agreement No. 1947 dated as of even date
herewith (the Agreement) between The Boeing Company (Boeing) and Western Pacific
Airlines, Inc. (Buyer) relating to Model 737-300 aircraft (the Aircraft).
All terms used herein and in the Agreement, and not defined herein, will have
the same meaning as in the Agreement.
1. Board of Directors Approval.
It is recognized that Buyer must obtain approval for the purchase of
the Aircraft from Buyer's Board of Directors. Accordingly, Buyer will use its
best efforts to obtain such Board of Directors approval as soon as practicable
and will advise Boeing promptly after such approval has been obtained. If Boeing
has not received written notice from Buyer on or before August 28, 1996 that
such approval has been obtained, either party will have the right, exercisable
by written notice given to the other within 10 days after such date, to
terminate the purchase of the Aircraft.
2. Effect of Termination.
If there is any termination under the above provision, all rights and
obligations of Boeing and Buyer with respect to the Aircraft will terminate and
be without further force and effect, except that (i) Boeing will promptly refund
to Buyer, without interest, all advance payments theretofore received by Boeing
from Buyer pursuant to the Agreement with respect to the Aircraft and (ii)
Letter Agreement 1947-1 will survive such termination and remain in full force
and effect.
P.A. No. 1947
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
6-1162-JDR-418 Page 2
3. Confidentiality.
Buyer understands that certain commercial and financial information
contained in this Letter Agreement are considered by Boeing as confidential.
Buyer agrees that it will treat this Letter Agreement and the information
contained herein as confidential and will not, without the prior written consent
of Boeing, disclose this Letter Agreement or any information contained herein to
any other person or entity, except as provided in Letter Agreement 1947-1.
Very truly yours,
THE BOEING COMPANY
By
--------------------------------
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: , 1996
WESTERN PACIFIC AIRLINES, INC.
By
--------------------------------
Its
P.A. No. 1947
K/WPA
<PAGE>
6-1162-JDR-426
(CONFIDENTIALITY REQUESTED)
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24B-21 AS
INDICATED BY "(XXX)"
Western Pacific Airlines, Inc.
2864 South Circle Drive
Suite 1100
Colorado Springs, CO 80906
Subject: Letter Agreement No. 6-1162-JDR-426
Model 737-700 - Option Aircraft
Conditioned upon the concurrent execution of this Letter Agreement between The
Boeing Company (Boeing) and Western Pacific Airlines, Inc. (Buyer) and
Supplemental Agreement No. 1 to Purchase Agreement No. 1947 between Boeing and
Buyer for the purchase of six (6) Model 737-300 aircraft, Boeing agrees to
manufacture and sell to Buyer six (6) additional Model 737-700 aircraft as
described in paragraph 1 of Attachment A hereto (Option Aircraft), subject to
the following.
1. Delivery.
1.1 The Option Aircraft will be delivered during or before
the month set forth in the following schedule:
Month and Year Number of
of Delivery Option Aircraft
-------------- ---------------
February 2000 One (1)
June 2000 One (1)
August 2000 One (1)
September 2000 One (1)
October 2000 One (1)
November 2000 One (1)
1.2 Buyer shall have the right to accelerate the delivery
of any of the Option Aircraft subject to (i) Boeing receiving written notice
from Buyer of Buyer's request for acceleration no later than the Option Exercise
Date for the Option Aircraft for which the acceleration is requested and (ii)
the availability of Model 737-700 aircraft delivery positions.
2. Price.
The estimated delivery prices (Advance Payment Base Prices) of the
Option Aircraft set forth below include (i) [XXXXXXXX] ($1995 STE) for the
special features listed in paragraph 1 of Attachment A, and (ii) an estimate of
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
6-1162-JDR-426 Page 2
[XXXXXXXX] ($1995 STE) for items of SPE. The Option Aircraft pricing elements
and associated pricing terms and conditions are in Attachment A.
Month and Year Advance Payment Base Price
of Delivery Per Option Aircraft
-------------- --------------------------
February 2000 [XXXXXXXXX]
June 2000 [XXXXXXXXX]
August 2000 [XXXXXXXXX]
September 2000 [XXXXXXXXX]
October 2000 [XXXXXXXXX]
November 2000 [XXXXXXXXX]
3. Payment.
3.1 Buyer will pay a deposit to Boeing of [XXXXXX] for
each Option Aircraft (Deposit). To meet this obligation, Boeing and Buyer agree
to apply [XXXXXXXX] of the advance payments originally held by Boeing against
Purchase Agreement No. 1947 as Deposits to be held by Boeing against the Option
Aircraft. The amount of such advance payments applied as Deposits hereunder will
no longer be considered advance payments under Purchase Agreement No. 1947. If
Buyer exercises an option, the Deposit will be credited against the first
advance payment due for such Option Aircraft.
If Buyer does not exercise an option, Boeing will retain the Deposit for that
Option Aircraft, except in the event Boeing and Buyer execute an agreement for
the purchase of other Boeing aircraft within five (5) years after execution of
Supplemental Agreement No. 1 to Purchase Agreement No. 1947, such Deposit will
be credited against the first advance payment due for such other aircraft.
If Buyer breaches any of its obligations under Purchase Agreement No. 1947, as
amended, Boeing in its sole discretion may apply all or any portion of the
Deposits in compensation of such breach, and in that event Buyer will as a
condition of maintaining its rights under this Letter Agreement pay such amount
to Boeing.
3.2 Following option exercise, advance payments in the
amount of 30% of the Advance Payment Base Price will be payable for the Option
Aircraft pursuant to Attachment A. The remainder of the Option Aircraft purchase
price will be paid at the time of delivery of the Option Aircraft.
3.3 All prices and payments are in United States Dollars.
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
6-1162-JDR-426 Page 3
4. Credit Memoranda.
4.1 Aircraft Basic Credit Memoranda. In consideration of
the purchase of the Option Aircraft, Boeing will issue a credit memorandum for
each Option Aircraft at the time of delivery in an amount determined by
multiplying the escalated Base Aircraft Price (which is exclusive of the value
of change requests, other special features purchased by master change and SPE or
BFE), times an aircraft credit factor of [XXX]. Such credit memoranda may be
utilized by Buyer for the purchase of Boeing proprietary spare parts, CFM
International (CFMI) proprietary spare engines and engine parts, other Boeing or
CFMI goods and services or applied against the balance of the purchase price of
the Aircraft or Option Aircraft for which such credit is issued, but may not be
used for the purchase of other aircraft or application against advance payments
for any Aircraft or Option Aircraft.
4.2 Special Credit Memoranda. In consideration of the
purchase of the Option Aircraft, Boeing will issue a Special Credit Memorandum
to Buyer in the amount of [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
upon execution of the definitive agreement to purchase the Option Aircraft. Such
Special Credit Memoranda may be utilized by Buyer for the purchase of Boeing
proprietary spare parts, CFM International (CFMI) proprietary spare parts or
other Boeing or CFMI goods and services, including the purchase of additional
operational weight or thrust, but may not be used for the purchase of other
aircraft or application against advance payments for any Aircraft.
4.3 Simulator Data Package Credit Memoranda. In
consideration of the purchase of the Option Aircraft, Boeing will issue a
Simulator Data Package Credit Memorandum to Buyer in the amount of [XXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX], in 1995 dollars subject to escalation,
per Aircraft upon execution of the definitive agreement to purchase the Option
Aircraft. Such Simulator Data Package Credit Memoranda may only be utilized by
Buyer for the purchase from Boeing of a Model 737 full flight simulator data
package.
5. Option Exercise.
5.1 To exercise an option, Buyer will give written notice
to Boeing on or before the applicable option exercise date (Option Exercise
Date).
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
6-1162-JDR-426 Page 4
Option Aircraft
Delivery Date Option Exercise Date
--------------- --------------------
February 2000 On or before Feb 1, 1998
June 2000 On or before Jun 1, 1998
August 2000 On or before Aug 1, 1998
September 2000 On or before Sep 1, 1998
October 2000 On or before Oct 1, 1998
November 2000 On or before Nov 1, 1998
5.2 If Boeing must make production decisions which are
dependent on Buyer exercising an option earlier than the Option Exercise Date,
Boeing may accelerate the Option Exercise Date subject to Buyer's agreement. If
Boeing and Buyer fail to agree to revised Option Exercise Dates, either party
may terminate such option and Boeing will refund to Buyer, with interest, any
Deposit and advance payments received by Boeing with respect to such Option
Aircraft. The interest rate will be the 90 day Certificate of Deposit rate
published in the Wall Street Journal on the first business day of each calendar
quarter during the interest period.
6. Rolling Option Aircraft.
If, and each time, Boeing and Buyer execute an agreement for the
purchase of an Option Aircraft, Boeing will offer an equivalent number of
additional Option Aircraft (Rolling Option Aircraft) to Buyer up to a maximum of
six (6) Rolling Option Aircraft, subject to Boeing's then available Model
737-700 delivery positions (STAP) but with delivery dates not sooner than
twenty-four (24) months from the date of such offer. The terms, provisions, and
conditions for sale of Rolling Option Aircraft shall be the same as those in
this Letter Agreement for Option aircraft delivering in the same general time
period, except that a Simulator Data Package Credit Memorandum as contemplated
in subparagraph 4.3 of this Letter Agreement will not be issued for Rolling
Option Aircraft.
7. Contract Terms.
Boeing and Buyer will use their best efforts to enter into a
definitive agreement for the purchase of an Option Aircraft, within thirty (30)
days after Buyer exercises such option.
Such definitive agreement will include the terms and conditions contained
herein, terms and conditions as may be mutually agreed upon, and the applicable
terms and conditions contained in Boeing's then-current standard form
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
6-1162-JDR-426 Page 5
of purchase agreement for the sale of Model 737-700 aircraft in effect as of the
date of option exercise. In the event the parties have not entered into such
agreement within such time, either party may terminate the purchase of such
Option Aircraft by giving written notice to the other within ten (10) days of
such period.
8. Confidentiality.
Buyer understands that certain commercial and financial information
contained in this Letter Agreement including any attachments hereto are
considered by Boeing as confidential. Buyer agrees that it will treat this
Letter Agreement and the information contained herein as confidential and will
not, without the prior written consent of Boeing, disclose this Letter Agreement
or any information contained herein to any other person or entity except as may
be required by (i) applicable law or governmental regulations, or (ii) for
financing the Option Aircraft. In connection with any such disclosure or filing
of the Letter Agreement, or the information contained herein pursuant to any
such applicable law or governmental regulation, Buyer will request and use its
best reasonable efforts to obtain confidential treatment of such Letter
Agreement and the information contained herein. Boeing agrees to cooperate with
Buyer in making and supporting its request for confidential treatment.
Very truly yours,
THE BOEING COMPANY
By
--------------------------------
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: , 1996
WESTERN PACIFIC AIRLINES, INC.
By
-------------------------------
Its
Attachments
K/WPA
<PAGE>
Attachment A to
6-1162-JDR-426
Page 1
Model 737-700 Aircraft
1. Option Aircraft Description and Changes.
1.1 Aircraft Description. The Option Aircraft are described in
Attachment B.
1.2 Changes. The Detail Specification will be revised to
include:
(1) Changes applicable to the basic Model 737- 700 aircraft
which are developed by Boeing between the date of the Detail Specification and
the signing of a definitive agreement to purchase the Option Aircraft.
(2) Changes mutually agreed upon.
(3) Changes required to obtain a Certificate of
Airworthiness.
K/WPA
<PAGE>
Attachment A to
6-1162-JDR-426
Page 2
2. Price Description
<TABLE>
<CAPTION>
2.1 Price Elements Per Option Aircraft
1 2 3 4 5 6 7
- - - - - - -
A/C BASIC ESTIMATED ADV. PMT.
BASE SPECIAL PRICE ESTIMATED ESCALATION BASE PRICE
AIRCRAFT PRICE FEATURES PRICE ELEMENTS ESCALATION SPE CREDIT ELEMENTS
(JULY 1995 $) (JULY 1995 $) 1 + 2 ON 3 (DELY YEAR) MEMO (*) 3 + 4 + 5 + 6
--------------- -------------- -------- ----------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
February 2000 [XXXXXXXXX] [XXXXXXXX] [XXXXXXXXX] [XXXXXXXX] [XXXXXXXX] [XXXXXXX] [XXXXXXXXX]
June 2000 [XXXXXXXXX] [XXXXXXXX] [XXXXXXXXX] [XXXXXXXX] [XXXXXXXX] [XXXXXXX] [XXXXXXXXX]
August 2000 [XXXXXXXXX] [XXXXXXXX] [XXXXXXXXX] [XXXXXXXX] [XXXXXXXX] [XXXXXXX] [XXXXXXXXX]
September 2000 [XXXXXXXXX] [XXXXXXXX] [XXXXXXXXX] [XXXXXXXX] [XXXXXXXX] [XXXXXXX] [XXXXXXXXX]
October 2000 [XXXXXXXXX] [XXXXXXXX] [XXXXXXXXX] [XXXXXXXX] [XXXXXXXX] [XXXXXXX] [XXXXXXXXX]
November 2000 [XXXXXXXXX] [XXXXXXXX] [XXXXXXXXX] [XXXXXXXX] [XXXXXXXX] [XXXXXXX] [XXXXXXXXX]
(*) Reflects Estimated Escalation Adjustment in 1997 and 1998
</TABLE>
Continued Next Page...
