EXHIBIT 10.6
Modification Services Agreement
Confidential treatment has been requested for certain confidential portions
of this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of
1934, as amended. In accordance with Rule 24b-2, these confidential portions
have been omitted from this exhibit and filed separately with the Securities
and Exchange Commission.
MODIFICATION SERVICES AGREEMENT
BETWEEN
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CORPORATION
AND
FEDERAL EXPRESS CORPORATION
DOCUMENT NO. DAC 96-29-M
9/11/96
AGREEMENT NO. DAC 96-29M
TABLE OF CONTENTS
RECITALS. . . . . . . . . . . . . . . . . . . . . .1-0
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . .1-1
2. SCOPE OF SERVICES . . . . . . . . . . . . . . . . .2-1
3. ADDITIONAL SERVICES . . . . . . . . . . . . . . . .3-1
4. PRICE AND PAYMENT . . . . . . . . . . . . . . . . .4-1
5. DELIVERY OF SERVICES. . . . . . . . . . . . . . . .5-1
6. TAXES, CUSTOMS, DUTIES. . . . . . . . . . . . . . .6-1
7. EXCUSABLE DELAYS. . . . . . . . . . . . . . . . . .7-1
8. WARRANTY. . . . . . . . . . . . . . . . . . . . . .8-1
9. INDEMNIFICATION . . . . . . . . . . . . . . . . . .9-1
10. TECHNICAL DATA. . . . . . . . . . . . . . . . . . .10-1
11. NOTICES . . . . . . . . . . . . . . . . . . . . . .11-1
12. ASSIGNMENT. . . . . . . . . . . . . . . . . . . . .12-1
13. SPECIFICATION CHANGES . . . . . . . . . . . . . . .13-1
14. DOCUMENTATION . . . . . . . . . . . . . . . . . . .14-1
15. APPLICABLE LAW AND VARIANCES. . . . . . . . . . . .15-1
16. TRAINING. . . . . . . . . . . . . . . . . . . . . .16-1
17. SIMULATOR . . . . . . . . . . . . . . . . . . . . .17-1
18. PARTS, MATERIALS, AND SUPPLIES. . . . . . . . . . .18-1
19. FEDERAL EXPRESS SUPPLIED PARTS. . . . . . . . . . .19-1
i
9/11/96
AGREEMENT NO. DAC 96-29M
20. REGULATORY REQUIREMENTS . . . . . . . . . . . . . .20-1
21. ACF SYSTEM VALIDATION AND CERTIFICATION TEST. . . .21-1
22. INSURANCE . . . . . . . . . . . . . . . . . . . . .22-1
23. INSPECTION, DEMONSTRATION, ACCEPTANCE AND DELIVERY.23-1
24. INTENTIONALLY DELETED . . . . . . . . . . . . . . .24-1
25. DEFAULT AND REMEDIES. . . . . . . . . . . . . . . .25-1
26. PRODUCT SUPPORT . . . . . . . . . . . . . . . . . .26-1
27. OUTSIDE SERVICES. . . . . . . . . . . . . . . . . .27-1
28. RECORDS . . . . . . . . . . . . . . . . . . . . . .28-1
29. ONSITE REPRESENTATION . . . . . . . . . . . . . . .29-1
30. PATENT PROTECTION . . . . . . . . . . . . . . . . .30-1
31. CERTIFICATION . . . . . . . . . . . . . . . . . . .31-1
32. MARKETING ASSISTANCE. . . . . . . . . . . . . . . .32-1
33. INTERFACE . . . . . . . . . . . . . . . . . . . . .33-1
34. TITLE . . . . . . . . . . . . . . . . . . . . . . .34-1
35. QUALITY AND STANDARDS . . . . . . . . . . . . . . .35-1
36. PUBLIC DISCLOSURE . . . . . . . . . . . . . . . . .36-1
37. MISCELLANEOUS . . . . . . . . . . . . . . . . . . .37-1
38. AFFIRMATIVE ACTION. . . . . . . . . . . . . . . . .38-1
39. CONDITION PRECEDENT . . . . . . . . . . . . . . . .39-1
ii
9/11/96
AGREEMENT NO. DAC 96-29M
EXHIBITS
Exhibit A. Top Specification (95-052)
Exhibit B. Passenger to Freighter (P-F) Conversion (95-051)
Exhibit C. Standardization (95-053)
Exhibit D. DC-10 Advanced Common Flight Deck (ACF) (95-054)
Exhibit E. Reliability Improvement Package (95-055)
Exhibit F. Refurbish & Restoration (Supermod) Package (95-056)
Exhibit G. Main Deck Cargo Loading System (96-024)
Exhibit H. Initial Heavy Maintenance Check (96-044)
Exhibit I. Rigid Cargo Barrier and Forward Cabin Courier
Area (96-051)
Exhibit J. Lower Deck Cargo Loading System (96-052)
Exhibit K. Price
Exhibit L. Payment Schedule
Exhibit M. Dispatch Reliability
Exhibit N. Escalation
Exhibit O. Schedule
Exhibit P. Federal Express Supplied Parts, Federal
Express Technical Data and Schedule
Exhibit Q. Aircraft Delivery Receipt
Exhibit R. Certificate of Acceptance
Exhibit S. ASR
Exhibit T. Supplier Change Proposal (SCP)
iii
9/11/96
AGREEMENT NO. DAC 96-29M
RELATED DOCUMENTS
Letter Agreement No. 1 [ * ]
Letter Agreement No. 2 (Training Services)
Storage (A00036B)
Simulator Data License Agreement (A00008B)
[ * ]
**Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
iv
9/11/96
AGREEMENT NO. DAC 96-29M
MODIFICATION SERVICES AGREEMENT
DOCUMENT NO. DAC 96-29-M
THIS MODIFICATION SERVICES AGREEMENT NO. DAC 96-29-M ("AGREEMENT") is
entered into as of this 16th day of September 1996, by and between ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Corporation, a Maryland corporation having an office in the city of Long
Beach, California ("MDC") and Federal Express Corporation, a Delaware
Corporation, having its principal place of business in the city of Memphis,
Tennessee ("Federal Express").
RECITALS
WHEREAS, Federal Express contemplates entering into a purchase
agreement with American Airlines (the "American Purchase Agreement")
to purchase certain DC-10-10 aircraft;
WHEREAS, Federal Express contemplates entering into a purchase
agreement with United Airlines (the "United Purchase Agreement") to
purchase certain DC-10-10 aircraft;
WHEREAS, Federal Express desires to incorporate certain
modifications in its DC-10 aircraft and MDC desires to perform such
modifications;
NOW THEREFORE, in consideration of the mutual covenants
contained herein, MDC and Federal Express agree as follows:
1-0
9/11/96
AGREEMENT NO. DAC 96-29M
1) DEFINITIONS
Unless otherwise indicated, paragraph and Article numbers referred to
herein will mean paragraphs and Articles of this Agreement. As used
within this Agreement and ASR forms which may be issued hereunder, the
following terms will have the meanings set forth below (terms defined
in the singular will have the same meaning when used in the plural and
vice versa), unless some other meaning is apparent from the context in
which the words and terms are used:
TERMS MEANING
--------------------------------------------------------------------------
Additional Services Any additional maintenance, modification or other
services other than those described in or required
by the Specification which may be requested by
Federal Express at any time and which, when agreed
to by Federal Express and MDC, shall become part
of the Services.
Additional Services A document in the form of Exhibit S which, when
Request Form (ASR) signed by Federal Express and MDC, shall amend
or Additional Work this Agreement include to MDC's performance of the
Form or "ASR" Additional Services set forth therein in respect
of the Aircraft specified therein.
Advanced Common Flight Modification to DC-10-10 and DC-10-30 series
Deck (ACF Modification) aircraft in accordance with Engineering Report 95-
054 revision C attached as Exhibit D, which
constitutes a part of the Services.
Agreement This Modification Services Agreement between MDC
and Federal Express, Document No. DAC 96-29-M,
including all Exhibits attached hereto and all
other documents incorporated therein as amended or
supplemented from time to time pursuant to the
terms thereof.
1-1
9/11/96
AGREEMENT NO. DAC 96-29M
Aircraft Each of the Federal Express DC-10 series aircraft
on which MDC will perform the Services provided
for in this Agreement. A list of such aircraft is
set forth in the Schedule.
Aircraft Delivery A receipt in the form of Exhibit Q executed by MDC
Receipt and delivered to Federal Express concurrently with
the delivery of an Aircraft to MDC for
modification and performance of the Services.
Aircraft Maintenance Log A document used to record the following with
respect to an Aircraft: (I) the periodic and
corrective maintenance accomplished on such
Aircraft, (II) information items detected during
the performance of the Services, (III) deferred
discrepancies and pilot reports, (IV) mechanical
discrepancies discovered during the performance of
Services on such Aircraft and not otherwise
documented on a SNRM or ASR and (V) the
airworthiness release of such Aircraft for
service.
Aircraft Position The sequential aircraft positions to which
specific Aircraft may be assigned in accordance
with Article 2 and the Schedule.
Aircraft Visit The period from Delivery of an Aircraft to MDC to
Redelivery of such Aircraft to Federal Express.
Baseline Functionality All required Functionality needed to satisfy the
requirements of the Specifications, and regulatory
(including, but not limited to, FAA) approval of
the type design of the Aircraft (i.e. includes
functionality not expressly contained in the
Specifications but required to complete type
approval by all applicable regulatory
authorities).
1-2
9/11/96
AGREEMENT NO. DAC 96-29M
Business Day Any day other than a Saturday, Sunday or other day
on which commercial banking institutions in New
York, New York, Memphis, Tennessee or Long Beach,
California are authorized or required by law to
close. Unless the term "Business Day" is used, the
word day shall refer to calendar days.
Certificate of A certificate of acceptance substantially in the
Acceptance form of Exhibit R hereto which shall be issued by
Federal Express to MDC upon completion of the
Services and Redelivery of each Aircraft.
Conversion Facility A conversion facility in Phoenix, Arizona or Moses
Lake, Washington or Tucson, Arizona, or such other
facility or MDC's subcontractor facility as MDC
may select, subject to the written consent of
Federal Express which consent shall not be
unreasonably withheld. By no later than September
30, 1996, MDC shall select a facility and
henceforth the term Conversion Facility shall mean
the facility selected.
Customer Requested Additional functions required by Federal Express
Functionality Changes that are not included in Baseline Functionality,
and not required by regulatory constraints.
Delivery Date or The date of delivery by Federal Express of the
Delivery applicable Aircraft to the Conversion Facility for
commencement of the Services and acceptance
thereof by MDC pursuant to an Aircraft Delivery
Receipt in accordance with Exhibit Q.
Engineering A document reviewed and approved by Federal
Authorization (EA) Express' engineering division providing immediate
and specific instructions and authorization for:
(1) one-time major or minor repair; (2) one-time
major or minor modification; (3) one-time
material substitution; or (4) immediate
deviations from technical manuals.
1-3
9/11/96
AGREEMENT NO. DAC 96-29M
Engineering Orders (EO) A document established by Federal Express that:
(1) provides the rationale, instruction, and
authorization necessary to effect modifications,
special inspections and repairs to an Aircraft;
and/or (2) authorizes the accomplishment of
service evaluations, airworthiness directives or
manufacturers' service bulletins; and/or (3)
controls and documents the modification,
inspection and repair processes.
Expendable and Required shop supplies (e.g., wiping rags, sanding
Consumable Materials discs, masking tapes, masking paper, greases,
sealants, expendable tools and standard hardware
including, but not limited to, fasteners and
aerospace standard parts) consumed or used during
the Services but which shall be supplied at no
additional charge to Federal Express.
FAA The Federal Aviation Administration of the United
States or any successor thereto.
FARs Federal Aviation Regulations.
Federal Express Federal Express' authorized and approved drawings.
Drawings
Federal Express Federal Express' on-site project manager or
Representative designee.
Federal Express Parts supplied by Federal Express, including,
Supplied Parts but not limited to, the kits furnished by Federal
Express which are listed in Exhibit P dated
September 5, 1996 (sometimes also referred to as
"Buyer Furnished Equipment" or "BFE").
Federal Express Federal Express Technical Data and other
Supplied Services services supplied by Federal Express in connection
with the Services which may be referred to or
required by Engineering Report Nos. 96-044, 95-
056, 95-053.
1-4
9/11/96
AGREEMENT NO. DAC 96-29M
Fleet Campaign A document issued by Federal Express
Directives (FCD) that is used to determine the configuration status
or condition of an aircraft or aircraft fleet.
Flight Test All aircraft ground and flight testing required to
develop and certify the ACF that utilize Federal
Express owned or operated aircraft.
Flight Test Aircraft Those Aircraft provided by Federal Express upon
which the ACF Modification will be performed, and
that will be utilized as required to support the
flight test program and complete the FAA
regulatory requirements.
Functionality The intrinsic system capability that provides
control, monitor, aircraft/pilot interface and
functions required to accomplish the launch,
completion of a flight plan, recovery and
maintenance of the operational capabilities
inherent to the aircraft specifications
(including, but not limited to, the
Specifications) and type design.
General Maintenance Federal Express' AOD General Maintenance Manual
Manual (GMM) document dated August 15, 1996, as may be revised
from time to time and in its then current issue,
which sets forth the maintenance procedures for
Federal Express aircraft in accordance with
applicable FARs.
Interest The annual charge for the use, including delay in
receipt, of money computed on the basis of a 365
day year at the prime commercial rate of the Chase
Manhattan Bank of New York as such rate may be
published from time to time, plus one percentage
point.
Interface Problem Any technical problem in the operation of an
Aircraft or any system thereof due to
incompatibility, malfunction or failure of any
accessory, equipment, or part.
Kits A collection of Parts necessary to perform the
Services.
1-5
9/11/96
AGREEMENT NO. DAC 96-29M
MD-10 DC-10-10 and DC-10-30 series aircraft which have
been modified in accordance with Engineering
Report 95-054 revision C attached as Exhibit D and
Engineering Report 95-055 revision __ attached as
Exhibit E, which constitutes a part of the
Services.
Maintenance Services Those tasks, included as part of the Services,
which are performed to restore, preserve or
improve each Aircraft's physical condition to a
specified level, including but not limited to
operational checks, inspections, disassembly,
cleaning, repair, rework, measurement, replacement
of parts, reassembly, testing, lubricating,
adjusting, etc., as more fully described in the
Specifications.
Master Job Control A document which lists the Services to be
Sheet (MJCS) performed on a particular Aircraft. The MJCS may
contain several pages and notes. Each page
contains line items (tasks) indicating the work to
be accomplished (Ref.: GMM 11-0-2910).
MDC's Design Detailed designs and detailed specifications
originated and prepared by or under the direction
of MDC.
MDC Parts Parts made to MDC's Design or available
exclusively from MDC.
Modification The date upon which MDC completes performance of
Completion Date the Services on the applicable Aircraft and
notifies Federal Express that such Aircraft is
ready for acceptance testing by Federal Express at
the Conversion Facility.
Non-routine Services Services performed to correct defects or
discrepancies identified prior to or during MDC's
performance of the Services other than those
described in the Specifications.
1-6
9/11/96
AGREEMENT NO. DAC 96-29M
On Dock Schedule The schedule included in Exhibit O which sets
forth the dates on which certain Federal Express
Supplied Parts will be delivered to the Conversion
Facility.
Parts All components, parts, supplies and materials
other than Expendable and Consumable Materials
required for the performance of the Services.
Passenger to Freighter Modification to DC-10-10 and DC-10-30 Aircraft in
(P to F) Services accordance with Engineering Report 95-051,
or P to F attached as Exhibit B, which constitutes a part of the
Services.
Payment Schedule The schedule of payment for performance of the
Services as set forth in Exhibit L.
Product Improvement An improvement which enhances form, fit or
function. A Product Improvement is not the result
of the correction of a design defect.
Recoverable Parts The classification of any Part which can be
restored to a Serviceable condition either through
repair or overhaul in accordance with the
Specifications or the manufacturer's current
specifications, or Federal Express Maintenance
Specifications.
Redelivery Date or The date upon which Federal Express accepts
Redelivery redelivery of each Aircraft in accordance with
Article 5.
Reliability Services Modification to DC-10-10 and DC-10-30 Aircraft in
accordance with Engineering Report 95-055,
attached as Exhibit E, which constitutes a part of
the Services.
Rotable Part A part that can be economically restored to a
Serviceable condition and, in the normal course of
operations, can be repeatedly rehabilitated to a
fully Serviceable condition over a period
approximating the life of the flight equipment to
which it is related.
1-7
9/11/96
AGREEMENT NO. DAC 96-29M
Schedule The schedule with respect to Aircraft, as
described in Exhibit O, setting forth the duration
of each Aircraft Visit during which the Services
are to be performed on such Aircraft.
Scheduled The scheduled date for Redelivery of each
Redelivery Date Aircraft as set forth in the Schedule.
Serviceable An item that meets all specified standards for
airworthiness following repair or overhaul and has
no known defects which would render it unfit for
its intended use.
Services The work to be performed by MDC with respect to
each Aircraft as described in this Agreement, the
Top Specification, the Specifications and each
MJCS.
Special or Non-Routine Special or Non-Routine Maintenance Form (SNRM),
Maintenance Form (SNRM) Federal Express M-1805B, is a form used to
authorize, schedule, and record work performed on
aircraft components, auxiliary power units (APU),
and engines.
Specifications Collectively, the specifications attached hereto
as Exhibits A through J.
Standardization Services Modification to DC-10-10 and DC-10-30 Aircraft in
accordance with Engineering Report 95-053,
attached as Exhibit C, which constitutes a part of
the Services.
Statement of Return A statement by MDC to be placed in the Express
to Service Federal Aircraft Maintenance Log Book and to be issued in
accordance with FAA regulations following the
performance of the Services.
Subcontractors Suppliers and contractors (other than MDC or
Federal Express) who perform any part of the
Services at the request and direction of MDC or
provide Parts to MDC for the performance of the
Services.
1-8
9/11/96
AGREEMENT NO. DAC 96-29M
Subcontract Services Any Services in connection with which MDC, subject
to Article 24 shall employ a Subcontractor or
Subcontractors.
Taxes or Tax Any and all taxes (including without limitation
sales, use and value added taxes), duties,
imposts, assessments, permits, fees and other
charges of any kind and related interest and
penalties, if any, imposed or levied upon or
arising as a consequence of this Agreement or the
Services to be provided hereunder or pursuant
hereto.
Technical Acceptance The period of time between the Modification
Period Completion Date and the Redelivery Date.
Technical Data Information of any kind that is related to the
performance of the Services under this Agreement
that can be used, or adapted for use, in the
design, engineering, development, production,
processing, manufacture, use, operation, overhaul,
repair, maintenance, modification or
reconstruction of articles or materials. The
Technical Data may be in tangible form, such as a
model, prototype, blueprint, drawing, photograph,
plan, instruction, computer software and
documentation, or operating manual (written or on
ecorded media).
Term The term shall commence on the date set forth in
the first paragraph hereof and terminate on the
later to occur of: (I) December 31, 2006; or (II)
the completion of the Services on all of the
Aircraft.
Top Specification Federal Express Engineering Report 95-052,
Revision ___ ,attached as Exhibit A.
Used Serviceable Zero Serviceable Parts that have not been used since
Time Since Overhaul their last overhaul and which have been restored
Parts (USZTSO) to a condition meeting established overhaul
tolerances and limits.
1-9
9/11/96
AGREEMENT NO. DAC 96-29M
2) SCOPE OF SERVICES
A. MDC shall perform the Services on each Aircraft as set forth in the
Specifications and in accordance with the Schedule. Federal Express
shall provide all Federal Express Supplied Parts as required by this
Agreement. Federal Express shall provide to MDC, upon MDC's request,
access to any data and records applicable to each Aircraft, if
available to Federal Express. To the extent practicable, all Services
shall be performed with the applicable Aircraft fully enclosed in the
hangar at the Conversion Facility.
B. Federal Express agrees to deliver to MDC sixty (60) firm Aircraft (the
"Firm Aircraft"), with options to deliver sixty (60) additional
Aircraft (the "Option Aircraft"). Federal Express may exercise the
Option Aircraft in blocks consisting of not less than ten (10)
Aircraft within each block. At any time less than ten (10) Option
Aircraft remain, such remaining Option Aircraft shall be the final
block of Option Aircraft. MDC agrees to make available an Aircraft
Position within the time period set forth on the Schedule for the Firm
Aircraft and, upon Federal Express' exercise of the applicable
options, for each block of Option Aircraft, at the Conversion Facility
for the performance of Services on the Aircraft. Federal Express shall
exercise its option for each block of Option Aircraft by notice in
writing to MDC by no later than eighteen (18) months prior to the
Delivery Date of the first Aircraft within the applicable block of
Option Aircraft. Each such notice shall be deemed to amend this
Agreement accordingly. Federal Express' failure to exercise any of
the option blocks shall constitute a termination of Federal Express'
right to exercise the remaining blocks of Option Aircraft.
1) The Aircraft shall be further identified by the following
identification numbers as specified in the "Op (Fus)" column of
the Schedule; (I) Firm Aircraft as numbers 1 through 25 and 51
through 85, (II) Option Aircraft as numbers 26 through 50 and
numbers 86 through 120.
