Exhibit 10.21


 


 


PORTIONS OF
THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH


THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR


CONFIDENTIAL
TREATMENT.  SUCH PORTIONS ARE DESIGNATED
[REDACTED].


 


 


All information
contained within this Agreement is confidential in nature.  It is not to be disclosed by any person
without prior

written consent of both Hawaiian Airlines, Inc. & Delta Air Lines, Inc.


 


INVENTORY SUPPORT & TECHNICAL



SERVICES AGREEMENT


 


 


Between


 


 


HAWAIIAN AIRLINES, INC.


 


And


 


DELTA AIR LINES, INC.


 


1

















 


This
Inventory Support and Technical Services Agreement (“Agreement”) is dated as of
December 4, 2002 by and between Delta Air Lines, Inc., a Delaware corporation
with its principal office at Hartsfield Atlanta International Airport, Atlanta,
Georgia (Delta) and Hawaiian Airlines, Inc. a corporation organized under the
laws of the State of Hawaii with its principal office at 3375 Koapaka Street,
Suite G350, Honolulu, Hawaii 96819-1869 (“Hawaiian”).


 


W I T N E S S E T H


 


WHEREAS,
Hawaiian operates or plans to operate certain Boeing 767-300ER aircraft powered
by Pratt & Whitney PW4060 engines as further described in the Annex hereto
(the “Aircraft”); and


 


WHEREAS,
Hawaiian desires for Delta to provide certain aircraft inventory support and
technical services for the Aircraft as further defined in Annex A to this
Agreement (as described herein and in the Annexes, the “Services”); and


 


WHEREAS,
Delta agrees to perform such Services in accordance with the terms and
conditions of this Agreement, including all agreements and Annexes incorporated
herein by reference.


 


NOW,
THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereby agree as follows:


 


1.                                      DESCRIPTION OF THE SERVICES


 


1.1           Subject to the terms and conditions
set forth in this Agreement, Delta agrees to provide to Hawaiian certain
inventory support and technical services for Components
for the Aircraft, as more specifically identified in the Annex hereto.  With the exceptions noted in Annex A,
Section 13.0, Delta is hereby designated as Hawaiian’s exclusive repair
services provider for repair and modification of Components.  Hawaiian agrees not to use any other person
or facility for such repairs or modifications without Delta’s prior written
consent, which may not be withheld by Delta without reasonable cause.


 


1.2           If not currently available to Delta
through its standard technical data library, Hawaiian will provide to Delta, or
provide Delta access to, as appropriate and as required, any and all
manufacturer-issued manuals, drawings, test equipment, software upgrades and
data and revisions thereto and any related logs and records and any and all
other technical data (hereinafter referred to as “Data”) which may be required
by Delta for completion of the Services and related record keeping
responsibilities at the location where any Service is to be performed prior to
commencement of such Service.  This
includes all manuals, data, drawings and revisions thereto produced by any
subcontractor, vendor and other supplier. These 


 


2

















 


will
be supplied to Delta in English and in a format, either paper, film or
electronic usable by Delta with its present equipment.


 


1.3           Standards
and Practices, Regulatory Requirements - Delta will perform work on Common
Components in accordance with the regulations set forth in FAR Part 43 &
121 as authorized under its FAR 121 Air Carrier Certificate, No. DALA026A.  Services will be performed in accordance
with Delta’s Continuous Airworthiness Maintenance Program and Manuals. Non-Common Components will be maintained in
accordance with the current manufacturer’s maintenance manuals.


 


2.                                      TERM & TERMINATION


 


2.1           This Agreement shall become effective
on the date first written above (the “Effective Date”) and, unless terminated
earlier as provided for herein, shall remain in force and effect for ten (10)
years from the Effective Date (the Term). 
Except in the case of a termination for cause by Delta or Hawaiian, any
services in progress upon the termination of this Agreement or any Annex shall
be completed and any payments due therefore shall be made in accordance with
the terms hereof, even if the period required to complete such services extends
beyond the date of termination.


 


2.2           The above notwithstanding, either
party may terminate this agreement upon not less than thirty (30) days (and
immediately upon notice in the case of non-payment)  prior written notice to the other party if such other party fails
to comply with any material provisions of this Agreement and such failure is
not corrected or, where such failure cannot be corrected in such period, is not
diligently seeking to correct such failure within such thirty (30) day period.


 


3.                                      CHARGES AND PAYMENT


 


3.1           [REDACTED]


 


3.2           [REDACTED]  Should an amount due to Delta by Hawaiian not be paid by its due
date, Hawaiian will pay a late charge equal to the lesser of 1% per month or
the maximum rate permitted by
applicable law from and after the due date until the unpaid balance and any
accrued interest is paid in full (“Past Due Rate”).


 


3.3           Any and all taxes (excluding any tax
upon the income or gross receipts of Delta), fees, duties or other charges
imposed or which may be imposed by any
federal, state, county or local taxing or other authority on the provision or
sale of Services, parts, materials and/or articles to Hawaiian supplied under
this Agreement (Taxes) for which Delta may be held responsible for the
collection or payment on its own behalf or on behalf of Hawaiian will be
Hawaiian’s sole and exclusive responsibility and will be payable exclusively by
Hawaiian.


 


3

















 


All amounts charged
hereunder are exclusive of such Taxes. 
Delta’s failure to invoice or collect such Taxes from Hawaiian will not
be deemed a waiver or release of Hawaiian’s obligations hereunder.  Hawaiian further agrees to indemnify and
hold Delta harmless from and against the payment of any and all such
Taxes.  In addition Hawaiian agrees to
repay the interest and penalties that may accrue or are otherwise incurred in
connection with any such overdue Taxes. 
If a claim is made against any party for Taxes with respect to which the
other party is liable for a payment or indemnity hereunder, the party receiving
such claim will promptly give the other notice in writing (and, in any case,
within fifteen (15) days of receipt of such claim); provided, however, that
failure to give notice will not relieve any party of its obligations
hereunder.  Hawaiian will remit payment
to Delta or the tax authority, as appropriate, unless Hawaiian is permitted by
applicable law to contest such claim and defer payment.  Such contest will be coordinated by Delta
and the reasonable expenses will be borne by Hawaiian including legal and
accounting fees, expenses, penalties and interest.  If either party receives any refund on account of any suit or
action for a Tax for which the other party has provided funds hereunder, such
party shall promptly, but in any event within thirty (30) days of receipt of
such refund, remit such refund to the other party, together with any interest
refunded on such amount.


 


3.4           [REDACTED]


 


4

















 


4.                                      TRANSPORTATION, TITLE, RISK OF LOSS


 


4.1           From locations other than where Delta
routinely performs maintenance on Aircraft, 
Hawaiian shall be responsible for the shipment of Components to Delta’s
TechOps center at Atlanta Hartsfield International Airport, Atlanta, Georgia,
or such other facility as requested by Delta, for all Components requiring
service under this Agreement, including, as applicable, all import/export
licenses, duties, and fees.  At
locations where Delta routinely performs maintenance on Aircraft, Delta shall
be responsible for the cost of transportation to Delta’s TechOps center at
Atlanta Hartsfield International Airport, Atlanta, Georgia, or such other
facility as determined by Delta, for all Components requiring service under
this Agreement.


 


4.2           For the initial provisioning of
Components to Common Stations, and for shipment of Components to all locations
where Delta does not routinely perform maintenance work on Aircraft, Hawaiian
shall be responsible for the one way shipment of Components to such locations including, as applicable, all
import/export licenses, duties, and fees associated with Component
shipments.


 


4.3           For shipment of Components to and
from any international location, international shipping costs and associated
charges, such as customs and brokers’ fees, import/export
licenses and fees will be borne by Hawaiian.