K/WPA
<PAGE>
Attachment A to
6-1162-JDR-426
Page 3
2. Price Description. (Continued)
2.2 Price Adjustments.
2.2.1 Special Features. The price for Special Features
selected for the Option Aircraft will be adjusted to Boeing's then-current
prices as of the date of execution of the definitive agreement for the Option
Aircraft.
2.2.2 Escalation Adjustments. The Aircraft Basic Price
of the Option Aircraft will be escalated according to the provisions of
Attachment C.
2.2.3 Base Price Adjustments. The Aircraft Basic Price
of the Option Aircraft will be adjusted to Boeing's then-current prices as of
the date of execution of the definitive agreement for the Option Aircraft.
2.2.4 BFE to SPE. An estimate of the total price for
items of Buyer Furnished Equipment (BFE) changed to Seller Purchased Equipment
(SPE) pursuant to the Configuration Specification is included in the Option
Aircraft price build-up. The purchase price of the Option Aircraft will be
adjusted by the price charged to Boeing for such items plus 10% of such price.
If all BFE except developmental avionics is converted to SPE, Boeing will waive
the 10% fee.
3. Advance Payment Schedules, Prices and Adjustments.
3.1 Buyer will pay to Boeing advance payments for the Option
Aircraft pursuant to the following schedule.
Amount Due per Option Aircraft
(Percentage times
Due Date of Payment Advance Payment Base Price)
- ------------------- ------------------------------
Upon signing of the definitive 1% (less the
agreement Deposit)
24 months prior to the first 4%
day of the scheduled delivery
month of the Option Aircraft
21 months prior to the first 5%
day of the scheduled delivery
month of the Option Aircraft
18 months prior to the first 5%
day of the scheduled delivery
month of the Option Aircraft
K/WPA
<PAGE>
Attachment A to
6-1162-JDR-426
Page 4
12 months prior to the first 5%
day of the scheduled delivery
month of the Option Aircraft
9 months prior to the first 5%
day of the scheduled delivery
month of the Option Aircraft
6 months prior to the first 5%
day of the scheduled delivery
month of the Option Aircraft
Total 30%
Any advance payments past due as of the date of signing the definitive purchase
agreement for the Option Aircraft are due and payable on the date of such
signing.
3.2 Option Aircraft advance payment base prices will be
increased or decreased, as appropriate, at the time of signing of the definitive
purchase agreement for the Option Aircraft, using the then-current forecasted
aircraft escalation factors used by Boeing, to determine the amount of the
advance payments to be made by Buyer for the Option Aircraft.
K/WPA
<PAGE>
Attachment B to
6-1162-JDR-426
Page 1
AIRCRAFT CONFIGURATION
relating to
BOEING MODEL 737-700 AIRCRAFT
The Detail Specification will be comprised of Boeing Configuration
Specification D6-38808, Revision E, dated September 15, 1995, as amended to
incorporate the applicable specification language to reflect the effect of the
changes set forth in the Change Requests listed below, including the effects of
such changes on Manufacturer's Empty Weight (MEW) and Operating Empty Weight
(OEW). The Aircraft Basic Price reflects and includes all effects of such
changes of price, except such Aircraft Basic Price does not include the price
effects of Change Requests changing Buyer Furnished Equipment to Seller
Purchased Equipment.
K/WPA
<PAGE>
Attachment B to
6-1162-JDR-426 Page 2
PRICE
PER A/P
1995$ PER
CR / TITLE A/P PRICE
======================================================= ===========
0110CG3021 IB
MODEL 737-700 AIRPLANE
STATUS: ACCEPT
0252CG3030 NC
CARGO COMPARTMENT PLACARDS - POUNDS AND
KILOGRAMS PER SQUARE FOOT
STATUS: ACCEPT
0252CG3037 NC
ENGLISH UNITS FOR FLIGHT MANUAL, OPERATIONS
MANUAL, FUEL QUANTITY SYSTEM, CDS
INDICATIONS, AND FMCS WEIGHTS
STATUS: ACCEPT
0253CH3093 NC
CHANGE SELECTED BUYER FURNISHED EQUIPMENT
(BFE) TO SELLER PURCHASED EQUIPMENT (SPE)
STATUS: ACCEPT
0310CG3V12 [XXXXXX]
INCREASE CERTIFIED MAXIMUM TAXI WEIGHT IN
1000 POUND INCREMENTS TO A MAXIMUM OF
153,500 POUNDS FOR 737-700
STATUS: ACCEPT
1110CG3289 NC
ENGINE WARNING STRIPES AND DECALS -
FUSELAGE LOCATIONS
STATUS: ACCEPT
2130CG3039 NC
600 FPM CABIN PRESSURE ASCENT RATE
STATUS: ACCEPT
2130CG3040 NC
350 FPM CABIN PRESSURE DESCENT RATE
STATUS: ACCEPT
2160CG3018 NC
CABIN TEMPERATURE INDICATOR - DEGREES
FAHRENHEIT
STATUS: ACCEPT
K/WPA
<PAGE>
Attachment B to
6-1162-JDR-426 Page 3
PRICE
PER A/P
1995$ PER
CR / TITLE A/P PRICE
======================================================= ===========
2170CG3002 [XXXXX]
CATALYTIC CONVERTERS - INSTALLATION - OZONE
CONTROL
STATUS: ACCEPT
2210CG3197 NC
DIGITAL FLIGHT CONTROL SYSTEM (DFCS) -
GLIDE SLOPE CAPTURE INHIBIT BEFORE
LOCALIZER CAPTURE
STATUS: ACCEPT
2210CG3198 NC
DIGITAL FLIGHT CONTROL SYSTEM (DFCS) -
CONTROL WHEEL STEERING WARNING
STATUS: ACCEPT
2210CG3210 [XXXX]
DIGITAL FLIGHT CONTROL SYSTEM (DFCS) -
SPEED AND ALTITUDE INTERVENTION - AUTOPILOT
ENGAGE MODE CONTROL PANEL
STATUS: ACCEPT
2210CG3235 NC
DIGITAL FLIGHT CONTROL SYSTEM (DFCS) -
ACTIVATION - ALTITUDE ALERT - 300/900 FEET,
FIXED ALERT
STATUS: ACCEPT
2210CG3236 NC
DIGITAL FLIGHT CONTROL SYSTEM (DFCS) -
ACTIVATION - FLIGHT DIRECTOR TAKEOFF MODE,
HEADING SELECT
STATUS: ACCEPT
2312CG3340 [XXXXX]
TRIPLE VHF COMMUNICATIONS - INSTALLATION -
BFE ROCKWELL INTERNATIONAL CORP
STATUS: ACCEPT
2312CG3346 NC
TRIPLE VHF COMMUNICATION - INSTALLATION -
CONTROL PANELS WITH DUAL TUNING CONTROLS -
BFE-GABLES
STATUS: ACCEPT
K/WPA
<PAGE>
Attachment B to
6-1162-JDR-426 Page 4
PRICE
PER A/P
1995$ PER
CR / TITLE A/P PRICE
======================================================= ===========
2321CG3528 NC
SELCAL DECODER - INSTALLATION -
BFE-MOTOROLA INC
STATUS: ACCEPT
2321CG3529 NC
SELCAL CONTROL PANEL - INSTALLATION -
GABLES WITH FIVE INDIVIDUAL CHANNEL
ANNUNCIATIONS-BFE
STATUS: ACCEPT
2322CH3414 [XXXXX]
ACARS 724B-PARTIAL PROVISIONS
INSTALLATION-FOR DFDAU/MULTIPORT PRINTER/
ARINC 739 MIDU INTERFACES - INSTALLATION ON
E3-2 SHELF
STATUS: ACCEPT
2350CG3158 NC
CONTROL WHEEL INTERPHONE SWITCH - REVISION
- - SPRING LOADED TO OFF
STATUS: ACCEPT
2350CG3183 NC
AUDIO SELECTOR PANEL - INSTALLATION - 3
VHF/1HF (P/N 10-62090-60)
STATUS: ACCEPT
2370CH3189 NC
SOLID STATE VOICE RECORDER - INSTALLATION -
BFE LORAL FAIRCHILD
STATUS: ACCEPT
2433CG3136 NC
STANDBY POWER - AIR TRAFFIC CONTROL (ATC)
NO. 1
STATUS: ACCEPT
2433CG3149 NC
STANDBY POWER - 30-MINUTE CAPABILITY
STATUS: ACCEPT
2511CG3076 [XXXX]
SECOND OBSERVER'S SEAT - ADDITION
STATUS: ACCEPT
K/WPA
<PAGE>
Attachment B to
6-1162-JDR-426 Page 5
PRICE
PER A/P
1995$ PER
CR / TITLE A/P PRICE
======================================================= ===========
2511CG3077 [XXXXX]
SECOND OBSERVER'S SUPPORT EQUIPMENT -
ADDITION
STATUS: ACCEPT
2520CH3820 [XXXXX]
INTERIOR ARRANGEMENT - 138 ALL TOURIST
CLASS, GALLEYS G1, G2 AND G4B AND
LAVATORIES LA AND LD
STATUS: ACCEPT
2523CG3104 NC
STAINLESS STEEL IDENTIFICATION PLATE
STATUS: ACCEPT
2541CH3043 NC
LIQUID SOAP DISPENSER - LAVATORY
STATUS: ACCEPT
2550CG3217 NC
FWD AND AFT CARGO COMPARTMENT FLOOR PANELS
- - ALL ALUMINUM FOR 737-700
STATUS: ACCEPT
2564CH3097 [XXXX]
EMERGENCY EQUIPMENT STOWAGE BOX - BULKHEAD
MOUNTED
STATUS: ACCEPT
2611CG3020 NC
ENGINE AND APU FIRE/OVERHEAT DETECTION
SYSTEM - WHITTAKER SAFETY SYSTEMS
STATUS: ACCEPT
2626CG3024 NC
FIRE EXTINGUISHER - INSTALLATION
STATUS: ACCEPT
2844CG3042 NC
MEASURING STICK CONVERSION TABLES - U.S.