2-1
9/11/96
AGREEMENT NO. DAC 96-29M
2) All of the Firm Aircraft shall have the ACF Modification, Exhibit
D, performed on them. If a block of Option Aircraft is exercised,
Federal Express shall notify MDC if the ACF Modification is to be
performed on each such Option Aircraft at the time Federal
Express exercises the option for such block of Option Aircraft.
3) Twenty five of the Firm Aircraft (numbers 1 through 25) shall
have the P to F Modification and Initial Heavy Maintenance Check,
Exhibit H and Rigid Cargo Barrier, Exhibit I (subject to Exhibit
K), performed on them in addition to the ACF Modification
specified above. If a block of Option Aircraft is exercised,
Federal Express shall notify MDC if the P to F Modification
and/or Initial Heavy Maintenance Check and/or Rigid Cargo Barrier
is to be performed on each such Option Aircraft at the time
Federal Express exercises the option for such block of Option
Aircraft.
4) The items listed in the Standardization Specification, Exhibit C;
Refurbish & Restoration Package, Exhibit F; and Reliability
Specification, Attachment E to Exhibit K; constitute a catalog of work
which will be selected for each Aircraft or Option Aircraft by Federal
Express through issuance of an MJCS. The labor price chargeable to
Federal Express by MDC for accomplishment of these Services shall be
determined by adding the total of applicable items shown on the
applicable MJCS at the labor prices specified in Exhibit K (or Article
3 if performed under an ASR) as applicable. Parts for these
Services shall be charged to Federal Express at prices determined in
accordance with Article 4. It is understood that the work defined in
Exhibit C is based on aircraft effectivities which are different from
the Aircraft. Federal Express has the responsibility to adapt the
engineering orders to the Aircraft to the extent the work content (in
man-hours) for the revised engineering orders is materially different
from the work content for the revisions defined herein, the line item
costs defined herein will be adjusted by mutual agreement. The MJCS
shall be delivered to MDC forty-five (45) days prior to the Delivery
of each Aircraft or Option Aircraft and shall concur with the
2-2
9/11/96
AGREEMENT NO. DAC 96-29M
Services previously indicated in accordance with Paragraph 2.B.2) and
2.B.3), and shall further specify the specific Services described in
Exhibits C, F and Attachment E to Exhibit K which are to be performed
on each Aircraft or Option Aircraft.
C. Federal Express shall have the right to modify specific Aircraft
designations and Schedules as follows:
1) Federal Express shall have the right to substitute a different
Aircraft for a previously designated Aircraft for Delivery on a
scheduled Delivery Date by delivering written notice to MDC:
a) on any date before the [* ] day prior to such scheduled
Delivery Date or;
b) on any date between the [* ] day and the [* ] day
prior to such scheduled Delivery Date, if MDC determines
that such designation of a different Aircraft for delivery
on such Delivery Date would not cause a material delay in
the performance of the Services, or if there is a material
delay and Federal Express accepts the cost consequences of
such delay, if any
provided, however, that in either instance, Federal Express shall
reimburse MDC for any reasonable incremental engineering costs
and reasonable incremental labor costs and reasonable incremental
parts costs incurred by MDC in connection with its performance of
the Services solely as a result of the substitution of the
Aircraft. Federal Express shall provide such reimbursement
within thirty (30) days after its receipt of MDC's invoice
setting forth in detail the nature and amount of such costs.
2) Federal Express shall have the right to request, in writing, that
MDC perform the Services on Aircraft earlier than the dates
listed in the Schedule, up to a maximum of [* ] additional
Aircraft per year, commencing January 1, 1999. If MDC determines
that such request would cause a material delay in the performance
of the Services, then Federal Express shall be notified in
writing of the Delivery and Redelivery Dates for the
**Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
2-3
9/11/96
AGREEMENT NO. DAC 96-29M
Aircraft which have been affected, and such Delivery and Redelivery Dates shall
be consistent with the Aircraft Visit period set forth in the Schedule for such
Aircraft.
3) Federal Express may request in writing to MDC not less than
[* ] months prior to the scheduled Delivery Date
of an Aircraft a delay in Delivery of any Aircraft by up to
[* ] The Redelivery Date of such Aircraft shall
be delayed by a number of days equal to the number of days by
which the Delivery of the Aircraft was delayed by Federal
Express. Additionally, if any such delay impacts the Scheduled
Redelivery Date of other Aircraft, and if MDC can demonstrate
such impact to Federal Express' reasonable satisfaction, then the
Schedule shall be adjusted as mutually agreed by MDC and Federal
Express.
4) Notwithstanding Paragraphs 2.C.2) and 2.C.3) above, Federal
Express shall not modify the Schedule in any way that allows the
number of Aircraft modified during any calendar year to be less
than [* ] Aircraft. MDC will allow the [* ]
Aircraft minimum rate per year to consist of any combination of
Aircraft modified in accordance with this Agreement or aircraft
modified in accordance with that certain Aircraft Modification
Agreement (FEC 96-0215 MD-11 P to F, dated December 1, 1995).
D. Except as otherwise provided in this Agreement, MDC shall provide all
Parts (other than Federal Express Supplied Parts), Expendable and
Consumable Materials, labor, facilities, materials, equipment,
fixtures, production control, technical planning and administration,
inspection, tooling and all other services necessary to perform the
Services in accordance with the Specifications, the GMM, all current
Aircraft manufacturer's manuals, FAA regulations, FARs and the
provisions of this Agreement.
E. At no additional cost, MDC shall provide to Federal Express a proposed
schedule applicable for the Services with respect to the first
Aircraft no later than thirty (30) days before Delivery of the first
Aircraft to MDC. In the event such schedule is materially different
for any*
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
2-4
9/11/96
AGREEMENT NO. DAC 96-29M
subsequent Aircraft, MDC shall provide Federal Express with any
changes by no later than thirty (30) days before the Delivery of such
subsequent Aircraft.
F. Except as required to be performed by MDC as part of the Services,
with respect to maintenance of the Aircraft, during the time that the
Services are being performed, MDC shall have responsibility only for
minimum routine maintenance customarily performed on airplanes.
G. Reliance
MDC warrants that it is, and that Federal Express has relied on and is
entitled to rely upon MDC as, an expert fully competent in all phases
of work involved in designing, producing, supporting, and performing
the Services provided hereunder. It is acknowledged by MDC and
Federal Express that the Specifications have been jointly developed by
MDC and Federal Express and do not constitute a design by Federal
Express of any or all of the Services with the exception of Federal
Express EOs that are inconsistent with MDC source service bulletins.
The Specifications define the requirements which each Aircraft must
meet upon completion of the Services and Redelivery of each Aircraft
to Federal Express and unless explicitly so stated the Specifications
do not include or specify the manner or design as to which the
Services are to be performed by MDC.
H. It is agreed that Federal Express shall have the right to store up to
twenty five Aircraft at the Conversion Facility prior to Delivery.
Unless otherwise agreed, MDC has no obligation to perform any work on
stored Aircraft. Federal Express has the right to have an independent
third party perform storage services on stored Aircraft. Unless
otherwise agreed, Federal Express shall assume the risk of loss,
damage or destruction of an Aircraft prior to Delivery and agrees to
release, defend, indemnify and hold harmless MDC, its employees,
directors, officers, agents and subcontractors from and against all
liabilities, claims, damages, losses, costs and expenses from all
injuries to or death of any and all persons and for loss of or damage
to any property, including loss of use thereof, arising directly or
indirectly out of or in connection with the storage of the Aircraft
prior to Delivery.
2-5
9/11/96
AGREEMENT NO. DAC 96-29M
3) ADDITIONAL SERVICES
A. As part of the Services, MDC shall, during the term of this Agreement,
perform such Additional Services requested by Federal Express'
Representative in writing and agreed to in writing by MDC. Such
written request shall be made on an ASR Form. The request shall set
forth in detail the particular Additional Services requested to be
performed on the Aircraft. Unless otherwise agreed by the parties,
MDC shall, as soon as practicable, but in any event not later than
five (5) Business Days following Federal Express' request for
Additional Services, advise Federal Express of its ability to perform
the Additional Services in accordance with Federal Express' request
and a date by which MDC can provide the following to Federal Express
(the "Final Response"):
1) Any anticipated changes in the scheduled Redelivery Date due to
such Additional Services; and
2) Any additional charges resulting from MDC's performance of the
Additional Services including, but not limited to, all, Parts
costs, equipment costs but excluding Expendable and Consumable
Materials, and all labor costs including, but not limited to,
design, production, inspection, planning, liaison engineering,
stress engineering, administration, scheduling impacts, if any,
associated with the Additional Services being requested .
Within five (5) Business Days of Federal Express' receipt of the
Final Response, Federal Express' Representative shall notify MDC in
writing of its acceptance or rejection of the Final Response. Once
agreed to and executed by both parties, the executed ASR shall amend
this Agreement in accordance with its terms.
B. The charge for Additional Services will be determined on a fixed price
basis unless the parties agree pursuant to the Final Response to
perform such Additional Services on a time and material basis. The
labor rate for Additional Services performed on a time and material
basis shall be [* ] per hour. The labor rate for 1997 and for
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
3-1
9/11/96
AGREEMENT NO. DAC 96-29M
subsequent years shall be escalated in accordance with the touch labor
element, Touch Labor Escalation Index, set forth in Exhibit N. The
price for vendor proprietary Parts, i.e. vendors with PMA, provided
by MDC in connection with any Additional Services performed under this
Agreement will be MDC's actual cost plus [* ] of such actual cost.
If MDC agrees to perform Additional Services, but is unable to provide
an estimate for the Additional Services, Federal Express may elect to
authorize a block of man-hours to initiate the performance of such
Additional Services ("Block Man-hour Approval"). MDC shall not exceed
the Block Man-hour Approval without the prior written approval of
Federal Express' Representative. In the event MDC has exhausted the
Block Man-hour Approval, and Federal Express has not provided written
approval for additional man-hours, MDC is not obligated to complete
any such Additional Services.
C. Any special items or conditions which would be applicable to the
performance of such Additional Services, (including for example,
location, warranty terms, etc.) shall be noted in the ASR.
D. No request for Additional Services shall be valid and the performance
of such Additional Services are not authorized under this Agreement
unless the applicable ASR Form has been executed by Federal Express'
Representative and MDC.
E. Additional Services provided pursuant to this Article shall become
part of the Services. MDC will not be obligated to provide such
Additional Services until Federal Express has accepted in writing the
Final Response. Upon execution of the ASR by both parties, this
Agreement shall be deemed amended.
F. In the event Federal Express elects to not have MDC accomplish a
portion of the Additional Services indicated on an executed fixed
price ASR, MDC shall determine a prorated price reduction on that ASR
for that specific Aircraft based on the scope of the Additional
Services that MDC is not required to perform. MDC shall issue a
credit for the appropriate amount applicable to that specific
Aircraft. If Federal
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
3-2
9/11/96
AGREEMENT NO. DAC 96-29M
Express elects to not have MDC accomplish all of the Additional
Services indicated on an executed fixed price ASR, MDC shall issue a
credit for the full value of such ASR applicable to the specific
Aircraft affected.
G. [* ]
H. Any changes that occur to the GMM after the date of the execution of
this Agreement, which impact the Services in such a way to affect
schedule and/or materially affect the price, shall be treated as an
amendment to the Agreement. However, notwithstanding the foregoing,
MDC will comply with changes to FARs, law or any other regulation and
which do not affect the content of an MJCS for a period of time up to
and including the Redelivery of Aircraft number 25, at no additional
charge to Federal Express. After Redelivery of Aircraft No. 25, MDC
and Federal Express agree to mutually re-evaluate the status of future
regulatory changes.
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
3-3
9/11/96
AGREEMENT NO. DAC 96-29M
4) PRICE AND PAYMENT
A. Prices for the Services are set forth in Exhibit K.
B. Payment for the Services with respect to each Aircraft shall be
in accordance with Exhibit L PAYMENT SCHEDULE. All prices are
subject to escalation in accordance with Exhibit N, ESCALATION,
except for: (I) Additional Services pursuant to an ASR which
shall not be subject to escalation unless expressly set forth in
an applicable executed ASR Form, and (II) Parts prices based on
the then- current Spares catalog (subject to any discounts
provided in this Agreement).
1) [* . ]
C. Payment for MDC charges for Additional Services are payable
within [* ] days from the date of an invoice which
complies with the requirements of Paragraph 4.F. in all
respects, as long as such invoice is sent by Federal Express
Service (overnight or 2nd day) to the address set forth in
Article 11 or via facsimile.
D. All payments made by Federal Express to MDC under this Agreement
shall be in U.S. Dollars, made by wire transfer in immediately
available funds and made to the following address:
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
4-1
9/11/96
AGREEMENT ▇▇. ▇▇▇ ▇▇-▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Bank
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ABA No. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation
- Acct. No ▇▇▇-▇-▇▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇ (or as otherwise notified)
E. If Federal Express fails to make any payment at the time and in
the amount required under this Agreement, Federal Express shall
pay MDC Interest on such payment commencing on the due date of
such payment and accruing until payment in full is received by
MDC. Payment of Interest shall be in addition to any other
rights or remedies available to MDC.
F. Invoices for Services, including the Additional Services, for
each Aircraft shall be itemized by each separately priced Service
or Additional Service, as the case may be, and shall be submitted
to the applicable address set forth in Article 11 NOTICES hereof
and shall contain the following:
1) An identification of the ASRs authorizing the Services
performed by MDC;
2) A separate identification of the Services performed on the
Aircraft, including MDC's (or its Subcontractor's) job
number, the registration number and factory serial number of
the Aircraft on which the Services were performed, the
Delivery Date and Redelivery Date of the Aircraft;
3) For time and material Additional Services, an identification
of all Parts used in performing the Services including
nomenclature, part number, quantity, Aircraft and generating
item. Such identification shall be set forth on the ASRs,
copies of which will be attached to the invoice;
4-2
9/11/96
AGREEMENT NO. DAC 96-29M
4) For time and material Additional Services, a separate,
itemized account recorded on the ASR of all charges
associated with performance of such Additional Services,
identifying the direct labor man-hours, materials and fees
separately for all such Services and Additional Services;
and
5) For time and material Additional Services, an itemized
account of all charges associated with MDC's use of
Subcontractors and suppliers, including direct labor,
materials and transportation, with an attached invoice from
each Subcontractor and supplier identifying the nature of
the Additional Services performed and the date(s) and
location(s) at which the Additional Services were performed
and the price to MDC of any Parts or equipment purchased by
MDC from any supplier or Subcontractor.
G. MDC shall keep full and accurate records of all man-hours,
material cost, subcontractor's charges and any related charges
incurred and billed in connection with the time and material
Additional Services performed for each Aircraft under this
Agreement, which record shall be open to audit by Federal Express
or any authorized representative of Federal Express approved by
MDC until one (1) year after Redelivery of such Aircraft. MDC
will require its Subcontractors to maintain similar records which
shall also be open to audit by Federal Express or any authorized
representative of Federal Express until one (1) year after
Redelivery of each applicable Aircraft; provided, however, that
the foregoing shall not apply to parts manufactured by
Subcontractors.
4-3
9/11/96
AGREEMENT NO. DAC 96-29M
5) DELIVERY OF SERVICES
A. Delivery and Redelivery of the Aircraft.
1) Federal Express shall cause each Aircraft to be delivered to the
Conversion Facility. It is agreed that delivery by Federal Express of
Aircraft to a storage site at the Conversion Facility shall constitute
Delivery to the Conversion Facility hereunder. At the time of
Delivery each Aircraft shall be configured in its then current
configuration. MDC shall complete the Services and Redeliver each
Aircraft to Federal Express at the Conversion Facility in accordance
with the Schedule.
2) In the event any discrepancies are identified prior to or during the
flight to the Conversion Facility which are not required to be
corrected as a part of the performance of the Services, the parties
acknowledge and agree that the cost of correcting such discrepancies
shall be borne by and be the responsibility of Federal Express. In
the event that Federal Express engages MDC to correct such
deficiencies, such engagement shall be pursuant to a request for
Additional Services.
3) If a relocation of the Conversion Facility is requested by MDC, MDC
shall be responsible for any and all commercially reasonable costs and
expenses incurred by Federal Express as a result of (i) the relocation
of the Conversion Facility or (ii) the performance of the Services at
more than one Conversion Facility. Such costs and expenses shall
specifically include, but not be limited to:
a) relocation of any Aircraft, Federal Express Supplied Parts or any
other part, item or material from the Conversion Facility to
another facility approved by Federal Express, and
b) any incremental costs incurred by Federal Express as a result of
the Services being performed at more than one Conversion Facility
(i.e. expenses related to additional employees required on site,
etc.).
5-1
9/11/96
AGREEMENT NO. DAC 96-29M
Nothing contained in this Section 5.A.3) shall be construed (i) as the
consent of Federal Express to the performance of any of the Services at any
facility other than the Conversion Facility and said relocation shall only
be permitted with the prior written consent of Federal Express, which shall
not be unreasonably withheld or (ii) as requiring MDC to reimburse Federal
Express for any costs other than those solely related to the Services
provided hereunder.
4) Upon Delivery of each Aircraft, Federal Express and MDC shall make a ground
inspection of such Aircraft. Following such inspection, MDC shall complete,
execute and deliver to Federal Express an Aircraft Delivery Receipt.
5) Prior to the performance of the Services, MDC shall remove all fixtures,
instruments and other equipment from the applicable Aircraft determined by
MDC to be susceptible to damage or theft during the performance of the
Services. MDC shall promptly provide to Federal Express a list of such
items and MDC agrees, at no additional charge to Federal Express and at
MDC's risk of loss, to provide adequate security and storage space for such
items until completion of the Services on such Aircraft or, if requested by
Federal Express, return such items to Federal Express or its agents at
Federal Express' expense. Prior to Redelivery, MDC shall re-install all
such items required by the Specifications in its possession on the
applicable Aircraft.
6) Federal Express shall be responsible for the costs and expense of providing
a vendor to de-fuel the Aircraft at Delivery and re-fuel the Aircraft at
Redelivery and to de-fuel and re-fuel the Aircraft at any other time during
an Aircraft Visit. The cost of any fuel required shall be paid by Federal
Express. MDC shall provide all personnel and support necessary for all
re-fueling and de-fueling required of the Aircraft.
5-2
9/11/96
AGREEMENT NO. DAC 96-29M
B. Redelivery of the Aircraft.
1) Upon completion of the Services on an Aircraft and the testing
described in Article 23, MDC shall Redeliver the Aircraft to Federal
Express at the Conversion Facility in accordance with the provisions
of this Agreement. At the time of Redelivery MDC shall deliver to
Federal Express all applicable attachments and supporting
documentation for such Aircraft. Upon Redelivery, Federal Express
shall execute and deliver to MDC a Certificate of Acceptance for the
redelivered Aircraft. MDC's Redelivery of an Aircraft to Federal
Express and MDC's signature constituting the airworthiness release
shall constitute a certification by MDC that:
a) The Aircraft's Maintenance Log will have received all appropriate
entries required by applicable law, the GMM and this Agreement,
including the airworthiness release signature and a maintenance
release each signed by MDCs' duly authorized representative;
b) All requested Services shall have been completed and
appropriately documented and shall have been performed in
conformance with all applicable FARs and the GMM; and
c) All Services shall have been performed in accordance with the
provisions of the Specifications and all provisions of this
Agreement and the Services performed shall not have adversely
affected the operation of systems or components not encompassed
within the Services.
C. Flight Maintenance Services
1) As part of the Services, MDC shall provide, at no additional cost to
Federal Express, the following services:
a) required preflight preparation consisting of, but not limited to,
a general cleaning of the interior of the Aircraft, servicing of
the lavatory and the cleaning of the
5-3
9/11/96
AGREEMENT NO. DAC 96-29M
exterior windows and those areas required for inspection of the
Aircraft following execution by Federal Express of a Certificate
of Acceptance; and
b) at Delivery and Redelivery, the ground handling, including towing
and repositioning of an Aircraft and the provision of sufficient
ground support equipment at Delivery and Redelivery
c) at Redelivery, completion of the Federal Express Service Check.
5-4
9/11/96
AGREEMENT NO. DAC 96-29M
6) TAXES, CUSTOMS, DUTIES
A. In addition to all other amounts payable under this Agreement, Federal
Express shall promptly pay to MDC upon demand any and all Taxes that
are imposed by any taxing jurisdiction in connection with this
Agreement, or the performance of any Services hereunder or in
connection herewith, including but not limited to Taxes occasioned by:
1) any sale, delivery, transfer, storage of MDC owned equipment
(only if storage was at the specific request of Federal Express),
use, repair, modification, manufacture or production relating to
Services and Additional Services; or
2) the purchase or retention by Federal Express of Federal Express
Supplied Parts , if any; or
B. Notwithstanding the preceding, Federal Express shall not be required
to pay to MDC:
1) any (federal, state or local):
a) Taxes measured by MDC's net or gross income, (not in the
nature of a sales tax), items of tax preference or minimum
tax or excess profits, receipts, capital, franchise, net
worth or conduct of business or other similarly-based taxes;
or
b) payroll or employment Taxes imposed on MDC; or
c) Taxes that would not have been imposed but for the willful
misconduct or gross negligence of MDC.
2) any Taxes imposed by a jurisdiction outside the United States in
connection with this Agreement and measured by MDC's net or gross
income or capital or any payroll or employment taxes.
