Document:

CONFIDENTIAL

SUPPLY AGREEMENT

Dated December 13, 2006

by and between

STELLAR PHARMACEUTICALS INC. 

("STELLAR")

and

WATSON PHARMA, INC. 

("WATSON")

SUPPLY AGREEMENT

THIS SUPPLY AGREEMENT is dated and made effective as of December 12th, 2006, (the "Effective Date") by and between STELLAR PHARMACEUTICALS INC., a corporation organized under the laws of the Province of Ontario, and having a principal place of business at 544 Egerton Street, London Ontario Canada N5W 3Z8 ("Stellar"), and WATSON PHARMA, INC, a corporation organized under the laws of the State of Delaware, United States of America, with its corporate headquarters located at 360 Mount Kemble Avenue, Morristown, New Jersey United States of America 07962-1953 ("Watson") (each individually a "Party" and collectively the "Parties").

W I T N E S S E T H:

WHEREAS Watson has been granted a license by Stellar to market, distribute and sell its proprietary product Uracyst® in the Territory (as such term is defined herein) as described in more detail on Schedule I attached hereto (the "Product"); and

AND WHEREAS pursuant to the terms of the Licence Agreement (as such term is defined herein) the Parties hereto agreed to enter into an agreement pursuant to which Stellar will manufacture, package, and sell the Product to Watson, on an exclusive basis in the Territory, on the terms and subject to the conditions of this Supply Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and promises set forth herein, the Parties agree as follows:

ARTICLE 1

DEFINITIONS

1.1

The following terms, whether used in the singular or plural, shall have the meanings assigned to them below for purposes of this Supply Agreement:

“Adverse Device Effects” means the definition in 21 CFR 812.46(b), 21 CFR 803 et. seq. and any laws, rules or regulations of similar effect in the Territory, as amended from time to time; 

“Affiliate” of any person means a corporation or other entity, which, directly or indirectly, is controlled by, controls or is under direct or indirect common control with such person.  For the purposes of this Section, “control” shall mean possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or entity, whether through the ownership of voting securities, by agreement or otherwise;

“Agency” means any governmental regulatory authority responsible for granting Regulatory Approvals for the sale of the Product in the Territory;

"Approved Manufacturer" shall mean any Third Party(s) contracted by Stellar to manufacture and package Product for Stellar under cGMPs;

"Audit" shall mean a review by Watson or its Affiliates or their appointed representatives of Stellar's, or its Approved Manufacturer’s, processes, procedures, and documents as described in Section 7.1 of this Supply Agreement;

“Business Day” shall mean means a day other than a Saturday, Sunday or any other day on which the principal chartered banks located in London, Ontario or in the United States are not open for business;

“CDN” means Canadian dollars;

“Certificate of Analysis” means a document which is signed and dated by a duly authorized representative of Stellar certifying that the Product conforms to the Specification.

"cGMP" shall mean current good manufacturing practices in the Territory, as applicable or as set forth in Title 21 of the United States Code of Federal Regulations, and as may be amended from time to time;

“Commercially Reasonable Efforts” means commercially reasonable efforts in accordance with such Party’s business, legal, medical, and scientific judgment and with the efforts and resources such Party would use for a product owned by it, or to which it otherwise has rights, which is of similar market potential, at a similar stage in its product life, taking into account the competitiveness of the market place, the proprietary position of the product, the regulatory structure involved and other relevant factors;

“Device Master File” shall have the meaning set forth in Section 7.4(g); 

 

"Documents" means, collectively, all books, pamphlets, bulletins, memoranda, letters, notices, reports, manufacturing records or other publications or documents prepared by or on behalf of Stellar setting forth information, formulae, production specifications, advice, standards, requirements, operating procedures, instructions or policies relating to the Products;

"Effective Date" means the date on which this Supply Agreement was executed;

"Facility" shall mean the Approved Manufacturer facility(s) as approved by the FDA to manufacture the Product;

"FD&C Act" shall mean the United States Federal Food, Drug and Cosmetic Act, as amended;

"FDA" shall mean the United States Food and Drug Administration, or any successor entity;

“Finished Product” shall mean commercially saleable Product for the Territory supplied to Watson, as further specified in Schedule II, with packaging specifications to include vial, labels, blister pack and carton;

"F.O.B" means Free on Board;

“Force Majeure Event” shall have the meaning set forth in Section 12.1;

"Forecast" shall have the meaning set forth in Section 2.2;

“Improvements” means any future innovations, inventions, designs, plans, drawings, Specifications, techniques, formulations, intellectual property, data and technical information relevant to the Product licensed hereunder with respect to new or improved methods of manufacture, formulas, method of delivery, dosage and uses thereof as well as the addition of other active ingredients.

"Interest Rate" means the commercial lending rate of two percent (2%) above the U.S. dollar prime or equivalent rate quoted by Citibank N.A. or another mutually acceptable bank, as in effect during the period from the date due until payment;

"License Agreement" shall mean the License Agreement entered into between Watson and Stellar as of December 12, 2006;

“Manufacturing Cost” shall mean all costs (direct and indirect) associated with producing the finished Product, including manufacturing costs charged to Stellar from time to time by each Approved Manufacturer, and as further defined in Schedule III. Manufacturing costs will be determined by the absorption costing method in accordance with United States generally accepted accounting principles (“GAAP”). 

"Methods and Technical Know-How" means all information, knowledge and experience of a technical and/or commercial nature, including, but not limited to, trade secrets, know-how, intellectual property, the Specifications, the Documents, information and data relating to techniques for, methods of or practices in the manufacturing, use and sale of the Products;

"Parties" shall mean, collectively, Stellar and Watson or their successors or permitted assigns, as applicable and individually a "Party" shall mean either Stellar or Watson, as applicable;

“Patents” mean all patents and patent applications, including provisional and priority filings, utility models, and their applications and which specifically or generally claim the Product, claim a method of treatment for the Product, claim a method of making the Product or otherwise covers the Product, including but not limited to the patent grants and applications listed in the License Agreement, together in all cases with any continuations, continuations-in-part, divisions, patents of additions, re-examinations, reissues, renewals as well as extensions, supplementary protection certificates and any other patent term extensions of any of the foregoing;

"Products" means, collectively, Uracyst®, a sterile sodium chondroitin sulphate solution marketed at 2.0% in a 20 mL vial for human use in the Field, and such related products as stipulated in Improvements (including but not limited to various strengths of chondroitin sulphate solution); 

"Product PMAs" shall mean pre-market approval applications and any other applications relating to the Product, and any supplements to such Product PMAs and/or other applications as may be filed with the FDA during the term hereof;

"Product Manufacturing Specifications" shall mean the manufacturing specifications for the Product described in the Documents and other materials set forth on Schedule II attached hereto and made a part hereof, as determined in accordance with the analytical methodology set forth therein, and as same is revised or supplemented from time to time and approved by the FDA;

"Product Packaging Specifications" shall mean the packaging and labeling specifications for the Product described in the Documents and other materials set forth on Schedule II attached hereto and made a part hereof, and as same is revised or supplemented from time to time and approved by the FDA;

"Proprietary Marks" shall mean the marks, trade marks, trade names and other commercial symbols and related logos relating to the Products as set forth in Appendix 3, together with such other trade names, trademarks, symbols, logos, distinctive names, service marks, marks, logo designs, insignia or otherwise which may be designated by Stellar; 

“Regulatory Approval” shall mean the approval by the FDA for Watson to market the Product in the Territory;  

"Specifications" shall mean all specifications, tests, methods, applications, criteria, qualities, requirements and all other information in connection with the manufacture, testing, use, handling, distribution, marketing and/or sale of the Products in any manner whatsoever, including any manual, specification booklet, letter, notice, memorandum or other written form;

“Supply Cost” shall mean Manufacturing Cost plus 10%, as calculated according to Schedule III;

“Supply Cost Ceiling” shall have the meaning set fourth in Section 3.5;

"Term" shall have the meaning as set forth in Section 9.1 hereof, and any renewal or extension of this Supply Agreement pursuant to Section 9.1; 

 

"Territory" shall mean the United States of America, its territories, and possessions;

“Third Party” means any Person other than a Party to this Supply Agreement or an Affiliate of a Party to this Supply Agreement; and

"USD" means United States of America dollars.