GALLONS
STATUS: ACCEPT
K/WPA
<PAGE>
Attachment B to
6-1162-JDR-426 Page 6
PRICE
PER A/P
1995$ PER
CR / TITLE A/P PRICE
======================================================= ===========
2910CG3093 NC
ENGINE DRIVEN HYDRAULIC PUMP WITH VESPEL
SPLINE - ABEX
STATUS: ACCEPT
2910CG3097 NC
AC MOTOR-DRIVEN HYDRAULIC PUMPS -
INSTALLATION - ABEX
STATUS: ACCEPT
3131CG3674 NC
ACCELEROMETER - INSTALLATION - BFE
ALLIEDSIGNAL INC
STATUS: ACCEPT
3131CG3779 NC
DIGITAL FLIGHT DATA ACQUISITION UNIT
(DFDAU) (P/N 2233000-85) WITH ACMS
INTERFACES AND INTERNAL OPTICAL DISKETTE
DRIVE -
STATUS: ACCEPT
3131CG3808 NC
SOLID STATE DIGITAL FLIGHT DATA RECORDER -
INSTALLATION - BFE ALLIEDSIGNAL - 256 WPS
STATUS: ACCEPT
3135CH3076 [XXXX]
ARINC 740 MULTIPORT PRINTER PROVISIONS, AND
PROVISIONS FOR EVENT/PRINT MODULE
STATUS: ACCEPT
3162CG3014 NC
PFD/ND DISPLAY FORMAT
STATUS: ACCEPT
3162CG3016 NC
FLIGHT DIRECTOR COMMAND DISPLAY - FILLED
INTEGRATED CUE
STATUS: ACCEPT
3162CG3025 NC
RADIO ALTITUDE HEIGHT ALERT DISPLAY - 2500
FEET
STATUS: ACCEPT
K/WPA
<PAGE>
Attachment B to
6-1162-JDR-426 Page 7
PRICE
PER A/P
1995$ PER
CR / TITLE A/P PRICE
======================================================= ===========
3162CG3029 NC
LOCALIZER BACKCOURSE POLARITY - REVERSAL
STATUS: ACCEPT
3162CG3032 NC
MAP MODE ORIENTATION - TRACK UP
STATUS: ACCEPT
3162CG3037 NC
AUTOTUNED NAVAIDS - SUPPRESSED
STATUS: ACCEPT
3162CG3045 NC
WEATHER RADAR RANGE INDICATORS - RANGE
MARKS
STATUS: ACCEPT
3162CG3052 NC
TCAS RESOLUTION ADVISORY ON ADI
STATUS: ACCEPT
3162CG3054 NC
TCAS 3 NM RANGE RING
STATUS: ACCEPT
3162CG3105 NC
ENGINE INSTRUMENTS DISPLAY - OVER AND UNDER
PRESENTATION
STATUS: ACCEPT
3162CG3107 NC
CDS FUEL FLOW DISPLAY - FULL TIME
STATUS: ACCEPT
3162CG3110 NC
DA/MDA BARO BUG - ADDITION TO PFD ALTITUDE
TAPE
STATUS: ACCEPT
3240CG3227 NC
NOSE AND MAIN LANDING GEAR WHEELS AND
BRAKES - INSTALLATION - BF GOODRICH CO FOR
737-600, -700
STATUS: ACCEPT
K/WPA
<PAGE>
Attachment B to
6-1162-JDR-426 Page 8
PRICE
PER A/P
1995$ PER
CR / TITLE A/P PRICE
======================================================= ===========
3245CG3030 NC
MAIN LANDING GEAR TIRES - INSTALLATION - SFE
- - H43.5"X16.0"- 21" -26 PLY FOR 737-600,
737-700
STATUS: ACCEPT
3342CG3024 NC
NOSE GEAR TAXI LIGHT - INSTALLATION -
250-WATT
STATUS: ACCEPT
3412CG3078 NC
AIR DATA COMPUTING - DUAL TAT PROBE
STATUS: ACCEPT
3421CH3061 [XXXX]
INERTIAL REFERENCE SYSTEM (IRS) - MODE
SELECT UNIT INSTALLATION - BOEING
COMMERCIAL AIRPLANES P/N 69-73713-17
STATUS: ACCEPT
3431CG3050 NC
ILS - INSTALLATION - BFE ROCKWELL
INTERNATIONAL CORP
STATUS: ACCEPT
3433CG3064 NC
LOW RANGE RADIO ALTIMETER (LRRA) -
INSTALLATION - BFE ROCKWELL INTERNATIONAL
CORP
STATUS: ACCEPT
3435CH3028 [XXXXX]
FLIGHT DYNAMICS CAPTAIN ONLY HEAD UP
GUIDANCE SYSTEM - PARTIAL PROVISIONS
STATUS: ACCEPT
3443CH3165 [XXXXX]
ARINC 708 WEATHER RADAR SYSTEM -
INSTALLATION - BFE ROCKWELL INTERNATIONAL
CORP (WITH DEACTIVATED PREDICTIVE WINDSHEAR
FEATURE
STATUS: ACCEPT
K/WPA
<PAGE>
Attachment B to
6-1162-JDR-426 Page 9
PRICE
PER A/P
1995$ PER
CR / TITLE A/P PRICE
======================================================= ===========
3443CH3189 [XXXXX]
WEATHER RADAR SYSTEM - PARTIAL PROVISIONS
FOR PREDICTIVE WINDSHEAR FEATURE OF AN
ARINC 708A SINGLE WEATHER RADAR SYSTEM
STATUS: ACCEPT
3445CG3168 NC
TCAS II - INSTALLATION - BFE ROCKWELL
INTERNATIONAL CORP/GABLES ENGINEERING INC
STATUS: ACCEPT
3446CH3162 NC
ACTIVATION OF DESCENT BELOW MINIMUMS (MODE
6) FEATURE - GROUND PROXIMITY WARNING
SYSTEM
STATUS: ACCEPT
3451CG3006 NC
VOR/MARKER BEACON - INSTALLATION - BFE
ROCKWELL INTERNATIONAL CORP
STATUS: ACCEPT
3455CG3119 NC
DISTANCE MEASURING EQUIPMENT (DME) -
INSTALLATION - BFE ROCKWELL INTERNATIONAL
CORP (SCANNING)
STATUS: ACCEPT
3457CG3092 NC
AUTOMATIC DIRECTION FINDER (ADF) CONTROL
PANEL - INSTALLATION - BFE GABLES
ENGINEERING INC
STATUS: ACCEPT
3457CG3106 NC
AUTOMATIC DIRECTION FINDER (ADF) -
INSTALLATION - BFE ROCKWELL INTERNATIONAL
CORP
STATUS: ACCEPT
3458CG3085 [XXXXX]
GLOBAL POSITIONING SYSTEM (GPS) -
INSTALLATION - HONEYWELL INC - 737-700
STATUS: ACCEPT
K/WPA
<PAGE>
Attachment B to
6-1162-JDR-426 Page 10
PRICE
PER A/P
1995$ PER
CR / TITLE A/P PRICE
======================================================= ===========
3458CH3098 [XXXXX]
GLOBAL POSITIONING SYSTEM (GPS) -
INSTALLATION - PARTIAL PROVISIONS FOR
737-700
STATUS: ACCEPT
3461CG3403 NC
BUYER FURNISHED NAVIGATION DATA BASE
STATUS: ACCEPT
3461CG3424 NC
FMC FLIGHT NUMBER ENTRY
STATUS: ACCEPT
3461CG3425 NC
FMC TEMPERATURE SELECTION - DEGREES F
DEFAULT
STATUS: ACCEPT
3461CG3433 NC
FMS BUILT-IN TEST EQUIPMENT PRINTER
RECEPTACLE
STATUS: ACCEPT
3461CG3498 [XXXXX]
FMC - ACTIVATION - 1 MEG NAVIGATION DATA
BASE
STATUS: ACCEPT
3461CG3521 [XXXX]
PORTABLE DATA LOADER CONNECTOR -
INSTALLATION
STATUS: ACCEPT
3461CH3559 [XXXXX]
FMC - ACTIVATION - QRH TAKEOFF SPEEDS
STATUS: ACCEPT
3461CH3562 [XXXX]
FMC - ACTIVATION - RETENTION OF WAYPOINTS
AFTER DIRECT TO
STATUS: ACCEPT
K/WPA
<PAGE>
Attachment B to
6-1162-JDR-426 Page 11
PRICE
PER A/P
1995$ PER
CR / TITLE A/P PRICE
======================================================= ===========
3461CH3563 [XXXXX]
FMC - ACTIVATION - SPEED AND ALTITUDE
INTERVENTION
STATUS: ACCEPT
3500CG3018 NC
OXYGEN SYSTEM - ALL TUBING AND FITTINGS -
STAINLESS STEEL
STATUS: ACCEPT
3510CG3097 NC
CREW OXYGEN CYLINDER - 76 CUBIC FEET
STATUS: ACCEPT
3510CG3102 NC
CREW OXYGEN SYSTEM - CAPTAIN, FIRST
OFFICER, AND FIRST OBSERVER - BFE OXYGEN
MASK AND BFE SMOKE GOGGLES
STATUS: ACCEPT
3530CH3026 [XX]
SMOKEHOOD ADDITION IN FLIGHT COMPARTMENT -
BFE - PURITAN BENNETT P/N 119003
STATUS: ACCEPT
5200CG3021 NC
HOLD OPEN LOCK INSTALLATION - ENTRY AND
SERVICE DOORS - DOWN TO RELEASE
STATUS: ACCEPT
5320CG3026 NC
FIVE POUND ALUMINUM UNDERSEAT FLOOR PANELS
FOR 737-700
STATUS: ACCEPT
7200CG3255 IB
AIRPLANE PERFORMANCE: CFM56-7 ENGINES WITH
OPERATIONAL THRUST OF 24,000 LBS. FOR
737-700, -800
STATUS: ACCEPT
7200CG3281 NC
SINGLE ANNULAR COMBUSTOR - CFM56-7 SERIES
ENGINES
STATUS: ACCEPT
K/WPA
<PAGE>
Attachment B to
6-1162-JDR-426 Page 12
PRICE
PER A/P
1995$ PER
CR / TITLE A/P PRICE
======================================================= ===========
7700CG3023 [XXXXX]
ELECTRONIC CHIP DETECTOR - CFM56-7B ENGINES
STATUS: ACCEPT
7731CG3037 NC
ENGINE VIBRATION MONITOR (EVM) SIGNAL
CONDITIONER - INSTALLATION - ENDEVCO
STATUS: ACCEPT
7731CG3038 [XXXX]
ENGINE VIBRATION MONITORING (EVM) SYSTEM
WITH ON-BOARD ENGINE TRIM BALANCE
STATUS: ACCEPT
7900CG3028 NC
LUBRICATING OIL - MOBIL JET II
STATUS: ACCEPT
CR'S 92 TOTAL [XXXXXXXX]
K/WPA
<PAGE>
Attachment C to
6-1162-JDR-426 Page 1
AIRCRAFT PRICE ADJUSTMENT
between
THE BOEING COMPANY
and
WESTERN PACIFIC AIRLINES, INC.
737-700 Aircraft
K/WPA
<PAGE>
Attachment C to
6-1162-JDR-426 Page 2
PRICE ADJUSTMENT DUE TO
ECONOMIC FLUCTUATIONS
AIRCRAFT PRICE ADJUSTMENT
(1995 Base Price)
1. Formula.
The Aircraft Price Adjustment will be determined at the time of
Aircraft delivery in accordance with the following formula:
Pa = (P)(L + M - 1)
Where:
Pa = Aircraft Price Adjustment.
L = .65 x ECI
130.1
M = .35 x ICI
123.6
P = Aircraft Basic Price (as set forth in Article 3.2 of
this Agreement).
ECI = A value using the "Employment Cost Index for workers in
aerospace manufacturing" (aircraft manufacturing, standard
industrial classification code 3721, compensation, base
month and year June 1989 = 100), as released by the Bureau
of Labor Statistics, U.S. Department of Labor on a
quarterly basis for the months of March, June, September
and December, calculated as follows: A three-month
arithmetic average value (expressed as a decimal and
rounded to the nearest tenth) will be determined using the
months set forth in the table below for the applicable
Aircraft, with the released Employment Cost Index value
described above for the month of March also being used for
the months of January and February; the value for June
also used for April and May; the value for September also
used for July and August; and the value for December also
used for October and November.
ICI = The three-month arithmetic average of the released
monthly values for the Industrial Commodities Index as set
forth in the "Producer Prices and Price Index" (Base Year
1982 = 100)
K/WPA
<PAGE>
Attachment C to
6-1162-JDR-426 Page 3
as released by the Bureau of Labor Statistics, U.S.
Department of Labor values (expressed as a decimal and
rounded to the nearest tenth) for the months set forth in
the table below for the applicable Aircraft.
In determining the value of L, the ratio of ECI divided by 130.1
will be expressed as a decimal rounded to the nearest ten-thousandth and then
multiplied by .65 with the resulting value also expressed as a decimal and
rounded to the nearest ten-thousandth.
In determining the value of M, the ratio of ICI divided by 123.6
will be expressed as a decimal rounded to the nearest ten-thousandth and then
multiplied by .35 with the resulting value also expressed as a decimal and
rounded to the nearest ten-thousandth.
Months to be Utilized
Month of Scheduled in Determining the
Aircraft Delivery Value of ECI and ICI
- ------------------ --------------------
January June B, July B, Aug. B
February July B, Aug. B, Sept. B
March Aug. B, Sept. B, Oct. B
April Sept. B, Oct. B, Nov. B
May Oct. B, Nov. B, Dec. B
June Nov. B, Dec. B, Jan. D
July Dec. B, Jan. D, Feb. D
August Jan. D, Feb. D, Mar. D
September Feb. D, Mar. D, Apr. D
October Mar. D, Apr. D, May D
November Apr. D, May D, June D
December May D, June D, July D
The following definitions of B and D will apply:
B = The calendar year before the year in which the
scheduled month of delivery as set forth in Article 2.1
occurs.
D = The calendar year during which the scheduled month of
delivery as set forth in Article 2.1 occurs.
2. If at the time of delivery of an Aircraft Boeing is unable to determine the
Aircraft Price Adjustment because the applicable values to be used to determine
the ECI and ICI have not been released by the Bureau of Labor Statistics, then:
K/WPA
<PAGE>
Attachment C to
6-1162-JDR-426 Page 4
2.1 The Aircraft Price Adjustment, to be used at the time of
delivery of each of the Aircraft, will be determined by utilizing the escalation
provisions set forth above. The values released by the Bureau of Labor
Statistics and available to Boeing 30 days prior to scheduled Aircraft delivery
will be used to determine the ECI and ICI values for the applicable months
(including those noted as preliminary by the Bureau of Labor Statistics) to
calculate the Aircraft Price Adjustment. If no values have been released for an
applicable month, the provisions set forth in Paragraph 2.2 below will apply. If
prior to delivery of an Aircraft the U.S. Department of Labor changes the base
year for determination of the ECI or ICI values as defined above, such rebased
values will be incorporated in the Aircraft Price Adjustment calculation. The
payment by Buyer to Boeing of the amount of the Purchase Price for such
Aircraft, as determined at the time of Aircraft delivery, will be deemed to be
the payment for such Aircraft required at the delivery thereof.
2.2 If prior to delivery of an Aircraft the U.S. Department of
Labor substantially revises the methodology used for the determination of the
values to be used to determine the ECI and ICI values (in contrast to benchmark
adjustments or other corrections of previously released values), or for any
reason has not released values needed to determine the applicable Aircraft Price
Adjustment, the parties will, prior to delivery of any such Aircraft, select a
substitute for such values from data published by the Bureau of Labor Statistics
or other similar data reported by non-governmental United States organizations,
such substitute to lead in application to the same adjustment result, insofar as
possible, as would have been achieved by continuing the use of the original
values as they may have fluctuated during the applicable time period.