 


4.4           Title to Components shipped to
Hawaiian shall remain with Delta while in storage or in transit but will vest
in Hawaiian upon installation on an Aircraft. 
Title to Components removed from an Aircraft shall vest in Delta upon
delivery to Delta or to a common carrier for shipment to Delta. The risk of
loss for all Components during shipment will pass from the shipping
party to the receiving party upon delivery to a common carrier for shipment.


 


5.                                      LIABILITY, INDEMNITY AND INSURANCE


 


5.1           To the fullest extent permitted by
law, Hawaiian shall indemnify, defend and hold harmless Delta, its directors,
officers, employees and agents from and against any and all claims, damages,
losses, liabilities, judgments, costs, fines and expenses of any kind or nature
whatsoever, including but not limited to interest, court costs and attorney’s
fees, which in any way arise out of or result from the performance or
nonperformance of Services under this Agreement,  including but not limited to injury to or death of any person and
damage to or destruction of any property, real or personal. However, nothing
contained in this section shall be construed as an indemnity by Hawaiian
against any loss, liability or claim to the extent arising from the negligence
or willful misconduct of Delta. In no event shall Delta be liable for 


 


5

















 


any
indirect, special or consequential damages, including lost revenues or profits
and loss of use of equipment, aircraft or facilities arising out of or in
connection with the performance or nonperformance of Services under this
Agreement.  The indemnification
obligations of this section shall survive termination or expiration of this Agreement.


 


5.2           Delta will promptly notify Hawaiian
of any claim made or suit brought within the scope of Section 5.1 and Hawaiian
shall have the right to assume and conduct the defense or to effect any
settlement which it may deem proper.


 


5.3           For the term of this Agreement, and
for a period of two (2) years thereafter, Hawaiian shall carry and maintain at
its own cost and expense: (i) Aviation Liability Insurance in an amount not
less than [REDACTED] Combined Single Limit on an occurrence basis for Bodily Injury
and Property Damage, including,
without limitation, products liability, ferry flights and contractual liability
and in such form as required by Delta; and (ii) Aircraft All Risk Hull
Insurance, including ground taxi, in-flight, spare parts (whether on or off the
Aircraft) and war risk coverage, and which contains a provision waiving any and
all rights of subrogation that Hawaiian’s insurers may have or acquire against
Delta arising out of Services provided hereunder.  Such liability insurance shall name Delta as an Additional
Insured with respect to Hawaiian’s indemnity obligations under this Agreement
and shall contain a standard cross-liability endorsement and a breach of
warranty provision in favor of Delta.


 


5.4           Hawaiian and Delta each agree to be solely
and fully responsible for payment of all Workers’ Compensation benefits for its
respective employees.


 


5.5           Hawaiian shall obtain the insurance
required by this Agreement from a financially sound insurance company of
recognized responsibility and shall furnish Delta with a certificate of
insurance evidencing such coverage prior to the commencement of Services under
this Agreement.  All insurance policies
shall be primary without contribution from any insurance carried by Delta.  All insurance policies shall continue in
full force and effect for at least thirty (30) days after Delta receives
written notice of cancellation, termination or material alteration.


 


5.6           In no event shall either party hereto
be liable to the other party for incidental, consequential or special
damages.


 


6

















 


6.                                      EXCUSABLE DELAY


 


Neither party shall be liable to the other or to any
other party for, nor be deemed to be in default of this Agreement because of
any failure or delay in its performance due under this Agreement for any cause
beyond its reasonable control including, but not limited to fires, floods,
riots, insurrection, war, labor disputes, act of God.


 


7.           WARRANTY


 


7.1           Delta warrants that any parts or
materials that are rebuilt or repaired by Delta shall be free from defects in
workmanship.  All parts or materials
furnished by Delta under this Agreement will be selected in accordance with
industry standards and shall, to the extent required by applicable regulations,
bear an appropriate repair tag.  Delta
will repair or replace at no charge any such parts or materials that do not
conform to the foregoing description. 
EXCEPT AS PROVIDED HEREIN, DELTA SPECIFICALLY DISCLAIMS ANY WARRANTY AS
TO THE QUALITY OR AIRWORTHINESS OF SUCH PARTS OR MATERIALS.


 


7.2           [REDACTED]


 


Additionally,
as required, Hawaiian will use commercially reasonable efforts to assign to
Delta any warranties it has received from the manufacturer, lessor, or vendor
of Components if such warranties have not been extinguished.  Hawaiian and Delta shall execute all
reasonable documents required by the manufacturer, lessor or vendor in order to
effect assignment of any Component warranties Hawaiian may have received.  All assignments of Component warranty rights
to Delta pursuant to this Section will expire immediately upon termination or
expiration of this Agreement and payment to Delta of all amounts due hereunder,
whether or not then invoiced or yet to be invoiced, and such rights will revert
back to Hawaiian.


 


7.3           WARRANY DISCLAIMER AND LIMITATION OF
LIABILITY.  THE WARRANTIES CONTAINED IN
THIS SECTION ARE GIVEN IN LIEU OF ANY AND ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION THOSE OF MERCHANTABILITY AND FITNESS FOR
INTENDED USE.  HAWAIIAN HEREBY WAIVES
AND RELEASES DELTA FROM ANY OTHER OBLIGATION OR LIABILITY ARISING OUT OF ANY
CLAIMED DEFECT, WHETHER IN CONTRACT, TORT, OR ANY OTHER FORM OF ACTION, AND IN
NO EVENT WILL DELTA BE LIABLE FOR INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES
TO HAWAIIAN OR ANY OTHER PARTY.  DELTA’S
SOLE AND EXCLUSIVE OBLIGATION UNDER THIS AGREEMENT IS LIMITED TO THE REPAIR OR
REPLACEMENT OF THE 


 


7

















 


DEFECTIVE EQUIPMENT,
UNDER THE TERMS SET FORTH ABOVE, UPON WHICH SERVICES WERE PERFORMED.


 


8.                                      GENERAL


 


8.1                                 This Agreement represents the entire understanding
of the parties as to its subject matter and its terms may not be modified or
amended other than by a writing of even or subsequent date executed for both
parties by their duly authorized representatives.


 


8.2                                 Neither an express waiver nor a failure by either
party to demand performance of any provision of this Agreement will constitute
a waiver of such provision at any time in the future or a waiver of any other
provision.


 


8.3                                 Any provision of this Agreement which may be
determined by competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.


 


8.4                                 This Agreement shall be governed by and construed
in accordance with the laws of the state of Georgia, regardless of its
conflicts of laws rules.


 


8.5                                 This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and
assigns.  No third party is intended to
benefit from, nor may any third party seek to enforce, any of the provisions of
this Agreement.


 


8.6                                 This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which, taken
together, shall constitute a single enforceable agreement.


 


8.7                                 If Delta initiates an action by way of a claim or
counterclaim to collect any amounts owed under this Agreement, it shall be
entitled to receive its court costs and reasonable attorneys fees and expenses
from Hawaiian.


 


9.                                      DELTA - PROVIDED INVENTORY


 


9.1           [REDACTED] 
Hawaiian will provide adequate warehousing and storage space for
Components delivered to Hawaiian by Delta. 
Hawaiian shall at all times store all Components in a segregated area
and identify them as Delta’s inventory, subject to a lien in favor of the
financing party, until installed on an Aircraft.  Hawaiian will use the same degree of care, but in no event less
than reasonable care, in keeping records of and 


 


8

















 


maintaining security for
Delta’s inventory as Hawaiian uses with respect to its own inventory.


