Common use of Penalty Application Clause in Contracts

Penalty Application. The Parties agree that the provision set forth in this Article 3.1.3.2 *****. A. Penalties for LHT: In the event that LHT fails to comply with the Target Service Level specified in section 3.1.3. as calculated in accordance with section 3.1.3.1 paragraph D) above, LHT shall pay Volaris the penalty described below: Service Level measurement will be ***** Discount for low performance will be ***** For avoidance of doubt, an example of Service Level measurement and discount is described below: ***** ***** ***** ***** ***** ***** ***** AOG ***** ***** ***** ***** ***** ***** ***** Crit A ***** ***** ***** ***** ***** ***** ***** Crit B ***** ***** ***** ***** ***** ***** ***** Scheduled ***** ***** ***** ***** ***** ***** ***** Replenishment ***** ***** ***** ***** ***** ***** ***** Total ***** ***** ***** Weighted deviation from target ***** Cumulative Invoice (Pool Rate) ***** Adjustment (credit/debit) ***** B. Penalties for Volaris: In the event that Volaris fails to comply with the following Performance Parameters, Volaris shall pay LHT the penalty described below: Performance Parameters ***** ***** Return Pool Components: ***** ***** ***** of Return Pool Components removed in Mexico to be delivered to the freight forwarder within ***** after *****. For San Salvador fourteen (14) days after Deemed Removal Date ***** AOG and CRIT A requests as defined 3.1.3.4 ***** ***** ***** of Removal Reason as specified below ***** ***** TCS Attachment - 8 - Execution Version Removal Reasons Unserviceable Flat Rate Components delivered to LHT shall be accompanied with Post Flight Reports (“PFR”) in addition to the required documentation. In case that no PFR is available Volaris has to ensure that a qualified removal reason description is stated in the removal tag to prevent redundant trouble shooting in the LHT workshops. It is the target of Volaris to ensure that ***** of the removed Flat Rate Components are accompanied with such PFR’s and/ or qualified removal reasons. For the avoidance of doubt, in the event that the actual Volaris Performance Parameters are as follows: • Return Pool Components: ***** • Quota for AOG and CRIT A: ***** • Removal Reason: ***** Components are accompanied with PFR and/ or qualified removal reasons. Solely as an example, the percentage figure of the Target Service Level for all categories will be reduced by: ***** C. Starting on February 1st 2014, the Parties will make annual reconciliations on the amounts that each Party owes the other as a result of the application of the penalties described in subparagraphs A. and B. above. LHT and Volaris agree that if amounts are due to the other Party as a consequence of the penalties described above, they will set-off such amounts on the next applicable invoice. D. The Parties agree the penalties set forth in this Article may be subject to modifications as agreed by both Parties in writing, as their intention is to maintain and improve performance.