Appropriate revision of the formula will be made as required to reflect any
substitute values. However, if within 24 months from delivery of the Aircraft
the Bureau of Labor Statistics should resume releasing values for the months
needed to determine the Aircraft Price Adjustment, such values will be used to
determine any increase or decrease in the Aircraft Price Adjustment from that
determined at the time of delivery of such Aircraft. Boeing will provide Buyer a
supplemental invoice to reflect such increase in the Aircraft Price Adjustment
or a supplemental credit invoice to reflect such decrease in the Aircraft Price
Adjustment.
2.3 In the event escalation provisions are made non-enforceable
or otherwise rendered null and void by any agency of the United States
Government, the parties agree, to the extent they may lawfully do so, to
equitably adjust the Purchase Price of any affected Aircraft to reflect an
K/WPA
<PAGE>
Attachment C to
6-1162-JDR-426 Page 5
allowance for increases or decreases in labor compensation and material costs
occurring since February, 1995, which is consistent with the applicable
provisions of paragraph 1 of this Exhibit D.
3. For the calculations herein, the values released by the Bureau of Labor
Statistics and available to Boeing 30 days prior to scheduled Aircraft delivery
will be used to determine the ECI and ICI values for the applicable months
(including those noted as preliminary by the Bureau of Labor Statistics) to
calculate the Aircraft Price Adjustment.
Note: Any rounding of a number, as required under this Exhibit D with
respect to escalation of the Aircraft price, will be accomplished
as follows: if the first digit of the portion to be dropped from
the number to be rounded is five or greater, the preceding digit
will be raised to the next higher number.
K/WPA
<PAGE>
September 20, 1996
6-1162-JDR-429
(CONFIDENTIALITY REQUESTED)
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24B-21 AS
INDICATED BY "(XXX)"
Mr. Edward R. Beauvais
Chairman, President and C.E.O.
Western Pacific Airlines
2864 South Circle Drive Suite 1100
Colorado Springs, CO. 80906
Telefax No.: 719-527-7410
Subject: Revision to Purchase Agreement No.1947
Dear Ed,
The following summarizes our discussions of Thursday, September 19, 1996
relative to revisions to Purchase Agreement No. 1947 (the Purchase Agreement) to
reflect the purchase of six (6) firm Model 737-300 aircraft (the Aircraft), six
(6) option Model 737-700 (the Option Aircraft) and six (6) rolling option Model
737- 700 aircraft.
1. Boeing and Western Pacific agree to execute a Supplemental Agreement
to Purchase Agreement No. 1947, substantially in the form of
Attachment A, on or before October 4, 1996, except that Letter
Agreement No. 6-1162-JDR-395 will be revised to reflect the
following:
a. Western Pacific will make advance payments as follows:
Payment Amount Payment Due Date
-------------- ----------------
[XXXXXXXX] Payment Complete
[XXXXXXXX] September 20, 1996
[XXXXXXXX] October 4, 1996
[XXXXXXXX] November 15, 1996
[XXXXXXXX] February 15, 1997
b. If Western Pacific fails to make the advance payment due on or
before October 4, 1996, the Purchase Agreement will be further
revised to (i) [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXX] (ii) [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
XXX (iii) revise the advance payment schedule defined in
paragraph 1.a above.
<PAGE>
Western Pacific Airlines, Inc.
6-1162-JDR-429 Page 2
c. If Western Pacific fails to make the scheduled advance payment
due by November 15,1996, (i) [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX] and
(ii) [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
If such later delivery position is identified and mutually
agreed to, the Purchase Agreement, including the advance
payment schedule defined in paragraph 1.a above, will be
revised.
d. If Western Pacific fails to make the scheduled advanced payment
due by February 15, 1997, (i) [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX] and (ii)
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]. If
such later delivery position is identified and mutually agreed
to, the Purchase Agreement, including the advance payment
schedule defined in paragraph 1.a above, will be revised.
e. If Western Pacific elects to follow the advance payment schedule
set forth in paragraph 1.a above, Western Pacific agrees to pay
to Boeing [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX] beginning on
[XXXXXXXXXXXXXXXXXX], on the [XXXXXXXXXXXXXXXXXX] the [XXXXXXX]
and [XXXXXXXXXXXXX] determined in accordance with Article 5 of
the Purchase Agreement and those set forth in paragraph 1.a
above. [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
<PAGE>
Western Pacific Airlines, Inc.
6-1162-JDR-429 Page 3
f. If Western Pacific enters into an assignment to a third party
for the purpose of financing the advance payments required for
purchase of the Aircraft, such third party may make advance
payments either in accordance with the alternate fifteen percent
schedule set forth in Letter Agreement 6-1162-JDR-395, or in
accordance with the thirty percent schedule set forth in Article
5 of the Purchase Agreement.
2. Boeing agrees to offer Western Pacific an Option Aircraft Agreement
substantially in the form of Attachment B. If Boeing and Western
Pacific execute such agreement, [XXXXXXXX] of the payments made in
accordance with paragraph 1 above will be applied to the Option
Aircraft Agreement as Option Deposits to be held against the Option
Aircraft.
3. Notwithstanding the provisions of Article 10 of the Purchase
Agreement, with respect to predelivery assignment of Western
Pacific's rights and obligations under the Agreement, Boeing and
Western Pacific agree that Western Pacific shall not assign any of
its rights and obligations under the Purchase Agreement to any third
party, without Boeing's prior written consent, which will not be
unreasonably withheld. Boeing agrees to discuss in good faith, on a
case by case basis, the terms and conditions under which predelivery
assignment of Western Pacific's rights to a third party may be
acceptable.
<PAGE>
Western Pacific Airlines, Inc.
6-1162-JDR-429 Page 4
Please acknowledge your concurrence with the above by signing below and
returning a telefaxed copy to the undersigned.
Best Regards,
/s/ J. D. Robinson
- -------------------------------
J. D. Robinson
Regional Director
Aircraft Contracts
Boeing Commercial Airplane Group
Accepted and Agreed to this 20th day of September 1996.
/s/ Edward R. Beauvais
- --------------------------
Edward R. Beauvais
Chairman, President and
Chief Executive Officer
Western Pacific Airlines
Attachments
<PAGE>
6-1162-JDR-393
Western Pacific Airlines, Inc.
2864 South Circle Drive
Suite 1100
Colorado Springs, CO 80906
Subject: Letter Agreement No. 6-1162-JDR-393 to
Purchase Agreement No. 1947 --
Aircraft Performance Guarantees
This Letter Agreement amends Purchase Agreement No. 1947 dated as of even date
herewith (the Agreement) between The Boeing Company (Boeing) and Western Pacific
Airlines, Inc. (Buyer) relating to Model 737-300 aircraft (the Aircraft).
All terms used herein and in the Agreement, and not defined herein, will have
the same meaning as in the Agreement.
1. Aircraft Performance Guarantees.
The only performance guarantees applicable to the Aircraft are those
set forth in Attachment A. Such guarantees are exclusive and will expire upon
delivery of the Aircraft to Buyer.
2. Confidentiality.
Buyer understands that certain commercial and financial information
contained in this Letter Agreement are considered by Boeing as confidential.
Buyer agrees that it will treat this Letter Agreement and the information
contained herein as confidential and will not, without the prior written consent
of
P.A. No. 1947
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
6-1162-JDR-393 Page 2
Boeing, disclose this Letter Agreement or any information contained herein to
any other person or entity, except as provided in Letter Agreement 1947-1.
Very truly yours,
THE BOEING COMPANY
By
-----------------------
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: , 1996
WESTERN PACIFIC AIRLINES, INC.
By
--------------------------------
Its
Attachment
P.A. No. 1947
K/WPA
<PAGE>
6-1162-JDR-394
(CONFIDENTIALITY REQUESTED)
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24B-21 AS
INDICATED BY "(XXX)"
Western Pacific Airlines, Inc.
2864 South Circle Drive
Suite 1100
Colorado Springs, CO 80906
Subject: Letter Agreement No. 6-1162-JDR-394 to
Purchase Agreement No. 1947 -
Certain Contractual Matters
This Letter Agreement amends Purchase Agreement No. 1947 dated as of even date
herewith (the Agreement) between The Boeing Company (Boeing) and Western Pacific
Airlines, Inc. (Buyer) relating to Model 737-300 aircraft (the Aircraft).
All terms used herein and in the Agreement, and not defined herein, will have
the same meaning as in the Agreement.
1. Credit Memoranda.
1.1 Aircraft Credit - Aircraft. In consideration of the purchase
of the Aircraft, Boeing will issue a credit memorandum for each Aircraft at the
time of delivery in an amount determined by multiplying the Base Aircraft Price
(which is exclusive of the value of change requests, other special features
purchased by master change and SPE or BFE), escalated utilizing the adjusted
escalation calculation pursuant to Letter Agreement 6-1162-JDR-396 in lieu of
the escalation provisions set forth in Exhibit D, times an aircraft credit
factor of [XXX].
1.2 Application of Credit Memoranda. Such credit memoranda may be
utilized by Buyer for the purchase of Boeing proprietary spare parts, CFM
International (CFMI) proprietary spare engines and engine parts, other Boeing or
CFMI goods and services or applied against the balance of the purchase price of
the Aircraft for which such credit is issued, but may not be used for the
purchase of other aircraft or application against advance payments for any
Aircraft.
1.3 Special Credit. In consideration of Buyer's purchase of the
Aircraft, Boeing will issue a Special Credit Memorandum to Buyer in the amount
of [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
P.A. No. 1947
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
6-1162-JDR-394 Page 2
per Aircraft upon execution of the Agreement. If Buyer fails to purchase or take
delivery as operator lessee of any Aircraft, then Boeing shall be entitled to
withhold the sum of [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX] plus interest from
advance payments Boeing has received with respect to each such undelivered
Aircraft. The interest rate for calculation of such interest is the Citibank
base rate in effect from time to time during the period between execution of the
Agreement and the scheduled delivery month of such Aircraft.
1.4 Application of Special Credit Memoranda. Such Special Credit
Memoranda may be utilized by Buyer for the purchase of Boeing proprietary spare
parts, CFM International (CFMI) proprietary spare parts or other Boeing or CFMI
goods and services, including the purchase of additional operational weight or
thrust, but may not be used for the purchase of other aircraft or application
against advance payments for any Aircraft.
2. Confidentiality.
Buyer understands that certain commercial and financial information
contained in this Letter Agreement are considered by Boeing as confidential.
Buyer agrees that it will treat this Letter Agreement and the information
contained herein as confidential and will not, without the prior written consent
of Boeing, disclose this Letter Agreement or any information contained herein to
any other person or entity, except as provided in Letter Agreement 1947-1.
Very truly yours,
THE BOEING COMPANY
By
------------------------
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: , 1996
P.A. No. 1947
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
6-1162-JDR-394 Page 3
WESTERN PACIFIC AIRLINES, INC.
By
-----------------------------
Its
P.A. No. 1947
K/WPA
<PAGE>
6-1162-JDR-395
(C0NFIDENTIALITY REQUESTED)
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24B-21 AS
INDICATED BY "(XXX)"
Western Pacific Airlines, Inc.
2864 South Circle Drive
Suite 1100
Colorado Springs, CO 80906
Subject: Letter Agreement No. 6-1162-JDR-395 to
Purchase Agreement No. 1947 --
Advance Payment Matters
This Letter Agreement amends Purchase Agreement No. 1947 dated as of even date
herewith (the Agreement) between The Boeing Company (Boeing) and Western Pacific
Airlines, Inc. (Buyer) relating to Model 737-300 aircraft (the Aircraft).
All terms used herein and in the Agreement, and not defined herein, will have
the same meaning as in the Agreement.
Notwithstanding the Advance Payment Schedule set forth in Article 5.1 of the
Agreement, Boeing and Buyer hereby agree to an alternate schedule for the
advance payments as follows:
1. Advance Payment Schedule.
1.1 Buyer will pay to Boeing advance payments for all Aircraft in
accordance with the following schedule:
Payment Date Payment Amount
------------ --------------
April 26, 1996 [XXXXXXXX]
September 20, 1996 [XXXXXXXX]
October 4, 1996 [XXXXXXXX]
November 15, 1996 [XXXXXXXX]
February 15, 1997 [XXXXXXXX]
1.2 Additional advance payment amounts customarily payable under
article 5.1 of the Agreement will be [XXXXXXX] as set out in this Letter
Agreement and subject to paragraph 2 below. [XXXXXXX] advance payments are
amounts that would be payable under Article 5.1 but which are paid [XXXXX]
by agreement of the parties.