 


9.2           Hawaiian will pay all personal
property Taxes on all Components to the extent assessed on Components while in
Hawaiian’s possession.  If Delta
receives any assessment on Components for periods while such Components were in
Hawaiian’s possession, Delta will promptly provide a copy of such assessment to
Hawaiian, together with a calculation showing the amount Delta believes is
allocable to Hawaiian.  Hawaiian will
pay or reimburse Delta for such amount promptly.


 


9.3           Except as provided in Section 4.4,
title to Components will remain with Delta at all times.  In the event of any loss, theft, damage or
destruction of any Components while in Hawaiian’s possession or under
Hawaiian’s control which is not recoverable through insurance, Hawaiian will
pay Delta for such Component as provided in Section 19.3 of Annex A.


 


9.4           [REDACTED]


 


9.5           Hawaiian will keep Delta inventory
Components in Hawaiian’s possession or control free and clear of all liens and
encumbrances arising through Hawaiian or out of or in connection with
Hawaiian’s possession thereof.  If
Hawaiian or any creditor of Hawaiian seeks to, or does, encumber any of the Components
in any way, Delta may demand that Hawaiian unencumber such Components
immediately and Hawaiian will immediately unencumber such Components.  If Hawaiian fails to do so, Delta may
immediately terminate this Agreement pursuant to Section 2.2.  Hawaiian will cooperate in all efforts by
Delta to notify third parties that the Components are the property of Delta,
including in accordance with Section 9.5.


 


9.6           Hawaiian and Delta will jointly
prepare a written report, no less than quarterly, listing the item and quantity
of each Component in Hawaiian’s possession or control. Any inventory
discrepancies will be promptly addressed and reconciled by both parties.


 


9.7           Delta and its representatives [REDACTED]
may, at all times during the Term, enter Hawaiian’s facilities, whether owned
or leased, to inspect any or all Components and related records, including
Hawaiian’s computer systems, to review all records of location, condition and
disposition thereof, and to verify Hawaiian’s compliance with the terms
hereof.  Except during a period when
Hawaiian has been notified by Delta that it is in default hereunder, all such
inspections shall be during normal business hours upon reasonable notice to
Hawaiian.  Hawaiian will assist Delta
with all ongoing or occasional inventory audits Delta may undertake and assist
to reconcile any and all inventory discrepancies.


 


9.9           Upon expiration or termination of
this Agreement for any reason or upon default by Hawaiian that is not cured
within the time allowed therefor, Hawaiian shall purchase those Components or
equivalents that Delta has purchased for the support of Aircraft in accordance
with Annex A, Section 19.3 of this Agreement. 



 


9

















 


All
such Components which are then in Delta’s possession, shall be provided to Hawaiian
as agreed by the parties no later than ten (10) business days after payment, in
accordance with Annex A, Section 19.3, for such Components is received by
Delta.  All other Components must be
returned by Hawaiian to Delta in accordance with Delta’s instructions.  If Hawaiian does not purchase or return all
the Components as required, Delta may enter onto Hawaiian’s premises, whether
leased or owned, and segregate, pack and remove such Components from such
premises.  The cost of shipment,
insurance, duties and other costs, if any, incurred in connection with any such
return or recovery will be borne by Hawaiian, and Hawaiian will promptly pay or
reimburse Delta for the cost thereof.


 


10.          CONFIDENTIALITY


 


10.1         The parties hereto each agree that the
terms of this Agreement is confidential and neither party shall disclose the
terms of this Agreement to any third party without the prior written consent of
the other party.


 


10.2         All data exchanged between the parties
pursuant to this Agreement and marked as confidential or proprietary (in the
case of data exchanged orally and expressly stated as confidential which is
followed up in writing within thirty (30) days of such disclosure) shall be
considered Confidential Information. Each party hereto agrees to keep Confidential
Information provided to it by the other party in confidence and not to disclose
such Confidential Information to any third parties or to any person within the
employ of the receiving party without a need to know such information, without
the prior written consent of the disclosing party, such consent not to be
unreasonably withheld. Each party agrees to exercise the same degree of care in
protecting the other party’s Confidential Information as it uses to protect its
own Confidential Information, but in any event, a reasonable degree of
care.  Each party agrees that at the
earlier of termination of this Agreement or upon a request by the other party
for the return of any Confidential Information, it shall, as soon as practical,
return such Confidential Information, or destroy such Confidential Information
and certify such destruction to the disclosing party unless such information is
required by Delta to perform its obligations under this Agreement.


 


11.                               NOTICES


 


Notices
required by this Agreement will be deemed sufficient when received, if given in
writing by personal delivery, by certified mail, or by electronic transmission
or by fax addressed to the parties as follows, except to the extent that a
specific Annex specifies that notices with respect to matters covered in that
Annex are to be sent as provided therein:


 


IF
TO DELTA:


 


Director - Technical Sales and Services


Delta Air Lines, Inc.


 


10

















 


Hartsfield Atlanta International Airport


Atlanta, Georgia 30320


Facsimile No.: 
(404) 714-3281


 


Copy To: Vice President - TechOps Engineering &
Planning


 


IF TO HAWAIIAN:


 


Hawaiian Airlines, Inc.


Attn: 
Vice-President - Maintenance & Engineering


3375 Koapaka Street, Suite G350


Honolulu, Hawaii 96819-1869


Tel:  (808)
835-3376


Fax:  (808)
835-3380


 


with a copy to:


Hawaiian Airlines, Inc.


Attn:  Vice
President, General Counsel and Corporate Secretary


3375 Koapaka Street, Suite G350


Honolulu,
Hawaii 96819-1869


Tel: 808-835-3610


Fax: 808-835-3690


 


IN
WITNESS WHEREOF, the parties have hereunto set their hands and seals through
the signatures of their duly authorized representatives, as of the date first
specified herein.


 


	
  HAWAIIAN
  AIRLINES, INC.

  	
   

  	
   

  	
  DELTA
  AIR LINES, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ H. Norman Davies, Jr.

  	
  By:

  	
   

  	
  /s/ Ray Valeika

  
	
  Name:

  	
  H.
  Norman Davies, Jr.

  	
   

  	
   

  	
  Name:

  	
  Ray
  Valeika

  
	
  Title:

  	
  Executive
  Vice-President -

  Operations

  	
   

  	
   

  	
  Title:

  	
  Senior
  Vice President -

  Technical Operations

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Christine R. Deister

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Christine
  R. Deister

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Executive
  Vice President,

  Chief Financial Officer and Treasurer

  	
   

  	
   

  	
   

  	
   

  



 


11

















 


ANNEX A


 


TO


 


INVENTORY SUPPORT & TECHNICAL 


 


SERVICES AGREEMENT


 


12

















 


Table of Contents


 


Annex A


 


	
  DEFINITIONS

  
	
  1.0  Inventory Maintenance; Basis for Provisioning

  
	
  2.0 Configuration Management

  
	
  3.0 Reliability
  Monitoring & Tracking

  
	
  4.0 Performance Measures

  
	
  5.0 Adjustments to Inventory

  
	
  6.0 Inventory Management

  
	
  7.0 Maintenance and Repair

  
	
  8.0 Misuse or Abuse of
  Components

  
	
  9.0 No Fault Found
  (NFF) Components

  
	
  10.0 Airworthiness
  Directives (ADs).

  
	
  11.0 Service Bulletins (SBs)

  
	
  11.1 SBs Costing No
  More Than $1,200

  
	
  11.2 SBs Costing More
  than $1,200

  
	
  11.3 Determining the Cost
  of SBs

  
	
  11.4 Modification
  Compatibility

  
	
  12.0 Undocumented
  Components or Repairs

  
	
  13.0 Supply Response Times

  
	