ARTICLE 2

SUPPLY OF PRODUCT

2.1

Supply of Product.

Subject to the provisions of this Supply Agreement and Schedule IV herein, during the Term of this Supply Agreement, Stellar shall manufacture (and/or cause to be manufactured) at a GMP compliant facility supply and sell finished Product (including derivative formulations thereof which are used to support clinical trials) to Watson on an exclusive basis in the Territory, and Watson agrees to purchase the Product exclusively from Stellar.  Stellar shall use its best efforts to meet Watson's forecast requirements for the Product during the Term of this Agreement.  

2.2

Forecasts.

Watson shall submit to Stellar at least ninety (90) days before the first day of every calendar quarter (i.e., January 1, April 1, July 1, and October 1) during the Term hereof, a twelve (12) month rolling forecast ("Forecast") organized by months and Product setting forth estimated orders Watson expects to place for the Product during the twelve (12) month period commencing with the beginning of each calendar quarter; provided, however, that only the forecast for the first calendar quarter (which may be divided into monthly segments) shall constitute a firm written order and be binding upon Watson (it being expressly understood that the forecast for the last three calendar quarters of each forecast shall be non-binding).  Each firm written order for a quarter shall be for a quantity of Product no less than 80% of the amount forecasted for such calendar quarter in the immediately preceding forecast.  Each quarter, Stellar shall be required to manufacture and supply to Watson such quantities of Product as Watson orders up to 120% of the quantity forecasted for such quarter in the immediately preceding forecast.  In the event Watson's firm written order for a quarter exceeds 120% of the forecast for such quarter, Stellar agrees to make Commercially Reasonable Efforts to meet such needs.

2.3

Orders.

(a)

Purchase Orders.  Watson shall purchase Product solely by written purchase orders for the Product; provided, however, that the terms and conditions of this Supply Agreement govern the terms and conditions of such purchase orders.  Watson shall submit each such written purchase orders to Stellar at least one hundred and twenty (120) days in advance of the date specified in each purchase order on which delivery of the Product is required.  Notwithstanding the foregoing, Stellar shall use Commercially Reasonable Efforts to meet any request of Watson for delivery of Product in less than ninety (90) days, and further, Stellar will attempt to accommodate any changes requested by Watson in delivery schedules for Product following Stellar's receipt of purchase orders from Watson.  Upon receipt of each purchase order by Stellar hereunder, Stellar shall supply the Product in such quantities (with any variances permitted hereunder) and on such dates as is specified in such purchase orders.  Stellar is not required to accept verbal orders of any kind for the production of Product hereunder.  

(b)

Purchase Quantities.  Quantities of Product actually shipped by Stellar may vary from the quantities specified in any purchase order by up to ten percent (10%), or as mutually agreed upon by the Parties, and still be deemed to be in compliance with 

such purchase order; provided, however, Watson only shall only be invoiced and required to pay for the quantities that Stellar actually ships to Watson.  

2.4

Delivery and Shipping Terms.

Delivery by Stellar of the Product shall be F.O.B. Stellar’s warehouse in London Ontario, Canada (Incoterms, 2000) in accordance with the shipping and handling instructions specified by Watson in each purchase order.  Title to the Product shall pass to Watson at the time of receipt of the Product by Watson's designated carrier at Stellar's warehouse in London, Ontario, Canada.  All Product shall be shipped to Watson in approved shipping containers as agreed upon by the Parties.

2.5

Raw Materials and Components. 

Stellar shall obtain at its cost and expense all raw materials, components, and other resources required in connection with production of the Product hereunder.  Stellar represents and warrants to Watson that it and its Approved Manufacturer currently have access to, and during the entire Term of this Supply Agreement will make all Commercially Reasonable Efforts to maintain access to, sufficient supplies of raw materials, packaging materials, labor, and all other items required to perform the services required of Stellar or its Approved Manufacturer hereunder, without interruption unless otherwise provided by this Supply Agreement.  Furthermore, Stellar represents to Watson that its raw material suppliers shall adhere to cGMP and are GMP compliant.  Upon request, Stellar will supply Watson with Certificates of Compliance and/or Analysis for the raw materials contained within the Product. 

2.6

Failure to Supply.

Without limiting Watson's rights arising from Stellar's breach of this Supply Agreement, Stellar shall promptly notify Watson if Stellar determines that it will be unable to meet the delivery date or quantity specified in any firm order placed by Watson in accordance with Sections 2.2 and 2.3 herein.  If more than once during any twelve (12) consecutive month period, (i) Stellar is unable to deliver at least eighty-five percent (85%) of any firm order placed by Watson in accordance with Sections 2.2 and 2.3 herein, or (ii) any firm order placed by Watson in accordance with Sections 2.2 and 2.3 herein is delivered more than fifteen (15) days after the delivery date specified in such firm order, or (iii) any Product supplied by Stellar is determined to be nonconforming pursuant to Section 5.2, Watson shall have the right to require Stellar to validate and contract with  another Approved Manufacturer for the Product within six months of written notification from Watson, to minimize the commercial impact of limited Product supply in the Territory.  

ARTICLE 3

PRICE; PAYMENT

3.1

Prices for Product.    

Watson shall pay to Stellar the Supply Cost during the term of this Supply Agreement for Product supplied by Stellar to Watson pursuant to this Supply Agreement.  For the sake of clarity, any Product or derivative formulations thereof used in support of clinical trials shall be supplied to Watson at Stellar’s Manufacturing Cost.  

3.2

Method of Payment.

Stellar shall provide an invoice in U.S. dollars with each delivery of Product to Watson specifying the amount that shall be due to Stellar, which shall be based on the Supply Cost, other than Product to be used in support of clinical trials which shall be based on the Manufacturing Cost. Payments shall be offset by amounts of credits as issued by Stellar pursuant to Sections 3.4, 6.1 or 8.1 herein.  In no case shall a credit be taken by Watson until prior written acknowledgement has been issued by Stellar.  Watson shall pay to Stellar the 

amount covered by such invoice in U.S. dollars within thirty (30) days after the date of shipment of the Product.  

3.3

Exchange Rates.  All payments, the Supply Cost and all other amounts and calculations to be made pursuant to this Supply Agreement shall be made in U.S. dollars and based on the average noon exchange rate as posted by the Citibank N.A. during the thirty (30) days preceding the date the Product is shipped. 

3.4

Supply Cost Adjustment and Reconciliation

(a)

For the first twelve month period, commencing with the Product launch, the Supply Cost for Product may be adjusted by Stellar upon written notice to Watson at the beginning of each calendar quarter to reflect an increase or decrease in Stellar’s Manufacturing Cost for the Product, subject to Article 3.5 below.  Any reconciliation for over or under payments by Watson shall occur on a quarterly basis in accordance with Article 3.4 (c).  Stellar shall, within thirty (30) days of the beginning of each calendar quarter, provide Watson with the estimated Supply Cost for Product to be shipped during such quarter, based on Stellar’s analysis of the actual average Supply Cost for the previous calendar quarter.

  

(b)

For the second twelve month period after the Product launch, and each subsequent year thereafter, Stellar shall provide an annual estimated Supply Cost for the Product no later than sixty (60) days before the beginning of each calendar year.  Stellar may further adjust the Supply Cost for the last two quarters of any given calendar year with written notice to Watson, to reflect an increase or decrease in Stellar’s Manufacturing Cost for the Product, based upon its analysis of the actual average Supply Cost for the previous semi-annual period, subject to the provisions of Article 3.5 below.  Any reconciliation for over or under payments by Watson shall occur on a semi-annual basis in accordance with Article 3.4 (c).  If mutually agreed to in writing by the Parties, the time periods set forth in this Article 3.4 (b) may be modified to better suit the Parties needs. 

(c)

Any overpayment made by Watson, in accordance with this Article 3, for any calendar year shall be, at Watson’s sole option, credited to purchases in the next calendar quarter or paid by Stellar within 30 days of determination of such overpayment.  Any underpayment by Watson for any calendar quarter shall be paid to Stellar within 30 days from the date of Watson’s receipt of Stellar’s invoice.