P.A. No. 1947 SA-1
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
6-1162-JDR-395 Page 2
1.3 Advance payments will be applied to the Aircraft Price payable
upon delivery of an Aircraft (other than the sixth Aircraft) only to the extent
that advance payments made exceed [XXXXXXXXXXXXXXXXX] of the aggregate Advance
Payment Base Prices of all undelivered Aircraft. Advance payments equal to no
more than [XXXXXXXXXXXXXXXXX] of the Advance Payment Base Price of an Aircraft
will be applied to the Aircraft Price at delivery of each of the first [XXXX]
Aircraft. Following delivery of the [XXXXX] Aircraft, all remaining advance
payments will be applied to the [XXXXX] Aircraft unless otherwise directed by
Buyer and agreed to by Boeing.
1.4 If Buyer fails to make the advance payment due on October 4,
1996, the Agreement will be revised to (i) [XXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXX] (ii) [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXX] and (iii) revise the advance payment schedule
defined in paragraph 1.1 above. Such revised advance payment schedule will be
established by Boeing, at Boeing's sole discretion, not to exceed the
requirements of [XXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
1.5 If Buyer fails to make the advance payment due on November 15,
1996, (i) [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX] and
(ii) [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]. Such
revised advance payment schedule will be established by Boeing, at Boeing's
sole discretion, not to exceed the requirements of Article 5.1 of the Agreement.
1.6 If Buyer fails to make the advance payment due on February 15,
1996, (i) [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX] and (ii) [XXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]. Such revised advance payment
schedule will be established by Boeing, at Boeing's sole discretion, not to
exceed the requirements of [XXXXXXXXXXXXXXXXXXXXXXXXXXXX].
2. Payment of Interest on Deferred Advance Payments.
Buyer agrees to pay to Boeing interest as calculated on the difference
between (i) advance payment amounts that would have been paid under Article 5.1
of the Agreement had this Letter Agreement not been made and (ii) advance
payment amounts paid
P.A. No. 1947 SA-1
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
6-1162-JDR-395 Page 3
under the advance payment schedule set forth in paragraph 1.1 above, as amended
by paragraphs 1.4, 1.5 and/or 1.6 above or any substitute schedule (such as the
schedule set forth in Attachment A to this Letter Agreement) which may be
established for the Aircraft. Interest will be paid on deferred advance payments
commencing on September 20, 1996. Buyer will pay such interest quarterly on the
first business day of the quarter with the initial payment due on January 2,
1997. Such interest will accrue at a fluctuating rate per annum equal to the
rate of interest publicly announced by Citibank, N. A. New York, New York as
their base rate plus [X] percent, compounded monthly.
Boeing will submit to Buyer, not less than fifteen (15) days prior to the end of
each quarter, an invoice for interest accrued during each such quarter.
3. Assignment.
In the event Buyer enters into a predelivery assignment of its rights
and obligations under Article 10 of the Agreement to a third party, such third
party may make advance payments either in accordance with the schedule set forth
in Attachment A hereto, or in accordance with Article 5.1 of the Agreement.
Boeing's consent to any such assignment is subject to (i) receipt of payment
bringing advance payments current under the selected schedule, (ii) payment of
interest at the rate set out in paragraph 2 above on payments made later than
required under the selected schedule and (iii) payment of any interest owed
under paragraph 2 at the time of such assignment.
4. Confidentiality.
Buyer understands that certain commercial and financial information
contained in this Letter Agreement are considered by Boeing as confidential.
Buyer agrees that it will treat this Letter Agreement and the information
contained herein as confidential and will not, without the prior written consent
of Boeing, disclose this Letter Agreement or any information
P.A. No. 1947 SA-1
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
6-1162-JDR-395 Page 4
contained herein to any other person or entity, except as provided in Letter
Agreement 1947-1.
Very truly yours,
THE BOEING COMPANY
By
---------------------------
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: , 1996
WESTERN PACIFIC AIRLINES, INC.
By
-----------------------------
Its
Attachment
P.A. No. 1947 SA-1
K/WPA
<PAGE>
Attachment A to
Letter Agreement 6-1162-JDR-395
Page 1
ALTERNATE ADVANCE PAYMENT SCHEDULE
737-300 AIRCRAFT
Amount Due Per Aircraft
(Percentage of Advance
Due Date of Payment Payment Base Price)
- ------------------- ------------------------
Upon signing the Agreement 1.0% (less the Deposit)
24 months prior to the first 2.0%
day of the scheduled delivery
month of such Aircraft
21 months prior to the first 2.5%
day of the scheduled delivery
month of such Aircraft
18 months prior to the first 2.5%
day of the scheduled delivery
month of such Aircraft
12 months prior to the first 2.5%
day of the scheduled delivery
month of such Aircraft
9 months prior to the first 2.5%
day of the scheduled delivery
month of such Aircraft
6 months prior to the first 2.0%
day of the scheduled delivery
month of such Aircraft
Total 15.0%
P.A. No. 1947 SA-1
K/WPA
<PAGE>
6-1162-JDR-396
(CONFIDENTIALITY REQUESTED)
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24B-21 AS
INDICATED BY "(XXX)"
Western Pacific Airlines, Inc.
2864 South Circle Drive
Suite 1100
Colorado Springs, CO 80906
Subject: Letter Agreement No. 6-1162-JDR-396 to
Purchase Agreement No. 1947 -
Escalation Matters
This Letter Agreement amends Purchase Agreement No. 1947 dated as of even date
herewith (the Agreement) between The Boeing Company (Boeing) and Western Pacific
Airlines, Inc. (Buyer) relating to Model 737-300 aircraft (the Aircraft).
All terms used herein and in the Agreement, and not defined herein, will have
the same meaning as in the Agreement.
1. Commitment.
Boeing agrees to share [XXXXXXX] of the escalation up to a maximum of
[X] percent per year in each of the years [XX] and [XX], as more fully described
in paragraph 2 below, for any of Buyer's aircraft which are scheduled to deliver
after December 31, 1996. For the purpose of this Letter Agreement such aircraft
are referred to as "Eligible Aircraft."
All escalation calculations under this Letter Agreement will be made in
accordance with Exhibit D to the Agreement entitled "Price Adjustment Due to
Economic Fluctuations - Aircraft Price Adjustment" (hereinafter referred to as
"Exhibit D"), using actual escalation indices published for the applicable
period.
2. Escalation Credit Memo.
2.1 Calculation - Eligible Aircraft Delivering in 1997.
At the time of delivery of each Eligible Aircraft delivering
in 1997, Boeing will issue to Buyer a credit memorandum (the 1997 Credit
Memorandum) which shall be applied to the Purchase Price of such Aircraft. The
1997 Credit Memorandum shall be calculated as follows:
[XXXXXX] of the difference between the Aircraft escalation
calculated for a December [XX] aircraft delivery position, and
the escalation calculated for the month of delivery of the
[XX] Eligible Aircraft;
P.A. No. 1947
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
6-1162-JDR-396 Page 2
provided however,
The maximum amount of the [XX] Credit Memorandum shall not
exceed [X] percent pursuant to the following calculation:
At the time of the delivery of the 1997 Eligible
Aircraft, the Aircraft Basic Price will be escalated
to a December 1996 delivery month. The December 1996
escalated price will be referred to in the following
formula as the "December 1996 Index Amount." The [XX]
Credit Memorandum for the [XX] Eligible Aircraft will
not exceed an amount equal to:
the December 1996 Index Amount times [XX].
2.2 Calculation - Eligible Aircraft Delivering in 1998.
At the time of delivery of each Eligible Aircraft delivering
in [XX], Boeing will issue to Buyer a credit memorandum (the [XX] Credit
Memorandum) which shall be applied to the Purchase Price of such Aircraft. The
[XX] Credit Memorandum shall be calculated as follows:
(i) [XXXXXX] of the difference between the Aircraft escalation
calculated for a December [XX] aircraft delivery position, and
the escalation calculated for the month of delivery of the
[XX] Eligible Aircraft;
provided however,
The maximum amount of the [XX] Credit Memorandum shall not
exceed [X] percent pursuant to the following calculation:
At the time of the delivery of the 1998 Eligible
Aircraft, the Aircraft Basic Price will be escalated
to a December 1997 delivery month. The December 1997
escalated price will be referred to in the following
formula as the "December [XX] Index Amount." The [XX]
Credit Memorandum for the [XX] Eligible Aircraft will
not exceed an amount equal to:
the December 1997 Index Amount times [XX];
and,
P.A. No. 1947
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
6-1162-JDR-396 Page 3
(ii) The amount calculated above in paragraph 2.1 for the 1997
Credit Memorandum calculated through December, 1997.
2.3 Eligible Aircraft Delivering after 1998.
For Eligible Aircraft delivering after the calendar year 1998,
the amount of the Credit Memorandum will be the amount calculated pursuant to
paragraph 2.2 above through December 1998. This credit memorandum amount will be
escalated from December 1998 to the month of delivery.
3. Advance Payment Base Price.
It is agreed that the Advance Payment Base Prices for the Eligible
Aircraft set forth in Article 3.4 of the Agreement include an estimate for the
escalation sharing Credit Memorandum pursuant to this Letter Agreement.
4. Escalating Credits (STE).
It is agreed that the credit memoranda specified in Letter Agreement
No. 6-1162-JDR-394 which escalate in accordance with Exhibit D, will be
calculated using the same factors used to develop the adjusted aircraft
escalation pursuant to this Letter Agreement.
5. Confidentiality.
Buyer understands that certain commercial and financial information
contained in this Letter Agreement are considered by Boeing as confidential.
Buyer agrees that it will treat this Letter Agreement and the information
contained herein as confidential and will not, without the prior written consent
of Boeing, disclose this Letter Agreement or any information contained herein to
any other person or entity, except as provided in Letter Agreement 1947-1.
Very truly yours,
THE BOEING COMPANY
By
Its Attorney-In-Fact
P.A. No. 1947
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
6-1162-JDR-396 Page 4
ACCEPTED AND AGREED TO this
Date: , 1996
WESTERN PACIFIC AIRLINES, INC.
By
--------------------------------
Its
P.A. No. 1947
K/WPA
<PAGE>
6-1162-JDR-397
(CONFIDENTIALITY REQUESTED)
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24B-21 AS
INDICATED BY "(XXX)"
Western Pacific Airlines, Inc.
2864 South Circle Drive
Suite 1100
Colorado Springs, CO 80906
Subject: Letter Agreement No. 6-1162-JDR-397 to
Purchase Agreement No. 1947 --
Promotion Support
This Letter Agreement amends Purchase Agreement No. 1947 dated as of even date
herewith (the Agreement) between The Boeing Company (Boeing) and Western Pacific
Airlines, Inc. (Buyer) relating to Model 737-300 aircraft (the Aircraft).
All terms used herein and in the Agreement, and not defined herein, will have
the same meaning as in the Agreement.
1. Planning Meeting.
Boeing will assist Buyer in the introduction of the Aircraft by
providing to Buyer certain promotion support. Promptly after execution of the
Agreement and before any funds are disbursed, a Boeing Airline Promotion
representative will meet with Buyer's designated representatives to discuss the
extent, selection, scheduling, and disbursement process for the promotion
support to be provided.
2. Support Level.
Boeing will make available to Buyer up to [XXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXX] for the first Aircraft and up to [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX] per
Aircraft for each Aircraft thereafter for Buyer's marketing communications
programs. Programs include marketing research; tourism development; corporate
identity; direct marketing; video tape, film or still photography requirements;
planning, design and production of collateral materials; management of promotion
programs; and advertising campaigns. The intent of this funding program is to
encourage the use of the Aircraft benefits in support of Buyer's marketing
communications programs, as Boeing and Buyer mutually agree. Prior to any funds
being disbursed, Boeing and Buyer will meet to mutually agree on the marketing
communications programs related to Buyer's introduction and operation of the
Aircraft.
Boeing's obligation to provide the support will commence at the time the
purchase of the Aircraft becomes firm (not subject to
P.A. No. 1947
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
6-1162-JDR-397 Page 2
cancellation by either party) and will terminate at the later of two (2) years
from the date the first Aircraft is delivered to Buyer or delivery of the last
Aircraft. There will be no cash payments or other support in lieu thereof.
3. Additional Support.
Additional promotional support may be provided by Boeing subject to the
parties reaching mutual agreement as to the type of services, timing and price.
4. Confidentiality.
Buyer understands that certain commercial and financial information
contained in this Letter Agreement are considered by Boeing as confidential.
Buyer agrees that it will treat this Letter Agreement and the information
contained herein as confidential and will not, without the prior written consent
of Boeing, disclose this Letter Agreement or any information contained herein to
any other person or entity, except as provided in Letter Agreement 1947-1.
Very truly yours,
THE BOEING COMPANY
By
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: , 1996
WESTERN PACIFIC AIRLINES, INC.
By
--------------------------------
Its
P.A. No. 1947
K/WPA
<PAGE>
6-1162-JDR-398
(CONFIDENTIALITY REQUESTED)
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24B-21 AS
INDICATED BY "(XXX)"
Western Pacific Airlines, Inc.