3) any taxes on ozone depleting chemicals supplied by MDC as part of
the Services or Additional Services.
4) any state Taxes imposed by a state taxing authority other than
the States of [* ]
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
6-1
9/11/96
AGREEMENT NO. DAC 96-29M
C. In addition to all other amounts payable under this Agreement, Federal
Express shall pay MDC upon demand any customs, duties and related
brokerage, freight and other charges (including related interest and
penalties) which are imposed upon MDC in connection with the
importation into the United States of any Federal Express Supplied
Parts, provided that the importation or exportation was at the request
of Federal Express.
D. Federal Express and MDC shall promptly pay and discharge when due,
unless the validity or application to the relevant Services is being
contested in good faith, any and all Taxes the responsibility and
liability for which is assumed by such party pursuant to the
provisions of this Article 6. Each party indemnifies and saves the
other harmless from any and all Taxes assessed against the other party
but which are the responsibility of the indemnifying party pursuant to
this Article 6.
E. If any Tax for which Federal Express has assumed the responsibility
for payment pursuant to this Article 6 is levied, assessed or imposed
upon MDC, MDC shall promptly give Federal Express notice of such Tax,
whereupon Federal Express shall promptly pay and discharge the same,
or if permitted by law, and in Federal Express's sole discretion,
shall contest such liability before payment. If MDC fails to notify
Federal Express, Federal Express shall be relieved of its indemnity
obligation under this Article with respect to that Tax to the extent
such failure materially adversely impacts Federal Express. Upon the
written request and at the expense of Federal Express, MDC shall fully
cooperate with Federal Express in contesting or protesting the
validity or application of any Tax for which Federal Express has
assumed responsibility under this Article 6 (including, but not
limited to, permitting Federal Express to proceed in MDC's name if
required or permitted by law provided, in each case, that such contest
does not involve, or can be separated from the contest of any tax or
issues unrelated to the transactions described in the Agreement).
Federal Express also shall have the right to participate in any
contest conducted by MDC with respect to a Tax indefinable under this
Article 6, including without limitation, the right to attend
conferences
6-2
9/11/96
AGREEMENT NO. DAC 96-29M
with the taxing authority and the right to review submissions to the
taxing authority or any court to the extent such contest does not
involve, or can be separated from, the contest of any other Tax or
issues unrelated to the transactions described in this Agreement. Any
payment made by MDC of such Taxes will be made under protest if so
directed by Federal Express. If payment is made, MDC will, at Federal
Express' expense, take such action as Federal Express may Reasonably
direct to recover such payment.
F. In the event MDC shall receive a refund of all or any part of a Tax,
(including a refund of interest and penalties, if any, in connection
therewith) which Federal Express has paid and discharged, the amount
of such refund shall promptly be remitted to Federal Express by MDC,
less any expenses of MDC associated with contesting the validity or
application thereof not previously reimbursed by Federal Express.
6-3
9/11/96
AGREEMENT NO. DAC 96-29M
7) EXCUSABLE DELAYS
A. Neither party shall be responsible to the other party for any
excusable delay ("Excusable Delay") in the performance of its
respective duties under this Agreement. An Excusable Delay shall be
deemed to have occurred if a party's delay in performance is due to
causes such as an act of God, partial or complete destruction of the
Aircraft, court actions and orders, acts of public enemies, acts of
any kind of the government of the United States, or any state or other
subdivision thereof, war, natural disaster, insurrection or riots,
civil commotion, fire, floods, plagues, epidemics, strikes, lock-outs,
organized labor action resulting in a slowdown or interruption of
work, inability after due and timely diligence to seasonably procure
material, accessories, equipment or parts or qualified labor or
without limitation by enumeration of the foregoing any other causes
beyond such party's reasonable control and not occasioned by the
intentional acts or omissions or negligence of the relevant party.
None of the foregoing shall be considered an Excusable Delay if the
cause of any such delay can be cured by the applicable party in any
commercially reasonable legal way including, but not limited to, the
payment of commercially reasonable amounts of money. Both parties
shall use their best efforts to inform the other by written notice in
the event of the occurrence of an Excusable Delay and the probable
extent of such delay and shall from time to time thereafter notify the
other party of any material development relating to such delay or the
cause thereof. The relevant party shall take all reasonable steps to
mitigate the effects of any such delay.
B. Notwithstanding any rights MDC may have to take other action, MDC
shall not be held responsible for, nor be deemed to be in default on
account of, delays in the performance of this Agreement due to failure
of Federal Express to deliver to the Conversion Facility any Federal
Express Supplied Parts or to respond in a prompt manner under the
terms of Article 3. hereof or to take any other action required
hereunder.
7-1
9/11/96
AGREEMENT NO. DAC 96-29M
C. Upon the occurrence of an Excusable Delay, this Agreement shall
remain in full force and effect during the period of such Excusable
Delay so long as the same does not extend beyond
[* ], and the scheduled Redelivery Date of each
Aircraft affected by such Excusable Delay shall be extended and
modified accordingly. If any Excusable Delay lasts for more than
ninety (90) days,
1) This Agreement may be canceled by either party by written notice
as to one or more affected Aircraft in which case neither party
shall have any liability whatsoever other than in respect of work
already performed and substantiated with respect to this
Agreement as to the terminated Aircraft(s).
2) and if the Agreement is not terminated, then both parties shall
use diligent efforts to ensure that the time requirements of the
Schedule are amended to reflect a mutually acceptable completion
schedule.
D. Notwithstanding the foregoing or any other provision of this
Agreement, Federal Express shall have no obligation to Deliver any
Aircraft to MDC in the event Federal Express reasonably foresees that
an Excusable Delay could arise during the Aircraft Visit of any
Aircraft and that such Excusable Delay would prevent such Aircraft
from being Redelivered in accordance with the Schedule. Any delay in
performance of this Agreement caused by Federal Express' failure to
Deliver an Aircraft pursuant to this Paragraph D will be considered an
Excusable Delay.
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
7-2
9/11/96
AGREEMENT NO. DAC 96-29M
8) WARRANTY
A. MDC's Warranties
1) With respect to the performance of the Services, MDC warrants to
Federal Express that such Services and all MDC Parts used in
connection with the Services shall, at the time of the Redelivery
of each Aircraft to Federal Express, be free from:
a) Defects in workmanship;
b) Defects in design originated or specified by MDC. The
existence of Product Improvements does not inherently imply
the existence of design defects;
c) Defects caused by installation of any Part in a manner not
in accordance with the instructions of the manufacturer of
such Part; and
d) Defects arising from failure to conform to the description
of the Services set forth in the Specifications or any ASR
Form executed by Federal Express and MDC after the date of
this Agreement.
2) Additionally, MDC warrants to Federal Express that with the
exception of Federal Express Supplied Parts, MDC has good title
to all Parts and other items installed on each Aircraft or
otherwise supplied under this Agreement to Federal Express.
3) The warranty set forth herein will survive technical acceptance
of the Services only upon the conditions and subject to the
limitations set forth in this Article 8.
4) MDC also warrants that at the time of Redelivery by MDC to
Federal Express all documents and MDC Technical Data provided to
Federal Express pursuant to this Agreement shall be free from
errors and omissions, excluding any data provided in any form
whose source is data and/or manuals and/or documents of any form
obtained from the previous owner of the Aircraft. MDC's
liability under this Paragraph A.4). is limited to
8-1
9/11/96
AGREEMENT NO. DAC 96-29M
replacement during the first [* ] months after
Redelivery of the last Aircraft to Federal Express under this
Agreement with a similar MDC document or page or replacement MDC
Technical Data thereof free from the error in question. If such
an error poses a severe material operational limitation or
restriction to Federal Express, MDC shall use its commercially
reasonable efforts to provide to Federal Express within twenty
four (24) hours following receipt of notification to MDC by
Federal Express that the condition exists, a temporary page
correction, or replacement MDC Technical Data and if this is not
possible, a corrective action plan indicating when such data will
be provided.
5) [* ]
6) [* ]
B. Condition of Warranties
1) Except as expressly set forth herein, MDC's warranties set forth
shall be effective for the following periods:
a) as to MDC Parts, the warranty period shall commence upon the
Redelivery of the Aircraft upon which the MDC Part is
installed, and shall continue for [*
] and as to Parts repaired or overhauled by MDC
or any Subcontractor any remaining warranty period shall
apply to a repaired part and for an overhauled part either
the remaining warranty period or twelve (12) months,
whichever is longer, shall apply (with respect to Parts with
shelf-life limitations, the warranty period shall
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
8-2
9/11/96
AGREEMENT NO. DAC 96-29M
be the period of the manufacturer's warranty, such period to
commence upon Redelivery of the Aircraft):
b) as to Services performed on an Aircraft, the warranty period
shall commence upon Redelivery of such Aircraft and continue
for [* ].
C. Limitations to Warranties.
Notwithstanding any other provisions hereof, MDC shall have no
obligation under this Article 8 if Federal Express:
1) following Redelivery, has not operated and maintained the
warranted item in accordance with the FARs, manufacturers
recommendations, and Federal Express' Engineering Maintenance
Program Specification (Federal Express Engineering Report
84-013); or
2) following Redelivery, has not used the warranted item under
normal operating conditions or has subjected such item to misuse,
abuse, improper installation or application, improper maintenance
or repair, alteration, accident or negligence in use, storage,
transportation or handling by anyone other than MDC; or
3) has not notified MDC in writing within [* ] of its
or its agent's discovery of the defect in the warranted item,
provided, however, that a failure by Federal Express to provide
such notice shall not entitle MDC to reject any warranty claims
unless such failure has an adverse material impact on MDC's
obligation to honor such warranty claim; or
4) does not return the defective part to MDC's facility, unless
otherwise mutually agreed by MDC and Federal Express (which
agreement shall not be unreasonably withheld by either party),
within two (2) months after the defect becomes apparent; or does
not submit reasonable proof to MDC within two (2) months after
the defect becomes apparent that the defect is due to a matter
covered with this warranty.
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
8-3
9/11/96
AGREEMENT NO. DAC 96-29M
D. Wear and Tear
1) Normal wear and tear and the need for regular overhaul shall not
constitute a defect or failure under this warranty.
E. Warranty Repairs
1) MDC's liability under the warranties set forth in Article 8 shall
be limited to the replacement or repair, at MDC's expense, of any
warranted Part or the correction of any portion or all of the
Services which in the reasonable determination of MDC and Federal
Express are defective.
[*
]
2) Notwithstanding any other provisions contained herein, Federal
Express reserves all of its rights and remedies under this
Agreement and in no event shall the acceptance of warranty
services set forth in this Article 8 be deemed to constitute a
waiver of the right to future warranty claims against the same
component or Services provided the defect and repair required are
still, in the reasonable judgment of MDC and Federal Express,
within the scope of the warranty and the limitations set forth in
Article 8.
F. Federal Express' Warranty Repairs
1) If MDC cannot perform within a reasonable time the replacement or
repair referred to in this Article 8 or if it is, in the opinion
of MDC, not feasible to perform the replacement or repair by MDC
(or MDC's subcontractors/vendors), Federal Express will be
authorized, upon MDC's prior written consent, to perform the
replacement or repair or have the replacement or repair performed
at MDC's expense ("Federal Express' Warranty Repairs").
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
8-4
9/11/96
AGREEMENT NO. DAC 96-29M
2) Notwithstanding the foregoing, if for valid operational reasons
(in the reasonable business judgment of Federal Express) there is
insufficient time to obtain MDC's prior written consent, Federal
Express may perform such replacement or repair without MDC's
prior written consent. In all such events, it shall be Federal
Express' responsibility to certify the business operational
requirements which rendered it impracticable to obtain MDC's
prior written consent and to demonstrate to MDC's reasonable
satisfaction that any warranty claim based upon such repair is a
valid warranty claim.
3) In the event that Federal Express performs such replacement or
repair hereunder, MDC shall have the option of staffing such
replacement or repair with such technical representatives as it
deems necessary to monitor the repairs. Upon receipt of Federal
Express' claim for reimbursement with respect to Federal Express
Warranty Repairs, MDC shall reimburse Federal Express for an
amount equal to the lesser of:
a) Federal Express direct cost for all Parts and materials
incorporated in such repair or replacement plus all
reasonable direct labor cost and all reasonable
transportation cost incurred by Federal Express in the
performance of Federal Express' Warranty Repairs. MDC will
establish reasonable standard labor hours therefore and will
reimburse Federal Express for such standard hours at Federal
Express' direct labor rate (average hourly labor rate,
exclusive of fringe benefits, applicable to employees
performing warranty repairs) plus a burden of not to exceed
fifty percent, provided percent of MDC's direct labor rate.
[*
]
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
8-5
9/11/96
AGREEMENT NO. DAC 96-29M
[*
]
b) the amount which MDC would have charged Federal Express for
such repair or replacement had MDC performed such repair or
replacement and if such repair or replacement were not under
warranty, which amount shall be provided to Federal Express
with reasonable documentation to verify such amount to
Federal Express' reasonable satisfaction.
MDC shall reimburse Federal Express within sixty (60) days for any
amounts due and owing to Federal Express pursuant to this Article 8.
G. Assignment of Warranties
1) MDC agrees to assign and does hereby assign to Federal Express
any and all assignable warranties, service life policies and
patent indemnities of manufacturers, suppliers and Subcontractors
other than MDC which arise in connection with the Services or
Additional Services, and, upon Federal Express request, MDC shall
provide to Federal Express, reasonable assistance in enforcing
Federal Express' rights under such warranties, service life
policies and patent indemnities. Upon Federal Express request,
MDC shall give notice to any such manufacturers, suppliers and
Subcontractors of the assignment of such warranties, service life
policies and patent indemnities.
2) For those non-MDC Parts installed on the Aircraft during the
performance of the Services, excluding the engine or the engine
manufacturer's parts and Federal Express Supplied Parts (the
"Supplier Warranty Parts"), in the event of a default by the
supplier of such Supplier Warranty Parts in the performance of
any material obligation under any applicable warranty from such
supplier, or in the event of a disclaimer of responsibility by
such supplier for any defect constituting a breach of such
warranty and upon timely notice thereof to MDC, the warranties
and all
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
8-6
9/11/96
AGREEMENT NO. DAC 96-29M
other terms and conditions of this Article 8 shall become
applicable as if such Supplier Warranty Parts had been
manufactured by MDC except that the warranty period shall be the
warranty period as set forth herein or the suppliers warranty
period, whichever is shorter and all transportation costs
associated with such Supplier Warranty Parts shall be borne by
Federal Express.
H. Warranty Procedures
1) All warranty claims shall be submitted in writing to MDC's
Warranty Administrator at Long Beach, California and shall
include the identity of the Part or document involved, including
MDC's part number or identification number, nomenclature and the
quantity claimed to be defective; the identity of the Aircraft
from which each Part was removed or which document applies; the
date the claimed defect became apparent to Federal Express or its
agents; the total flight hours accrued on the Part at the time
the claimed defect became apparent to Federal Express; and a
description of the claimed defect and circumstances.
2) Federal Express shall pay all costs of transportation of any
defective part or document returned to and from MDC's facility in
Long Beach, California. In the event such returned part or
document is defective, MDC shall reimburse Federal Express for
its actual internal transportation costs for such defective parts
or documents to and from Federal Express' facility.
3) MDC shall use reasonable efforts to approve or disapprove in
writing Federal Express' warranty claim within two months of
receipt of such claim.
I. [*
]
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
8-7
9/11/96
AGREEMENT NO. DAC 96-29M
[*
]
J. Limitation of Warranties
1) THE WARRANTIES PROVIDED IN THIS ARTICLE AND THE OBLIGATIONS AND
LIABILITIES OF MDC UNDER SAID WARRANTIES ARE EXCLUSIVE AND IN
LIEU OF, AND FEDERAL EXPRESS HEREBY WAIVES, ALL OTHER WARRANTIES
OR, GUARANTEES, EITHER EXPRESSED OR IMPLIED, WITH RESPECT TO ALL
PARTS, SERVICES, SPARE PARTS, DOCUMENTS AND MDC TECHNICAL DATA
PERFORMED OR DELIVERED UNDER THIS AGREEMENT, ARISING BY LAW OR
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
8-8
9/11/96
AGREEMENT NO. DAC 96-29M
OTHERWISE (INCLUDING WITHOUT LIMITATION, ANY OBLIGATION OR
LIABILITY ARISING FROM NEGLIGENCE OR TORT OR WITH RESPECT TO
FITNESS, MERCHANTABILITY, LOSS OF USE, REVENUE, PROFIT OR
CONSEQUENTIAL DAMAGES). PROVIDED, HOWEVER, THAT NOTHING CONTAINED
IN THE FOREGOING SHALL BE CONSTRUED TO LIMIT OR AFFECT IN ANY WAY
MDC'S OBLIGATIONS CONTAINED IN ARTICLE 9 OR ARTICLE 22.
8-9
9/11/96
AGREEMENT NO. DAC 96-29M
9) INDEMNIFICATION AND LIMITATION OF LIABILITY
A. Indemnification of Federal Express
1) MDC shall indemnify, defend, and hold harmless Federal Express,
its officers, directors and employees from any and all
liabilities, damages, losses, expenses, claims, suits or
judgments, including reasonable attorneys' fees and expenses, for
the death of or bodily injury to any person and for the loss of,
damage to, or destruction of any property (except any loss of,
damage to, or destruction of any Aircraft) to the extent arising
out of [*
]
B. Indemnification of MDC
1) Federal Express shall be liable for, and agrees to indemnify,
defend and hold MDC harmless from any and all liabilities,
damages, losses, expenses, claims, suits or judgments, including
reasonable attorney's fees and expenses, for the death of or
bodily injury to any person and for the loss of, damage to, or
destruction of any property arising out of [*
]
**Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
9-1
9/11/96
AGREEMENT NO. DAC 96-29M
[*
]
2) Federal Express shall be liable for, and agrees to indemnify,
defend and hold MDC harmless from any and all liabilities,
damages, losses, expenses, claims, suits or judgments, including
reasonable attorney's fees and expenses, for the death of or
bodily injury to any person and for the loss of, damage to, or
destruction of any property arising out of [*
].
C. Limitation of Liability
With respect to the transactions contemplated by this Agreement,
neither party shall be liable for any consequential damages arising
from claims brought by the other.
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
9-2
9/11/96
AGREEMENT NO. DAC 96-29M
10) TECHNICAL DATA
A. Technical Data may be exchanged by the parties during the term of this
Agreement. All information contained in the Technical Data is owned
by the disclosing party or a third party and is proprietary and
confidential to such party; and, except as expressly provided herein,
is furnished for use pursuant to this Agreement and not for disclosure
to any other party. The recipient agrees to use commercially
reasonable efforts to protect and maintain the proprietary and
confidential status of the Technical Data. In the event it is
necessary to disclose Technical Data to third parties, it is agreed
that the recipient will impose upon third parties to whom such
disclosures are made, obligations no less stringent than those set
forth in this Agreement. The recipient agrees to furnish evidence of
said third party Agreement to the disclosing party, if the disclosing
party requests such in writing. Except as may otherwise be provided
herein, any information in the Technical Data which can be shown to be
in any of the following categories shall lose its confidential status
upon such a showing:
1) that which is in the public domain at the time of disclosure;
2) that which later becomes a part of the public domain by
publication or otherwise, except by breach of this Agreement or
any third party under an obligation of confidence;
3) that which the recipient can establish by competent proof was in
its possession at the time of disclosure and was not acquired
directly or indirectly from the disclosing party or from a third
party under an obligation of confidence:
4) that which the recipient lawfully receives from third parties on
a nonconfidential basis; and
5) that which is independently developed by the recipient without
the use of the Technical Data furnished by the disclosing party
under this Agreement.
Except as provided elsewhere in this or any other contract between MDC
and Federal Express, upon cancellation or termination of this
10-1
9/11/96
AGREEMENT NO. DAC 96-29M
Agreement Federal Express agrees not to make use of any information
contained in the MDC Technical Data for so long as such information
remains in a confidential status except for aircraft support purposes,
to ensure continued aircraft operation, modification, maintenance and
repair and MDC agrees not to use any of the Federal Express Technical
Data for so long as such information remains in a confidential status
except for the performance of Services under this Agreement.
Technical Data shall be identified with an appropriate legend, marking
or stamp or other positive written identification; provided, however,
that failure of the disclosing party to ▇▇▇▇, stamp or identify any
Technical Data shall have no effect on the confidential status of
such Technical Data if the recipient knew, or should reasonably have
known, that the disclosing party considers such Technical Data to be
confidential.
B. Where MDC Technical Data is included in or used by Federal Express to
prepare documentation to accomplish a portion of the Specifications,
that MDC Technical Data shall remain MDC Technical Data.
C. Injunctive Relief
1) The parties agree that in the event either party violates or
threatens to violate the provisions of this Article 10 as it
pertains to their respective Technical Data, the other party may
be entitled to obtain from a court of competent jurisdiction
preliminary or permanent injunctive relief as well as an
equitable accounting of all profits or benefits arising from such
violation which rights and remedies shall be cumulative and in
addition to any other rights or remedies at law or in equity to
which such party may be entitled.
D. License Agreement
1) Nothing contained in this Article 10 shall be deemed to amend,
supersede or limit the terms of any currently valid license
agreement(s) between Federal Express and MDC and the
10-2
9/11/96
AGREEMENT NO. DAC 96-29M
terms of any and all of such other license agreement(s) shall
remain in full force and effect and unchanged by this Agreement.