3.5

Supply Cost Ceiling.   In no event will the Supply Cost during any calendar year of this Agreement exceed CDN$ 13.98 per Product vial (excluding any price increase resulting from any Improvement) plus cumulative percentage increases thereon reflecting cumulative percentage increases in the Producer Price Index – Pharmaceutical Preparations (as reported by the United States Department of Labor website: www.bls.gov/ppi/home.htm) from the Effective Date of this Supply Agreement through such date whereby a Supply Cost adjustment is enacted, as shown in the sample calculation set out in Schedule III (“Supply Cost Ceiling”).  

ARTICLE 4

REPRESENTATIONS AND WARRANTIES

4.1

Representations and Warranties of Stellar.

(a)

Stellar warrants to Watson that the Product, at the time of sale and shipment to Watson, (i) will conform to the applicable Product Manufacturing Specifications and applicable Product Packaging Specifications, as then in effect; (ii) will have been manufactured in accordance with cGMPs as in effect at the time of manufacture; and (iii) will not be adulterated or misbranded within the meaning of the FD&C Act, (iv) 

will not be an article that may not be introduced into interstate commerce under the provisions of Sections 301, 404 or 505 of the FD&C Act, (v) will not be manufactured, sold or shipped in violation of any agreement, judgment, order, or decree to which Stellar or its Approved Manufacturer is a party, or otherwise, (vi) such merchandise is merchandise which may be legally transported or sold under the provisions of any other applicable federal, state or municipal law; and (vii) will not be manufactured, sold, or shipped in violation of any applicable federal, provincial, or local law, rule, regulation or ordinance in any material respect.

(b)

Stellar represents and warrants that there is no claim, suit, proceeding, or other investigation pending, or to the actual knowledge of Stellar, overtly threatened against Stellar, or to Stellar’s knowledge, any Approved Manufacturer, which is likely to prevent or materially interfere with Stellar's performance under this Supply Agreement or materially adversely affect the rights and interests of Watson hereunder.

(c)

Stellar represents and warrants that neither it nor any of its employees, officers or directors or any Approved Manufacturer have been disqualified or debarred by the FDA for any purpose.  If during the term of this Supply Agreement, Stellar becomes aware that Stellar or any Approved Manufacturer or any member of their respective staffs is or is about to become disqualified or debarred, Stellar will provide immediate written notice of same to Watson.

(d)

Stellar represents and warrants that neither it nor to Stellar’s knowledge any Approved Manufacturer nor any of their respective employees, officers or directors have been charged with or convicted under applicable law for conduct relating to the development or approval of any medical device, or otherwise relating to the regulation of any medical device.  If at any time Stellar becomes aware that it or any Approved Manufacturer or any of their respective employees, officers or directors is charged with or convicted under applicable law for conduct relating to the development or approval of any FDA regulated product, Stellar will provide immediate written notice of same to Watson. 

(e)

Stellar represents and warrants that it shall use its best efforts to cause any Approved Manufacturer to comply in all material respects with all federal, provincial and state laws and regulations applicable to the conduct of its business pursuant to this Supply Agreement, including, but not limited to, the FD&C Act.  

(f)

Stellar is duly organized and validly existing under the laws of the Province of Ontario and is duly qualified to carry on its business as now conducted and to own, lease and operate its property and assets and is in good standing in each jurisdiction in which the conduct of its business or the ownership, leasing or operation of its property and assets requires such qualification; 

(g)

Stellar represents and warrants to Watson that all corporate action on the part of Stellar and its officers and directors necessary for the authorization, execution, and delivery of this Supply Agreement and the performance of all obligations of Stellar hereunder has been taken.

(h)

Stellar represents and warrants to Watson that any Approved Manufacturer will be approvable by the FDA to manufacture and test the Product for distribution and sale in the Territory and that said Approved Manufacturer(s) shall be cGMP compliant.

(i)

EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE 4, STELLAR MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE PRODUCT.  STELLAR EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR 

PURPOSE, OR NON-INFRINGEMENT.  WATSON’S EXCLUSIVE REMEDY FOR ANY DEFECT IN THE PRODUCT OR BREACH OF ANY REPRESENTATION, WARRANTY OR COVENANT SHALL, AT STELLAR’S SOLE OPTION, BE REFUND OR REPLACEMENT.  IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING ANY LOSS OF PROFITS REGARDLESS OF WHETHER SUCH CLAIM ARISES IN CONNECTION WITH AN ALLEGED BREACH OF CONTRACT, TORT OR OTHERWISE.

4.2

Representations and Warranties of Watson.

(a)

Watson represents and warrants that it shall comply in all material respects with all laws and regulations applicable to the conduct of its business pursuant to this Supply Agreement, including, but not limited to, the FD&C Act.

(b)

Watson is duly organized and validly existing under the laws of the State of Delaware and is duly qualified to carry on its business as now conducted and to own, lease and operate its property and assets and is in good standing in each jurisdiction in which the conduct of its business or the ownership, leasing or operation of its property and assets requires such qualification;

(c)

Watson hereby represents and warrants to Stellar that all requisite action on the part of Watson and its officers and directors necessary for the authorization, execution, and delivery of this Supply Agreement and the performance of all obligations of Watson hereunder has been taken.

(d)

Watson shall only sell, transfer or otherwise dispose of the Product in accordance with the terms of the License Agreement entered into between Watson and Stellar as of December 12, 2006.

(e)

Watson represents and warrants that, as of the Effective Date of this Supply Agreement, neither it nor to Watson’s knowledge its Affiliates or their appointed representatives nor any of their respective employees, officers or directors has been charged with or convicted under applicable law for conduct relating to the development or approval of any medical device, or otherwise relating to the regulation of any medical device.  If at any time Watson becomes aware that it or its Affiliates or their appointed representatives or any of their respective employees, officers or directors is charged with or convicted under applicable law for conduct relating to the development or approval of any FDA regulated product, Watson will provide immediate written notice of same to Stellar.

ARTICLE 5

PRODUCT SPECIFICATIONS

5.1

Certificate of Analysis.

Stellar shall furnish to Watson with each shipment of Finished Product hereunder a Certificate of Analysis reflecting that such Finished Product meets the Product Specifications.  However, Watson shall have the exclusive right and responsibility for the ultimate approval or rejection of finished Product produced by Stellar hereunder, pursuant to and in accordance with Article 6 below.

5.2

Notice of Failure to Meet Specifications.

Stellar shall immediately notify Watson, but at least within seventy-two (72) hours, of the discovery that any finished Product, which has previously been approved in accordance with procedures set forth herein, is out of specification and Stellar will notify Watson of such fact 

along with details concerning the nature of any such failure to meet the Product Specifications.  Stellar shall make, at its expense, such further internal investigation of any failure to meet the Product Specifications that is appropriate under the circumstances and otherwise consistent with its obligations hereunder.  The liability for costs associated with any finished Product shall be determined in accordance with Article 6 below, with the exception of the requirement that Watson provide written notice of rejection within forty five (45) days.

5.3

Product Specifications Changes.

In the event that Watson is required to change the Product Specifications pursuant to applicable law, rule, or regulation or in response to the order or request of a governmental authority or regulatory body, Watson shall promptly advise Stellar in writing of any such change and Stellar shall promptly advise Watson as to any scheduling adjustments which may result from any such change.

5.4

Shelf Life.

All quantities of the Product supplied by Stellar to Watson pursuant to this Supply Agreement shall, at the time of delivery, have a shelf life which is no less than eighty five percent (85%) of the applicable shelf life as determined by the FDA, or as may be determined by mutual written agreement but in no event shall such shelf life at the time of delivery be required to be more than eighteen (18) months.

5.5

Packaging and Labeling.  Stellar shall provide to Watson the proposed layout for the packaging, labeling and insert for the Product (and Watson shall cooperate and assist Stellar in connection therewith, if and as may be reasonably requested by Stellar from time to time), and Watson shall provide to Stellar its proposed artwork, including its corporate name and any related logos, in sufficient time to enable Stellar and/or its designee to review it and complete final packaging for shipment of the Product to Watson prior to any scheduled launch in the Territory. Stellar shall have the right, in conjunction with Watson, to approve such packaging, labeling and insert layouts, and Stellar shall be responsible for producing the same or having the same produced.  It is expressly understood that responsibility for all packaging changes in the Territory, including those mandated by any regulatory body, are the responsibility of Watson including the payment for all discarded materials resulting from such Watson packaging changes.  