2864 South Circle Drive
Suite 1100
Colorado Springs, CO 80906
Subject: Letter Agreement No. 6-1162-JDR-398 to
Purchase Agreement No. 1947 --
Customer Support Matters
This Letter Agreement amends Purchase Agreement No. 1947 dated as of even date
herewith (the Agreement) between The Boeing Company (Boeing) and Western Pacific
Airlines, Inc. (Buyer) relating to Model 737-300 aircraft (the Aircraft).
All terms used herein and in the Agreement, and not defined herein, will have
the same meaning as in the Agreement.
1. Training Entitlement Flexibility.
In the event Buyer chooses to forego all or part of the Maintenance or
Flight Training entitlements contemplated in Part A and Part C of Exhibit C of
the Agreement, Buyer will have the right to select alternative Boeing
Maintenance or Flight Training services up to the value of the unused
entitlements. The selection of such alternative Boeing services will be subject
to availability and mutually agreed scheduling. Selection of such alternative
Boeing services will be mutually agreed upon prior to or during the planning
conferences contemplated in paragraph 2 of Part A and paragraph 2 of Part C of
Exhibit C of the Agreement, unless otherwise agreed.
2. Full Flight Simulator Data.
Boeing agrees to provide Buyer a credit memorandum in the amount of
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX], specified in 1995 dollars
subject to escalation, which may only be applied by Buyer against Buyer's
purchase from Boeing of a Model 737 full flight simulator data package. The
price for such data package will be Boeing's then-current price at the time
Buyer issues a purchase order for the data package and the purchase will be
subject to Boeing's then-current terms and conditions for the purchase of such
data packages.
P.A. No. 1947 SA-1
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
6-1162-JDR-398 Page 2
3. Confidentiality.
Buyer understands that certain commercial and financial information
contained in this Letter Agreement are considered by Boeing as confidential.
Buyer agrees that it will treat this Letter Agreement and the information
contained herein as confidential and will not, without the prior written consent
of Boeing, disclose this Letter Agreement or any information contained herein to
any other person or entity, except as provided in Letter Agreement 1947-1.
Very truly yours,
THE BOEING COMPANY
By
-------------------------------
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: , 1996
WESTERN PACIFIC AIRLINES, INC.
By
--------------------------------
Its
P.A. No. 1947 SA-1
K/WPA
<PAGE>
6-1162-JDR-399
(CONFIDENTIALITY REQUESTED)
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24B-21 AS
INDICATED BY "(XXX)"
Western Pacific Airlines, Inc.
2864 South Circle Drive
Suite 1100
Colorado Springs, CO 80906
Subject: Letter Agreement No. 6-1162-JDR-399 to
Purchase Agreement No. 1947 --
Configuration Matters
This Letter Agreement amends Purchase Agreement No. 1947 dated as of even date
herewith (the Agreement) between The Boeing Company (Boeing) and Western Pacific
Airlines, Inc. (Buyer) relating to Model 737-300 aircraft (the Aircraft).
All terms used herein and in the Agreement, and not defined herein, will have
the same meaning as in the Agreement.
1. Exterior Markings.
It is understood that Buyer intends to define unique exterior markings
for each Aircraft. Unless otherwise agreed, Buyer agrees to give Boeing notice
as soon as reasonably practicable, but no later than five (5) months prior to
the month during which an Aircraft is scheduled for delivery, of the definition
of the exterior markings for such Aircraft. Promptly after notification, Boeing
will advise Buyer as to whether the requested exterior markings can be applied
to the requested Aircraft prior to delivery.
In the event Boeing determines the requested unique exterior markings cannot be
applied prior to delivery or Buyer does not provide notice as required, as
directed by Buyer, the Aircraft will be delivered (i) with Buyer's previously
defined baseline exterior markings or (ii) with only those exterior markings
required to receive a Certificate of Airworthiness.
In the event the Aircraft is delivered with only those exterior markings
required to receive a Certificate of Airworthiness, Boeing will issue a credit
memorandum to Buyer at the time of delivery of the Aircraft in the amount of
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]. Such credit memorandum may be utilized by
Buyer for the purchase of Boeing proprietary spare parts, CFM International
(CFMI) proprietary spare engines and engine parts, other Boeing or CFMI goods
and services or applied against the balance of the purchase price of the
Aircraft for which such credit is issued,
P.A. No. 1947 SA-1
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
6-1162-JDR-399 Page 2
but may not be used for the purchase of other aircraft or application against
advance payments for any Aircraft.
2. Thrust Enhancement.
2.1 Documentation Revision. In recognition of Buyer's
requirement for aircraft operation at high altitude airports and high ambient
temperatures (Operation), Boeing agrees to provide Buyer FAA approved Flight
Manual Appendices for utilization of enhanced thrust for CFM56-3C-1 engines at
high altitude airports and high ambient temperatures for the Aircraft and for
CFM56-3C-1 powered Model 737-300 aircraft which are currently in or may be added
to Buyer's fleet. Such utilization of enhanced thrust will be for takeoff only
and will be subject to the proposed schedule and the limitations and operational
requirements set forth in master change 7200MP3286.
Upon delivery of such Flight Manual Appendices, Boeing will issue to Buyer a
credit memorandum in the amount of the then-current price(s) of the master
change(s) initiated to accomplish the Flight Manual revision(s), such credit
memorandum to be used only for the purchase of such master change(s) and may not
be used for the purchase of increased thrust.
2.2 Enhanced Thrust Utilization. Such Operation may
require an increase in the thrust rating of the CFM56-3C-1 engine from 22,000
pounds SLST to 23,500 pounds SLST. In recognition of the understanding that such
increase in the thrust rating will be utilized by Buyer on a limited basis, the
price of such increase in the thrust rating for each Aircraft is thirty (30)
percent of the difference between the then current prices at time of delivery of
the Aircraft for two CFM56-3C-1 engines rated at 23,500 pounds SLST and two
CFM56-3C-1 engines rated at 22,000 pounds SLST, subject to the following:
(i) The enhanced thrust is exclusively for use of Buyer and may
not be sold or transferred without the prior written consent
of CFM International (CFMI).
(ii) Such price will be payable directly to CFMI on a one-time
basis concurrent with delivery of each Aircraft to be operated
by Buyer utilizing such enhanced thrust.
(iii) Such enhanced thrust will not be utilized by Buyer for more
than fifteen (15) percent of Buyer's annual departures, on a
CFM56-3C-1 powered Model 737-300 fleet basis.
P.A. No. 1947 SA-1
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
6-1162-JDR-399 Page 3
(iv) Buyer will provide a written report to CFMI in January
of each year following delivery of the first Aircraft,
such report shall document Buyer's usage of the
enhanced thrust, as a percentage of departures for the
previous calendar year, for Buyer's CFM56-3C-1 powered
Model 737-300 fleet for which Buyer has purchased the
enhanced thrust (Buyer's Fleet).
2.3 Excess Annual Utilization. In the event Buyer's annual
utilization of the enhanced thrust during any given calendar year exceeds the
percentage of annual utilization previously paid for by Buyer (Excess Annual
Utilization), Buyer will be required to purchase the Excess Annual Utilization
for each Aircraft in Buyer's Fleet on December 31 of the year in which the
utilization of enhanced thrust exceeded the percentage of annual utilization
previously paid for by Buyer.
The price per aircraft for such Excess Annual Utilization will be calculated by
multiplying the applicable factor corresponding to the Excess Annual Utilization
shown on the schedule below times the then current price difference between two
such engines rated at 23,500 pounds SLST and two such engines rated at 22,000
pounds SLST (Then Current Price Difference), minus any amounts previously paid
by Buyer pursuant to paragraph 2.2 above and this paragraph 2.3.
Excess
Annual
Utilization Factor
----------- ------
16% - 20% 0.35
21% - 25% 0.40
26% - 30% 0.45
Over 30% 1.00
Note: Utilization is a departure in which enhanced thrust is
used. Annual utilization is the total number of departures
during a given year in which enhanced thrust is used
divided by the total number of Buyer's Fleet departures
for the same year, expressed as a percentage rounded to
the nearest whole percent.
In the event such Excess Annual Utilization exceeds thirty percent, the price
will be the Then Current Price Difference, reduced by (i) any amounts previously
paid by Buyer for utilization of the enhanced thrust pursuant to paragraph 2.2
above and this paragraph 2.3 and (ii) an additional amount determined by
multiplying the Then Current Price Difference times
P.A. No. 1947 SA-1
K/WPA
<PAGE>
Western Pacific Airlines, Inc.
6-1162-JDR-399 Page 4
the aircraft credit factor defined in Letter Agreement 6-1162- JDR-394,
paragraph 1.1.
2.4 Payment For Excess Annual Utilization. In the event
Buyer exceeds fifteen percent annual utilization and is therefore required to
purchase the enhanced thrust for a higher percentage of annual utilization
pursuant to paragraph 2.3 above, such payment will be made on a one time basis
and the higher percentage of annual utilization so purchased will then be
allowed for subsequent calendar years with no further payment required by Buyer
for such higher percentage of annual utilization.
Buyer will make any such payment for Excess Annual Utilization, if any, directly
to CFMI concurrently with Buyer's submittal of the report of usage for the year
in which the usage exceeded the percentage of annual utilization previously paid
for by Buyer.
2.5 Aircraft Not Purchased Under the Agreement. In the
event Buyer intends to utilize enhanced thrust for aircraft not purchased under
the Agreement which are currently in or subsequently added to Buyer's fleet,
Boeing and Buyer acknowledge that Buyer will enter into a separate agreement
with CFMI, containing similar terms to those set forth herein, to provide for
such enhanced thrust and any required hardware revisions.
3. Alternate Forward Center of Gravity.
In recognition of Buyer's requirement for aircraft operation at high
altitude airports and high temperatures, Boeing agrees to provide Buyer FAA
approved Flight Manual Appendices and to revise the operations manual for use of
alternate forward center of gravity limits for the Aircraft and for the existing
Model 737- 300 aircraft in Buyer's fleet. Such utilization of alternate forward
center of gravity will be subject to the proposed schedule and to the
limitations set forth in master change 0220MP3322.
Upon delivery of such Flight Manual Appendices and operations manual revisions,
Boeing will issue to Buyer a credit memorandum in the amount of the then-current
price(s) of the master change(s) initiated to accomplish the Flight Manual and
operations manual revision(s), such credit memorandum to be used only for the
purchase of such master change(s).
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4. Confidentiality.
Buyer understands that certain commercial and financial information
contained in this Letter Agreement are considered by Boeing as confidential.
Buyer agrees that it will treat this Letter Agreement and the information
contained herein as confidential and will not, without the prior written consent
of Boeing, disclose this Letter Agreement or any information contained herein to
any other person or entity, except as provided in Letter Agreement 1947-1.
Very truly yours,
THE BOEING COMPANY
By
--------------------------------
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: , 1996
WESTERN PACIFIC AIRLINES, INC.
By
--------------------------------
Its
P.A. No. 1947 SA-1
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Western Pacific Airlines, Inc.
6-1162-JDR-400 Page 1
6-1162-JDR-400
Western Pacific Airlines, Inc.
2864 South Circle Drive
Suite 1100
Colorado Springs, CO 80906
Subject: Letter Agreement No. 6-1162-JDR-400 to
Purchase Agreement No. 1947 --
Miscellaneous Matters
This Letter Agreement amends Purchase Agreement No. 1947 dated as of even date
herewith (the Agreement) between The Boeing Company (Boeing) and Western Pacific
Airlines, Inc. (Buyer) relating to Model 737-300
aircraft (the Aircraft).
All terms used herein and in the Agreement, and not defined herein, will have
the same meaning as in the Agreement.
1. Notice of Delivery Date.
Boeing and Buyer agree that Article 2.3 is hereby revised to read
as follows:
2.3 Notice of Delivery Date. Boeing will give Buyer at
least 15 days notice of the delivery date of the Aircraft. If an Aircraft
delivery is delayed beyond such delivery date due to the responsibility of
Buyer, Buyer will reimburse Boeing for all costs incurred by Boeing as a result
of such delay, including reasonable amounts for storage, insurance, Taxes,
preservation or protection of the Aircraft and interest on payments due.
2. Bill of Sale.
Boeing and Buyer agree that Article 2.6 is hereby revised to read
as follows:
2.6 Bill of Sale. Upon delivery of an Aircraft Boeing will
deliver to Buyer, or to such other entity as Buyer directs in accordance with
Article 10 hereof, a bill of sale conveying to Buyer or such other entity good
title to such Aircraft, free and clear of all liens, claims, charges and
encumbrances of every kind whatsoever, and such other appropriate document of
title that Buyer reasonably requests.
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3. Taxes.
Boeing and Buyer agree that Article 4.1 is hereby revised to read
as follows:
4.1 Taxes. Buyer will pay all Taxes imposed by any
domestic or foreign taxing authority arising out of or in connection with this
Agreement or performance pursuant to it. In this Agreement, "Taxes" are defined
as all taxes, fees, charges or duties and any interest, penalties, fines, or
other additions to tax (other than any such penalties, fines, interest or other
additions arising from the failure of Boeing to pay any such taxes in a timely
manner, fees, charges or duties which it has reason to believe are applicable),
including, but not limited to, sales, use, value added, gross receipts, stamp,
excise, transfer and similar taxes, except U.S. federal income taxes and
Washington State business and occupation tax imposed on Boeing.