  14.0 Shipment of
  Components for Services

  
	
  15.0
  Shipment Methods and Costs; Packing; Required Records

  
	
  15.1 Method of Shipment
  and Costs.

  
	
  15.2 Proper Packaging.

  
	
  15.3 Records and Reports.

  
	
  16.0 Warranty Administration

  
	
  17.0 Project
  Manager; Hawaiian Representatives

  
	
  18.0 Description of Aircraft

  
	
  19.0 Charges & Payments

  
	
  19.1 Allocated
  Inventory -  Flat Rate

  
	
  19.2
  Common Component/Common Station Inventory - Flat Rate

  
	
  19.3 Inventory Purchase

  
	
  19.4
  Component Repair & Warranty Management

  
	
  19.5 Power by the Hour Rate

  
	
  19.6 Delta Time &
  Material Rates

  
	
  19.7 Late Charges

  
	
  19.8 Time & Material
  Invoices

  
	
  20.0 Rate
  Escalation Formulas and Adjustments

  
	
  20.1 Yearly Rate
  Escalation Determination

  



 


13

















 


DEFINITIONS


 


Definitions.  The following terms have the meanings
defined below when used in this Agreement (whether or not underscored):


 


“AD” (Airworthiness
Directive) means an airworthiness directive issued by the FAA and
applicable to any Component.


 


“Aircraft”
means each Boeing 767-300ER aircraft that is operated by Hawaiian or lised on
its operations specifications during the Term as set forth in Section 18 of
Annex A.


 


 “Allocated Inventory”  means that group of Components provided from
time to time to Hawaiian by Delta to support Aircraft maintenance and operations.


 


“AOG”
(Aircraft-on-Ground) means any Aircraft which is not airworthy because of
the unavailability of one or more serviceable Common Components required for
dispatch in accordance with Hawaiian Minimum Equipment List manual.


 


“Boeing”
means The Boeing Company or any successor or assignee corporation which is
approved by the FAA to provide maintenance, parts, and product support for the
Aircraft.


 


“Boeing Manuals”
means the various Boeing manuals that pertain to or relate to the Aircraft or
the Components (as they may be amended, supplemented, or superseded from time
to time).


 


“Business Day”
means any day other than a Saturday or Sunday or a holiday on which the banks
in Georgia, New York, or Hawaii are authorized or required by law to close for
business.


 


 “CLP” means the current list price of
a Component as defined in the most recently published original equipment
manufacturer’s catalog.


 


“Common Components”
means any Component that is then currently a Delta common component , and is
eligible for service under this Agreement.


 


 “Common Station” means any
station in the continental United States at which both Hawaiian and Delta
operate B767-300ER aircraft and where Delta maintains inventory to support its
operations.


 


14

















 


“Component(s)”
means, collectively, any self-contained part, combination of parts,
subassemblies or units, which perform a distinctive function necessary to the
operation of a system of the Aircraft. 
The following components or systems are not covered under the power by
the hour charges and are not eligible for service under this Agreement:   Aircraft engines and all gas path parts for
such engines, Aircraft APU including all APU externals/accessories and all gas
path parts for such APU, landing gear (everything below the landing gear to
aircraft attachment points that is not a line replaceable unit), flight control
surfaces, thrust reversers, life limited and/or time controlled parts (shop
visits for time controlled aircraft Components are not provided as part of the
PBTH services but will be performed under Time and Material billing.   Advanced exchanges for such time controlled
aircraft Components will be provided as part of the PBTH services), passenger
accommodation items (including passenger seats, and in-flight entertainment
system and components thereof), Scheduled Removal(s), wheels, tires,
brakes,  Components manufactured or
assembled by either Honeywell or Collins as further defined in Appendix B, and
insurance spares identified as leaseable spare parts in the then current Boeing
Spare Parts Price Catalog.  Any services
provided for such components or systems shall be performed at Delta’s then
current Time and Material Rates.


 


“Delta Time &
Material Rates” means Delta Time & Material rates as
specified in Annex A Section 19.7.


 


“Dollars”
and “$” means dollars in lawful currency of the United States of
America.


 


“FAA”
means the Federal Aviation Administration of the United States of America and
any successor agency thereto.


 


“FAA Regulations”
means all present and future laws, rules, and regulations promulgated by the
FAA and all orders issued by the FAA applicable to the Components.


 


“Flight Hour”
means, for any particular reference period, every hour (or portion of an hour)
flown by an Aircraft, computed from each take-off (wheels off) of the Aircraft
until the subsequent landing (wheels on), as recorded in the technical log book
(or equivalent) of the applicable Aircraft


 


15

















 


“Non-Common
Component” means any Component that is not a Common
Component.


 


“Non-Common
Station” means any station or city outside of the continental
United States or any station at which Delta does not operate B767-300ER
aircraft or does not stock Components for support of such aircraft operation.


 


“OEM Manual”
means the respective manuals of each original equipment manufacturer as
applicable to their respective Components (as the manuals may be amended,
revised, supplemented, or superseded from time to time).


 


  “Other Agreement” means
any agreement (other than this Agreement) entered into between Hawaiian and
Delta related to the maintenance or support of the Aircraft or any Aircraft
system, or related to reduced-rate travel or shipments.


 


 “Parts Related Delay” means
the delay ( for more than 120 minutes) or cancellation of a scheduled Hawaiian
flight due to the unavailability of a Common Component that is also required
for dispatch as defined by the then current Hawaiian Airlines Minimum Equipment
List, at Common Stations where Delta routinely performs maintenance on the
Aircraft and at HNL.


 


“PBTH
(Power-by-the-Hour) Rate” means the rate defined in Annex A,
Section 19.5.


 


“SB” (Service
Bulletin) means a service bulletin issued by Boeing or the manufacturer of a
Component which recommends or provides authority for repair or modification of
a Component.


 


“Scheduled
Removal” means the removal of a Component not due to a
confirmed or suspected failure, but brought about as a result of the Component
life having approached or achieved a previously defined limit.


 


“Time and Material Rate”
means the then-current Delta time and material rates described in Section 19.6
of this Annex A, as escalated or revised from time to time.


 


“Undocumented
Component” means any Component that is not part of the
Allocated Inventory is not a Delta or Hawaiian purchased Component, or a
Component that was not originally delivered with the Aircraft.


 


16

















 


“Unscheduled
Removal” means any removal of a Component from an Aircraft
due to a confirmed or suspected failure of such Component.


 


17

















 


DESCRIPTION OF SERVICES


 


1.0          Inventory Maintenance; Basis for Provisioning


 


At Common Stations where Delta routinely performs
maintenance on Aircraft and HNL, Delta will maintain an inventory of Common
Components to support the operation of the Aircraft, as described below.  Delta shall provide a Common Component
supply, inventory management, and tracking function for Components, and provide
serviceable Common Components to Hawaiian on an exchange basis.


 


[REDACTED]


 


The Common Components at
Common Stations shall be commingled with Delta’s inventory for use on both
Delta aircraft and Hawaiian’s Aircraft. 
[REDACTED]


 


Hawaiian is responsible
for acquiring or having access to Non-Common and non covered Component
requirements.  Hawaiian may request
Delta to provide storage for such items at Common Stations.  As available storage and parts handling will
be in accordance with the Hawaiian/Delta Line Maintenance Agreement.


 


2.0          Configuration Management


 


Delta shall be responsible for the configuration
management and build standard determination for Common Components.  Hawaiian shall be responsible for the
configuration management and build standard determination for Non-Common
Components.  Delta shall provide
periodic, but no less than quarterly, 
reports to Hawaiian for actual and proposed changes to Common Components
configuration/build standard.   Hawaiian
shall be responsible for providing to Delta, in a format useable by Delta with
its most current equipment, all build standard change orders for Non-Common
Components.