ARTICLE 6

CLAIMS

6.1

Promptly after taking delivery, Watson shall perform a lot inspection of the Product to determine whether the shipment is complete and to detect any defect or damage to the Product or its packaging.  Any deficiencies which are determined by such inspection shall be brought to Stellar's attention by written notice within a maximum of forty five (45) days following such delivery.  In the absence of any such written notice, Watson will, for the purposes of this Section 6.1, be deemed to have accepted the Product.  If there is a disagreement between the Parties as to whether any Product meets the Product Manufacturing Specifications, then samples and/or batch records, as appropriate, from the batch that is in dispute will be submitted for testing and evaluation to an independent third party testing laboratory as shall be agreed to in writing by both Parties.  The determination of such third party as to whether such Product meets the Product Manufacturing Specifications will be final and binding.  If it is determined that the non-conformity is due to damage to the Product (a) caused solely by Watson or its agents or (b) which occurs subsequent to delivery of such Product to the carrier for shipment, Stellar shall have no liability to Watson with respect to such non-conformity and the cost of any testing and evaluation by the third party shall be borne by Watson.  If the non-conformity is caused in any other manner, the cost of any testing or evaluation by a third party shall be borne by Stellar and, at Watson's election solely within Watson's discretion, Stellar shall either (i) replace such non-conforming Product within sixty (60) days at no additional cost to Watson, or (ii) in lieu of replacing such non-conforming Product, credit 

Watson's account for the price invoiced (exclusive of all taxes and duties) for such non-conforming Product (or if payment therefore has previously been made by Watson, pay Watson the amount of such credit or offset the amount thereof against other amounts then due hereunder to Stellar).  The foregoing remedy constitutes the exclusive remedy against Stellar, and the entire liability of Stellar in connection with any rejected shipment / batch.  

ARTICLE 7

AUDITS; COMPLAINTS; REGULATORY MATTERS; ETC.

7.1

Audits.

(a)

Performance of Audits.  During the term of this Supply Agreement and for a period of three (3) years thereafter, Watson or its Affiliates shall have the right, at Watson's sole expense, to conduct an Audit, upon thirty (30) calendar days written notice to Stellar (the notice must identify any specific Audit requests and necessary contact person), no more than one (1) time per calendar year, during Stellar's or its Approved Manufacturer’s normal business hours, of all records, Documents, processes, procedures, and facilities directly associated with the Manufacturing Cost, manufacture, processing, and packaging of the Product, as well as with the receipt, storage and use of raw materials, labeling and packaging. Notwithstanding the immediately preceding sentence, in the event of a rejection of Product by Watson because of a failure to meet Product Specifications which, if disputed, is resolved in Watson’s favour in accordance with Article 6, then Watson shall have an additional right to conduct an Audit under the provisions of this Section 7.1.  Watson warrants that all inspections and Audits hereunder shall be carried out in a manner that does not unreasonably interfere with Stellar's or its Approved Manufacturer’s normal and ordinary conduct of business and that ensures the continued confidentiality of Stellar's business and technical information.  Any representatives involved in such audit shall be reasonably qualified in terms of auditing skill to conduct the Audits, shall execute a written agreement to maintain in confidence all information obtained during the course of any such Audit except for disclosure to Watson, and shall comply with Stellar’s normal security and safety regulations.

(b)

Audit Feedback. Within thirty (30) days of completing any Audit hereunder, Watson shall submit to Stellar a written report outlining its findings and/or observations from any such Audit.  If deficiencies are discovered during an Audit that could, in Watson's opinion, prevent Stellar from satisfying the requirements of cGMP obligations hereunder, and Stellar in good faith disputes the observations or conclusions of Watson, then the Parties shall promptly enter into good faith discussions to resolve their differences.  If the Parties fail to resolve their differences within thirty (30) days, then the disputed points shall be resolved by arbitration in accordance with Article 14.  If Stellar does not dispute the observations made during any Audit it shall promptly correct those deficiencies at its own cost, and shall notify Watson in writing when those deficiencies are corrected.

(c)

Audit Payments.  For financial Audits, if the Audit determines that Stellar is in default under this Article, or that Stellar’s records and procedures are insufficient to permit a determination of Stellar’s Supply Price, or that there is a deficiency or overpayment in any payments made by Watson to Stellar pursuant to this Supply Agreement, then Watson shall, within thirty (30) days, correct such deficiency, or Stellar shall, within thirty (30) days correct such overpayment, by paying the amount of such deficiency or overpayment, as applicable, to the other Party, and such payment shall be the sole remedy related thereto.  If any payments owing to Stellar pursuant to this Supply Agreement are overstated by five percent (5%) or more, Stellar shall, in addition, pay to Watson the amount of the cost of the audit.  The report of the independent representative is final and binding on the Parties hereto.  

7.2

Complaints. 

Watson and Stellar will comply with, and provide assistance to the other in order to comply with, medical device reporting requirements in both the United States and Canada.  The Parties shall meet prior to the launch of the Product in order to confirm the process to take place pursuant to this Section.  Watson shall maintain complaint files for the Product in 

accordance with cGMP and applicable laws. Product complaint reports received by Watson will be summarized in an electronic database and that database having been prepared in a mutual acceptable software program sent to Stellar by electronic transmission to the attention of the Quality Manager at Quality@stellarpharma.com, with an original sent on the same day in accordance with Section 15.6.  Product complaint reports received by Stellar will be summarized and sent to Watson by electronic transmission to the attention of Watson Drug Safety at the email address: dsaeintake@watsonpharm.com, with an original sent on the same day in accordance with Section 15.6.  Each of the Parties shall notify the other of (i) any Adverse Device Effects or reaction reports or any other reports or information indicating that any of the Finished Product hereunder have any toxicity, sensitivity reactions, or are otherwise alleged to cause illness or injury of any kind or are adulterated or misbranded, or (ii) any product complaints made by customers that will or could cause an FDA "field alert" to be issued.  The foregoing notices shall be provided by the applicable Party within at least twenty-four (24) hours of such Party becoming aware of any such difficulties.  The Parties shall thereafter reasonably cooperate with respect to any investigation or inquiry that may be initiated by the FDA with respect thereto (which Watson shall have the right to direct and control), and shall further provide the other Party all data or other information that it may reasonably require in connection with any reports or correspondence filed with the applicable regulatory authorities relative to any such device adverse reaction or product complaints.  Notwithstanding any other provision of this Section 7.2, it is understood by the Parties that Watson shall have the sole authority and final responsibility for responding to any mandatory device reports, product complaints, or making any contact with customers or any regulatory agencies concerning any problems with the Finished Product in the Territory. 

7.3

Returns. 

Product returns from customers in the Territory shall be the sole responsibility of Watson, and Stellar shall have no obligation with respect to any such returned Product except as may be otherwise specified in this Agreement.

7.4

Regulatory Matters. 

(a)

General Compliance.  At Stellar’s sole expense, Stellar shall use its best efforts to cause its Approved Manufacturer to, comply with all federal, provincial, state and local laws, regulations, and standards and specifications applicable to production of the Product and the performance of its obligations hereunder, including, without limitation, all applicable regulations of or requirements under licenses, registrations, permits, or approvals from the FDA.  Watson will pay any fees, costs or expenses necessary to maintain licenses, registrations, permits, or approvals from the FDA which are applicable to the marketing, distribution or sale of the Product in the Territory.  Costs or expenses associated with a change in Product Specifications requested by Watson or a new or modified regulatory requirement, directly related to the Product, not in existence on the date hereof, shall be borne by Watson.

(b)

Validations and Qualifications.  Stellar or its Approved Manufacturer shall perform process and cleaning validation, analytical methods validation, and installation/operating qualification, and calibration of all equipment and facilities utilized in the manufacture, packaging, testing, storing, and release of finished Product.  Such validations, qualifications, and calibrations are to be in accordance with all current FDA regulations, and Stellar shall, through effective control procedures, ensure all such validations, qualifications, and calibrations will be current.  Upon reasonable advance notice and arrangement with Stellar, Watson will have the right to observe the validation process and review the results thereof during the annual Audit or in conjunction with the implementation of a new process or the use of new equipment.  In general, Stellar shall, at all times in the performance of its obligations hereunder, comply with its standard operating procedures for the Product and will make copies of such standard operating procedures available to Watson for review.