4. Claims Made Against Boeing.
Boeing and Buyer agree that Article 4.4 is hereby added to the
Agreement to read as follows:
4.4 Claims Made Against Boeing. If claim is made against
Boeing for any such Taxes, Boeing shall promptly notify Buyer. If requested by
Buyer in writing in a timely matter, Boeing shall, at Buyer's expense, take such
action as Buyer may reasonably direct with respect to such claim, and any
payment by Boeing of such Taxes shall be made under protest, if protest is
necessary and proper. If payment is made, Boeing shall, at Buyer's expense, take
such action as Buyer may reasonably direct to recover such payment and shall, if
requested, permit Buyer in Boeing's name to file a claim or prosecute an action
to recover such payment. If a refund is obtained by Boeing of all or any part of
such Taxes, Boeing shall pay Buyer the amount of any such refund.
5. Excusable Delay.
Boeing and Buyer agree that Article 6.1 is hereby revised to read
as follows:
6.1 General. Boeing will not be liable for or be deemed to
be in default under this Agreement on account of any delay in delivery of any
Aircraft or other performance hereunder arising out of causes such as: acts of
God; war, armed hostilities, riots, fires, floods, earthquakes or serious
accidents; governmental acts or failures to act affecting materials, facilities
or Aircraft; strikes or labor troubles causing cessation, slowdown or
interruption of work; damage to
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an Aircraft; failure of or delay in transportation; or inability, after due and
timely diligence, to procure materials, systems, accessories, equipment or
parts; or arising out of any other cause to the extent it is beyond Boeing's
control or not occasioned by Boeing's fault or negligence. A delay resulting
from such causes is referred to as an "Excusable Delay".
In the event of any Excusable Delay, Boeing shall use its best reasonable
efforts to reduce the extent of such delay and to mitigate the results thereof.
Promptly upon the occurrence of any event hereunder which may result in a delay
in the delivery of an Aircraft, Boeing shall give notice thereof to Buyer, which
notice shall identify such occurrence and specify either the period of delay
which may reasonably be expected to result therefrom, or that such period of
probable delay is so uncertain as not to be susceptible of reasonable estimate.
Thereafter, Boeing shall keep Buyer advised of the status of such delays and
shall furnish Buyer with reasonable details regarding such occurrence. It is
understood that any such Excusable Delay shall not affect the Aircraft Basic
Price except that such price shall be adjusted for changes agreed upon
subsequent to those changes previously covered by Change Order. The adjustment
due to economic fluctuations set forth in Exhibit D to this Agreement shall be
determined as of the original month of scheduled aircraft delivery as defined in
Article 2.1 of the Agreement for Aircraft so delayed.
6. Anticipated Excusable Delay.
Notwithstanding the provisions of Article 6.2.1, in the event (i)
Boeing notifies Buyer that due to an Excusable Delay, delivery of an Aircraft
will be delayed more than 12 months beyond the month in which delivery is
scheduled, (ii) such notice does not identify the revised delivery month for
such Aircraft and (iii) neither party terminates the Agreement pursuant to
Article 6.2.1, then Boeing and Buyer agree that at such time as Boeing provides
written notification to Buyer of the revised delivery month for such Aircraft,
Buyer may terminate the Agreement with respect to such Aircraft by giving
written notice to Boeing within 15 days after receipt by Buyer of Boeing's
notification of the revised delivery month.
7. Future Changes to Article 6, Excusable Delay.
If, prior to delivery of Buyer's last Aircraft, Boeing
substantially changes the proforma language of Article 6, Excusable Delay, to
the benefit of its other customers with aircraft delivering in the same general
time period as Buyer's Aircraft, Boeing will offer
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Buyer the same revised provisions for inclusion in the Agreement, which Buyer
may accept or reject within thirty (30) days. If Buyer accepts Boeing's offer to
incorporate revised provisions, then the Agreement will be amended, as
appropriate, to incorporate the revised provisions.
8. FAA Manufacturer Changes.
Notwithstanding the provisions of Article 8.2, Boeing agrees to
work with Buyer to attempt to lessen the impact of incorporation of FAA
Manufacturer Changes.
9. Aircraft Inspection and Flight.
Boeing agrees to provide Buyer timely standard notice of Aircraft
manufacture, Aircraft inspection and Aircraft production flight schedules.
10. Special Aircraft Test Requirements.
Notwithstanding the provisions of Article 9.5, in the event Boeing
deems that the tests contemplated by Article 9.5.2 are desired to be performed
using one of Buyer's Aircraft, Boeing will so advise Buyer in advance of such
tests, including all pertinent particulars thereof, and obtain Buyer's consent
to conduct such tests.
11. Predelivery Assignment.
Notwithstanding the provisions of Article 10, with respect to
predelivery assignment of Buyer's rights and obligations under the Agreement,
Boeing and Buyer agree that Buyer shall not assign any of its rights and
obligations under the Agreement relating to the purchase of any Aircraft to any
third party without Boeing's prior written consent. Boeing agrees to discuss in
good faith, on a case by case basis, the terms and conditions under which
predelivery assignment of Buyer's rights to a third party may be acceptable.
12. Assignment.
Boeing and Buyer agree that Article 10.1.1 and 10.1.3 are hereby
revised to read as follows:
10.1.1 Either party may assign its interest to a
corporation that (i) results from any merger or reorganization of such party or
(ii) acquires or succeeds to substantially all the assets of such party;
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10.1.3 Boeing may assign all or any part of its
rights and obligations under this Agreement to any wholly owned subsidiary of
Boeing, provided that Boeing will remain fully and solely responsible to Buyer
for all obligations and liabilities as the seller of the Aircraft, Buyer will
continue to deal exclusively with Boeing and provided no action by Boeing shall
subject Buyer to any liability, increase in costs (e.g. Taxes) or diminish
rights Buyer would otherwise have absent such action.
13. Exculpatory or Indemnity Clause in Post-Delivery
Sale or Lease.
Boeing and Buyer agree that Article 10.6 is hereby revised to read
as follows:
10.6 Exculpatory or Indemnity Clause in Post-Delivery Sale
or Lease. If, following delivery of an Aircraft, Buyer sells or leases such
Aircraft and obtains from the transferee an exculpatory or indemnity clause
protecting Buyer, Buyer will use best reasonable efforts to include the same
protection for Boeing.
14. Termination.
Boeing and Buyer agree that Article 11.1.1 is hereby revised to
read as follows:
11.1.1 Ceases doing business as a going concern,
suspends all or substantially all its business operations, generally does not
pay its debts, or admits in writing its inability to pay its debts; or
15. Contributions Toward Third-Party Damage. Boeing and Buyer agree
that Article 12.6 is hereby added to the Agreement to read as follows:
12.6 Contributions Toward Third-Party Damage. Claims by
Buyer against Boeing for contribution toward third-party bodily injury or
property damage claims, to the extent of Boeing's relative percentage of the
total fault or other legal responsibility of all persons causing such bodily
injuries or property damage, are excepted from the terms of this Article 12.2.
16. Warranty Remedies.
Boeing and Buyer agree that Exhibit B, Part A, paragraphs 5.1 and
5.2 are hereby revised to read as follows:
5.1 As to a defect in conformance to the Detail
Specification, the correction at Boeing's expense of such defect; provided,
however, that Boeing
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6-1162-JDR-400 Page 6
will not be obligated to correct any defect that Boeing and Buyer agree has no
material adverse effect on the maintenance, use or operation of the Aircraft.
The warranty period for the corrected item will be the unexpired warranty period
for the defective item.
5.2 As to a defect in material or workmanship, (i) the
repair at Boeing's expense of such defect or, (ii) with Buyer's concurrence, the
replacement of such item with a similar item free from defect or the issuance of
a credit memorandum to reimburse Buyer for a spare part previously purchased
from Boeing as the replacement for such defective item. The warranty period for
either correction will be the unexpired warranty period for the defective item.
17. Returned Warranty Items.
Boeing and Buyer agree that Exhibit B, Part A, paragraph 6.1.2 is
hereby revised to read as follows:
6.1.2 All warranty work will be performed at
Boeing's expense, with best reasonable efforts to minimize Aircraft
out-of-service time. In addition, Boeing will reimburse Buyer by issuing a
credit memorandum for the cost of fuel, oil and landing fees incurred in
ferrying the Aircraft to Boeing's facilities and in ferrying the Aircraft back
to Buyer's facilities. Buyer will minimize the length of both ferry flights.
18. Warranty Reimbursement.
Boeing and Buyer agree that Exhibit B, Part B, paragraph 5 is
hereby revised to read as follows:
Reimbursement.
Upon approval of Buyer's claim for reimbursement, Boeing will use
reasonable efforts to reimburse Buyer within thirty days of approval by issuing
a credit memorandum as follows:
19. Service Life Policy.
Boeing and Buyer agree that Exhibit B, Part C, paragraph 2 is
hereby revised to read as follows:
Service Life Policy.
If a Failure occurs in any Covered Component within the following
periods, Boeing will promptly, at a price calculated pursuant to this Policy,
either (i) design and furnish to Buyer materials required to correct the Failed
Component (including Boeing designed
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6-1162-JDR-400 Page 7
standard parts but excluding other industry standard parts) or (ii) furnish to
Buyer a replacement Covered Component:
20. Boeing Indemnity Against Patent Infringement.
Boeing and Buyer agree that Exhibit B, Part D, paragraphs 1, 3.1,
3.3 and 3.4 are hereby revised to read as follows and paragraph 3.6 is hereby
added to Exhibit B, Part D of the Agreement to read as follows:
1. Indemnity.
Subject to the provisions of this Part D, Boeing will indemnify and
hold harmless Buyer from and against all claims, suits, actions, liabilities,
damages and costs (including reasonable attorney fees for efforts reasonably
required in defense of claims covered by this indemnity) arising out of actual
or alleged infringement, by any Aircraft or any system, accessory, equipment or
part (item) installed thereon at the time of Aircraft delivery, of any patent
issued under the laws of any country in which Buyer lawfully operates the
Aircraft (Country).
3.1 Buyer must give Boeing written notice within 10 days
after Buyer receives formal notice of a suit or action against Buyer alleging
infringement or within 30 days after Buyer receives a written claim of
infringement.
3.3 Buyer will (i) promptly furnish to Boeing all data,
records and assistance (other than non-use of the allegedly infringing Aircraft
or item) within Buyer's control which are material to any such claim, suit or
action and (ii) (except as to amounts mandated by a judgment) obtain Boeing's
prior approval to pay or assume any liabilities, damages, royalties or costs.
3.4 Boeing's obligations and Buyer's remedies herein
exclude Buyer's incidental or consequential damages and liabilities, costs, loss
of revenue or loss of profit resulting from loss of use, but include, as Boeing
and Buyer may mutually agree, replacing the infringing item or otherwise curing
any infringement on account of which use of the Aircraft by Buyer is prevented.
3.6 Except as required by a final judgement entered
against Buyer by a court of competent jurisdiction, Buyer will obtain Boeing's
written approval prior to paying, committing to pay, assuming any obligation, or
making any material concession relative to any infringement covered by this
indemnity.
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6-1162-JDR-400 Page 8
21. Boeing Indemnity Against Copyright Infringement.
Boeing and Buyer agree that Exhibit B, Part D-1, paragraphs 1, 2.1,
2.4, 2.5, 2.7 and 2.8 are hereby revised to read as follows:
1. Indemnity.
Subject to the following, Boeing will indemnify Buyer with respect
to claims, suits, actions, liabilities, damages and costs (including reasonable
attorney fees for efforts reasonably required in defense of claims covered by
this indemnity) arising out of actual or alleged copyright infringement by any
computer software included with the Aircraft when the Aircraft is first
delivered by Boeing (Aircraft Software).
2.1 Boeing will have no obligation to indemnify Buyer
relative to software comprising, contained in or included with Buyer Furnished
Equipment, engines, software not manufactured to Boeing's detailed design, or
software manufactured to Boeing's detailed design without Boeing's written
authorization.
2.4 Boeing may, as Boeing and Buyer may mutually agree,
replace any infringing or allegedly infringing Aircraft Software (or item
containing Aircraft Software) with a noninfringing equivalent or otherwise cure
any infringement.
2.5 Buyer must inform Boeing in writing (a) within 10 days
after Buyer receives formal notice of a suit or other formal action against
Buyer alleging copyright infringement involving Aircraft Software and (b) within
30 days after Buyer receives any allegation or claim in the nature of copyright
infringement involving Aircraft Software.
2.7 Buyer will promptly furnish to Boeing all data,
records and assistance (other than non-use of the allegedly infringing Aircraft
or item) within Buyer's possession or control which may be material to any
copyright infringement claim, suit or action relating to Aircraft Software.