 


3.0          Reliability Monitoring & Tracking


 


Delta shall provide to Hawaiian an unscheduled removal
report for Components removed from Delta’s B767-300ER aircraft.  This report shall be provided no later than
the 5th business day of every month, to aid in monitoring Component
reliability trends, and failures, in order to determine any adjustment to the
Component inventory.  Hawaiian shall
provide to Delta an unscheduled removal report for Components removed from
Aircraft. This report shall be provided no later than the 5th
business day of every month to aid in monitoring Component reliability trends,
and failures, in order to determine any adjustment to the Component
inventory.  As available, these monthly
reports shall contain the date of removal, part number, serial number, time
since last overhaul, time since last installation, cycles since overhaul,
cycles since last installation, removal reason, failure confirmation (yes/no),
aircraft and position, and repair text. 
Additionally, Delta will provide Component teardown reports to Hawaiian
as available and as and when the need arises in order to aid Hawaiian engineering
with investigating failure trends and causes. Hawaiian shall provide Delta with
a list of all the Components removed from the Aircraft for which Hawaiian does
not have repair text so that Delta can provide such information if and when it
becomes available.  All such reports
will be considered Confidential Information and will be delivered in electronic
format whenever possible.


 


18

















 


The systems to be tracked, the calculations to be made
and the performance standards against which the systems are measured will be in
accordance with FAA accepted practices. The data required to support such a
tracking program will be supplied to Delta by Hawaiian as requested by
Delta.  For Components installed on
Delta aircraft, Delta intends to periodically review the reliability trend
analysis and implement corrective action if reliability falls below Delta’s
established statistical limits.  Delta
does not intend to track the reliability of Components while operating on Aircraft.As
available and upon reasonable request, Delta will provide reports on the
reliability of Components as experienced by Delta during the operation of such
Components on its own aircraft,  listing
any corrective action undertaken by Delta.


 


4.0          Performance Measures


 


[REDACTED] 
If either standard is not met, then Delta shall assist Hawaiian in
evaluating the cause of such failure and determine and implement the
appropriate corrective action(s) in a timely manner so as to ensure that sufficient
Common Component inventory support is made available to expeditiously correct
the Parts Related Delay rate for Aircraft. As revised from time to time,  Delta will provide revised Parts Related
Delay rate goals to Hawaiian.


 


For Aircraft operating from Non-Common Stations, Delta
shall provide Common Component support as available,  but in any case Delta intends to ship Common Components as
requested by Hawaiian within [REDACTED] of the demand as acknowledged by
Delta.


 


As part of the Services provided under this Agreement,
Delta shall provide repair services for Non-Common Components but shall not be
held to either a Parts Related Delay rate nor a backfill performance level for
the provisioning or availability of Non-Common Components.  However, for Non-Common Component repairs,
Delta intends to manage such repair services so as to ensure a [REDACTED]
rolling average turn around time of [REDACTED].


 


Except in the case where
a Common Component is on order but is not available due to procurement lead
time, should the [REDACTED] rolling average Parts Related
Delay rate for Common Components at Common Stations and HNL fall below the
performance measures and should Hawaiian incur an AOG situation because of
Delta has not provided a Common Component at a Common Station or HNL, Delta
shall either, in order of preference to Delta, I) be responsible for the
documented loan charges, not including other such charges such as access
charge, availability fee, etc., actually and reasonably incurred by Hawaiian
for the loan/borrow of a Common Component to relieve an AOG situation until
such Common Component is made available to Hawaiian by Delta, or II) be
responsible, as pre-approved by Delta, for the purchase of such “no-go” item
but only to the extent that such purchase can relieve the AOG situation.  For any such Delta approved purchase
Hawaiian shall submit a Component purchase payment notice to Delta’s Hawaiian
Airlines Account Manager for crediting the purchase cost against future services
to be provided by Delta to Hawaiian under the Terms of this Agreement.  Within [REDACTED] days of receipt of credit notice,
Hawaiian will forward title and all available records for the purchased
Component to Delta.  In either case, if
such Component would otherwise be eligible for Services under this
Agreement,  Delta will provide repair
services for such purchased Components in accordance with the Terms and
Conditions of this Agreement.


 


The remedies provided
above are the exclusive remedies offered by Delta and accepted by Hawaiian for
any failure of Delta or any Delta subcontractor to meet the performance
standards of this Agreement, and Hawaiian understands and acknowledges that the
prices and other terms hereof were agreed to and negotiated on that basis.  Hawaiian has no other or additional remedy 


 


19

















 


against Delta or any claim for liquidated damages, whether in contract
or in tort, for the failure to meet the performance standards described above.


 


5.0          Adjustments to Inventory


 


No less than quarterly, Delta and Hawaiian intend to
define and adjust, as mutually agreed, the type and quantity of Common
Component Inventory provisioned at Common Stations and HNL for the support of
Aircraft in order to meet the operational standards as described above.


 


6.0          Inventory Management


 


 Delta intends
to use its inventory management system to manage, order and track Common
Components at Common Stations and HNL. 
Hawaiian acknowledges that Delta may change, revise, upgrade or degrade
such system from time to time, as Delta in its sole judgment deems appropriate.


 


7.0          Maintenance and Repair


 


Delta shall repair and restore both Common and
Non-Common Components removed from Aircraft that are otherwise eligible for
Services under this Agreement.  Upon
return from servicing at Delta or from one of its approved maintenance
providers, each Component will have a Delta Air Lines approved return to
service tag (e.g. 8130, Pick List, Pass Parts tag) attached..  After a Component has received an initial
shop visit, on second and subsequent shop visits, Delta shall bear all costs
for the replacement of all Common Components eligible for Services under this
Agreement and which are deemed beyond economic repair (BER) due to normal wear
and tear, except as provided in Section 8.0 of this Annex A.


 


8.0          Misuse or Abuse of Components


 


Delta shall repair and
replace Components damaged due to use of such Component outside of the
manufacturer’s recommendations, improper operation or maintenance, foreign
object damage, abuse, negligence or accidental damage at Delta Time and
Material Rates, or if replacement is necessary, shall be replaced by Delta and
charged to Hawaiian at the Delta’s purchase price or cost or the manufacturer’s
then-current list price, whichever is less, plus [REDACTED] for the replacement
unit.


 


Except when directly
attributable to Delta negligence, Delta will not be responsible under PBTH
Rates for repairs to any downstream part or system caused by failure, loss or
damage to any upstream part or system, even if the latter is covered under PBTH
Rates, and even if the failure of the former would, if not caused by the
latter, have been covered by PBTH Rates. 
Hawaiian understands that any such downstream damage will be repaired by
Delta and charged to Hawaiian at Delta Time and Material Rates.


 


9.0          No Fault Found (NFF) Components


 


If Delta cannot confirm a
failure of a Component returned to Delta for Service under the PBTH Rate after
inspection or testing, or if such inspection or testing shows the Component to
be in serviceable condition (“NFF”), then: (1) Delta will advise and provide
inspection and testing results to Hawaiian; and (2) Hawaiian will pay to Delta
[REDACTED]
for testing and verification of serviceability of NFF Component(s).  If testing and verification of
serviceability is accomplished by a Delta vendor or subcontractor, Hawaiian
will pay to Delta, Delta’s cost plus [REDACTED]. 
The preceding notwithstanding, Hawaiian will not be charged an NFF fee
if the removal of the 


 


20

















 


Component was based on a troubleshooting recommendation by Delta that
such Component be removed or if such Component was removed by Delta, unless
such Component was removed by Delta at the specific direction of Hawaiian.  For Delta tested and verified NFF
Component(s), if such Component(s) is subsequently removed within [REDACTED]
Flight Hours of installation with a confirmed failure for the same reason as
identified on the prior removal, then Delta will repair such Component and, in
addition, will either: (i) issue Hawaiian a credit against the unpaid Delta
invoice issued for a NFF charge, or (ii) credit to Hawaiian the amount paid by
Hawaiian for the NFF charge.