(c)

Device History Records.  Device history records, including information relating to the manufacturing, packaging, and quality control testing and analysis for each lot of Finished Product produced hereunder will be prepared as and when Stellar or its Approved Manufacturer performs any such tasks.  These records shall include, without limitation, the following: raw material and packaging or container/closure component release, mixing, and filling records, container and component tracing records, equipment usage records, in-process and final laboratory testing results, in-process and final physical inspection results, finished product and labeling reconciliations, labeling and packaging records, records relating to deviations from approved procedures, out-of-specification investigative reports and records.  Device history records and all other records relating to production hereunder shall be retained by Stellar or its Approved Manufacturer for the longer of the duration of this Supply Agreement or the period required for meeting all rules and regulations of the FDA and other applicable regulatory agencies.  Upon Watson's written request therefore, Stellar shall furnish to Watson for any calendar quarter during the Term of this Supply Agreement, a complete copy of the device history record for each production lot of Product produced during such quarter; provided, however, that Stellar shall not be required to furnish any such information on more than one occasion during each calendar quarter. Additionally, Stellar shall, upon Watson's written request in connection with any Audit, make available for review by Watson during the course of such Audit, updates to the validation package for each Product.

(d)

Notice of Warnings.  Stellar will notify Watson promptly of any warning (including any FDA Form 483), citation, indictment, claim, lawsuit, or proceeding issued or instituted by any federal, state, provincial or local governmental entity or agency against Stellar if, and only to the extent that, the manufacture of Product hereunder is affected, or of any revocation of any license or permit issued to Stellar or its Approved Manufacturer, but only to the extent that such license or permit relates directly to Stellar's performance of its obligations hereunder.

(e)

Product Reviews, Reports.  Stellar shall participate with Watson in conducting annual product reviews at a mutually agreed upon date for the Product, which shall include trend analysis of critical process parameters when reasonably available as well as a review of stability, reserve samples, complaints, and mandatory device experience reports, in-process variances, rejections, investigations and process changes.  Further, Stellar agrees to timely compile all data reasonably necessary for Watson to file annual reports and other periodic reports with the FDA, in accordance with applicable laws, rules, and regulations, relative to the Product PMAs or supplements thereto.

(f)

Stability.  Stellar shall be responsible for taking and maintaining quality control stability samples in support of the Product PMAs for the Product, testing stability samples on a timely basis, and providing Watson on an annual basis, and as otherwise reasonably requested by Watson, with stability data.  Stellar and its Approved Manufacturer shall initiate a stability failure investigation on any stability test failure promptly (but at least within seventy-two (72) hours) of learning of any such deviation. Stellar shall notify Watson promptly (but at least within seventy-two (72) hours) upon its actual discovery of objective evidence of a stability failure with regard to the Product. 

(g)

DMFs.  Stellar shall provide reasonable assistance to Watson in obtaining Device Master File ("DMF") reference authorizations from all approved Stellar suppliers (where available) as soon as possible following the date hereof.  At Stellar’s or its supplier’s sole discretion, these DMF reference authorizations may be submitted directly to the FDA in confidence. 

7.5

Inspections. 

In the event the Facility producing Product hereunder is inspected by representatives of any federal, state, provincial or local regulatory agency in connection with Stellar’s or its Approved Manufacturer’s manufacture of the Product, Stellar shall notify Watson promptly (but at least within seventy-two [72] hours) upon learning of such inspection, and shall supply Watson with copies of any correspondence or portions of correspondence which relate to the Product. Watson may send representatives to such manufacturing facility and may participate in any portion of such inspection relating to the Product (and shall do so upon the request of Stellar).  In the event Stellar or its Approved Manufacturer receives any regulatory letter or comments from any federal, state, or local regulatory agency in connection with its manufacture of the Product requiring a response or action by Stellar, including, but not limited to, receipt of a Form 483 (Inspectional Observations) or a "Warning Letter," Watson will promptly provide Stellar with any data or information required by Stellar in preparing any response relating to the manufacture of the Product, and will cooperate fully with Stellar in preparing such response.  Stellar shall provide Watson with a copy of each such response for Watson's review prior to submission of the response.

7.6

Correspondence.  

Except with regard to Adverse Device Effects, which shall be handled as set forth in Section 7.2, each Party shall provide the other Party with all reasonable assistance and take all actions reasonably requested by the other Party that are necessary or desirable to enable such Party to comply with any law, rule or regulation applicable to the Product in the Territory.  Such assistance and actions shall include (a) keeping the other Party informed (as applicable to the role of such Party relative to the Product) within three (3) Business Days (or sooner if  required pursuant to this Supply Agreement or if necessary to permit the other Party a reasonable and sufficient amount of time to respond or take action to comply with applicable laws, rules, and regulations) and as may be required by applicable laws, rules, and regulations, of notification of any action by, or notification or other information which it receives (directly or indirectly), from any Agency, and (b) immediately providing copies of any written communications which (i) raise any concerns regarding the safety or efficacy of the Product in the Territory, (ii) indicate or suggest a potential liability for either Party to a Third Party arising in connection with the Product in the Territory, or (iii) is reasonably likely to lead to a recall or withdrawal of the Product in the Territory; provided that neither Party shall be required to disclose information in breach of any contractual restriction regarding confidentiality.  The following types of information shall be deemed to be included in categories (i), (ii) and (iii) above:  (1) inspections by an Agency of manufacturing, distribution or other facilities related to the Product which have arisen solely because of that Party’s dealings with the Product; (2) inquiries by an Agency concerning clinical investigation activities in relation to the Product (including inquiries of investigators, clinical monitoring organizations and other related Persons); (3) any communication from an Agency involving the manufacture, sale, promotion, marketing, use or distribution of the Product or any other Agency reviews or inquiries relating to the Product; (4) an initiation of an Agency investigation, detention, seizure or injunction concerning the Product; or (5) any other regulatory action (e.g., proposed labeling or other registrational dossier changes and recalls) that would affect the Product in the Territory. 

ARTICLE 8

RECALLS

8.1

Stellar and Watson each shall notify the other promptly if any batch of Product purchased by Watson pursuant to this Supply Agreement is alleged or proven to be the subject of a recall, market withdrawal, or correction, and the Parties shall cooperate in the handling and disposition of such recall, market withdrawal, or correction; provided, however, in the event of a disagreement as to any matters related to such recall, market withdrawal, or correction, other than the determination of who shall bear the costs as set forth in the immediately following sentence, Watson shall have final authority with respect to such matters in the 

Territory.  If such recall or withdrawal is required because of the failure of the Product to meet the Specifications, Stellar shall pay all administrative costs and expenses incurred in connection therewith, and in the event such recall or withdrawal is required because of the acts or omissions of Watson or its Affiliates or sub-distributors or any of their agents in connection with the handling, storage, release, distribution, promotion, marketing, sale or use of the Product, Watson shall pay all administrative costs and expenses incurred in connection therewith; provided that nothing herein shall limit either Party’s indemnification obligations set forth in Article 10.  Furthermore, should there be shared responsibility for said recall, the Parties will negotiate in good faith a percentage allocable to each of them.  In the event the responsibility/liability for the defect or failure cannot be ascertained, the costs of the recall will be shared equally between the Parties.  In the event that the Product is recalled or withdrawn (or to be recalled or withdrawn) in the Territory, and/or Stellar is required to disseminate information relating to the Product in connection therewith, Stellar shall so notify Watson within a reasonable time so as to enable Watson to provide Stellar with such assistance in connection with such recall or withdrawal, as applicable, as may reasonably be requested by Stellar.  Watson shall comply with all such reasonable requests from Stellar in connection with any such recall or withdrawal, and the Parties shall cooperate in the coordination of all actions, including all publicity and notifications of customers, relating to such recall or withdrawal.  Watson shall maintain and cause all its sub-licensees and other agents to maintain records of all sales of Product and customers sufficient to adequately administer a recall, market withdrawal or correction for the longer of two (2) years after termination or expiration of this Supply Agreement or the period required by applicable law.  Watson shall, in all events and regardless of who bears the cost, be responsible for controlling and conducting any recalls, market withdrawals, or corrections with respect to the Product in the Territory. 