2.8 Except as required by a final judgement entered
against Buyer by a court of competent jurisdiction, Buyer will obtain Boeing's
written approval prior to paying, committing to pay, assuming any obligation, or
making any material concession relative to any infringement covered by this
indemnity.
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6-1162-JDR-400 Page 9
22. Supplier Warranties and Patent Indemnities.
Boeing and Buyer agree that Exhibit B, Part E, paragraphs 1 and 3.2
are hereby revised to read as follows:
1. Supplier Warranties and Supplier Patent
and Copyright Indemnities.
Boeing will use diligent efforts to obtain adequate warranties and
indemnities against patent and copyright infringement enforceable by Buyer from
manufacturers (Suppliers) of systems, accessories, equipment or parts installed
on the Aircraft at the time of delivery that were purchased by Boeing, but not
manufactured to Boeing's detailed design. Boeing will furnish copies of such
warranties and patent and copyright indemnities to Buyer prior to delivery of
the first Aircraft.
3.2 At Boeing's request, Buyer will assign to Boeing, and
Boeing will be subrogated to, Buyer's rights against the manufacturer providing
such Supplier warranty but only to the extent required by Boeing to fulfill its
obligations hereunder.
23. Boeing Interface Commitment.
Boeing and Buyer agree that Exhibit B, Part G, paragraph 3 is
hereby revised to read as follows:
3. Manufacturer Responsibility.
If Boeing determines that the Interface Problem is primarily
attributable to the design of an item not manufactured to Boeing's detailed
design, Boeing will assist Buyer in processing a warranty claim against the
manufacturer of such item. Boeing will also take whatever reasonable action is
permitted by its contract with such manufacturer in an effort to obtain a
correction of such Interface Problem acceptable to Buyer.
24. Maintenance Training.
Boeing and Buyer agree that Exhibit C, Part A, paragraphs 1 and 5.3
are hereby revised to read as follows:
1. General.
This Part describes the maintenance training to be provided by
Boeing (Maintenance Training) at Boeing's training facility at or near Seattle.
The Maintenance Training will be provided at no additional
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charge to Buyer, except as otherwise provided herein. If any part of the
Maintenance Training is not used by Buyer prior to delivery of the last
Aircraft, but in no event later than June 1, 1998, Boeing will not be obligated
to provide such Maintenance Training at a later date, unless the parties have
otherwise agreed in writing.
All instruction, examinations and materials shall be prepared and presented in
the English language and in the units of measure used by Boeing.
Buyer will be responsible for the living expenses of Buyer's personnel during
Maintenance Training. For Maintenance Training provided at or near Seattle,
Boeing will transport Buyer's personnel between their local lodging and the
training facility.
5.3 Buyer will provide or reimburse Boeing for round-trip
transportation for Boeing's instructors and training materials between Seattle
and such alternate training site.
25. Flight Training.
Boeing and Buyer agree that Exhibit C, Part C, paragraphs 1 and 4.3
are hereby revised to read as follows:
1. General.
This Part describes the flight training to be provided by Boeing
(Flight Training) at or near Seattle, or at some other location to be determined
pursuant to this Part. The Flight Training will be provided at no additional
charge to Buyer, unless otherwise specified herein. If any part of the Flight
Training is not used by Buyer prior to delivery of the last Aircraft, but in no
event later than June 1, 1998, Boeing will not be obligated to provide such
Flight Training at a later date unless the parties have otherwise agreed in
writing.
All instruction, examinations and materials will be prepared and presented in
the English language and in the units of measure used by Boeing.
Buyer will be responsible for living expenses of Buyer's personnel during the
Flight Training Program. For Flight Training provided at or near Seattle, Boeing
will transport Buyer's personnel between their local lodging and the training
facility.
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6-1162-JDR-400 Page 11
4.3 Buyer will provide or reimburse Boeing for round-trip
transportation for Boeing's flight training instructors and materials between
Seattle and such alternate site.
26. Technical Data and Documents.
Boeing and Buyer agree that Exhibit C, Part D, paragraph 2.1 is
hereby revised to read as follows:
2.1 The data and documents provided by Boeing under Exhibit C, Part
D of the Agreement ("Documents") are licensed to Buyer. They contain
confidential, proprietary and/or trade secret information belonging to Boeing;
and Buyer will treat them in confidence and use and disclose them only for
Buyer's own internal purposes as specifically authorized herein. If Buyer makes
copies of any Documents, the copies will also belong to Boeing and be treated as
Documents under this Agreement. Buyer will preserve all restrictive legends and
proprietary notices on all Documents and copies.
27. Disclosure of Detail Specification.
Boeing and Buyer agree that Boeing Detail Specification D6-38604-28
will be treated as confidential and Buyer will not, without the prior written
consent of Boeing, disclose such Detail Specification or any information
contained therein to any other person or entity except as may be required by (i)
applicable law or governmental regulations, or (ii) for financing the Aircraft.
28. Payment of Advance Payments.
Notwithstanding the provisions of Article 5, as amended by Letter
Agreement 6-1162-JDR-395, Boeing and Buyer agree that payment of those Advance
Payments due upon signing of the Agreement will be made by Buyer no later than
September 6, 1996.
29. Confidentiality.
Buyer understands that certain commercial and financial information
contained in this Letter Agreement are considered by Boeing as confidential.
Buyer agrees that it will treat this Letter Agreement and the information
contained herein as confidential and will not, without the prior written consent
of
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Boeing, disclose this Letter Agreement or any information contained herein to
any other person or entity, except as provided in Letter Agreement 1947-1.
Very truly yours,
THE BOEING COMPANY
By
--------------------------------
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: , 1996
WESTERN PACIFIC AIRLINES, INC.
By
--------------------------------
Its
P.A. No. 1947
K/WPA
<PAGE>
6-1162-JDR-401
Western Pacific Airlines, Inc.
2864 South Circle Drive
Suite 1100
Colorado Springs, CO 80906
Subject: Letter Agreement No. 6-1162-JDR-401 to
Purchase Agreement No. 1947 --
Product Assurance Matters
This Letter Agreement amends Purchase Agreement No. 1947 dated as of even date
herewith (the Agreement) between The Boeing Company (Boeing) and Western Pacific
Airlines, Inc. (Buyer) relating to Model 737-300 aircraft (the Aircraft).
All terms used herein and in the Agreement, and not defined herein, will have
the same meaning as in the Agreement.
1. Appointment of Agent for Warranties.
It is understood that Buyer intends to appoint an agent to act directly
with Boeing with respect to the warranties under the Agreement. Such appointment
will require that Buyer and agent enter into an Appointment of Agent containing
terms and conditions substantially as set forth in Attachment A to this Letter
Agreement. Such assignment will be effective upon Boeing's consent.
2. Return of Defective Items.
Notwithstanding the provisions of Exhibit B, Part A, paragraph 6 of the
Agreement, at Buyer's option, Buyer shall have the right to return the Aircraft
or items claimed to be defective under Exhibit B of the Agreement to either
Boeing or to any FAA certified aircraft repair station for performance of
warranty work. In the event such items are submitted by Buyer to a repair
station other than Boeing, Buyer will remain responsible to submit the claim for
reimbursement, unless Buyer has appointed an agent in accordance with paragraph
1 above, in which case Buyer's agent may submit the claim for reimbursement. All
other terms and conditions of Exhibit B to the Agreement shall remain in effect.
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3. Extension of Warranty and Service Life Policy Periods.
Boeing has defined priced programs to extend the warranty period
defined in Exhibit B, Part A of the Agreement and to extend the period and
components of Service Life Policy coverage defined in Exhibit B, Part C of the
Agreement. Buyer may elect to extend the warranty period or the Service Life
Policy coverage for any Aircraft at any time up to expiration of the applicable
warranty or service life policy as defined in Exhibit B for such Aircraft. The
prices for such extensions will be the then current prices in effect at the time
Buyer notifies Boeing of its request for extension. Following such notification,
Boeing and Buyer agree to supplement the Agreement in a timely manner to
incorporate such extension.
4. Confidentiality.
Buyer understands that certain commercial and financial information
contained in this Letter Agreement are considered by Boeing as confidential.
Buyer agrees that it will treat this Letter Agreement and the information
contained herein as confidential and will not, without the prior written consent
of Boeing, disclose this Letter Agreement or any information contained herein to
any other person or entity, except as provided in Letter Agreement 1947-1.
Very truly yours,
THE BOEING COMPANY
By
--------------------------------
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: , 1996
WESTERN PACIFIC AIRLINES, INC.
By
--------------------------------
Its
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(CONFIDENTIALITY REQUESTED)
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24B-21 AS
INDICATED BY "(XXX)"
Supplemental Agreement No. 1
to
Purchase Agreement No. 1947
between
The Boeing Company
and
Western Pacific Airlines, Inc.
Relating to Boeing Model 737-300 Aircraft
THIS SUPPLEMENTAL AGREEMENT, entered into as of the 27th day of
September, 1996, by and between THE BOEING COMPANY, a Delaware corporation
(hereinafter called Boeing), and Western Pacific Airlines, Inc., a Delaware
corporation with its principal office in the City of Colorado Springs, State of
Colorado, (hereinafter called Buyer);
W I T N E S S E T H:
WHEREAS, the parties hereto entered into an agreement on August 21,
1996, relating to Boeing Model 737-300 aircraft, which agreement, as amended,
together with all exhibits and specifications attached thereto and made a part
thereof, is hereinafter called the "Purchase Agreement;" and
WHEREAS, the parties desire to supplement the Purchase Agreement as
hereinafter set forth to reduce the quantity of Aircraft purchased from ten (10)
to six (6), to revise the alternate schedule for advance payments, to revise the
agreement for provision of a Model 737 full flight simulator data package and to
revise the conditions for provision of enhanced thrust and alternate forward
center of gravity, as well as certain additional changes as set forth herein;
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
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1. Article 1, entitled "Subject Matter of Sale." is deleted in its entirety and
replaced by the following new Article 1, which reflects the reduction in the
quantity of Aircraft purchased from ten (10) to six (6) in paragraph 1.1, "The
Aircraft.". Such revised Article 1 is attached hereto and incorporated into the
Purchase Agreement by this reference.
2. Article 2, entitled "Delivery, Title and Risk of Loss.", is deleted in its
entirety and replaced by the following new Article 2, which reflects the
deletion of one Aircraft in January 1998, two Aircraft in February 1998 and one
Aircraft in May 1998, in paragraph 2.1, "Time of Delivery.". Such revised
Article 2 is attached hereto and incorporated into the Purchase Agreement by
this reference.
3. Article 3, entitled "Price of Aircraft.", is deleted in its entirety and
replaced by the following new Article 3, which reflects the deletion of Aircraft
in January 1998, February 1998 and May 1998, in paragraph 3.4.1, "Advance
Payment Base Price.". Such revised Article 3 is attached hereto and incorporated
into the Purchase Agreement by this reference.
4. Letter Agreement No. 6-1162-JDR-395, entitled "Advance Payment Matters", is
revised by deleting in their entirety pages 1 and 2 and page 1 of Attachment A
and substituting new pages 1, 2, 3 and 4 and page 1 of Attachment A. This
revision (i) replaces the existing alternate schedule for advance payments with
a new schedule, (ii) identifies alternate delivery positions if certain of the
advance payments are not made in accordance with the new schedule and (iii)
identifies requirements relative to predelivery assignment of Buyer's rights and
obligations. Such new pages are attached hereto and incorporated into the
Purchase Agreement by this reference.
5. Letter Agreement No. 6-1162-JDR-398, entitled "Customer Support Matters", is
revised by deleting in their entirety pages 1, 2 and 3 and substituting new
pages 1 and 2. This revision replaces the agreement to provide a Boeing Model
737 full flight simulator data package with an agreement to provide a credit
memorandum in the amount of [XXXXXX], in July 1995 dollars, to be used only for
the purchase of a Model 737 full flight simulator data package. Such new pages
are attached hereto and incorporated into the Purchase Agreement by this
reference.
P.A. No. 1947 SA-1
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6. Letter Agreement No. 6-1162-JDR-399, entitled "Configuration Matters", is
revised by deleting in their entirety pages 2, 3, 4 and 5 and substituting new
pages 2, 3, 4 and 5. This revision (i) deletes the requirement to execute a
separate purchase agreement for Model 737-700 aircraft as a condition for
provision of credit memoranda for thrust enhancement and alternate forward
center of gravity and (ii) revises the payment process for use of thrust
enhancement to reflect that all payments, including the initial payment to be
made at delivery, for use of thrust enhancement will be made directly to CFMI.
7. Boeing and Buyer agree that the terms and conditions of Letter Agreement No.
1947-1 dated August 21, 1996, shall apply to this Supplemental Agreement No. 1
and related letter agreements.
The Purchase Agreement shall be deemed to be supplemented to the extent herein
provided and as so supplemented shall continue in full force and effect.
EXECUTED IN DUPLICATE as of the day and year first above written.
THE BOEING COMPANY WESTERN PACIFIC AIRLINES, INC.
By: By:
---------------------- ----------------------
Its: Attorney-In-Fact Its:
P.A. No. 1947 SA-1
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