 


10.0        Airworthiness Directives (ADs).


 


Delta will review, analyze and issue engineering
documentation for the accomplishment of ADs on Common Components.  Hawaiian will review, analyze and issue
engineering documentation in a format acceptable to Delta with instructions for
the accomplishment of ADs on Non-Common Components.  The actual accomplishment of any ADs on Components will be charged
to Hawaiian at Delta Time & Material Rates, but only for the amount of such
Components deemed to be either Allocated Components, or non-complying
Components delivered with Aircraft. The amount of labor charged for
accomplishing any AD will be that number of man-hours specified in the AD, or
if the AD fails to specify the number of man-hours, then such information will
be obtained from the relevant equipment manufacturer.  If the manufacturer specifies the number of man-hours, then not
more than such number will be invoiced by Delta.  If the manufacturer does not supply such information, Delta will
estimate the labor required to accomplish the AD and advise Hawaiian.  Delta will track and invoice Hawaiian for
the actual labor necessary to accomplish the AD, advising of any substantive
changes, if they occur, that would significantly alter the estimate. Any labor
expended on Services not required to accomplish the AD will be allocated as
appropriate either to the PBTH Rate or to the Delta Time & Material Rate as
provided elsewhere herein.  The material
part of the Delta Time & Material Rate charge will be for only that
material necessary to complete the AD. 
If the AD fails to provide the list of materials necessary to accomplish
the AD, such information will be obtained from the relevant equipment
manufacturer.  If that information is
not available, Delta will estimate the material required to accomplish the AD.
If the only reason for removing a Component from an Aircraft was to accomplish
an AD, Delta will invoice Hawaiian for, and Hawaiian will pay to Delta, all the
charges required for the Services associated with the accomplishment of the AD
and other Services required by the Maintenance Program to return the Component
to serviceable condition at Delta Time & Material Rates.  Any other work performed during such a shop
visit to enhance any performance or life of any Common Component will be borne
by Delta.  To the extent allowed by the
time limits of the AD, Delta intends to make reasonable efforts to accomplish
ADs in conjunction with other scheduled maintenance on Components.


 


11.0        Service Bulletins (SBs)


 


Hawaiian will review,
analyze and issue engineering documentation in a format acceptable to Delta
with instructions for the accomplishment of SBs on Non-Common Components.  SBs shall be incorporated into Non-Common
Components at Hawaiian direction.  For
Non-Common Components, all SBs shall be accomplished by Delta or Delta’s repair
provider at then current Time and Material Rates.


 


If, during an initial
shop visit, Delta finds that the build standard for any Common Component is
below the current Delta build standard for such component, Delta will
incorporate the current Delta build standard into such component and charge
Hawaiian for such improvement(s) at Delta or repair provider T&M
rates.  If during an initial shop visit,
Delta finds any Common 


 


21

















 


Component is BER, Delta will charge Hawaiian at Delta’s purchase price
or cost or the manufacturer’s then current list price, whichever is less, plus
[REDACTED]
for the replacement of such Component. 
For Common Components that have had at least one shop visit accomplished
at Delta, Delta will, as part of the Services, review, analyze and in those
instances where Delta determines it is appropriate, issue engineering
documentation for the incorporation of SBs into Common Components.  For Common Components that have had at least
one shop visit accomplished under this Agreement and which require
incorporation of an SB in order to meet a Delta modification standard,  such SB will be incorporated at the same
time that other services are performed on such Components, in accordance with
the following:


 


11.1        SBs Costing No More Than [REDACTED]


 


If, after a first
qualifying shop visit, Delta reasonably estimates that the incorporation of an
SB into a Common Component will cost no more than [REDACTED], when calculated at
applicable Delta Time & Material Rates, then such SB will be incorporated
into the Component as part of the Services provided under the PBTH rate in
those instances where Delta has decided to perform such SB.  For Common Components such SBs may be automatically
incorporated with or without Hawaiian permission so long as Delta advises
Hawaiian and the SB does not change the fit, form or function of the
Component.  If the SB will change the
fit, form or function of the Component, then Delta will provide Hawaiian with a
written copy of Delta Engineering Order (EO) for such change. If Hawaiian
disapproves of any such SB incorporation within [REDACTED] business days after
receipt of such EO by notice to Delta, Delta will not perform the SBon any
Allocated Inventory of that part number and such Component(s) becomes a
Non-Common Component.


 


11.2        SBs Costing More than [REDACTED]


 


If Delta reasonably
estimates that the incorporation of a SB into a Common Component will cost more
than [REDACTED],
when calculated at applicable Delta Time & Material Rates, then Delta will,
at Hawaiian’s sole cost and expense for the total amount of the SB, incorporate
such SB into the Component at Delta Time & Material Rates or at supplier
invoiced cost, but only for the number of such Components either deemed to be
Allocated Inventory, or Components delivered with Aircraft that do not have the
particular SB incorporated.  If the
Component manufacturer or some other person compensates Delta for the
incorporation of the SB, then Hawaiian shall not be charged to the extent such
compensation reduces Delta’s cost for incorporating the SB below [REDACTED].


 


11.3        Determining the Cost of SBs


 


The determination of the
time and material elements of Delta Time & Material Rates for incorporation
of SBs provided for above will be calculated in accordance with this
Section.  The markup on materials will
be based on Delta’s purchase price or cost or the manufacturer’s then-current
list price, whichever is less. The labor part of the Delta Time & Material
Rate charge will be only for that number of man-hours specified in the SB, or
if the SB fails to specify the number of man-hours, then such information will
be obtained from the relevant equipment manufacturer.  If the manufacturer specifies the number of man-hours, then Delta
will invoice not more than such number. 
If the manufacturer does not supply such information, Delta will
estimate the labor required to accomplish the SB and advise Hawaiian. Delta
shall track and invoice for the actual labor necessary to accomplish the SB,
advising of any substantive changes if they occur that would significantly
alter the estimate. The material part of the Delta Time & Material Rate
charges will be for only that material necessary to complete the SB per the
information in the respective SB.  If
the 


 


22

















 


SB fails to provide the
list of material necessary for accomplishment of the SB, Delta shall obtain
such information from the appropriate equipment manufacturer.  Using the bill of material specified either
in the SB or by the manufacturer, Delta will flat-rate the material for the SB
at Delta’s purchase price or cost or the manufacturer’s then-current list
price, whichever is less, plus [REDACTED]. If that information is not
available, Delta will estimate the material required to accomplish the SB.  Delta will track and invoice Hawaiian for
the actual material necessary to accomplish the SB Labor expended on Services
not required by the accomplishment will be allocated as appropriate either to
the PBTH Rate or the Delta Time & Material Rate as provided elsewhere
herein.  If the only reason for removing
a Component from an Aircraft is to accomplish the performance of an SB, Delta
intends to invoice for, and Hawaiian will pay to Delta, all the costs required
for the Services associated with the accomplishment of the SB and other
Services, as determined by Delta, required to return the Component to
serviceable condition at Delta Time & Material Rates


 


11.4        Modification Compatibility


 


If Hawaiian chooses not
to accept a Common Component modification that Delta is performing on Common
Components for Delta’s fleet, Hawaiian agrees to amend this Agreement to remove
such Common Component from Delta’s support obligations hereunder.  Such removed Component shall then be deemed
a Non-Common Component under the terms of this Agreement.