ARTICLE 9

TERM; TERMINATION

9.1

The term (“Term”) of this Supply Agreement shall commence on the Effective Date and shall continue for the longer of either: (a) the expiry or termination of the License Agreement or (b) fifteen (15) years; and will be renewable at Watson’s option for additional two (2) year periods upon ninety (90) days written notification to Stellar, unless earlier terminated pursuant to Sections 9.2, 9.3 or 9.4. 

9.2

Either party shall be entitled at any time, by written notice to the other, to terminate this Supply Agreement if the other party commits or permits a material breach or default of any of the provisions of this Supply Agreement and fails to remedy or cure such breach or default within sixty (60) days after receipt of written notice by the non-breaching party.  Notwithstanding the foregoing, in respect of a default in timely payment of any  amount payable pursuant to this Supply Agreement, the non-defaulting Party shall be entitled at any time to terminate this Supply Agreement if such default has not been remedied within thirty (30) days of the date such payment was due.  In either of the forgoing circumstances the relevant cure period shall be suspended during any time that a Party seeks resolution of a dispute as to an alleged breach pursuant to Section 14.2 of this Supply Agreement.  

9.3

Either party shall be entitled at any time, by written notice to the other, to terminate this Supply Agreement immediately, upon written notice to the other, if (i) the other party makes an assignment for the benefit of its creditors; (ii) the other party is adjudicated bankrupt or becomes voluntarily or involuntarily subject to any proceedings for the benefit of its creditors, or (iii) a receiver of the property of the other party is appointed or if any judgment or execution against it or its property remains unsatisfied for such period which would permit its property or any substantial part thereof to be sold.

9.4

Either Party shall have the right to terminate the Supply Agreement with respect to any Product in the Territory upon sixty (60) days prior written notice to the other should both 

Parties reasonably agree in writing that such Product is no longer commercially viable in the Territory.  In such event, this Supply Agreement will remain in full force and effect for any remaining Product. 

 

9.5

Except as otherwise set forth in this Agreement, neither Party shall be entitled to any compensation whatsoever as a result of expiration or termination of this Supply Agreement, but without limiting either Party’s right to damages for any breach of this Supply Agreement.  No termination of this Supply Agreement will affect any amounts owing to any Party prior to such termination.

9.6

Survival.  

Termination or expiration of this Supply Agreement for any reason shall be without prejudice to any obligations which shall have accrued to the benefit of either Party prior to such termination or expiration.  Upon termination or expiration of this Supply Agreement, any payments owed to the other Party on or before the effective date of termination would be due within thirty (30) days of the effective date of such expiration or termination.  Further, the expiration or termination of this Supply Agreement shall not affect any rights and obligations of the Parties under this Supply Agreement, which are intended by the Parties to survive such expiration or termination.  Without limiting the generality of the foregoing, the following provisions of this Supply Agreement shall survive expiration or termination hereof: Section 2.4 and Article 3 (with respect to Products sold prior to such Termination or permitted to be sold thereafter hereunder), Articles 4, 5, 6, 7, 8, Section 9.6, 10.7, 11.5, Articles 13, 14, and Section 15.6.   

ARTICLE 10

INDEMNIFICATION AND LIABILITY

10.1

Watson shall defend, indemnify and hold harmless Stellar from and against all losses (other than loss of profits), damages (other than indirect, special, consequential and punitive damages), liabilities and expenses (including reasonable attorneys' fees) for personal injury or property damage to a third party arising out of the use of the Products marketed by Watson, its Affiliates or sub-licensees insofar as any such claim for loss, liability and expense is based upon the willful misconduct or negligence of Watson, its affiliates or sub-licensees.  To the extent that they are available, the proceeds of the insurance of Watson as set out in Section 10.6 may be utilized by Watson for this indemnity.  However, the indemnity is in no way limited by the availability or amount of such insurance. Stellar shall give Watson prompt written notice of any such claim.  Watson shall be entitled to assume complete control of the defence of such claim.  Stellar shall render such assistance to Watson as may be reasonably requested by Watson and Watson shall reimburse Stellar for its reasonable out-of-pocket expenses incurred in rendering such assistance.  For greater certainty, in no event shall Watson have any liability (whether direct or indirect, in contract or tort or otherwise) to Stellar or any other person asserting claims on behalf of or in right of Stellar hereunder to the extent such liability has resulted from the negligence or willful misconduct of Stellar or its representatives.  

10.2

Stellar shall defend, indemnify and hold harmless Watson from and against all losses (other than loss of profits), damages (other than indirect, special, consequential and punitive damages), liabilities and expenses (including reasonable attorneys' fees) for (i) personal injury or damage arising out of the use of the Products, provided the claim for such loss, liability and expense is based upon product liability in respect of the Product or the willful misconduct or negligence of Stellar, its Affiliates or Approved Manufacturer or (ii) any suit or proceeding brought against Watson insofar as such suit or proceeding is based on a claim that the Methods and Technical Know-How and Improvements to any Products constitutes an infringement of any patent, copyright, trade secret or other intellectual property right of any person other than Stellar.  To the extent that it is available, the proceeds of the insurance of Stellar as set out in Section 10.6 may be utilized by Stellar for this indemnity. However, notwithstanding the foregoing, the indemnity is in no way limited by the availability or amount of any such insurance.  Watson shall give Stellar prompt written notice of any such claim. Stellar shall be entitled to assume complete control of the defence of such claim. 

Watson shall render such assistance to Stellar as may be reasonably requested by Stellar and Stellar shall reimburse Watson for its reasonable out-of-pocket expenses incurred in rendering such assistance.  For greater certainty, in no event shall Stellar have any liability (whether direct or indirect, in contract or tort or otherwise) to Watson or any other person asserting claims on behalf of or in right of Watson hereunder to the extent such liability has resulted from the negligence or willful misconduct of Watson, its Affiliates, sublicensees or representatives.  

10.3

(a)

Each party indemnified under the provisions of this Supply Agreement (the “Indemnified Party”), upon receipt of written notice of any claim, or the service of a summons or other initial legal process upon it in any action instituted against it, in respect of the agreements contained in this Supply Agreement, shall promptly give written notice of such claim, or the commencement of such action, or threat thereof to the party from whom indemnity shall be sought hereunder (the “Indemnifying Party”); provided, however, the failure to provide such notice within a reasonable period of time shall not relieve the Indemnifying Party of any of its obligations hereunder except to the extent the Indemnifying Party is prejudiced by such failure.  The Indemnifying Party shall be entitled at its own expense to participate in the defence of such claim or action, or, if it shall elect, to assume such defence, in which event such defence shall be conducted by counsel chosen by such Indemnifying Party, which counsel may be any counsel reasonably satisfactory to the Indemnified Party against whom such claim is asserted or who shall be the defendant in such action, and such Indemnified Party shall bear all fees and expenses of any additional counsel retained by it.  If the Indemnifying Party shall elect not to assume the defence of such claim or action, such Indemnifying Party shall reimburse such Indemnified Party for the reasonable fees and expenses of any one counsel retained by it.  Neither party shall be responsible to or bound by any settlement made by the other party without its prior written consent, which shall not be unreasonably withheld or delayed. 

(b)

Notwithstanding Section 10.3(a), if the named Parties in such action (including impeded Parties) include both the Indemnified Party and the Indemnifying Party, and the Indemnified Party shall have been advised by counsel that, consistent with applicable standards of professional responsibility, there may be a conflict between the positions of the Indemnifying Party and the Indemnified Party in conducting the defence of such action or that there are legal defences available to such Indemnified Party different from or in addition to those available to the Indemnifying Party, then the Indemnified Party shall be entitled to retain one separate counsel to conduct its defence to the extent reasonably determined by such counsel to be necessary to protect the interests of the Indemnified Party, at the expense of the Indemnifying Party.  

10.4

IN NO EVENT SHALL EITHER PARTY HERETO BE RESPONSIBLE OR LIABLE TO THE OTHER PARTY FOR CONSEQUENTIAL, INCIDENTAL OR OTHER INDIRECT DAMAGES OF ANY KIND (WHETHER ARISING UNDER CONTRACT, TORT, OR OTHERWISE) INCLUDING, BUT NOT LIMITED TO, LOST PROFITS OR LOSS OF BUSINESS OPPORTUNITY, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT SHALL ANY PARTY HERETO BE LIABLE FOR ANY PUNITIVE OR EXEMPLARY DAMAGES.