Notwithstanding the foregoing or any other provision of this
Agreement, there shall be no royalty or any other additional
charge for any Technical Data unless expressly provided in this
Agreement.
E. [*
]
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
10-3
9/11/96
AGREEMENT NO. DAC 96-29M
[*
]
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
10-4
9/11/96
AGREEMENT NO. DAC 96-29M
11) NOTICES
A. All notices, approvals, requests, consents, invoices and other
communications given pursuant to this Agreement shall be in writing
and shall be deemed to have been duly given when received if
hand-delivered, sent by telex, sent by courier or Federal Express
service or sent by certified or registered mail, addressed as follows:
IF TO MDC:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: MD-10 Program Manager
Product Support
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
SITA Code TOAMD7X
Telex No. 674359
IF TO FEDERAL EXPRESS:
Federal Express Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: MD-10 Contract Officer (or as otherwise notified)
AND WITH REGARD TO ANY CHANGES OR CERTIFICATION CHANGES, WITH A COPY TO:
Federal Express Corporation
3101 Tchulahoma
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: Manager, Aircraft Project Engineering
11-1
9/11/96
AGREEMENT NO. DAC 96-29M
12) ASSIGNMENT
This Agreement shall inure to the benefit of and be binding upon each of
the parties and their respective successors and assigns but, neither the
rights nor the duties of either party under this Agreement may be
voluntarily assigned, in whole or part, without the prior written consent
of the other party, which is not to be unreasonably withheld. It is
understood that subcontracting by MDC shall not be considered an assignment
in the sense of this clause, provided that under no circumstances shall
subcontracting be considered as releasing MDC from any of its obligations
under this Agreement. Either party shall be entitled to assign all or part
of this Agreement to a wholly-owned subsidiary; and Federal Express shall
be entitled to assign all or part of this Agreement to any third party in
connection with any transaction for the financing of one or more of the
Aircraft; provided that under no circumstances shall the foregoing be
considered as releasing any party from any of its obligations under this
Agreement.
12-1
9/11/96
AGREEMENT NO. DAC 96-29M
13) SPECIFICATION CHANGES
A. It is expressly understood and agreed that the MD-10 program is a
development program. Accordingly, changes to the Specifications
within the general scope of this Agreement may be required to define
solutions necessary to achieve the Baseline Functionality. Such
design iterations and related changes shall not be considered as
Customer Requested Functionality Changes and there shall be no
additional charge to Federal Express for any such changes prior to ACF
certification. In the event that there are Interface Problems that
occur in developing design solutions which satisfy the Specifications,
the correction of any such Interface Problems as required to satisfy
the Specifications and ensure full functional compatibility between
various elements of the Specification shall be the responsibility of
MDC and shall not be considered Customer Requested Functionality
Changes.
B. Except as may be otherwise provided in this paragraph or elsewhere in
this Agreement, and except where the change affects form, fit,
function, Parts interchangeability, tooling, maintainability, crew
work load, flight training, maintenance training, or certification,
MDC may make changes in the design of, or make improvements to, any of
the Services or manner of performing the Services which may be ordered
hereunder, pursuant to the procedure outlines in Paragraph 13.E. MDC
may make such changes without obligation to make such changes in any
Services performed prior to such change.
C. MDC shall create an MD-10 Change Control Board (MD-10 CCB) consisting
of the various process disciplines (e.g. estimating, planning,
pricing, engineering, etc.) necessary to review proposed changes. The
MD-10 CCB shall be in effect for the term of this Agreement. Federal
Express may have one or more representatives present during the MD-10
CCB meetings. It is understood the place of these meetings will be at
MDC's Long Beach, California facility, and the meetings will be held
in accordance with a mutually agreed schedule.
13-1
9/11/96
AGREEMENT NO. DAC 96-29-M
D. Federal Express and MDC may, at any time, request changes for review
by the MD-10 CCB which may or may not affect Functionality as defined
in the Specifications relating to the Services or the time or rate of
delivery.
E. Except as defined in Paragraph A, upon any request by Federal Express
or MDC for a change as provided in Paragraph C. above, MDC or Federal
Express may be entitled to an equitable adjustment in price, schedule
or other terms and conditions in accordance with the following
procedures:
1) Federal Express or MDC shall request a change by providing a
change request form (Exhibit T - Supplier Change Proposal , DAC
26-710) which form shall be mutually agreed to between Federal
Express and MDC, which details the scope of the change. Such
change request shall be presented by either party for review at
the next scheduled MD-10 CCB. The MD-10 CCB shall review the
proposed change for technical validity, and to determine if the
proposed change is above (impacts Specification wording) or below
(no impact to Specification wording) Specification level.
a) For Specification changes (above specification level),
Federal Express shall complete all required information on
the change request form for formal submittal to the MD-10
CCB. The change request form shall provide a detailed
description of the scope of the change, as well as the
proposed changes to the actual wording in each of the
affected Specifications. The change request form shall be
submitted at the next scheduled MD-10 CCB meeting, and MDC
shall respond within an agreed time period with MDC's
pricing proposal, technical recommendations, impact to
weight, dispatch reliability, certification,
implementation schedule and other factors. Within the
allowed time, MDC shall provide the applicable pricing and
other information at the next scheduled MD-10 CCB meeting
for review by Federal Express and MDC
13-2
9/11/96
AGREEMENT NO. DAC 96-29-M
for approval. If accepted by Federal Express and MDC, the change
request form shall be executed by the authorized representatives
of both parties and upon such execution shall constitute an
amendment to this Agreement.
F. The terms and conditions of this Agreement may be amended from time to
time by means of:
1) An ASR, pursuant to the provisions of Article 3.
2) A change request form, pursuant to the provisions of this Article
13, or
3) by other written amendments duly signed by both parties;
The ASR, and such other written amendments shall not be binding
on either party until signed by the authorized representatives of
both parties and upon being so signed shall constitute amendments
to this Agreement in accordance with the provisions of this
Article 13.
G. Federal Express' Engineering and Technical personnel may, from time to
time, render assistance or give technical advice to, or effect an
exchange of information with MDC's personnel in a liaison effort
concerning the Services. Such assistance, advice, or exchange of
information shall not be considered a Customer Requested Functionality
Change nor shall such change allow MDC to deviate in any manner from
the provisions of this Agreement. Customer Requested Functionality
Changes shall only be authorized if they are directed in writing by
those persons authorized to give such an order as specified in Article
3. MDC's compliance with any order, direction, interpretation or
determination either written or oral, from someone other than a person
designated as being authorized to issue change orders shall be at
MDC's risk and Federal Express shall not be liable or otherwise
responsible for any increased cost, delay in performance or
nonconformance by MDC with the provisions of this Agreement.
13-3
9/11/96
AGREEMENT NO. DAC 96-29-M
14) DOCUMENTATION
A. Document Revision
MDC shall integrate the MD-10 peculiar data into the existing Federal
Express DC-10 aircraft manuals or United/American manuals (except the
Flight Crew Operating Manual) and documents in the current style and
formats that reflect changes to the Aircraft resulting from the
performance of the Services included in this Agreement as required
such that the documents reflect the Aircraft as Redelivered. This
does not include Federal Express' peculiar engineering orders or
Federal Express Technical Data which deviates from MDC service
bulletins. As a result of the performance of the Services included in
this Agreement, MDC will supply Federal Express with a Flight Crew
Operating Manual which is based on the style and format of the MD-11
Flight Crew Operating Manual. Federal Express and MDC agree to form a
working group to work toward a goal of merging the MD-10 and MD-11
manuals where possible.
B. Document Media
MDC agrees to pursue conversion of the basic DC-10 Operational &
Maintenance data into a Standardized Generalized Markup Language
environment (SGML). SGML manuals will be provided based on an MDC
Document Type Definition', which is compatible with existing MDC
manual formats. (Note: The DC-10 Technical Publications manuals will
not be rewritten to be ATA 2100 compliant). MDC agrees to provide the
documents listed below in MDC SGML format no later than December 2002.
All documents authored in MDC SGML shall be capable of being viewed
and printed by any document viewer which is fully SGML compatible. In
the event MDC SGML is not fully SGML compatible then MDC shall provide
to Federal Express the MDC document type definitions.
1) Flight Crew Operating Manual
2) Maintenance Manual
3) Illustrated Parts Catalog
4) Structural Repair Manual
14-1
9/11/96
AGREEMENT NO. DAC 96-29-M
5) Wiring Diagram Manual/Equipment List
6) Troubleshooting Guide
7) Aircraft Schematics Manual
8) Powerplant Build-up
9) Nondestructive Test
10) Cargo Loading Manual (Upper)
11) Cargo Loading Manual (Lower)
12) Component Maintenance Manuals (DAC) - On an attrition basis
13) MMEL
14) New Service Bulletins
[*
]
C. Manuals and Documents
1) Documents Provided
It is understood that these will be fully integrated documents
and will not be supplemental manuals. Unless otherwise specified
herein, such documents shall be furnished in the quantities
specified by MDC at no additional cost to Federal Express.
Additional copies of the documents shall be made available at
MDC's then current published prices. Such documents shall be
prepared in the American English language and as may otherwise be
required to reflect the Aircraft instrumentation.
2) ATA Specifications
Unless otherwise noted, all documents specified are prepared in
general accordance with ATA Specification 100, Revision 14, or
later as MDC may adopt. All other documents shall be provided to
MDC's existing commercial practices.
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
14-2
9/11/96
AGREEMENT NO. DAC 96-29-M
3) Shipment
All documents shall be shipped surface F.O.B. shipping point to
Federal Express' designated point in the continental United
States of America.
4) Revision Service
Where revision service has been identified as applicable to a
document such revision service shall be provided for five years
following Redelivery of the last Aircraft, unless otherwise
noted. Subsequent revision service may be purchased at the then
current prices specified in the Services and Support Catalog.
5) List of Documents
The following identified documents to be provided in support of
the Aircraft. The explanation of the table is as follows:
COLUMN HEADING EXPLANATION OF CODE
1 DOCUMENT Title of Document provided.
2 MEDIUM 1 = Print 2 Sides, Drill & Fold
2 = Print 1 Side, Drill & Fold
3 = Print 1 Side, No drill & Fold
4 = Microfilm (Diazo)
5 = Microfilm (Silver Negative)
6 = Magnetic Tape (Reel)
7 = 3 1/2 Floppy Disk
8 = Indexed Aperture Cards (or digital format
(.DWG or .IGES) format, if available)
9 = On-line Downloadable
10 = Digital Media in MAC readable format
* = See REMARKS Column
3 REV Revision:
Y = Scheduled Revision Service Applies
N = Revision Service Not Applicable
S = Revised as Required by MDC
* = See REMARKS Column
4 QTY Quantity:
(Number) = Quantity per this Agreement
(Number) PER = Quantity per Aircraft
* = See REMARKS Column
14-3
9/11/96
AGREEMENT NO. DAC 96-29-M
5,6 DEL Delivery:
ASAP = As Soon As Possible following the
Agreement execution.
ATD = At Time of Redelivery of first Aircraft.
ASAV = As Soon As Available
PTD = Prior To Redelivery
* = See REMARKS Column
-------------------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 6
DOCUMENT MEDIUM REV QTY DEL DEL REMARKS
P-F A/C ACF A/C
-------------------------------------------------------------------------------------------------------------------------
1. Aircraft Recovery Manual 1 S 3 PTD PTD
-------------------------------------------------------------------------------------------------------------------------
2. Airline Data Report 1 Y 4 ATD 10/1/98
-------------------------------------------------------------------------------------------------------------------------
3. Aircraft Maintenance Manual Series 10 1,2,6 Y 1,4,1 7/1/97 10/1/98
-------------------------------------------------------------------------------------------------------------------------
4. Aircraft Maintenance Manual Series 30 1,2,6 Y 1,4,1 PTD 10/1/98
-------------------------------------------------------------------------------------------------------------------------
5. Cargo Loading Manual (Upper) (As long 1 N 6 ATD 5/1/99
as it remains the currently defined
DC-10 or MD-11 system)
-------------------------------------------------------------------------------------------------------------------------
6. Cargo Loading Manual (Lower) 1 N 9 ATD 5/1/99
-------------------------------------------------------------------------------------------------------------------------
7. MDC Component Maintenance Manual 1,4 Y 3,2 ATD 1/5/99
-------------------------------------------------------------------------------------------------------------------------
8. Electrical Load Analysis 2 N 1 ATD ATD
-------------------------------------------------------------------------------------------------------------------------
14-4
9/11/96
AGREEMENT NO. DAC 96-29M
-------------------------------------------------------------------------------------------------------------------------
9. FAA Approved Airplane Flight Manual 2 Y 1 per ATD ATD
-------------------------------------------------------------------------------------------------------------------------
10. Flight Crew Operating Manual 1, 10 Y 10, 1 6/1/97 12/1/98
-------------------------------------------------------------------------------------------------------------------------
11. Ground Equipment Manual 1 Y 4 ATD ATD
-------------------------------------------------------------------------------------------------------------------------
12. Illustrated Parts Catalog 2,5,6 Y 3,1,1 3/15/97 3/15/99
-------------------------------------------------------------------------------------------------------------------------
13. Illustrated Tooling & Equipment 1,5 Y 8,1 ATD 3/1/99
-------------------------------------------------------------------------------------------------------------------------
14. ▇▇▇▇ Schematic Manual 1 N 150 ASAV ASAV
-------------------------------------------------------------------------------------------------------------------------
15. Master Minimum Equipment List 1, 10 Y 8, 1 ASAV ASAV
-------------------------------------------------------------------------------------------------------------------------
16. MD-10 Troubleshooting Guide (Including 1,3, 6 Y 2,1,1 --- 3/1/99
DC-10 common data)
-------------------------------------------------------------------------------------------------------------------------
17. MD-10 Schematics Manual (Including 1,3, 6 Y 2,1,1 --- 6/1/99
DC-10 common data)
-------------------------------------------------------------------------------------------------------------------------
18. Nondestructive Test Manual Series 10 1 Y 4 3/15/97 3/15/99
-------------------------------------------------------------------------------------------------------------------------
19. Nondestructive Test Manual Series 30 1 Y 4 3/15/97 3/15/99
-------------------------------------------------------------------------------------------------------------------------
20. Powerplant Build-Up Series 10 1 Y 3 7/15/97 7/1/98
-------------------------------------------------------------------------------------------------------------------------
21. Powerplant Build-Up Series 30 1 Y 3 7/1/98 7/1/98
-------------------------------------------------------------------------------------------------------------------------
22. Product Support Supplier Agreements Manual 1 N 7 ATD ATD
-------------------------------------------------------------------------------------------------------------------------
23. Production Flight Procedures Manual 1 N 1 ATD ATD
-------------------------------------------------------------------------------------------------------------------------
24. Recommended Spares Parts List * Y 1 --- ---
-------------------------------------------------------------------------------------------------------------------------
25. New Service ▇▇▇▇▇▇▇▇▇ ▇, ▇▇ ▇ ▇, ▇ ▇▇▇▇ ASAV
-------------------------------------------------------------------------------------------------------------------------
26. Structural Repair Manual Series 10 1,5,6 Y 1,1,1 5/1/97 5/15/99
-------------------------------------------------------------------------------------------------------------------------
27. Structural Repair Manual Series 30 1,5,6 Y 1,1,1 PTD 5/15/99
-------------------------------------------------------------------------------------------------------------------------
14-5
9/11/96
AGREEMENT NO. DAC 96-29-M
-------------------------------------------------------------------------------------------------------------------------
28. Wiring Diagram Manual & Equipment List 1,3,6 Y 1,2,1 7/1/97 3/15/99
-------------------------------------------------------------------------------------------------------------------------
29. Weight and Balance Manual on Board 1 Y 1 per ATD ATD
(Chapters 1 & 2)
-------------------------------------------------------------------------------------------------------------------------
30. Weight and Balance Manual (Office Copies) 1 Y 3 ATD ATD
-------------------------------------------------------------------------------------------------------------------------
31. Flight Environment Fault 1 Y 3 7/1/97 ---
Indications Manual
-------------------------------------------------------------------------------------------------------------------------
32. Turnaround Fault Isolation Manual 1 Y 3 7/1/97 ---
-------------------------------------------------------------------------------------------------------------------------
33. All Conversion Drawings 8 Y 1 ASAV ASAV
-------------------------------------------------------------------------------------------------------------------------
+ AFM Appendix 11 and 19 shall be added to American Airlines AFM and Appendix
22 to the United Air Lines AFM.
++ MDC shall identify the long lead items at a joint Federal Express/MDC
provisioning conference which shall be held no later than one year prior to
Redelivery of Aircraft no. 15.
14-6
9/11/96
AGREEMENT NO. DAC 96-29-M
D. Onboard Maintenance Terminal
MDC shall provide the following databases:
1) MD-10 FAULT REPORTING DATABASE (FRDB) -The technical content of
the MD-10 FRDB shall be based on a 6-digit, ATA-100 coded failure
indication system which can be used on both MD-10 and MD-11
aircraft. The design of this failure indication database shall
be based off of the MD-11 Fault Reporting Manual, modified as
required to fit within a 6-digit coding system. MDC and Federal
Express agree to mutually participate in a commercially
reasonable effort to develop the MD-10 FRDB. The FRDB shall be
delivered in a format that is compatible with the Microsoft
Access relational database program.
2) MD-10 FAULT MESSAGE DATABASE - MDC shall develop a separate and
distinct Fault Message Database (FMDB) for the MD-10, the format
of which shall be in general in accordance with the existing
MD-11 FMDB. The MD-10 FMDB shall be delivered to Federal Express
on electronic media at least ninety days before Redelivery of the
first Aircraft. Update to the MD-10 FMDB shall be included in
the revision service currently in place for the MD-11 FMDB. The
goal is to begin with the MD-11 FMDB, delete those entries which
do not apply to the MD-10 and add new entries which are specific
to the MD-10. The relational links between the FMDB and the FRDB
will be contained in the FMDB.
E. Vendor Documents
MDC agrees to make every reasonable effort with vendors, on the behalf
of Federal Express, to provide revisions to the following documents
that reflect changes made to the Aircraft resulting from the
performance of the Services by MDC.
1) Vendor Component Maintenance Manual
2) Flight Management System Pilot Guide
14-7
9/11/96
AGREEMENT NO. DAC 96-29-M
F. Right of Review
At all times during the term of this Agreement, on a non-interference
basis, Federal Express reserves the right to review all available
modification and maintenance documentation including, but not limited
to, drawings, maintenance work cards, engineering orders and manual
revisions to insure compliance with the Specifications. At no
additional charge and at the request of Federal Express, MDC shall
provide copies of such documentation to the FAA if required by the FAA
for addition of the Aircraft onto Federal Express' operations
specifications. MDC shall promptly provide, any additions or
clarifications to any applicable MDC documentation to the extent
required by this Agreement or the FAA related to the performance of
the Services.
G. Master Minimum Equipment List (MMEL) Design
1) A minimum of 45 days prior to the initial FAA Flight Operations
Evaluation Board (FOEB) meeting to address ACF configured
aircraft, MDC shall deliver to Federal Express a preliminary copy
of the MMEL that is to be presented to the FAA, as well as all
necessary data required to substantiate proposed MMEL relief
including proposed or anticipated procedures.
2) MDC shall deliver to Federal Express a ▇▇▇ Procedures Manual and
an FAA approved MMEL one week after the FAA releases the approved
MMEL. The MMEL proposed by MDC will provide maximum operational
relief for inoperative equipment permitted by the FAA (without
consideration of restrictions based on non-US regulatory or
non-regulatory requirements [e.g. manufacturer or other operator
policies]) MDC further agrees to negotiate in Federal Express'
behalf with regulatory authorities in seeking FAA approval of
MMEL relief.
14-8
9/11/96
AGREEMENT NO. DAC 96-29-M
H. Maintenance Program
A minimum of one hundred eighty days prior to Redelivery of the first
Aircraft, MDC shall deliver to Federal Express an FAA approved
Maintenance Review Board Document (MRB) based on the latest revision
of MSG-3 and the Maintenance Planning Document (MPD) and associated
work cards. The initial target intervals shall be no less than
current industry average intervals. The FAA approved MRB and MPD
shall be revised and delivered to Federal Express ninety days prior to
Redelivery of the first Aircraft upon which the ACF Modification
Services have been performed to incorporate required amendments
resulting from the ACF Modification.
14-9
9/11/96
AGREEMENT NO. DAC 96-29-M
15) APPLICABLE LAW
This Agreement shall be construed and the performance hereof shall be
determined according to the laws of the State of New York, United States of
America, excluding its laws regarding conflict or choice of law.
15-1
9/11/96
AGREEMENT NO. DAC 96-29-M
16) TRAINING
Federal Express may request maintenance technical training and flight
training related to the Services which shall be subject to separate
contractual negotiations.
16-1
9/11/96
AGREEMENT NO. DAC 96-29-M
17) SIMULATOR
Subject to separate contractual negotiations, MDC will provide parts and
MDC Technical Data necessary for the manufacture of an MD-10 simulator or
upgrade of its existing DC-10 simulators to reflect the MD-10
configuration.