 


Hawaiian is responsible
for creating, revising and maintaining current documentation and manuals to
incorporate corrections and revisions set forth in the EOs, ADs and SBs related
to Components.   It is also responsible
for revising, modifying or updating any test equipment or other systems or
equipment (other than Components maintained and modified by Delta), whether
used or installed on the Aircraft or on the ground.


 


12.0        Undocumented Components or Repairs


 


If, in performing any Services, Delta finds any
undocumented Component or repair, then Delta will notify Hawaiian promptly,
providing documentation of the undocumented Component and/or repair.  Hawaiian shall then substantiate such Component
within three (3)  business days of
Delta’s notice.  If Hawaiian is unable
to substantiate such Component, Delta will, at its option, either not accept
the undocumented Component for Services or remedy the undocumented Component or
repair at Delta Time & Material Rates.


 


13.0        Supply Response Times


 


When a Component is required to be removed from an
Aircraft and Hawaiian does not have a replacement Component available, Hawaiian
will immediately advise Delta Maintenance Control Center front desk.  Within thirty minutes of receiving any such
notice, Delta will: (i) acknowledge receipt of the request either by telephone,
email, or fax;  (ii) advise Hawaiian
whether a replacement Component is in stock or must be obtained from another
source; and (iii) either give Hawaiian complete shipping information for the
replacement Component or advise Hawaiian when such information will become
available.   Delta or its suppliers will
ship each Component to the location designated by Hawaiian as soon as possible;
but in any event, to comply with program performance measures.


 


Delta will ship Common
Components using the same degree of expediency for a Hawaiian AOG situation
that Delta generally uses for a Delta AOG situation. If Delta’s general AOG
handling 


 


23

















 


methods are not
sufficient in a particular situation, then at Hawaiian’s request, Delta will
arrange for unique shipping methods, such as the hiring of private aircraft to
ship the Common Component, all at Hawaiian’s cost and expense.


 


14.0        Shipment of Components for Services


 


Hawaiian will ship each Component it or its
contractors removes from an Aircraft to Delta’s Technical Operations Center at
Atlanta Hartsfield Airport in Atlanta, GA within five (5) business days after
such removal.  Hawaiian will handle or
arrange for all such shipments except as follows.  In those instances when Delta or a Delta subcontractor removes a
Component at a Common Station within the United States, Delta will pack, ship
and track shipment of such Component. 
In those instances when Delta or a Delta subcontractor removes a
Component outside the United States, Delta or its subcontractor will pack the
Component for shipment and coordinate with Hawaiian’s maintenance control
center for the shipment of the Component to a service provider as designated by
Hawaiian at Hawaiian’s sole cost and expense.


 


15.0        Shipment Methods and Costs; Packing;
Required Records


 


15.1        Method of Shipment and Costs.


 


At Hawaiian’s option,
Hawaiian may provide for shipment for any Component which requires Services at
its own cost and expense via any reasonable method that will satisfy the
Component shipment time requirement set forth in Section 14.0.


 


15.2        Proper Packaging.


 


Delta will initially
deliver all serviceable Components in reusable Category 1 containers (as
defined in ATA Specification 300). 
Hawaiian will return each removed Component in the same container as the
one in which the replacement was shipped or its equivalent.  If that container or its equivalent is not
returned to Delta, Hawaiian will be charged at the Delta purchase price or cost
or the manufacturer’s then-current list price, whichever is less, plus [REDACTED]
for its replacement or equivalent. Regardless of the method of shipment,
Hawaiian shall be responsible for ensuring that Components are properly
prepared, packaged, labeled and documented under applicable ATA 300 and IATA
dangerous goods regulations.  In the
event Delta receives a Component from Hawaiian that is not properly packaged
under applicable ATA 300 and IATA dangerous goods regulations, Delta will so
notify Hawaiian in order for Hawaiian to provide a proper package for use by
Delta in returning the Component to Hawaiian. 
In the event Hawaiian fails to provide the proper packaging, Delta may
provide such packaging required under the applicable ATA 300 and hazardous good
regulations and Hawaiian shall pay Delta for such packaging and other
associated costs at Delta Time & Material Rates.


 


24

















 


15.3        Records and Reports.


 


Hawaiian will furnish the following data with each
Component offered for Services:  the
registration and serial number of the Aircraft from which the Component was
removed; the Component part number, manufacturer, nomenclature, model,  and serial number; the number of Flight
Hours and cycles the Component accumulated on the Aircraft; the dates the
Component was installed and removed and the reason for removal.  Concurrent with shipment of serviceable
Components Delta will provide data on each such Component, including, as
available, aggregate flight hours and cycles accumulated, serial number, the
Component name, model and serial number; and the total number of hours and
cycles on the Component.


 


16.0        Warranty Administration


 


On behalf of Hawaiian, Delta will administer claims
against manufacturers of removed Components on which a warranty is in
effect.  Delta will retain any warranty
related compensation.  To achieve this
purpose, Hawaiian will cause the assignment to Delta of all warranty rights
related to the Components.  If Hawaiian
has not made reasonable efforts for such assignment before a warranted
Component must be repaired, Hawaiian will be charged for such repair at Delta
Time and Material Rates.  All
assignments of warranty rights to Delta pursuant to this Section will expire
immediately upon termination or expiration of this Agreement and such rights
will revert to Hawaiian, unless such termination is by Delta for breach by
Hawaiian, in which case such assignments will not revert to Hawaiian until
payment in full for all Services provided by Delta, and reimbursement for other
charges provided for herein, is received in full by Delta.


 


17.0        Project Manager; Hawaiian
Representatives


 


Delta will assign an employee with experience in
project management to coordinate all aspects of the Services and to be the
primary liaison with Hawaiian during the term of the Agreement.  Hawaiian will designate one or more
representatives who at all times during the term of this Agreement will have
the authority to accept or reject work performed by Delta.  Hawaiian will furnish to Delta’s Project
Manager a list of its personnel, with contact information, who are responsible
for the subjects covered by this Agreement. 
Delta will furnish to Hawaiian a list of its personnel, with contact
information, who are responsible for the subjects covered by this Agreement.


 


25

















 


18.0        Description of Aircraft


 


	
  Registration

  	
   

  	
  IPC Ref

  	
   

  	
  Mstr IPC

  	
   

  	
  Model

  	
   

  	
  Serial #

  	
   

  	
  Fuselage #

  	
   

  	
  Mfg. Date

  	
   

  	
  Engine
  Type

  	
   

  
	
  N580HA

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  28140

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  PW4000

  	
   

  
	
  N581HA

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  28141

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  PW4000

  	
   

  
	
  N582HA

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  28139

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  PW4000

  	
   

  
	
  N583HA

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  25531

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  PW4000

  	
   

  
	
  N584HA

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  24258

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  PW4000

  	
   

  
	
  N585HA

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  24257

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  PW4000

  	
   

  
	
  N586HA

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  24259

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  PW4000

  	
   

  
	
  N587HA

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  33421

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  PW4000

  	
   

  
	
  N588HA

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  33422

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  PW4000

  	
   

  
	
  N589HA

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  33423

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  PW4000

  	
   

  
	
  N590HA

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  33424

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  PW4000

  	
   

  
	
  N591HA

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  33425

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  PW4000

  	
   

  
	
  N592HA

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  33426

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  PW4000

  	
   

  
	
  N593HA

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  33427

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  PW4000

  	
   

  
	
  N594HA

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  33428

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  PW4000

  	
   

  
	
  N595HA

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  33429

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  PW4000

  	
   