10.5

The amount of any loss, liability, damage or expense for which indemnification is provided under this Section 10 shall be net of any amounts actually recovered by the indemnified Party in respect of such loss, liability, damage or expense under its insurance policies.

10.6

Each Party, at its own cost, shall maintain comprehensive general liability insurance, including product liability insurance against claims related to the manufacture and commercialization of the Product in connection with this Agreement.  Such insurance shall be in amounts of not less than $5,000,000 USD for each claim and $10,000,000 USD in the aggregate for Watson, and in the amount of not less than $2,000,000 CDN in the aggregate for Stellar, both during the Term and thereafter for a period of five (5) years.  In addition, Stellar 

shall ensure that its Approved Manufacturers of the Product shall maintain product liability insurance against claims related to the manufacture of the Product in an amount of not less than $10,000,000 CDN.  The amount of such insurance shall in no way limit the indemnification obligations of either Party set out in this Section 10.  Each Party shall provide the other Party with at least sixty (60) days prior written notice of any cancellation or any termination of its insurance.  Copies of all policies or certificates of insurance and any renewals thereof, shall be delivered promptly by both Parties to the other Party throughout the term of this License Agreement and any renewal thereof and for a period of five (5) years thereafter.  Stellar shall ensure that its Approved Manufacturer is compliant with this Section 10.6.  Watson shall, at its option, require Stellar to increase its policy limits.  If the parties deem that it is necessary to increase Stellar's insurance coverage from the level required in this Section 10.6, Watson will pay for the costs associated with any such increase including, without limitation, the increase in premiums associated therewith.  Furthermore, the parties hereby agree to negotiate in good faith the terms of such reimbursement prior to Stellar being required to obtain any such increase in such insurance coverage.  Each Party shall provide the other Party with at least sixty (60) days prior written notice of any cancellation or any termination of its insurance. Copies of all policies or certificates of insurance and any renewals thereof, shall be delivered promptly by both Parties to the other Party throughout the term of this License Agreement and any renewal thereof and for a period of five (5) years thereafter.

10.7

The terms of this Section 10 shall survive the termination or expiration of this Supply Agreement for a period of six (6) years.

ARTICLE 11

CONFIDENTIALITY

11.1

As it is used in this Supply Agreement, in respect of one party, the term "Confidential Information", without limiting the generality of its generally accepted meaning, shall include the Methods and Technical Know-How and all other information that is non-public, confidential or proprietary in nature disclosed by a Party to the other Party or any of its directors, officers, employees, agents, consultants or representatives (collectively, the "Representatives") relating to the Product, Improvements, New Indications or the business of the disclosing party or its affiliates, including information in respect of the disclosing party's or the disclosing party's affiliates' operations, customers, business and marketing strategies and all financial, production, scientific and technical data, methodology, specifications, formulas, production and manufacturing procedures and standards, techniques, and all analyses, compilations, data, studies, reports or other documents prepared by the receiving party or any of its Representatives containing or based upon, in whole or in part, any such furnished information, whether in written, oral, electronic or other form, but shall not include as evidenced by written records:

(a)

information in the public domain at the time of the receiving party's receipt of that information from the disclosing party;

(b)

information which, after the receiving party's receipt from the disclosing party, becomes a part of the public domain through no act or omission of the receiving party or any of its Representatives;

(c)

information which the receiving party can show was lawfully within its knowledge or possession prior to its receipt from the disclosing party;

(d)

information received in good faith by the receiving party from a third party, who to the knowledge of the receiving party was lawfully in possession of the information, and who was not under a contractual, legal or fiduciary obligation not to disclose the information;

(e)

information developed by the receiving party or its Representatives without using any of the Confidential Information disclosed by the disclosing party; or

(f)

information required by law to be disclosed by the receiving party so long as the receiving party provides prior written notice to the disclosing party so that the disclosing party may seek protection of such information prior to disclosure.

11.2

Except to the extent that disclosure is reasonably required to discharge the obligations of the Parties under this Supply Agreement, each of the Parties agrees that it will hold all Confidential Information in confidence and will not disclose any such Confidential Information to any person other than their respective Representatives whose duties justify their need to know the Confidential Information for the purposes of fulfilling their respective obligations under this Supply Agreement, provided that the Parties shall have first notified their respective Representatives of the obligations under this Supply Agreement with respect to the Confidential Information and the restrictions on its use.  Each of the Parties shall direct each of their respective Representatives to exercise a level of care sufficient to preserve the confidentiality of the Confidential Information and shall direct each such person to abide by the terms and conditions of this Supply Agreement, and will take all reasonable steps, including the obtaining of suitable undertakings, to ensure that the Confidential Information is not disclosed by any of such person to any person or used in a manner contrary to this Supply Agreement.  The receiving Party hereby agrees to legally enforce all such obligations of its Representatives on behalf of the disclosing Party.

11.3

Each of the Parties agrees that it shall not use any Confidential Information, directly or indirectly, for any purpose whatsoever other than to fulfill its obligations as defined herein, without first obtaining the prior written consent of the disclosing party.  Without limiting the generality of the foregoing, each of the Parties agrees that it will not use any Confidential Information for any improper purpose.

11.4

Without intending to limit the remedies available to each party, and notwithstanding Section 14.1, each party acknowledges that damages at law will be an insufficient remedy to the other party in view of the irrevocable harm which will be suffered by the other party if it violates the terms of this Section 11 and each party hereby agrees that the other party may apply for and have injunctive relief in any court of competent jurisdiction in State of New York, USA, specifically to enforce any such covenants upon the breach or threatened breach of any such provisions. 

11.5

The terms of this Section 11 shall survive the termination or expiration of this Supply Agreement.

ARTICLE 12

FORCE MAJEURE

The Parties hereto shall not be liable for any damage if the performance of all or parts of this Supply Agreement is hindered or prevented by unforeseen causes beyond the performing party's control and without its fault or negligence, including but not limited to acts of God or of public enemy, acts of terrorism, nuclear incidents, acts, laws, orders or regulations of any government or department or agency thereof acting in either its sovereign or contractual capacity, fires, floods, epidemics, quarantine restrictions, strikes, work stoppages, slowdowns or other job actions, freight embargoes, shortages of fuel or other items, delays in transportation, boycotts, unusually severe weather and riots, insurrections, revolutions, wars or other civil or military disturbances (a “Force Majeure Event”).  Each Party agrees to give the other Party prompt written notice of the occurrence of any Force Majeure Event, the nature thereof, and the extent to which the affected Party will be unable fully to perform its obligations hereunder.  Each Party further agrees to use reasonable efforts to correct the Force Majeure Event as quickly as possible and to give the other Party prompt written notice when it is again fully able to perform such obligations.  If, as a result of a Force Majeure Event, a Party is unable fully to 

perform its obligations hereunder for any consecutive period of one hundred eighty (180) days or more, the other Party shall have the right to terminate this Agreement in its entirety, upon providing written notice to the non-performing Party, such termination to be effective thirty (30) days from the date of such notice.

ARTICLE 13

PRESS RELEASES; USE OF NAMES

13.1

Press Releases.

No party shall at any time, without the prior written consent of the other party, disclose, publish or otherwise make known any of the terms and conditions of this Supply Agreement, except as may be required under applicable securities laws or stock exchange rules or policies.  For greater certainty, the Parties acknowledge that Stellar and Watson will issue simultaneous press releases which language has been mutually approved by the Parties pursuant to this Section in respect of the transactions contemplated hereby on or about the Effective Date.

13.2

Use of Names.

Except as otherwise required by law or by the terms of this Supply Agreement or mutually agreed upon by the Parties, neither Party shall make any use of the name of the other Party in any advertising or promotional material, or otherwise, without the prior written consent of the other Party, which consent shall not be unreasonably withheld. 

ARTICLE 14

APPLICABLE LAW / ARBITRATION

14.1

Applicable Law: This Supply Agreement shall be construed, interpreted and enforced in accordance with and shall exclusively be governed by the laws of the State of New York, USA.  The Convention on Contracts for the International Sale of Goods shall not apply to this Supply Agreement, and is hereby expressly disclaimed and excluded. 