17-1
9/11/96
AGREEMENT NO. DAC 96-29-M
18) PARTS AND MATERIALS
A. Parts
1) In the event that a Part is not available in accordance with
MDC's modification plan, MDC shall use its commercially
reasonable efforts to establish a "work-around" plan which will
enable such Part to be installed at a later date prior to the
Scheduled Redelivery Date of the affected Aircraft, provided,
however, that nothing contained in this Article 18 shall reduce,
limit or negate MDC's obligation to Redeliver each Aircraft in
accordance with the Schedule.
2) MDC and its subcontractors shall supply all available technical
documentation, teardown data(including maintenance release tags
and repair findings), and testing reports related to the Services
or Additional Services. (Ref: GMM 9-1-100 Item 3 E 1 through 6)
3) All Recoverable Parts or Rotable Parts removed from the Aircraft
by MDC shall have a Federal Express Rotable or Recoverable Parts
Tag or FAA (8130-3) equivalent completed and attached.
4) Unless otherwise approved in advance by Federal Express'
Representative in writing, all Parts provided by MDC for
performance of the Services (excluding Parts which are removed
from the Aircraft and which will be returned to the Aircraft)
shall be new, unused Parts that conform to current manufacturers'
standards ("New Parts").
5) Federal Express' representative or its designee may in its sole
discretion, agree to accept USZTSO in lieu of New Parts for the
Services provided that the fixed price for Services defined in
Exhibits A through J, that include such Parts shall be reduced
by the difference between the price contained in Exhibits A
through J for a New, Unused Part and the price for a USZTSO Part.
Any USZTSO Parts installed by MDC shall be certified by
18-1
9/11/96
AGREEMENT NO. DAC 96-29-M
a FAA approved repair station on Federal Express' approved vendor
list.
6) All Parts to be used in the performance of the Services shall
comply with applicable United States airworthiness regulations,
FARs, all requirements of the FAA, the Specifications, and the
GMM.
7) MDC shall be responsible for accumulation, inventory, storage,
and record accountability including, but not limited to, current
Aircraft issues, for all Parts from receipt to installation on an
Aircraft. MDC shall be responsible for the replacement or repair
of any Parts (including, but not limited to, Federal Express
Supplied Parts) lost or damaged while in MDC's control.
a) For all Parts that are removed prior to or during
performance of the Services and are to be reinstalled on the
Aircraft, or permanently removed, or are unused Federal
Express Supplied Parts, MDC shall tag such Part in
accordance with the FAA approved Repair Station Manual.
Federal Express shall determine the appropriate disposition
of such Parts at or prior to the Redelivery of each
Aircraft. The tag shall indicate the status of the Part when
removed (i.e. Okay to install, rework, or reject) which
shall be determined by either operation of the Part during
acceptance and ferry flights to the Conversion Facility or
by an On Aircraft Test Procedure (OATP) after arrival at the
Conversion Facility and if available, the time and cycles
since new or last overhaul. MDC reserves the right to have
an MDC licensed mechanic or other qualified person perform a
general inspection of each Aircraft prior to or following
its ferry flight, as necessary to accomplish the above
activities.
18-2
9/11/96
AGREEMENT NO. DAC 96-29-M
b) In addition to the tag referenced above, Parts that are
removed prior to or during performance of the Services and
are to be reinstalled on the Aircraft or permanently
removed, or are unused Federal Express Supplied Parts shall
have the applicable Federal Express tag attached.
c) MDC shall maintain a material management system adequately
staffed with qualified personnel to handle receipt,
inventory, warehousing, quality control, inspection,
storage, transportation, packaging, issue, and disposition
of Parts. Federal Express shall have the right to audit the
record keeping and storage management operations established
by MDC pertaining to Services or Additional Services on any
Aircraft.
d) Federal Express and MDC shall dispose of permanently
removed, or unused Federal Express Supplied Parts, in
accordance with the Federal Express Representative's
instructions as soon as practicable, but in no event more
that seven (7) days after the receipt of such instructions.
In the event Federal Express has not informed MDC of the
intended disposition of such Parts prior to or at Delivery
of each Aircraft, MDC may, upon thirty (30) day notice,
charge Federal Express a separate, reasonable fee for the
storage of such Parts from each individual Aircraft.
Storage shall not exceed three (3) months from the date of
Redelivery of the applicable Aircraft. Disposition of such
Parts shall be at the expense of Federal Express.
e) All Federal Express Supplied Parts and removed equipment
shall be stored, transported, and shipped in Federal Express
supplied shipping containers. If Federal Express does not
provide shipping containers, packaging appropriate to
prevent damage to such Parts and in accordance with aircraft
industry standards shall be at the expense of Federal
Express.
18-3
9/11/96
AGREEMENT NO. DAC 96-29-M
8) All Rotable Parts and Recoverable Parts (in addition to those
included in the Federal Express Supplied Parts but excluding
Rotable Parts specifically required by the applicable
Specification) required for the support of the Aircraft during
the Services will be furnished and maintained by Federal Express,
except as otherwise mutually agreed to between Federal Express
and MDC. Such Rotable Parts and Recoverable Parts will be
furnished to the Conversion Facility prior to the MDC required
date by Federal Express. A listing of Rotable Parts and
Recoverable Parts, if such components are determined to be
necessary, will be mutually agreed to by the Parties.
B. Supply of Parts, and Materials
1) Except for Federal Express Supplied Parts, MDC shall provide all
Parts and Expendable and Consumable Materials and all tooling,
equipment, facilities and fixtures, which are necessary for the
performance of the Services and Additional Services, except as
expressly provided herein. MDC shall be responsible for the
timely procurement of the Parts, except for Federal Express
Supplied Parts, to ensure completion of the Services in
accordance with the terms and conditions of this Agreement.
2) MDC shall have access to the Federal Express Maxi Merlin parts
and component control system. Federal Express will furnish the
equipment and training required to make the Maxi-Merlin entries.
MDC shall provide to Federal Express applicable MDC Technical
Data pertaining to MDC Parts as required by the GMM, and MDC will
perform all data entry into the Maxi-Merlin system for all Parts
on the Aircraft which require Maxi-Merlin entry.
18-4
9/11/96
AGREEMENT NO. DAC 96-29-M
19) FEDERAL EXPRESS SUPPLIED PARTS
A. Federal Express is hereby granted the option to furnish any Parts
required to perform the Services or Additional Services. Such option
shall only be valid prior to MDC's issuing a written purchase or
exchange commitment or fully becoming engaged in negotiations and
provided that Federal Express shall give MDC notice of its intent in
writing to provide such Parts by not later than six (6) months prior
to the Delivery of the applicable Aircraft unless otherwise provided
in an ASR Form, or as otherwise agreed.
B. Upon notification by Federal Express, as stipulated in Paragraph 19.A.
above, of its intent to supply Parts or Services which were to be
provided by MDC as a part of any fixed priced Services or Additional
Services, MDC shall, within two (2) weeks, issue a proposed credit in
writing for the applicable Aircraft in an amount equal to the amount
charged by MDC in the fixed price for the specific Services or Parts
to be supplied by Federal Express. MDC will document to Federal
Express' reasonable satisfaction the amount of the credit to which
Federal Express is entitled pursuant to this Article 19. Federal
Express shall notify MDC in writing within two (2) weeks of receipt of
the proposed credit of Federal Express' response to the proposed
credit. Upon mutual agreement of the proposed credit amount between
MDC and Federal Express, MDC shall issue a credit for such applicable
Aircraft for the mutually agreed amount.
C. MDC assumes full responsibility for the handling and storage of
Federal Express Supplied Parts to protect them from damage or
deterioration. Deterioration does not include items deteriorated due
to the lapse of shelf-life or other inherent deterioration. Federal
Express Supplied Parts shall be isolated from MDC's parts and MDC
shall ensure limited access to, and security for, Federal Express
Supplied Parts.
D. Federal Express shall furnish to MDC, at the Conversion Facility, the
Federal Express Supplied Parts set forth in Exhibit P by the
applicable date set forth in Exhibit P. Federal Express shall also
provide
19-1
9/11/96
AGREEMENT NO. DAC 96-29-M
Technical Data in the form of specifications for Federal Express
Supplied Parts ("Parts Technical Data"), consisting of, but not
limited to a written detailed description of the dimensions, weight
and all information necessary for the installation and operation
thereof. Such dimensions and weight shall not thereafter be revised
unless authorized by an amendment to this Agreement. Federal Express
shall also provide Technical Data in the form of engineering
information for the implementation of Federal Express Engineering
Orders ("Engineering Technical Data"), consisting of, but not limited
to all instructions necessary for installation and operation thereof.
Federal Express shall furnish all such Technical Data by the dates
specified in Exhibit P. Specific data requirements unique to MDC's
internal process which normally would not be required in Federal
Express operations shall be the responsibility of MDC unless Federal
Express data exists which can be used to satisfy MDC's internal
requirements or Federal Express has not imposed on its suppliers
either MDC's Commercial Product Support Agreement 12-100 or a tailored
version thereof which has been mutually agreed to between MDC and
Federal Express. Notwithstanding any other provision of this
Agreement, Federal Express is not obligated to deliver any Engineering
Technical Data more than three (3) months prior to the Delivery Date
of the applicable Aircraft.
E. Federal Express agrees, represents and warrants that each item of
Federal Express Supplied Parts to be furnished by Federal Express
shall be new, or if not new, have an FAA Serviceable Tag or
equivalent.
F. In the event that a Federal Express Supplied Part or Engineering
Technical Data or Parts Technical Data is not available due to a late
delivery or not meeting form, fit or function in accordance with MDC's
original production plan, MDC shall use its commercially reasonable
efforts to establish a "work-around" plan which will enable such Part
to be installed at a later date prior to the scheduled Redelivery Date
of the affected Aircraft. MDC will minimize any resulting costs and
effects on schedule in developing a "work-around" plan. All
reasonable costs
19-2
9/11/96
AGREEMENT NO. DAC 96-29-M
incurred by MDC in establishing a "work-around" plan shall be paid by
Federal Express and the Redelivery date for the affected Aircraft
shall, if necessary, be adjusted accordingly. An ASR form reflecting
cost and schedule affects shall be signed by both parties in
accordance with Article 3 herein.
G. Provided that Federal Express has satisfied its obligations under
Paragraph 19.E. MDC shall incorporate, integrate and interface
Federal Express Supplied Parts into MDC's designs, specifications,
drawings, test plans, certification plans, conformity inspection
plans, etc. as necessary to Redeliver the Aircraft in an FAA conformed
and certified configuration and in accordance with the Specifications.
19-3
9/11/96
AGREEMENT NO. DAC 96-29-M
20) REGULATORY REQUIREMENTS
A. MDC shall during the term of this Agreement, or in respect of any
Aircraft, during the period ending upon Redelivery:
1) at all times meet the technical and operational requirements of
an FAA certified repair station authorized to perform the
Services and Additional Services and shall maintain an FAR Part
145 Certificate which shall include the appropriate ratings for
performance of the Services and Additional Services;
2) at all times perform the Services and Additional Services in
accordance with the requirements of the Specification, any
applicable ASR forms and Master Job Control Sheets, this
Agreement, all applicable law and FARs, the FAA, and any other US
governmental body having jurisdiction over the Services or
Additional Services;
3) promptly correct, in a manner reasonably satisfactory to Federal
Express and satisfactory to the FAA, any discrepancies in the
Services that are not in compliance with the applicable
regulations and duly report all such discrepancies to Federal
Express and the FAA;
4) promptly provide a copy of the items reportable in accordance
with FARs to Federal Express;
5) provide Federal Express all appropriate records required to
comply with the FARs;
6) be responsible for preparing FAA Form 337 in accordance with the
FARs for the Services in order to maintain or secure, as
applicable, the FAA Certificate of Airworthiness as follows:
a) Execute at least in duplicate;
b) Provide a signed copy of the form to Federal Express;
c) Forward a signed copy of the form to the local FAA District
Offices within forty eight (48) hours after the Aircraft is
approved for return to service; and
20-1
9/11/96
AGREEMENT NO. DAC 96-29-M
d) obtain FAA approvals as required for return to service to
cover all major repairs, and alterations accomplished during
the Service;
7) classify major and minor repairs in accordance with the FAA
regulations and the GMM.
8) maintain the appropriate data and records to prepare the
maintenance records, alteration and repair reports required by
FAA Form 337 and all applicable FARs;
9) provide component serviceable tags for all repaired, overhauled
or exchanged components provided by MDC in accordance with all
applicable FARs and the GMM;
10) be responsible for accomplishing all sign-off's for routine work
task card inspection items in accordance with the GMM;
11) provide service engineering and quality control to ensure that
the Specifications and requirements of this Agreement are
completely and accurately adhered to;
12) promptly report to Federal Express' representative any
discrepancies between FAA requirements and MDC operations as
noted or reported to MDC by the FAA;
13) be responsible for completing and reporting malfunction or defect
Reports for all items required under the FARs to its FAA assigned
airworthiness inspector per the FARs and provide one (1) copy to
Federal Express' Representative;
14) provide to Federal Express records of all Services, Additional
Services, discrepancies, defects, component and piece part
removals, along with the related teardown findings as required by
the GMM;
15) maintain the necessary Technical Data and records to assist
Federal Express in the preparation of alteration and repair
reports required by the FARs;
16) not accomplish any Services or work other than the Services
specifically described in the Specifications of this Agreement
20-2
9/11/96
AGREEMENT NO. DAC 96-29-M
without prior written authorization from Federal Express'
Representative in the form of an ASR Form;
17) be responsible for signing-off the Airworthiness Release in
Federal Express' Aircraft Maintenance Logbook at the time of
Redelivery in accordance with the GMM;
18) be responsible for accomplishing all buy-backs/sign-off's for
Federal Express' Required Inspection Items ("RII's") as
identified in the GMM; and
19) complete Federal Express' Special Non Routine Maintenance Form
(SNRM), Aircraft Maintenance Log (AML) and Component
Serviceable/Repair Tags for all service transactions
accomplished, discrepancies, defects, Part removals, along with
the related teardown findings and repair billing information. MDC
shall complete these documents in accordance with the related
teardown findings and repair billing information. MDC shall
complete these documents in accordance with the GMM; and
20) After completion of the Services or Additional Services, if any,
for each Aircraft, MDC shall certify the Aircraft in accordance
with Article 31, and provide manuals and documentation in
accordance with the Agreement.
B. [*
]
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
20-3
9/11/96
AGREEMENT NO. DAC 96-29-M
[*
]
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
20-4
9/11/96
AGREEMENT NO. DAC 96-29M
21) ACF SYSTEM VALIDATION AND CERTIFICATION TEST
A. [*
]
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
21-1
9/11/96
AGREEMENT NO. DAC 96-29M
[*
]
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
21-2
9/11/96
AGREEMENT NO. DAC 96-29M
[*
]
B. As part of the Services, an ACF Flight Test program shall be conducted at
an appropriate mutually agreeable location to accomplish the objective of
meeting FAA requirements for airworthiness certification of the ACF
Modification.
1) MDC shall prepare a detailed Flight Test schedule, including a Flight
Test aircraft utilization schedule, no later than one (1) year
prior to the start of the Flight Test program. This schedule
shall be primarily based on two concurrent operational Aircraft
for the duration of the Flight Test program. The third Aircraft
will be used for Aircraft configuration specific testing.
2) [*
]
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
21-3
9/11/96
AGREEMENT NO. DAC 96-29M
3) MDC shall use commercially reasonable efforts to complete all
required Flight Testing within [* ] of ground testing and [* ] of
flight testing.
4) Selection of the primary flight test location shall be made no later
than one (1) year prior to commencement of said testing.
5) Federal Express will provide fifty percent of all flight crew
requirements for each Aircraft for the Flight Test program as defined
by the Flight Test schedules. These crews shall be "On-Call" within
a reasonable notification period. In the event Federal Express
cannot supply flight crew to support Flight Test activity, due to
operational needs, MDC shall provide additional flight crew personnel
at a cost to Federal Express not to exceed [* ] per hour of
flight time..
6) Federal Express will supply qualified maintenance personnel to
provide turnaround and servicing to the Flight Test Aircraft. These
crews shall be "On-Call" within a reasonable notification period.
The assigned duties of these personnel is to be jointly developed,
and reviewed periodically to update personnel requirements.
7) Federal Express will provide all necessary ground support equipment
to support the Flight Test program at the primary Flight Test site,
to the extent it is not currently available at any MDC flight test
location, as follows (GSE required for secondary Flight Test sites,
as applicable, is to be provided by Federal Express and shall be
mutually agreed):
EQUIPMENT DESCRIPTION SHIP 1 SHIP 2 SHIP 3 COMMON TOTAL
AIRCRAFT C2 TYPE AIRSPEED TESTER 1 1
ANGLE OF ATTACK TRANSDUCER TOOLS 1 1
BREAK OUT BOXES AS REQUIRED FOR AIRCRAFT MAINTENANCE 1 1
GROUND POWER "ISLAND" STEP DOWN TRANSFORMER, 440 DOWN TO 110 1 1 1 3
TUG CAPABLE OF TOWING, AIRCRAFT AT MAXIMUM GROSS WEIGHT 1 1
TUG(S) FOR MOVING EQUIPMENT, JACKS, STANDS, ETC. 2 2
FORK LIFT: SHOP TYPE 2 2
AIRCRAFT CARGO LOADER 1 1
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
21-4
9/11/96
AGREEMENT NO. DAC 96-29M
HYDRAULIC TEST STAND (MULE) 2 2
BRAKE BLEED CART 2 2
AIRCRAFT FUSELAGE/▇▇▇▇ ▇▇▇▇ SET, WITH ONE SPARE WING AND NOSE 1 1
COMPLETE SET OF ▇▇▇▇ PADS 1 1 1 3
AXLE ▇▇▇▇ SET, WITH ONE SPARE 1 1
NITROGEN TO SERVICE A/C TIRES, STRUTS, ETC. (AS REQUIRED) TBD 0
OXYGEN SERVICE CART 1 1
OXYGEN SOURCE, COMPRESSED IN CYLINDERS (AS REQUIRED) ▇▇▇ ▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇ ▇
▇▇▇▇▇▇▇▇ STAND 1 1 1 1 4
WORK STAND, WHEEL WELL 2 2
▇▇▇▇ LIFT WORK STAND SELF PROPELLED (AT LEAST TWO) 1 1 1 3
80' ▇▇▇▇ LIFT, BOOM TYPE 1 1
LADDERS, 4 FOOT AIRCRAFT MAINTENANCE APPROVED TYPE 1 1 1 3
LADDERS, 6, FOOT AIRCRAFT MAINTENANCE APPROVED TYPE 1 1 1 3
LADDERS, 8 FOOT AIRCRAFT MAINTENANCE APPROVED TYPE 1 1 1 3
LADDERS, 12 FOOT AIRCRAFT MAINTENANCE APPROVED TYPE 1 1 1 3
DIESEL POWERED WORK LIGHT (2 EACH) 2 2 2 2 8
125 KVA 400 DEGREE DIESEL POWERED AIRCRAFT GROUND POWER UNIT 1 1
300 FEET 3/4 INCH AIR HOSE (IN VARIOUS LENGTHS) 1 1 1 3
1,000 FEET 1/2 INCH AIR HOSE (IN VARIOUS LENGTHS)
AND 2 DISTRIBUTION MANIFOLDS 1 1 1 1 4
500 FEET ELECTRIC CORDS (IN VARIOUS LENGTHS) 2 2 2 1 7
PORTABLE WORK LIGHTS (ASSORTED STYLES) 2 2 2 2 8
WHEEL, TIRE, AND BRAKE REMOVAL/INSTALLATION
EQUIPMENT (INCLUDING TOOLS) 1 1
POTABLE WATER SERVICING CART 1 1
LAVATORY SERVICE CART, (NEED DUMP STATION AT FACILITY) 1 1
ENGINE OIL DISPENSING CART 1 1
HYDRAULIC FLUID DISPENSING CART 1 1
OIL DRY DISPENSING CART 1 1
BARRELS FOR DISPOSAL OF USED OIL DRY AND HAZARDOUS WASTE
(AS REQUIRED) TBD 0
55 TON DIESEL AIR CONDITIONER (WITH HOSE AND A/C CONNECTION) 1 1 1 3
HIGH RATE AIRCRAFT A/C FUELING (>8,000 GALLON CAPACITY
PER TRUCK) 2 2
SHIPSET OF LD3 CARGO CONTAINERS 1 1 1 3
150,000 LBS. OF BALLAST 1 1 1 3
VHF RADIO GROUNDSTATION 1 1
TOTALS 19 19 19 37 94
NOTE: THIS LIST ASSUMES NO REQUIREMENT FOR HEAVY MAINTENANCE (ENGINE CHANGES,
TANK ENTRY, ETC.}
21-5
9/11/96
AGREEMENT NO. DAC 96-29M
8) MDC shall develop an FAA approved maintenance program, subject to
Federal Express concurrence, for the Flight Test Aircraft. MDC shall
maintain all Engineering Modification Drawings and Engineering Orders
related to the ACF Modification and the Flight Test instrumentation
installation.