  



 


In the event Hawaiian adds additional aircraft to the
fleet of Aircraft , Delta reserves the right to adjust the PBTH Rates in


accordance with the rates listed in Annex A, Section
19, Component Repair & Management - Cost per Flight Hour & Rate


Adjustment section


 


26

















 


19.0        Charges & Payments


 


19.1        Allocated Inventory - Flat Rate


 


[REDACTED]


 


19.2        Common Component/Common Station
Inventory - Flat Rate


 


[REDACTED]


 


19.3        Inventory Purchase


 


[REDACTED]


 


19.4        Component Repair & Warranty
Management


 


Delta will charge Hawaiian and Hawaiian will pay to Delta
a fixed monthly price per Aircraft Flight Hour for Component repair and
warranty administration in accordance with the rate table in Annex A Section
19.5. Within five (5) business days after the end of each calendar month,
Hawaiian will provide Delta with a report specifying, for each Aircraft by tail
number, the number of Flight Hours for such Aircraft for the preceding
month.  Concurrently, Hawaiian will pay
to Delta, as specified in Section 3.2, the appropriate Power by the Hour (PBTH)
charges for such month. If there is any discrepancy in the amount of such
payment, Delta will issue an invoice or credit therefore, and it will be
resolved with the next payment due.


 


19.5        Power by the Hour Rate


 


The PBTH rate charge during the term of this Agreement
for a particular Aircraft shall be determined by the Aircraft age table
below.  The Aircraft age is defined as
the number of calendar months since the aircraft was completed as new and
available for delivery by the OEM


 


[REDACTED]


 


Delta reserves the right
to amend the rates specified above in the event of unusual circumstances
related to any Aircraft. All rates shall be subject to escalation as defined in
Section 20 of this Annex.   At any time
during the term of this Agreement, should the documented power by the hour
costs for all Non-Common Component repairs exceed [REDACTED]/flight hour, Delta
and Hawaiian agree to negotiate a fair and equitable increase in such rate to
address the higher than anticipated power by the hour repair costs for
Non-Common Components.


 


19.6        Delta Time & Material Rates


 


Delta will charge Hawaiian and
Hawaiian will pay to Delta for Services performed under Delta Time &
Material Rates according to the following:


 


[REDACTED]


 


19.7        Late Charges


 


For every day beyond the fifth (5th)business
day that Hawaiian retains or fails to ship a removed Component or fails to
provide the required data for such Component, Delta will charge Hawaiian and
Hawaiian will pay to Delta a fee computed by applying a percentage to the
manufacturer’s then-current list price, computed cumulatively as follows:  [REDACTED] until 


 


27

















 


Hawaiian satisfies its obligation or until day 60 at
which time Delta will consider the part lost and will invoice Hawaiian for the
purchase of a replacement Component at Delta’s purchase price or cost or the
manufacturer’s then-current list price, whichever is less, plus a [REDACTED]
administrative fee.


 


19.8        Time & Material Invoices


 


Delta intends to issue to Hawaiian at least monthly or
on a project basis, an invoice setting forth the Delta Time & Material Rate
charges for Services not covered by the PBTH Rate.  Such invoices will be addressed and sent to Hawaiian at the
following address:


 


Hawaiian Airlines

Attn:  Accounts Payable

P.O. Box 30008

Honolulu, Hawaii 96820




20.0        Rate Escalation Formulas and
Adjustments


 


20.1        Yearly Rate Escalation Determination


 


PBTH, and Delta
Time and Material Rates will all be subject to annual economic escalation
effective on the first day of January of each contract year beginning in CY
2003 (Allocated inventory and common inventory at common station lease rates
are not subject to yearly rate adjustments). 
All such rates shall be adjusted at an annual escalation rate/price
adjustment as defined by the following formulate.


 


Price Adjustments shall
be determined 90 days prior to the start of each calendar year


 


For PBTH and all Flat Rates,
the Price Adjustment (PA) will be determined according to the following
formula:


 


	
  PA

  	
  =

  	
  (P) x (L + M – 1)

  
	
   

  	
   

  	
   

  
	
  where  P

  	
  =

  	
  applicable support
  service price

  
	
   

  	
   

  
	
  L

  	
  = Labor =

  	
  [REDACTED] x Forecasted
  AHE372NS(1) for the upcoming year

  
	
   

  	
   

  	
  [REDACTED]

  
	
   

  	
   

  
	
  M

  	
  = Material =

  	
  [REDACTED] x Forecasted
  PPI372NS for the upcoming year

  
	
   

  	
   

  	
  [REDACTED]

  
					



 


For Time and Material Labor Rates,
the price adjustment (PA) will be determined using only the labor index
according to the following formula:


 


	
  PA

  	
  =

  	
  (P) x (L – 1)

  
	
   

  	
   

  	
   

  
	
  where  P

  	
  =

  	
  applicable Fixed Price
  Labor Rate

  
	
   

  	
   

  
	
  L

  	
  = Labor =

  	
  Forecasted AHE372NS(2)
  for the upcoming year

  
	
   

  	
   

  	
  [REDACTED]

  
				



 












(1)
For purposes of the calculation, use the index forecast published in the second
calendar quarter of the year of the adjustment.  Thus, for an adjustment applicable to calendar year 2006,
calculated 90 days prior to January 1, 2006, use the index published in 2nd
quarter 2005.


 


(2)
For purposes of the calculation, use the index forecast published in the second
calendar quarter of the year of the adjustment.  Thus, for an adjustment applicable to calendar year 2006,
calculated 90 days prior to January 1, 2006, use the index published in 2nd
quarter 2005.


 


28

















 


where, AHE372NS is the
Average Hourly Earnings index established in Standard and Poor’s Data Resources
Incorporated; PPI372NS is the Producer Price Index established in Standard and
Poor’s Data Resources Incorporated; and the denominators of the equations above
are the applicable index values published for 2nd quarter of the
given calendar year.


 


If, prior to calculation,
the U.S. Department of Labor changes the base year for determination of the AHE
or PPI values, such re-based values will be incorporated in the Price
Adjustment calculation.


 


If, prior to calculation,
the U.S. Department of Labor or Standard and Poors substantially revises the
methodology used for the determination of the index values, or for any reason
has not released values needed to determine the applicable Price Adjustment,
the parties will, prior to calculation, select a substitute for such values
from data published by Standard and Poors DRI or other similar data reported by
non-governmental United States organizations. 
The substitute will lead in application to the same adjustment result,
insofar as possible, as would have been achieved by continuing the use of the
original values.


 


In the event escalation
provisions are made non-enforceable or otherwise rendered null and void by any
agency of the United States Government, the parties agree, to the extent they
may lawfully do so, to negotiate an adjustment to the prices to reflect an
allowance for increases or decreases in labor compensation and material costs.


 


Prior to applying index
values to dollars or rates, all index calculations shall be carried to the
nearest ten-thousandth prior to the next calculation.  Any rounding of a number, as required under this clause with
respect to escalation, will be accomplished as follows: if the first digit of
the portion to be dropped from the number to be rounded is five or greater, the
preceding digit will be raised to the next higher number.  Rounding will be performed at each level of
calculation prior to proceeding to the next level.


 


 


29

















 


Appendix B


 


Honeywell and Collins Parts
Exclusions


 


[REDACTED]


 


30

















 


Appendix C


 


Common Stations


 




	
  ATL

  
	
  LAX

  
	
  JFK

  
	
  PDX

  
	
  SAN

  
	
  SFO

  
	
  CVG

  
	
  SEA

  
	
  BOS

  
	
  PHX

  
	
  DFW

  
	
  SLC

  
	
  LAS

  






 


31