9) MDC shall develop manual revisions reflecting the modified Flight Test
Aircraft configuration necessary to maintain the Flight Test Aircraft
during the Flight Test period. The required manuals shall include,
but are not to limited to, the following:
a) Flight Crew Operating Manual
b) Airplane Flight Manual
c) FMS Pilot's Guide
d) MD-10 Flight Guidance Operations Guide
e) Maintenance Manual
f) Illustrated Parts Catalog
g) Wiring Diagram Manual
h) Structural Repair Manual
i) Aircraft Troubleshooting Manuals, including the Fault Message
Data Base and the Fault Reporting Data Base
j) Aircraft modification records related to the Services
10) MDC will provide all necessary engineering support, including data
system and data analysis equipment and engineering work effort
required to complete the Flight Test program and meet FAA
certification requirements.
11) Federal Express and MDC agree to divide the Flight Test
responsibilities and accept assignment for said responsibilities as
shown below. Detailed descriptions of the items and responsibilities
shall be jointly developed by MDC and Federal Express prior to the
Flight Test program:
21-6
9/11/96
AGREEMENT NO. DAC 96-29M
--------------------------------------------------------------------------------
ITEM DESCRIPTION MDC FDX
---- ----------- --- ---
A/C Hvy MX Check Pre Mod MX Check X
ACF Mod Engineering EO to install ACF X
P-F MOD Engineering P-F Engineering X
P-F Component/Installs Part of P-F package X
F/T Sys Install Data System/Equip X
F/T Engrng EO installs X
F/T Wts Engr - Wt/CG periodic pre/post weights X
F/T Data Sys Equipment X
Offsite Data Tools & Support Equipment Support Equip X
F/T Mx/Mods MX upkeep X
ACF LRU/Racks ACF components X
ACF S/W & H/W Updates ACF LRU MX X
F/T Pilots Flight crew X X*
F/T FTEs Flight crew X
ACF Systems Engineers - F/T/D&T ET&E & Design X X**
A/C MX Touch Labor - On/Offsite A/C Maintenance X*** X
Consumable/Rotable A/C Parts Non-ACF parts X
ACF System Parts ACF Parts X
Oil/Gas/Lubes MX fluids X
Hull Insurance (As required by Article 22) X
Wheels/Tires/Brakes X
Ramp/Landing Fees X
Refurbishment for Delivery Re-delivery mods X
Refurbishment parts ACF production X
Pre-delivery Production Flights Re-delivery flights X
QA and Conformity Inspections Inspectors/paper X
--------------------------------------------------------------------------------
21-7
9/11/96
AGREEMENT NO. DAC 96-29M
NOTE:
* See paragraph B.5) of this Article 21.
** Participation only during critical phases of the Development &
Certification, and does not indicate a full time support obligation
*** MDC to provide maintenance supervision only
12) At the completion of the Flight Test program, MDC shall complete
Refurbish for Delivery (RFD) services necessary to remove all flight
test instrumentation and wiring, to complete any open production
installations and to restore each Aircraft to a condition and
configuration as required for Redelivery to Federal Express under this
Agreement, reasonable wear and tear excepted considering normal air
carrier operations.
13) The certification Flight Test shall be conducted in a manner that does
not result in Master Minimum Equipment List (MMEL) limitations that
are more restrictive than that permitted by FAA requirements.
14) It is agreed that the Flight Test Program constitutes a part of the
Services and, therefore, during the Flight Test Program, all
provisions of this Agreement shall be applicable in all respects
including, but not limited to, the provisions of Article 22 and
Article 9.
15) The Flight Test program plan does not require the Aircraft to be
operated outside the certified envelope for the airframe or the
engines.
21-8
9/11/96
AGREEMENT NO. DAC 96-29M
22) INSURANCE
A. Federal Express' General Coverage
1) Prior to the commencement of the Services, Federal Express shall
provide to MDC evidence of satisfactory insurance coverage for
the Aircraft. Said insurance coverage:
a) shall be maintained at Federal Express' expense at all times
during the term of this Agreement and for a period of two
(2) years thereafter;
b) shall name MDC and MDC's employees, officers, directors,
representatives and agents as additional insureds under
Federal Express' third party liability insurance;
c) contain a severability of interest clause; and
d) provide that the insurance is primary and without
contribution from other insurance which may be available to
the additional insureds;
e) Include the following insurance in the amounts noted:
(i) Federal Express shall maintain hull insurance
coverage (in the amount of such Aircraft's value at
the time of modification, including all components
and parts removed from the Aircraft and parts
shipped from the Conversion Facility or MDC's
Facility to other locations on the instructions of
Federal Express or pursuant to the provisions of
this Agreement).
(ii) Third party liability coverage (in the amount of
Federal Express' current coverage, but not less than
$300,000,000).
22-1
9/11/96
AGREEMENT NO. DAC 96-29M
B. MDC's Coverage
1) Prior to the commencement of the Services, MDC shall provide
Federal Express evidence of satisfactory insurance coverage.
Said insurance coverage shall:
a) be maintained at MDC's expense at all times during the term
of this Agreement and for a period of two (2) years
thereafter;
b) name Federal Express and Federal Express' employees,
officers, directors, representatives and agents as
additional insureds under MDC's third party liability
insurance;
c) contain a severability of interest clause;
d) provide that the insurance is primary and without
contribution from other insurance which may be available to
the additional insureds; and,
e) include the following insurance in the amounts noted:
(i) Comprehensive Aviation General Liability Insurance
with a combined single limit of liability of not
less than Three Hundred Million U.S. Dollars
($300,000,000.00) for Bodily Injury, Property
Damage, Products Liability, Completed Operations
Coverage and Premises Operation Liability;
(ii) Hangar Keeper's Liability Insurance providing
property damage coverage with limits of liability of
Three Hundred Million U.S. Dollars ($300,000,000.00)
per occurrence (evidence of compliance with this
requirement by a Subcontractor shall satisfy this
requirement as to any Aircraft which will only be in
the possession of such Subcontractor in connection
with the performance of the Services);
22-2
9/11/96
AGREEMENT NO. DAC 96-29M
(iii) Worker's Compensation as required by applicable law
and Employer's Liability Insurance of not less than
One Million U.S. Dollars ($1,000,000.00) per
occurrence unless a greater amount is required by
law.
C. All insurance coverage set forth in Paragraphs A, and B above shall:
1) except for workers compensation insurance, contain a waiver of
subrogation by such parties insurers of any rights it may have
against the other party and the other parties employees,
officers, directors, representatives, agents and subcontractors,
but only to the extent the parties have waived their rights of
recourse against the other party under this Agreement; and
2) contain a clause which states that any cancellation, restriction
or reduction in coverage shall only be effective upon thirty (30)
days written notice to the other party of such cancellation,
restriction or reduction in coverage.
D. Notwithstanding the foregoing,
[*
]
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
22-3
9/11/96
AGREEMENT NO. DAC 96-29M
[*
]
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
22-4
9/11/96
AGREEMENT NO. DAC 96-29M
[*
]
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
22-5
9/11/96
AGREEMENT NO. DAC 96-29M
23) INSPECTION, DEMONSTRATION, ACCEPTANCE AND DELIVERY
A. INSPECTION AND DEMONSTRATION
1) The performance of the Services by MDC and all materials and
Parts procured by MDC for this purpose as well as log books,
records and all other documentation may be inspected by Federal
Express' Representatives during normal business hours at the
Conversion Facility. All inspections by Federal Express'
representative shall be made in such a way that the performance
of the Services is not hindered or delayed.
2) MDC shall conduct flight tests on one or more of the early Flight
Test Aircraft receiving the ACF Modification in order to
demonstrate compliance of such Aircraft with the Specifications
and this Agreement. The Aircraft upon which such flight tests
are not performed shall be deemed to comply with these
performance estimates if reasonable engineering interpretations
and calculations based on the results of the tests establish that
the Aircraft would comply with the Specifications and this
Agreement if such flight tests were actually conducted on each
Aircraft. The results of such engineering interpretations and
calculations shall be made available for review to Federal
Express on request, and at no additional charge to Federal
Express.
3) MDC will perform all functional tests and inspections required in
order to comply with this Agreement, the Specifications and the
FARs. Such tests will be performed, as appropriate, inside or
outside the hangar, and MDC shall provide the schedule of the
performance of any tests or inspections to Federal Express'
Representative. The results of these tests will be provided in
writing upon request to Federal Express, and at no additional
charge to Federal Express. Federal Express shall have the right,
but not the obligation, to observe on a non-interference basis
the performance of such inspections and tests. Federal Express'
inspection of an Aircraft prior to Redelivery shall not
23-1
9/11/96
AGREEMENT NO. DAC 96-29M
constitute an acceptance of Services not performed in accordance
with this Agreement nor shall it release MDC from its obligation
to render the Services or Additional Services free from defects.
It is further agreed that observance of or participation in such
inspections and tests by Federal Express shall not be deemed to
constitute an acceptance by Federal Express hereunder.
4) If flight tests are necessary because of Federal Express
requested special features incorporated in the Aircraft, MDC
agrees to notify Federal Express of such requirement and may use
one or more of the Aircraft for such flight tests and Federal
Express will accept delivery of such Aircraft without any
reduction in the Price on account of normal wear and tear
resulting from such flight tests.
5) Federal Express' representatives, at any time prior to tender for
technical acceptance of the Aircraft involved (as described in
this Article), may request correction of Parts or Services which
they believe (i) are not in accordance with the Specifications or
MDC's standard engineering and quality manuals or (ii) have
material or workmanship which, if the Aircraft were Redelivered
and were within the applicable warranty period, would entitle
Federal Express to warranty correction under Article 8. Federal
Express shall promptly notify MDC after it discovers any such
nonconformance. MDC shall correct or replace all such Parts,
Services or workmanship which are brought to its attention and
mutually determined to be nonconforming.
6) In addition to the tests referred to in Paragraph 23.A.2, MDC
shall perform all such procedures (including, without limitation,
correction of discrepancies resulting from the Services or
Additional Services) upon completion of the Services or
Additional Services with respect to an Aircraft as required by
the applicable manufacturer's manuals, as well as applicable FARs
(tests required to be performed by MDC are referred to as the
"MDC Tests"). If mutually agreeable, flight tests required by
this
23-2
9/11/96
AGREEMENT NO. DAC 96-29M
Article 23 may be performed on the same flight as Federal
Express' Acceptance Tests, unless required otherwise by the FAA
or Federal Express.
B. Technical Acceptance
1) The Aircraft shall be tendered to Federal Express for Technical
Acceptance ("Technical Acceptance") after all Services and all
required tests have been completed and tested in accordance with
the Specifications and the Schedule.
2) For Aircraft that have had any Services performed other than the
ACF Modification, upon MDC's completion of the MDC Tests
described in Paragraph 23.A. above, Federal Express may, at its
expense for fuel, oil, landing fees and the use of Federal
Express flight crews, perform acceptance tests (the "Acceptance
Tests") of the Aircraft in accordance with the DAC DC-10
Production Flight Procedures Manuals (PFPM). MDC shall assist
Federal Express in preparation for the Acceptance Tests, and MDC
may, at its sole risk, have two (2) employees participate as
observers during the Acceptance Tests. Any additional seats and
emergency equipment required for any additional employees of MDC
to participate in the Acceptance Tests shall be provided by MDC,
at MDC's expense.
3) For Aircraft upon which the ACF Modification has been performed,
an acceptance procedure, including ground functional and flight
test(s), shall be performed on each Aircraft jointly by Federal
Express and MDC and shall be conducted in accordance with MDC's
standard PFPM and such other procedures as mutually agreed. Up
to five (5) representatives of Federal Express may participate in
this Technical Acceptance. MDC shall not be required to provide
special instrumentation for this Technical Acceptance procedure.
MDC shall have complete control of all test flights and shall
bear all costs and expenses, except for Federal Express flight
crews, incident to Technical Acceptance of an Aircraft.
23-3
9/11/96
AGREEMENT NO. DAC 96-29M
4) Federal Express agrees to complete all inspections and testing
authorized or permitted under this Article during the Technical
Acceptance Period. Federal Express shall technically accept the
Aircraft if it meets the requirements of the Specifications and
this Agreement. Notwithstanding the provisions of this
Paragraph, if at the time an Aircraft is tendered by MDC to
Federal Express for Technical Acceptance such Aircraft does not
fully comply with the Specifications or any other requirement of
this Agreement, Federal Express may, at its option, (i) accept
such Aircraft after receiving MDC's written agreement (prior to
acceptance of such Aircraft by Federal Express) as to the manner
and time such Aircraft will be corrected by MDC (or agreement on
such other disposition of deficiencies as Federal Express and MDC
agree), or (ii) refuse to accept the Aircraft until such time as
the Aircraft has been corrected by MDC. If Federal Express fails
to conduct and to complete its Technical Acceptance within the
Technical Acceptance Period which shall not exceed ten days in
accordance with Exhibit O, the Aircraft shall be deemed to have
been technically accepted by Federal Express on the scheduled
Redelivery Date after tender as if Federal Express had expressly
indicated its Technical Acceptance as noted above. If during the
Technical Acceptance Period Federal Express determines and
notifies MDC that there is a noncompliance with the
Specifications or this Agreement, the Technical Acceptance Period
shall be suspended until (i) MDC corrects the noncompliance or
(ii) the condition is resolved to the satisfaction of Federal
Express and MDC. Unless otherwise agreed, within two Business
Days after Technical Acceptance pursuant to Paragraph B.2. or
B.3. above, Federal Express shall accept Redelivery of the
Aircraft by endorsement of a Certificate of Technical Acceptance
for such Aircraft. Federal Express will designate, in writing,
its representative for the purpose of executing the Certificate
of Technical Acceptance.
23-4
9/11/96
AGREEMENT NO. DAC 96-29M
C. MDC Correction of Discrepancies.
1) Upon completion of the MDC Tests and the Acceptance Tests, MDC
shall, at no cost to Federal Express, promptly correct any
defects or discrepancies in the Services or Additional Services
performed by MDC identified by MDC or Federal Express during the
MDC Tests or Acceptance Tests. Additional MDC Tests and
Acceptance Tests shall be performed at MDC's expense (except for
the cost of Federal Express' flight crew) solely to inspect its
correction of the defects or discrepancies related to such
Services or Additional Services previously identified. In the
event any additional defects or discrepancies in the Services or
Additional Services performed by MDC are noted during any
required additional MDC Tests or Acceptance Tests (or if the
original defects or discrepancies are not satisfactorily
corrected), MDC shall correct such defects or discrepancies at
its expense, and, as necessary, further MDC Tests and Acceptance
Tests shall be performed at the expense of MDC until all defects
or discrepancies related to such Services or Additional Services
have been corrected to meet the requirements of this Agreement
and the Specifications.
2) If other systems or components of the Aircraft are adversely
affected by MDC's performance of the Services or Additional
Services and discrepancies pertaining to such systems or
components are identified by the Acceptance Tests, MDC shall
restore such affected systems or components to a serviceable
condition in accordance with the applicable Maintenance Manual.
For discrepancies discovered during Redelivery flight testing,
Federal Express is responsible for providing replacement items or
equipment which are unchanged by the Services for specific items
on systems unchanged by the Services (e.g. items simply removed
and reinstalled as part of the Services), and, except for
engines, MDC shall be responsible for the labor only to correct
these discrepancies. Labor for engines shall be the
responsibility of Federal Express
23-5
9/11/96
AGREEMENT NO. DAC 96-29M
unless the cause can be attributed to the Services performed by
MDC. MDC shall be responsible for labor and material associated
with the correction of all other discrepancies discovered at
Redelivery flight testing.
23-6
9/11/96
AGREEMENT NO. DAC 96-29M
24) INTENTIONALLY DELETED
24-1
9/11/96
AGREEMENT NO. DAC 96-29M
25) DEFAULT AND REMEDIES
A. Events of Default
1) The occurrence of one or more of the following events of default
(the "Events of Default") shall entitle the non-defaulting party
to exercise those rights and remedies described in this Article:
a) If either party shall be in default in a material respect in
the performance of any of its material obligations referred
to in this Agreement, (including, but not limited to any
delay in the Delivery or Redelivery of any Aircraft which is
not due to an Excusable Delay) which default shall continue
uncured for a period of forty-five (45) days following
written notice from the other party, unless a default is not
capable of being cured within such forty-five (45) day
period, in which case such default shall not constitute an
Event of Default if the defaulting party provides to the
other adequate assurance of its ability to cure such default
and diligently undertakes its best efforts to cure such
default and actually cures such default within ninety (90
days following the aforementioned initial written notice of
default; or
b) If either party shall file a voluntary petition in
bankruptcy, or shall be adjudicated bankrupt or insolvent or
shall file any petition or answer seeking any
reorganization, composition, readjustment, liquidation or
similar relief for itself under any present or future
statutes, law or regulation of the United States, or shall
seek consent to or acquiesce in the appointment of any
trustee, or shall make any general assignment for the
benefit of creditors, or shall admit in writing its
inability to pay its debts generally as they become due; or,
c) If a petition shall be filed against either party seeking
any reorganization, composition, readjustment, liquidation
or similar relief under any present or future statute, law
or
25-1
9/11/96
AGREEMENT NO. DAC 96-29M
regulation of the United States and shall remain undismissed
or unstayed for an aggregate of ninety (90) days (whether or
not consecutive), or if any trustee, receiver or liquidator
of either party is appointed, which appointment shall remain
unvacated or unstayed for an aggregate of ninety (90) days
(whether or not consecutive); or
d) If either party fails to make payments in the amounts and
under the terms defined in this Agreement.
2) Any notice of default shall specifically state that it is a
notice of default and shall describe the default asserted and set
forth the provision(s) of the Agreement asserted to be in
default.
3) Notwithstanding the foregoing, no default shall be deemed to have
occurred under Paragraph 1. above if the party from which payment
or performance is required: (i) reasonably disputes that a
payment or performance is required or the amount of the payment
required, (ii) pays or performs that portion not in dispute,
(iii) within the cure period provided, responds to the other
party in writing, detailing the reasons for the its position, and
(iv) diligently pursues a resolution of the dispute thereafter.
B. General Remedies
1) Upon the occurrence of an Event of Default by MDC, Federal
Express shall be entitled to:
a) terminate this Agreement in its entirety;
b) cancel all or a portion of its commitments for Services or
Additional Services;
c) reschedule MDC's performance of any or all of the Services;
d) recover all amounts required to have the Services completed
by another person (including Federal Express itself), less
(1) the cost of all materials purchased by MDC hereunder and
either delivered to Federal Express
25-2
9/11/96
AGREEMENT NO. DAC 96-29M
or used in the performance of the Services by such other
person and (2) the labor costs of MDC incurred in connection
with the performance of the Services prior to the occurrence
of the Event of Default but not previously paid for by
Federal Express and provided that Federal Express shall use
commercially reasonable efforts to mitigate the damages for
which MDC is liable under this Paragraph 25.B.1)d); and/or
e) pursue all other remedies available at law or in equity in
addition to those set forth in this Agreement, all of which
remedies shall be cumulative and not exclusive.
2) In addition to the foregoing, and notwithstanding any other
provision of this Agreement, in the event Federal Express
terminates this Agreement for default, MDC shall immediately make
available to Federal Express any Aircraft or equipment of Federal
Express in MDC's possession so that Federal Express may take
possession of such Aircraft and equipment.
3) Upon the occurrence of an Event of Default by Federal Express,
MDC shall be entitled to:
a) terminate this Agreement in its entirety;
b) cancel all or a portion of its commitments for Services or
Additional Services;
c) reschedule any or all of the Services or Additional
Services;
d) retain any and all sums theretofore paid by Federal Express;
and/or
e) pursue all other remedies available at law or in equity in
addition to those set forth in this Agreement, all of which
remedies shall be cumulative and not exclusive;
4) [*
]
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
25-3
9/11/96
AGREEMENT NO. DAC 96-29M
[*
]
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
25-4
9/11/96
AGREEMENT NO. DAC 96-29M
[*
]
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
25-5
9/11/96
AGREEMENT NO. DAC 96-29M
26) PRODUCT SUPPORT
A. Factory Service
1) MDC agrees to maintain capability consistent with or better than
the capability on the date of this Agreement to respond to
Federal Express' technical inquiries, to conduct investigations
concerning repetitive maintenance problems and the issuance of
findings and recommended action. This service shall be provided
for as long as five (5) of the Aircraft remain in commercial air
transport service. Any investigations which MDC reasonably,
normally and customarily deems to be extensive and require more
than routine effort by MDC's personnel shall be the subject of
separate contractual negotiations.
2) For as long as five (5) of the Aircraft remain in commercial and
transport service, MDC agrees to maintain a level of product
support, including current software knowledge and future software
development capability equal to or better than the level of
product support currently available for DC-10's from MDC as of
the date of the Agreement.
B. Launch Teams
1) A Launch Team of a total of four (4) technical experts will be
assigned to the most advantageous locations within Federal
Express' MD-10 system as mutually agreed by Federal Express and
MDC. These experts shall be available as mutually agreed between
Federal Express and MDC prior to the Redelivery of the first
Aircraft to receive the ACF modification, Aircraft No. 15 and
shall remain so assigned for not less than six (6) months.
26-1
9/11/96
AGREEMENT NO. DAC 96-29M
27) OUTSIDE SERVICES
A. Use of Subcontractors
1) MDC may have any of the Services or Additional Services performed
by Subcontractors subject to the prior written approval of
Federal Express; provided, however, that Federal Express'
approval shall not be required for any MDC Parts. Additionally,
MDC's use of Subcontractors shall be subject in all respects to
any required FAA approval including, but not limited to, the
approval of such Subcontractor by the FAA principal inspector
assigned to Federal Express, if required.
B. Subcontractor Relationship
1) Nothing in this Agreement or otherwise shall create any
contractual relationship between Federal Express and any
Subcontractor and no subcontract entered into relating to any
part of MDC's obligations hereunder shall relieve MDC of its
obligations to Federal Express hereunder, it being agreed that
MDC shall be primarily liable to Federal Express for the
performance of its obligations hereunder regardless of whether
MDC elects to have any portion of such obligations performed by a
Subcontractor.
C. Payment to Subcontractors
1) MDC's obligation to pay its Subcontractors is an independent
obligation from Federal Express' obligation to pay MDC, and
Federal Express shall have no obligation to pay or to see to the
payment of any moneys to any Subcontractor. Further, Federal
Express' withholding of payments in accordance with this
Agreement shall not be grounds for MDC to withhold payments
properly due its Subcontractors.
D. Subcontract Service Requirements
1) It is a condition of this Agreement that all Subcontract Services
shall be performed in compliance with the requirements of this
Agreement, the Specifications, any applicable ASR Forms, FARs and
the FAA and any other regulatory agency or
27-1
9/11/96
AGREEMENT NO. DAC 96-29M
governmental body having jurisdiction over such Subcontract
Services.
27-2
9/11/96
AGREEMENT NO. DAC 96-29M
28) RECORDS
A. Previous Maintenance Records
1) Prior to the Delivery of each of the Aircraft by Federal Express
to MDC, whether such Aircraft has been on a United Airlines,
American Airlines or a Federal Express storage maintenance
schedule, Federal Express shall ensure that the relevant and
available maintenance records for such Aircraft are made
available to MDC.
B. Recordkeeping
1) MDC shall maintain the following records on the Services and
shall provide to Federal Express at the time of Redelivery of an
Aircraft all original records or copies of records, as
appropriate, on forms supplied by Federal Express acceptable to
the FAA and in accordance with the GMM and FAR 43 and 145:
a) component teardown finding reports as required by the FAA;
b) serviceable tags for components;
c) discrepancy reports;
d) documents describing tests and inspections, including test
result data, performed by MDC, if any;
e) photographs of unusual conditions or catastrophic failures;
f) work task cards related to the performed aircraft
maintenance and/or modifications;
g) reports such as aircraft weighing reports, engine trimming
and run up reports, ground and flight test reports and other
special reports;
h) Aircraft Delivery and Acceptance Receipts;
i) summary list of alterations;
28-1
9/11/96
AGREEMENT NO. DAC 96-29M
j) all engineering orders performed and all Engineering Order
Work Instruction Cards;
k) loose equipment inventory list;
l) Special or non-routine document and Aircraft Maintenance Log
pages;
m) FAA Form 337;
n) Engineering Authorizations and Fleet Campaign Directives
(FCD's) accomplished by MDC; and
o) Complete Master Job Control sheets which account for all of
Federal Express' routine and non-routine paperwork including
Work Task Cards, special or non-routine form document,
special or non-routine index form FEC-M-1810, Aircraft
Maintenance Log pages and components serviceable/repairable
tags provided or generated during each Aircraft visit.
2) MDC shall maintain all records required by the FAA and the GMM.
3) MDC shall deliver the original or copy, as applicable,
installation sign-offs of all Services and all records which
substantiate the Services to Federal Express not later than
Redelivery of an Aircraft to Federal Express by MDC. All other
records shall be delivered to Federal Express within forty-five
(45) days of such Redelivery.
4) If requested in writing to MDC all data including, but not
limited to, Technical Data which is not otherwise specified in
this Agreement, and which is required by the FAA to transition
Aircraft into revenue service, will be provided by MDC to Federal
Express as soon as practicable with a goal of five (5) days after
receipt of the request.
28-2
9/11/96
AGREEMENT NO. DAC 96-29M
C. Aircraft Modification Records
MDC shall use and comply with the Aircraft modification documents as
required by the Specifications. All entries in the Aircraft
modification and maintenance records shall be in accordance with the
GMM.
28-3
9/11/96
AGREEMENT NO. DAC 96-29M
29) ONSITE REPRESENTATION
A. On-Site Personnel
1) Federal Express shall have the right to place at the Conversion
Facility up to [* ] representatives (who may be
employees or agents of Federal Express) for the purpose of
monitoring the progress of the Services and Additional Services
on the Aircraft ("Federal Express' Personnel"), including but not
limited to representatives from the following areas in such
numbers as are reasonably required by Federal Express:
a) Quality Control;
b) Engineering and Modification Planning;
c) Material;
d) Fleet Development.
2) In addition to the Federal Express' Personnel, Federal Express
shall have the right to place at the Conversion Facility
representatives of suppliers and vendors reasonably required by
Federal Express and approved by MDC.
B. MDC's Accommodations
1) MDC shall furnish, at no cost to Federal Express or Federal
Express Personnel, standard office accommodations at the
Conversion Facility as required by Federal Express, and such
accommodations shall include:
[*
]
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
29-1
9/11/96
AGREEMENT NO. DAC 96-29M
e) file cabinets not to exceed four (4) four drawer cabinets;
and
f) other office accommodations mutually acceptable to Federal
Express and MDC.
2) Federal Express shall bear the expense of all long distance
telephone calls, including telex and facsimile, placed by Federal
Express' personnel or representatives.
3) MDC shall have no responsibility to pay any salaries, lodging,
travel and food expenses or any other personal or business
expenses relating to such personnel except as expressly stated in
this Article.
29-2
9/11/96
AGREEMENT NO. DAC 96-29M
30) PATENT PROTECTION
A. Patent Protection
1) MDC hereby declares that any MDC Parts furnished under this
Agreement do not infringe or misappropriate any U.S. or foreign
patent, trademark or copyright owned by any third party. If,
however, any such MDC Part does infringe any patent, trademark or
copyright owned by a third party, and as a result of such
infringement or misappropriation Federal Express or any lessor or
lessee of any Aircraft is restrained from use of such item, MDC
will, at MDC's option and expense, either:
a) procure for Federal Express the right to use the item free
of any liability for such infringement or
misappropriation; or
b) modify or replace the item with a non-infringing substitute
which otherwise complies with all requirements of this
Agreement.
2) MDC shall have no obligations or liability under Paragraph A.1)
above or Paragraph A.4) below with respect to any claim that an
MDC Part furnished under this Agreement infringes or
misappropriates a U.S. or foreign patent, trademark or copyright
owned by a third party, unless:
a) Federal Express refrains from making any admission of
liability, except as required by any applicable law or
regulation, without the prior written approval of MDC;
b) Federal Express uses all commercially reasonable efforts to
notify MDC in writing of any claim within thirty (30) days
after Federal Express has been restrained from the use of
such item or ten (10) days after service of any suit or
action, or within such shorter period as is reasonably
required to enable MDC to defend the claim on time;
30-1
9/11/96
AGREEMENT NO. DAC 96-29M
c) MDC shall, at MDC's expense, have sole control of the
defense against and settlement of any such claim to the
extent that it relates to any item furnished by MDC under
this Agreement provided that MDC shall have first
acknowledged its obligations to defend and indemnify Federal
Express hereunder; and
d) Federal Express gives MDC all commercially reasonable
assistance, at MDC's expense, in the defense of any such
claim.
3) MDC shall have no obligation or liability with respect to any
claim under Paragraph 30.A.1 above that an MDC Part furnished
under this Agreement infringes or misappropriates a U.S. or
foreign patent, trademark or copyright owned by a third party,
when such item is manufactured pursuant to detailed
Specifications or engineering drawings or designs furnished to
MDC by Federal Express.
4) EXCEPT AS PROVIDED ABOVE, AND IN ADDITION TO THE LIABILITY OF MDC
UNDER PARAGRAPH 30.A.1) ABOVE, MDC HEREBY AGREES TO INDEMNIFY,
DEFEND AND HOLD HARMLESS FEDERAL EXPRESS AND ITS RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, AFFILIATES AND AGENTS AGAINST ANY
AND ALL LIABILITIES, CLAIMS, PROCEEDINGS, PENALTIES, FINES OR
OTHER SANCTIONS, JUDGMENTS, CHARGES, TAXES, IMPOSITIONS, LIENS,
COSTS AND EXPENSES WHICH MAY AT ANY TIME BE MADE OR CLAIMED BY
ANY PERSON ARISING IN ANY MANNER OUT OF ANY CLAIM THAT ANY MDC
PART FURNISHED UNDER THIS AGREEMENT INFRINGES OR MISAPPROPRIATES
ANY U.S. OR FOREIGN PATENT, TRADEMARK OR COPYRIGHT OWNED BY ANY
THIRD PARTY.
30-2
9/11/96
AGREEMENT NO. DAC 96-29M
5) EXCEPT AS PROVIDED BELOW, FEDERAL EXPRESS HEREBY AGREES TO
INDEMNIFY, DEFEND AND HOLD HARMLESS MDC AND ITS RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, AFFILIATES AND AGENTS AGAINST ANY
AND ALL LIABILITIES, CLAIMS, PROCEEDINGS, PENALTIES, FINES OR
OTHER SANCTIONS, JUDGMENTS, CHARGES, TAXES, IMPOSITIONS, LIENS,
COSTS AND EXPENSES WHICH MAY AT ANY TIME BE MADE OR CLAIMED BY
ANY PERSON ARISING IN ANY MANNER OUT OF ANY CLAIM THAT ANY
FEDERAL EXPRESS SUPPLIED PART FURNISHED UNDER THIS AGREEMENT
INFRINGES OR MISAPPROPRIATES ANY U.S. OR FOREIGN PATENT,
TRADEMARK OR COPYRIGHT OWNED BY ANY THIRD PARTY.
6) Federal Express shall have no obligations or liability under
Paragraph A.5) above with respect to any claim that a Federal
Express Supplied Part furnished under this Agreement infringes or
misappropriates a U.S. or foreign patent, trademark or copyright
owned by a third party, unless:
a) MDC refrains from making any admission of liability, except
as required by any applicable law or regulation, without the
prior written approval of Federal Express;
b) MDC uses all commercially reasonable efforts to notify
Federal Express in writing of any claim within thirty (30)
days after MDC has been restrained from the use of such item
or ten (10) days after service of any suit or action, or
within such shorter period as is reasonably required to
enable Federal Express to defend the claim on time;
c) Federal Express shall, at Federal Express' expense, have
sole control of the defense against and settlement of any
such claim to the extent that it relates to any item
30-3
9/11/96
AGREEMENT NO. DAC 96-29M
furnished by Federal Express under this Agreement provided
that Federal Express shall have first acknowledged its
obligations to defend and indemnify MDC hereunder; and
d) MDC gives Federal Express all commercially reasonable
assistance, at Federal Express' expense, in the defense of
any such claim.
30-4
9/11/96
AGREEMENT NO. DAC 96-29M
31) CERTIFICATION
A. The Services, and each Aircraft upon which the Services have been
performed, shall at the time of Redelivery meet the FAA requirements
for airworthiness certification and be so certified under all the
conditions set forth in the Specifications.
B. Subject to the provisions of Article 19 entitled Federal Express
Supplied Parts, if any change, modification or addition affecting a
Service is required prior to Redelivery pursuant to any United States
law or governmental regulation or interpretation thereof by a United
States governmental agency in order to meet the FAA requirements for
airworthiness certification of any Aircraft, such change, addition or
modification shall be made in each undelivered Aircraft affected. MDC
shall bear the cost of complying with FAA airworthiness certification
requirements which are required to be incorporated in any Aircraft
prior to its Redelivery. Any delay in delivery of an Aircraft by
reason of such change, addition or modification shall be deemed an
Excusable Delay and the Scheduled Redelivery Date of such Aircraft
shall be adjusted to the extent of such delay. Any such change,
addition or modification effective after Aircraft delivery shall be
the sole responsibility of Federal Express.
31-1
9/11/96
AGREEMENT NO. DAC 96-29M
32) MARKETING ASSISTANCE
A. From and after the date upon which Federal Express accepts Redelivery
of the first Aircraft upon which MDC or its Subcontractors have
performed the ACF Modification pursuant to this Agreement, Federal
Express agrees to provide commercially reasonable marketing assistance
to MDC in the promotion of ACF Modification on DC-10 aircraft to other
airline operators and owners who may be potential customers thereof.
Such reasonable marketing assistance may include information as to the
performance of the modified Aircraft, a visual inspection or
photographs of the modified cockpit or such other information and
assistance as shall be mutually agreed to by the parties hereto;
provided, that Federal Express shall not be required to provide any
assistance to MDC in connection with an ACF Modification for any
competitor of Federal Express and provided that Federal Express shall
not be required to provide any assistance to MDC which Federal Express
deems, in its sole discretion, to subject Federal Express to any
liability of any kind including, but not limited to, product liability
or any regulatory liability of any type. In assisting in the
promotion of the ACF Modification, Federal Express shall be acting
solely on its own behalf and shall not be an agent or representative
of MDC.
B. [*
]
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
32-1
9/11/96
AGREEMENT NO. DAC 96-29M
[*
]
C. [*
]
D. The parties may, by mutual written agreement, agree to amend or revise
the provisions of this Article 32 upon any change in circumstances.
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
32-2
9/11/96
AGREEMENT NO. DAC 96-29M
33) INTERFACE
A. If Federal Express experiences an Interface Problem prior to
Redelivery, MDC shall correct such Interface Problem prior to
Redelivery.
B. If Federal Express experiences an Interface Problem after Redelivery
which the parties mutually agree is attributable to the Services or
Additional Services provided under this Agreement, MDC shall, at
Federal Express' request to MDC's Warranty Administrator and without
charge to Federal Express, conduct an investigation and analysis of
such problem to determine, if possible, the cause of the problem and,
in a timely manner (i) allocate resources; and (ii) recommend feasible
corrective action. Federal Express shall furnish to MDC all Technical
Data and information in Federal Express' possession applicable to the
Interface Problem and shall cooperate with MDC in the conduct of its
investigation and such tests as may be required. MDC, at the
conclusion of its investigation, shall advise Federal Express in
writing of MDC's opinion as to the cause of the Interface Problem and
MDC's recommended corrective action. If MDC and Federal Express
mutually determines that such Interface Problem is primarily
attributable to the Services or Additional Services, MDC shall
correct, at its expense such Interface Problem through issuance of
engineering changes or service bulletins, as applicable. Materials
required for accomplishment of such service bulletins shall be
provided by MDC to Federal Express at no additional charge.
C. For the purposes of this Article 33, all Federal Express Supplied
Parts identified in Exhibit P will be handled in a manner consistent
with the handling of all Parts provided by MDC. Any and all Interface
Problems associated with any Federal Express Supplied Parts identified
in Exhibit P will be handled as if the items were MDC provided Parts.
Upon the occurrence of any Interface Problem related to Federal
Express Supplied Parts, Federal Express shall use commercially
reasonable efforts to secure information and data required for
Interface Problem resolution from Federal Express Supplied Parts
suppliers.
33-1
9/11/96
AGREEMENT NO. DAC 96-29M
Such efforts shall include negotiating such obligations from Federal
Express Supplied Parts suppliers to Federal Express.
33-2
9/11/96
AGREEMENT NO. DAC 96-29M
34) TITLE
A. At all times during the accomplishment of the Services, title to each
of the Aircraft, shall remain with its registered owner. If Federal
Express is not the registered owner, it shall provide MDC, prior to
the Delivery of such Aircraft, with any necessary consent of the
registered owner, and mortgagee, if any.
B. Federal Express or Federal Express' lessor shall at all times have
full legal title and beneficial ownership in and to the Aircraft. MDC
shall have no independent possessory right in the Aircraft except as
created hereby. MDC shall; (a) be responsible for any mechanic's or
similar liens created pursuant to the Services or Additional Services
being performed hereunder and any liens associated with the flights
contemplated herein other than in respect of any such liens arising
from any act or failure to act by Federal Express; and (b) remove any
liens arising during and related to MDC's possession of the Aircraft
pursuant to the terms of this Agreement. At all times while any
Aircraft is in the possession and control of MDC under this Agreement,
MDC shall use reasonable efforts to identify such Aircraft, including
but not limited to material components or parts that are not attached
to or installed on such Aircraft, as owned by Federal Express. To the
extent commercially reasonable, any material components or parts
removed from an Aircraft will not be commingled with any components or
parts not owned by Federal Express.
34-1
9/11/96
AGREEMENT NO. DAC 96-29M
35) QUALITY AND STANDARDS
A. Quality Assurance
1) MDC shall maintain and execute quality assurance procedures to
assure that its workmanship and materials are consistent and in
accordance with standard aircraft manufacturing and repair
practices as set forth in all applicable FARs and the GMM.
Additionally, any Subcontractor of MDC must be approved by
Federal Express' Quality Audit Department prior to the
commencement of Services and at all times during the period on
which Services hereunder are being performed; provided, however,
that nothing contained in this sentence shall apply to any
manufacturer of Parts for MDC.
2) Federal Express shall have the right to inspect and audit any
work performed for the purpose of monitoring compliance with FAA
regulations and quality assurance standards deemed applicable by
Federal Express. MDC shall in no way be relieved of its
responsibilities for ensuring aircraft airworthiness and
compliance with appropriate quality assurance standards.
3) All inspections and audits by Federal Express' Representative
shall be performed in such a manner as to not delay or hinder the
performance by MDC or its Subcontractors of its obligations under
this Agreement.
35-1
9/11/96
AGREEMENT NO. DAC 96-29M
36) PUBLIC DISCLOSURE
A. Each party covenants and agrees that it shall not disclose the terms
of this Agreement or any agreement amending this Agreement to third
parties except as required by law or any third party in connection
with any transaction for the financing of one or more of the Aircraft.
In the event such disclosure is required by law or required for any
third party in connection with any transaction for the financing of
one or more of the Aircraft, each party further agrees to attach to
each page of this Agreement and supplemental agreements, if any, the
following legend:
"This document contains trade secrets and commercial, financial
and proprietary information which are privileged and confidential
and which shall not be disclosed to any person, governmental
agency, company, corporation or other party except as such
disclosure is required by law."
B. Each party agrees to notify the other party in writing of any such
disclosure they intend to make at least five (5) Business Days in
advance of the date the notifying party is required to make the
disclosure. Further, both parties agree to follow any other or
additional commercially reasonable procedure, if any, necessary to
protect this Agreement or any agreement amending this Agreement from
disclosure to third parties.
C. MDC and Federal Express shall in each instance obtain the prior
written approval of the other concerning the exact text and timing of
any and all news releases, articles, brochures, advertisements,
prepared speeches and other informational releases concerning this
Agreement or the Services provided hereunder, except to the extent
required by law.
36-1
9/11/96
AGREEMENT NO. DAC 96-29M
37) MISCELLANEOUS
A. Independent Contractor
MDC is an independent contractor and personnel used or supplied by MDC
in performance of this Agreement shall be and remain employees or
agents of MDC, and under no circumstances are such personnel to be
considered employees or agents of Federal Express. MDC shall have the
sole responsibility for supervision and control of its personnel. Each
party assumes full responsibility for any and all liability on account
of bodily injury to or death of any of its own employees occurring in
the course of their employment. Each party, with respect to its own
employees, accepts full and exclusive liability in the payment of
Worker's Compensation or employer's liability insurance premiums and
for the payment of all taxes, contributions, or other payments for
unemployment compensation or old age benefits, pensions or annuities
imposed by any government or agency having jurisdiction.
B. Article Headings and Captions
All Article headings and captions used in this Agreement are for
convenient reference and shall not affect the interpretation of this
Agreement.
C. Compliance with Laws
Both parties agree that in the performance of this Agreement they will
comply with all applicable statutes, rules, regulations and orders of
the United States, or of any state or political subdivision thereof,
including, but not limited to, laws and regulations pertaining to
safety and other conditions of employment.
D. Exhibits
All Exhibits described in this Agreement shall be deemed to be
incorporated herein and made a part of this Agreement, except that if
37-1
9/11/96
AGREEMENT NO. DAC 96-29M
there is any inconsistency between this Agreement and the provisions
of any Exhibit, the provisions of this Agreement shall control.
E. Entire Agreement
This Agreement supersedes all prior understandings, representations,
negotiations and correspondence between the parties and constitutes
the entire agreement between the parties with respect to the
transaction contemplated herein and, except as otherwise provided,
shall not in any manner be supplemented, amended or modified by any
course of dealing, course of performance or usage of trade or by any
other means except by a written instrument executed on behalf of the
parties by their duly authorized officers or officials, as applicable.
F. Legality of Provisions
If any provision of this Agreement shall be held to be invalid,
illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired
thereby.
G. No Waiver
The failure of either party at any time to require performance by the
other of any provision of this Agreement shall in no way affect that
party's right thereafter to enforce such provisions, nor shall the
waiver by either party of any breach of any provision of this
Agreement be taken or held to be a waiver of any further breach of the
same provision or any other provision.
H. Further Assurances
Each party agrees that it will take such actions, provide such
documents, do such things and provide such further assurances as may
reasonably be requested by the other party during the term of this
Agreement. Each party agrees to provide to the other, from time to
time, such generally available financial information as the other
party may reasonably request to determine their respective ability to
perform
37-2
9/11/96
AGREEMENT NO. DAC 96-29M
obligations under this Agreement including, but not limited to, an
annual financial statement during each year of the term.
I. Survival
In addition to any other provisions in this Agreement which by their
terms shall survive this Agreement, the obligations and duties set
forth in Articles 4, 6, 8, 9, 10, 14, 22, 30, 32, 33, 34 and 36 shall
survive the expiration or earlier termination of this Agreement.
J. Amendment
Except as otherwise provided, this Agreement shall not be amended or
modified except by written agreement signed on behalf of Federal
Express' and MDC's respective authorized officers.
K. Conflict
In the event of any conflict or inconsistency between any provisions
of this Agreement and the Specification, the provisions of this
Agreement shall control.
37-3
9/11/96
AGREEMENT NO. DAC 96-29M
38) AFFIRMATIVE ACTION
A. MDC's Responsibilities
1) To the extent applicable, MDC agrees to comply with the
affirmative action requirements applicable to contracts with U.S.
government contractors as set forth in Title 41 of the Code of
Federal Regulations. The provisions of said regulations are
incorporated by reference into this Agreement.
2) Prior to performance of the Services, MDC shall provide evidence
satisfactory to Federal Express that MDC has in place an Anti-
Drug and Alcohol Program for its employees of subcontractors who
perform safety-sensitive or security related services in
compliance with 14 C.F. R. 121.429, 121.455, 121.457, 121.458,
121.459 and Appendix I and Appendix J to 14 C.F.R. Part 121 If at
any time during the term of this Agreement Federal Express or the
FAA discovers, and the FAA determines that MDC, its employees or
Subcontractors are not in full compliance with 14 C.F.R. 121.429,
121.455, 121.457, 121.458, 121.459 and Appendix I and Appendix J
to 14 C.F.R. Part 121, and as a result of such determination the
FAA Administrator issues an order suspending or revoking MDC's or
its Subcontractor's repair station certificate, then Federal
Express shall have the right, in addition to any and all other
remedies at law or in equity, to immediately terminate the
Agreement and secure a replacement contractor, with no further
obligations of liabilities to MDC. MDC acknowledges that Federal
Express has entered into this Agreement in reliance on MDC's
representation that it is in compliance with the requirements of
the Federal Aviation Administration's drug and alcohol testing
requirements for the aviation industry.
3) [
]
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange commission pursuant to Rule 24b-2 under the
Securities Exchance Act of 1934.
38-1
39) CONDITION PRECEDENT
In the event either the American Purchase Agreement or United Purchase
Agreement has not been executed by September 23, 1996, then either party
may terminate this Agreement in its entirety by giving the other party
written notice by no later than September 27, 1996. If no such notice
shall have been received by such date, then the parties shall each be
deemed to have waived its rights under this Article 39.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as of the date first above, by their officers or agents there unto
duly authorized.
FEDERAL EXPRESS CORPORATION
BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
ITS: VICE PRESIDENT
--------------
------------------------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CORPORATION
BY: /s/ ▇.▇. ▇▇▇▇
------------------------------------------
ITS: VP-CFO
------------------------------------------
------------------------------------------
EXHIBIT A
AGREEMENT NO. DAC 96-29-M
--------------------------------------------------------------------------------
TOP SPECIFICATION
(95-052)
Confidential commercial and financial information has been omitted from this
exhibit and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
EXHIBIT B
AGREEMENT NO. DAC 96-29-M
--------------------------------------------------------------------------------
PASSENGER TO FREIGHTER (P-F) CONVERSION
(95-051)
Confidential commercial and financial information has been omitted from this
exhibit and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
EXHIBIT C
AGREEMENT NO. DAC 96-29-M
--------------------------------------------------------------------------------
STANDARDIZATION
(95-053)
Confidential commercial and financial information has been omitted from this
exhibit and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
EXHIBIT D
AGREEMENT NO. DAC 96-29-M
--------------------------------------------------------------------------------
DC-10 ADVANCED COMMON FLIGHT DECK (ACF)
(95-054)
Confidential commercial and financial information has been omitted from this
exhibit and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
EXHIBIT E
AGREEMENT NO. DAC 96-29-M
--------------------------------------------------------------------------------
RELIABILITY IMPROVEMENT PACKAGE
(95-055)
Confidential commercial and financial information has been omitted from this
exhibit and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
EXHIBIT F
AGREEMENT NO. DAC 96-29-M
--------------------------------------------------------------------------------
REFURBISH & RESTORATION (SUPERMOD) PACKAGE
(95-056)
Confidential commercial and financial information has been omitted from this
exhibit and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
EXHIBIT G
AGREEMENT NO. DAC 96-29-M
--------------------------------------------------------------------------------
MAIN DECK CARGO LOADING SYSTEM
(96-024)
Confidential commercial and financial information has been omitted from this
exhibit and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
EXHIBIT H
AGREEMENT NO. DAC 96-29-M
--------------------------------------------------------------------------------
INITIAL HEAVY MAINTENANCE CHECK
(96-044)
Confidential commercial and financial information has been omitted from this
exhibit and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
EXHIBIT I
AGREEMENT NO. DAC 96-29-M
--------------------------------------------------------------------------------
RIGID CARGO BARRIER AND FORWARD
COURIER AREA (96-051)
Confidential commercial and financial information has been omitted from this
exhibit and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
EXHIBIT J
AGREEMENT NO. DAC 96-29-M
--------------------------------------------------------------------------------
LOWER DECK CARGO LOADING SYSTEM
(96-052)
Confidential commercial and financial information has been omitted from this
exhibit and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
EXHIBIT K
AGREEMENT NO. DAC 96-29-M
DATED: SEPTEMBER 11, 1996
--------------------------------------------------------------------------------
PRICE
Confidential commercial and financial information has been omitted from this
exhibit and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
EXHIBIT L
AGREEMENT NO. DAC 96-29-M
DATED: SEPTEMBER 11, 1996
--------------------------------------------------------------------------------
PAYMENT SCHEDULE
Confidential commercial and financial information has been omitted from this
exhibit and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
EXHIBIT M
AGREEMENT NO. DAC 96-29-M
DATED: SEPTEMBER 11, 1996
--------------------------------------------------------------------------------
DISPATCH RELIABILITY
Confidential commercial and financial information has been omitted from this
exhibit and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
EXHIBIT N
AGREEMENT NO. DAC 96-29-M
DATED: SEPTEMBER 11, 1996
--------------------------------------------------------------------------------
PRICE ADJUSTMENTS FOR FLUCTUATIONS IN THE ECONOMY
Confidential commercial and financial information has been omitted from this
exhibit and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
EXHIBIT O
AGREEMENT NO. DAC 96-29-M
DATED: SEPTEMBER 11, 1996
--------------------------------------------------------------------------------
MD-10 P-F/ACF MODIFICATION
MASTER DELIVERY SCHEDULE
Confidential commercial and financial information has been omitted from this
exhibit and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
EXHIBIT P
AGREEMENT NO. DAC 96-29-M
--------------------------------------------------------------------------------
FEDERAL EXPRESS SUPPLIED PARTS LISTING
Confidential commercial and financial information has been omitted from this
exhibit and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
EXHIBIT Q
AGREEMENT NO. DAC 96-29-M
DATED: SEPTEMBER 11, 1996
--------------------------------------------------------------------------------
AIRCRAFT DELIVERY RECEIPT
MDC does hereby accept Delivery of one (1) _______________ aircraft, Factory
Serial no. __________, FAA Registration No. ___________, together with three (3)
__________ engines, Manufacturer's Serial Nos. __________, _________, and
__________ together with all fixed equipment, parts, components and accessories
installed thereon and all loose equipment specified in the inventory list from
MDC, such Delivery having been made at _________________________, at _________
(a.m./p.m.) on the __________ day of ___________, 199_ in accordance with the
Aircraft Modification Services Agreement Document No. DAC-96-29M between FEDERAL
EXPRESS AND MDC.
MDC does hereby accept Delivery of the Aircraft for the performance of the
Services required by this Agreement.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CORPORATION
BY:
-------------------------------
TITLE:
----------------------------
Fuel on Board: __________ (U.S. gallons)
EXHIBIT R
AGREEMENT NO. DAC 96-29-M
DATED: SEPTEMBER 11, 1996
--------------------------------------------------------------------------------
CERTIFICATE OF ACCEPTANCE AND REDELIVERY
MDC certifies that the MD-10 Aircraft, Factory Serial No. ________,
Registration No. __________, has been modified in accordance with the terms of
the Modification Services Agreement Document No. DAC 96-29-M.
- Engine 1
-------------------------
- Engine 2
-------------------------
- Engine 3,
-------------------------
- Fuel on Board lbs.
--------------------
The inspections and tests set forth in the Agreement have been satisfactorily
completed, and Federal Express Corporation as the Owner or Lessee, hereby
approves this Aircraft as being in conformity with the provisions of the
foresaid Agreement.
Federal Express' acceptance has taken place at ______________________ on
__________________.
Redelivery is hereby made by MDC of the above referenced Aircraft together with
all fixed equipment, parts, components and accessories installed thereon and all
loose equipment specified in the inventory list provided by MDC at Delivery.
Said acceptance does not impair the rights that may be derived from the
warranties or other provisions relating to the Aircraft as set forth in said
Agreement.
Place: Date: Time:
--------------- --------------- ---------------
FEDERAL EXPRESS CORPORATION ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CORPORATION
BY: BY:
------------------------- ------------------------
NAME: NAME:
------------------------- ------------------------
TITLE TITLE:
------------------------- ------------------------
EXHIBIT S
AGREEMENT NO. DAC 96-29-M
DATED: SEPTEMBER 11, 1996
--------------------------------------------------------------------------------
ADDITIONAL SERVICES REQUEST
AUTHORIZATION FORM ASR NUMBER _______
--------------------------------------------------------------------------------
FedEx Generating Item: MDC W/O Number:
--------------------------------------------------------------------------------
Technical Documents and Specifications:
--------------------------------------------------------------------------------
General Description:
--------------------------------------------------------------------------------
Materials:
--------------------------------------------------------------------------------
Material Provisioning Responsibility: Scheduling Impact:
/ / MDC / / FedEx
--------------------------------------------------------------------------------
Estimated Material Cost: Estimated Manhours:
--------------------------------------------------------------------------------
Scheduled Redelivery Date: MDC Engineering:
--------------------------------------------------------------------------------
Revised Redelivery Date: Agreed to Fixed Price:
--------------------------------------------------------------------------------
Other: (Specify)
Authorized By: Date:
------------------------------------ --------------------
Federal Express Corporation
Accepted By: Date:
-------------------------------------- --------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation
EXHIBIT T
AGREEMENT NO. DAC 96-29-M
--------------------------------------------------------------------------------
SUPPLIER CHANGE PROPOSAL (SCP)
DAC 26-710 (REV. 7-88)
Confidential commercial and financial information has been omitted from this
exhibit and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
09-05-96 Letter Agreement ▇▇. ▇
▇▇▇ ▇▇-▇▇-▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Simultaneously herewith, Federal Express Corporation (Federal Express) and
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation (MDC) have entered into Modification Services
Agreement Document No. DAC 96-29-M (the Agreement) dated September 16, 1996,
which Agreement covers Federal Express' desire to incorporate certain
modifications in its DC-10 aircraft (the Aircraft) and MDC desires to perform
such modifications. As a further consideration of the parties hereto, this
Letter Agreement No. 1 shall constitute a part of said Agreement.
[*
]
--------------------
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
09-05-96 Letter Agreement No. 1
DAC 96-29-M
Page 2
[*
]
If the foregoing sets forth our understanding, please execute this Letter
Agreement in the space provided below:
FEDERAL EXPRESS CORPORATION
By
------------------------------------------
Its
------------------------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CORPORATION
By
------------------------------------------
Its
------------------------------------------
Date
----------------------------------------
--------------------
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
09-12-96
Letter Agreement ▇▇. ▇
▇▇▇ ▇▇-▇▇-▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Simultaneously herewith, Federal Express Corporation (Federal Express) and
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation (MDC) have entered into Modification Services
Agreement Document No. DAC 96-29-M (the Agreement), which Agreement covers
Federal Express' desire to incorporate certain modifications in its DC-10
aircraft (the Aircraft) and MDC desires to perform such modifications. As a
further consideration of the parties hereto, this Letter Agreement No. 2 shall
constitute a part of said Agreement.
1. TRAINING SERVICES. In addition to the Services set forth in the Agreement,
the parties agree to the following:
a. Maintenance Training
MDC will provide the following:
i) In accordance with Paragraph 2. of this Letter Agreement, MDC and
Federal Express will work together to identify and collect
preliminary Technical Data as follows in advance of the scheduled
documentation submittal to Federal Express in accordance with
Article 14. of the Agreement. Such preliminary Technical Data
shall be made available to Federal Express for the purpose of
developing its MD-10 maintenance training program. Additionally,
updated Technical Data related to the documents below shall
continuously be made available to Federal Express as it becomes
available or as changes occur. Analysis tools to be utilized by
Federal Express and MDC will be mutually agreed upon.
a) Maintenance Manual
b) Troubleshooting Guide
c) ▇▇▇▇ Schematics Manual
d) Wiring Diagrams
e) Powerplant Build-up
f) Cargo Loading Manual (Upper)
g) Cargo Loading Manual (Lower)
h) Master Minimum Equipment List
i) MD-10 Troubleshooting Guide (Including DC-10 common data)
j) MD-10 Schematics Manual (Including DC-10 common data)
k) MD-10 Fault Reporting Database
l) Aircraft maintenance performance objectives (MPO); and
m) Honeywell Data - MDC will use commercially reasonable efforts
to have the following data released to Federal Express in
preliminary format to support the creation of Federal Express's
Maintenance Training Program:
(1) Fault Isolation Manuals;
(2) Bite Users Guide;
(3) Vendor Manuals;
(4) Analog to Digital Interface;
(5) Student Study Guides;
(6) Software Requirements Document; and
(7) Other data which is created specifically for the MD-10.
ii) On the Job Training (OJT) instruction at Federal Express
designated locations for up to [* ].
iii) Up to [* ] of course developer support which can be
expanded by mutual agreement between Federal Express and MDC in
increments of man-months to assist Federal Express with the data
gathering and development of its maintenance training program.
The content and schedule for such support will be mutually agreed
upon between MDC and Federal Express in writing at the
"Maintenance Training Conference" to be held in Long Beach,
California, within three weeks of execution of this Agreement.
4) Office space and equipment for up to four Federal Express
employees or its agents at MDC's Cypress training facility.
5) Any software tools purchased in the development of maintenance
courseware for the MD-10 will be mutually agreed to between MDC
and Federal Express and will be consistent with Federal Express
courseware development standards. [*
] Any standards applied in
the development of maintenance courseware for the MD-10 will be
approved by Federal Express
---------------------------
*Blank space contained confidential information which has been filed
separately with the Securities and Exchange Commission pursuant to Rule
24b-2 under the Securities Exchange Act of 1934.
b. Flight Operations Training
i) In accordance with Paragraph 2. of this Letter Agreement, MDC
will provide preliminary aircraft data as follows in advance of
the scheduled document submittal to Federal Express in accordance
with Article 14. of the Agreement which data shall constitute
Technical Data. Such preliminary Technical Data shall be made
available to Federal Express for the purpose of developing its
MD-10 differences training programs. Additionally, updated
Technical Data related to the documents below shall continuously
be made available to Federal Express as it becomes available or
as changes occur. This same Technical Data may be used by
Federal Express in the development of its recurrent training
program.
a) Flight Crew Operating Manual
b) Minimum Equipment List
c) Weight and Balance Manual
d) Documentation which is to be produced to define the Crew
Performance Objectives (CPO) differences between the MD-11 and
the MD-10
ii) MDC will create and provide the following Technical Data to
Federal Express in support of the development of its flight
training program. Federal Express may participate in the initial
Crew Performance Objective (CPO) development.
a) Component, Controls and Indicator (CCI) Development
CCI worksheets to describe each switch, knob, lever, dial,
gauge, display and any other controls the flight crew may
utilize during flight. The worksheets will describe the
following information on the component, control or indicator:
- name
- location
- mode of operation - automatic or manual
- purpose
- function of each position
- indications associated with each position (i.e. master
warning/caution, aural or visual warnings
b) Crew Performance Objectives (CPO)
A CPO will be written for each task or procedure the crew is
required to perform from arrival at the aircraft until the
"Before Leaving Aircraft" checklist has been completed. The
CPO will provide a step-by-step listing of each task that is
required to
complete a procedure, the standard to which it must be
performed and the media where the task is trained. The CPOs
will reflect the differences between the MD-11 and the MD-10.
iii) Computer Based Training (CBT)
MDC and Federal Express will work together in the development of the
flight operations courseware and the flight training device (FTD)
syllabus which will be jointly developed to a standard acceptable to
both parties.
a) The story boards will be produced by MDC to address the
differences for each major system and will comply with
mutually agreeable instruction design standards.
b) The final CBT media will be mutually agreed to by Federal
Express and MDC and produced by Federal Express.
b. License of Technical Data
All Technical Data provided to Federal Express by MDC hereunder shall
be considered Technical Data under the Agreement and shall be deemed
to be licensed to Federal Express by MDC pursuant to the terms of the
Agreement and this Letter Agreement.
2. SCHEDULE
a. Maintenance Training
i) Schedule for the OJT and course developer support set forth in
Paragraphs 1.a) 2. and 1.a) 3. above to be established as
mutually agreed between MDC and Federal Express.
ii) All Technical Data required to support the development of the
MD-10 maintenance training will be made available in preliminary
form and updates as available as required by the joint
MDC/Federal Express maintenance training development effort.
b. Flight Training
i) All preliminary Technical Data required to support the
development of MD-10 differences training will be made available
in preliminary form and updates as available as required by the
joint MDC/Federal Express differences training development
effort.
ii) The courseware set forth in Paragraph 1.b.2) shall be submitted
to Federal Express in preliminary form on July 30, 1997, updates
as available and the final submittal to be complete six (6)
months after flight test completion.
3. NOTICE
Federal Express shall notify MDC, in writing, within ninety (90) days, or
as otherwise mutually agreed, of the need for OJT support. The location
and length
of time such support will be required will be provided to MDC within
thirty (30) days, or as otherwise mutually agreed, of the need for the
OJT support.
4. PRICE
a. Maintenance Training
i) The price per straight-time man-hour for the OJT set forth in
Paragraph 1.a) 2. above which is provided in 1997 shall be
[* ]; and provided in 1998 shall be [* ]. For any
OJT provided in 1999 and beyond, the price shall be MDC's then
current rate per man-hour.
If all three man-years OJT is provided in 1997 without overtime,
the total price shall be [* ]. The material and other
direct operating costs one time charge shall be [* ].
Additionally, Federal Express agrees to provide or reimburse, at
its discretion, MDC for all transportation and lodging for MDC
personnel and MDC's then current rate of per diem for each day
MDC's personnel are away from MDC's facility at the request of
Federal Express. Notwithstanding Federal Express' discretion,
all transportation provided by Federal Express shall not be in
conflict with MDC's corporate travel policy.
ii) The price per man-hour for the course developer support set
forth in Paragraph 1.a) 3. above which is provided in 1997 shall
be [* ]; and provided in 1998 shall be [* ]. For any
support provided in 1999 and beyond the price shall be MDC's then
current rate per man-hour.
If all six man-years of course developer support is provided in
1997 without overtime, the total price shall be [* ].
The material and other direct operating costs one time charge
shall be [* ].
b. Flight Training
i) The price for the flight training services provided in Paragraph
1.b. above shall be [* ].
5. PAYMENT
a. MDC shall ▇▇▇▇ Federal Express on a monthly basis for all man-hours
expended for both the OJT and the course developer support provided
pursuant to this Letter Agreement.
b. MDC shall ▇▇▇▇ Federal Express [* ] following
submittal of preliminary courseware and [* ] upon
submittal of the final courseware for the flight training services
provided in Paragraph 1.b. above.
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Change Coommission pursuant to Rule 24b-2 under
the Securities Exchange Act of 1934.
a.
b. Payment is due in full within 30 days of the date of each invoice.
2. INDEMNIFICATION
FEDERAL EXPRESS HEREBY RELEASES AND AGREES TO DEFEND, INDEMNIFY, AND HOLD
HARMLESS MDC, ITS EMPLOYEES, DIRECTORS, OFFICERS, AGENTS, AND
SUBCONTRACTORS FROM AND AGAINST ALL LIABILITIES, CLAIMS, DAMAGES, LOSSES,
COSTS AND EXPENSES FOR ALL INJURIES TO OR DEATH OF ANY AND ALL PERSONS
AND FOR LOSS OF OR DAMAGE TO ANY PROPERTY, INCLUDING LOSS OF USE THEREOF,
ARISING DIRECTLY OR INDIRECTLY OUT OF OR IN CONNECTION WITH THE SERVICES
OR TECHNICAL DATA DESCRIBED HEREIN, WHETHER OR NOT CAUSED BY THE
NEGLIGENCE OR TORT OF MDC OR ITS EMPLOYEES, DIRECTORS, OFFICERS, AGENTS
OR SUBCONTRACTORS.
If the foregoing sets forth our understanding, please execute this Letter
Agreement in the space provided below:
FEDERAL EXPRESS CORPORATION
Signature
-----------------------------------
Printed Name
--------------------------------
Title
---------------------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CORPORATION
Signature
-----------------------------------
Printed Name
--------------------------------
Title
---------------------------------------
Date
----------------------------------------