14.2

Disputes / Arbitration: This Supply Agreement is made on the basis of mutual confidence, and it is understood that the differences, if any, during the life of this Supply Agreement should freely be discussed between the two Parties.  The Parties shall initially attempt in good faith to resolve any significant controversy, claim, or dispute arising out of or relating to this Supply Agreement, or its interpretation, performance, non-performance or any breach of any respective obligations hereunder (hereinafter collectively referred to as a “Dispute”) through negotiations between senior executives of Watson and Stellar.  If the Dispute is not resolved within thirty (30) days (or such other period of time mutually agreed upon by the Parties) of commencing such negotiations, or if the Party against which a claim has been asserted refuses to participate in such negotiations or does not otherwise participate in such negotiations within thirty (30) days (or such other period of time mutually agreed upon by the Parties) from the date of notice of a Dispute, then the Parties agree to resolve any Dispute exclusively through arbitration conducted under the auspices of the CPR Institute for Dispute Resolution (the “CPR”) pursuant to CPR Rules for Non-Administered Arbitration of International Disputes (“CPR Rules”).  The arbitration shall be conducted in the English language before one (1) arbitrator selected by the Parties pursuant to CPR Rules.  Unless otherwise mutually agreed by the Parties, any arbitration hereunder shall be brought only and exclusively in New York, New York, U.S.A. Any arbitrator selected shall have reasonable experience as an arbitrator of disputes between entities in the pharmaceutical industry.  The arbitrator shall hear evidence by each Party and resolve each of the issues identified by the Parties. The arbitrator shall render a formal, binding non-appealable resolution and award on each issue as expeditiously as possible, but not more than thirty (30) business days after the hearing.  In any arbitration, the Parties shall use Commercially Reasonable Efforts to minimize any discovery, including by limiting discovery where reasonable and appropriate to twenty (20) hours of depositions, ten (10) interrogatories, and twenty-five (25) requests for production of 

documents per side, and each Party shall voluntarily produce to the other all documents such Party shall use in its portion of the arbitration.  The prevailing Party, as determined by the Arbitrator, shall be entitled to reimbursement of its reasonable attorneys’ fees and the Parties shall use all reasonable efforts to keep arbitration costs to a minimum.  

ARTICLE 15

MISCELLANEOUS

15.1

Partnership, Agency Denied.

This Supply Agreement does not and shall not be construed to create any partnership, joint venture or agency whatsoever as between the Parties and neither party shall, by reason of any provision herein contained, be deemed to be the partner, joint venturer, agent or legal representative of the other nor shall either have the ability, right or authority to assume or create, in writing or otherwise, any obligation of any kind, express or implied, in the name of or on behalf of the other party.

15.2

No Assignment.

Except as otherwise permitted by this Supply Agreement, this Supply Agreement may not be assigned, by either Party, to any Third Party without the prior written consent of the other Party, such consent not to be unreasonably withheld, and shall enure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns.

Notwithstanding the foregoing, either Party may assign this Supply Agreement to a Third Party, without the other Party’s consent, only in connection with a sale of the business and assets of the Party to which this Agreement relates.

15.3

Waiver. 

The failure at any time to require performance of any provision of this Supply Agreement shall not affect the full right to require performance at any later time. The waiver of a breach of any provision of this Supply Agreement shall not constitute a waiver of the provision or of any succeeding breach.

15.4

Severability. 

Should any of the provisions of this Supply Agreement be or become unenforceable or invalid for any reason whatsoever, such unenforceability or invalidity shall not affect the enforceability or validity of the remaining provisions of the Supply Agreement and such unenforceable or invalid portion shall be severable from the remainder of this Supply Agreement.

15.5

Headings.

The division of this Supply Agreement into articles and sections is for convenience of reference only and shall not affect the interpretation or construction of this Supply Agreement.

15.6

Notices.

All notices, requests, demands or other communications made by the terms hereof required or permitted to be given by one party to the other shall be given in writing by personal delivery or sent by (a) registered or certified mail, return receipt requested; (b) a nationally-recognized courier service guaranteeing next-day delivery, charges prepaid; or (c) facsimile transmission (with the original promptly sent by any of the foregoing manners), addressed to such other party or delivered to such other party as follows:

If to Watson: 

Watson Pharma, Inc.

360 Mt. Kemble Avenue

P.O. Box 1953

Morristown, NJ 07962-1953

USA

Attention:  President 

Telephone:  +973-355-8550

Telefax:  +973-355-8581

With a copy to:

Watson Pharmaceuticals, Inc.

311 Bonnie Circle

Corona, California  91720

U.S.A.

Attention:  General Counsel

Telephone:  +951-493-5300

Telefax:  +951-493-5821

If to Stellar:

Stellar Pharmaceuticals Inc.

544 Egerton St

London, Ontario

N5W 3Z8

Canada

Attention:   President

Facsimile:  +519-434-4382

or to such other address as the addressee may have specified by a written notice given under this provision.  Any such notice or other communication shall be deemed to have been given when received, or three days after it is sent by such registered or certified mail or, if sent by facsimile transmission, shall be deemed to have been given when the appropriate answerback is received provided such answerback is received on a Business Day and if it is not a Business Day it shall be deemed to be received on the next Business Day.

15.7

Counterparts.

This Supply Agreement may be executed by the Parties in separate counterparts each of which when so executed and delivered in original form or by facsimile transmission shall be an original, but all such counterparts shall together constitute one and the same instrument, and shall be equally valid and binding on the Parties.

15.8

Entire Agreement.

This Supply Agreement, along with the License Agreement dated December 13 , 2006, constitute the entire agreement between the Parties hereto with respect to the subject-matter herein contained, and the execution thereof has not been induced by, nor do either of the Parties hereto rely upon or regard as material, any representations or writings whatsoever not incorporated herein and made a part hereof.  This Supply Agreement shall not be amended, altered or qualified except by an instrument in writing, signed by each of the Parties hereto and any amendments; alterations or qualifications hereof shall not be binding upon or affect the rights of any party who has not given its written consent as aforesaid. All other previous agreements or arrangements between the Parties, written or oral, relating to the subject matter hereof are hereby cancelled and superseded, except for the Confidentiality Agreement dated as of May 16th, 2006 between the Parties.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first above written.

STELLAR PHARMACEUTICALS INC.

By:

/s/ Peter Riehl

Name:

Peter Riehl

Title:

President & CEO

WATSON PHARMA, INC.

By:

/s/ Edward F. Heimers, Jr. 

Name:

Edward F. Heimers, Jr.

Title:

President, Brand DivisionFedEx Corporation Exhibit 10.1

 

EXHIBIT 10.1

PURCHASE AGREEMENT NUMBER 3157

between

THE BOEING COMPANY

and

FEDERAL EXPRESS CORPORATION

Relating to Boeing Model 777-FREIGHTER Aircraft

P.A. No. 3157

BOEING PROPRIETARY

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	SA
	ARTICLES	 	NUMBER
	 
	 	 	 	 	 	 
	 

	 	1. 
	 	Quantity, Model and Description	 	 
	 
	 	 	 	 	 	 
	 

	 	2. 
	 	Delivery Schedule	 	 
	 
	 	 	 	 	 	 
	 

	 	3. 
	 	Price	 	 
	 
	 	 	 	 	 	 
	 

	 	4. 
	 	Payment	 	 
	 
	 	 	 	 	 	 
	 

	 	5. 
	 	Miscellaneous	 	 
	 
	 	 	 	 	 	 
	TABLE	 	 
	 
	 	 	 	 	 	 
	 

	 	1. 
	 	Aircraft Information Table	 	 
	 
	 	 	 	 	 	 
	EXHIBIT	 	 
	 
	 	 	 	 	 	 
	 

	 	A.
	 	Aircraft Configuration	 	 
	 
	 	 	 	 	 	 
	 

	 	B.
	 	Aircraft Delivery Requirements and Responsibilities	 	 
	 
	 	 	 	 	 	 
	SUPPLEMENTAL EXHIBITS	 	 
	 
	 	 	 	 	 	 
	 

	 	AE1. 
	 	Escalation Adjustment/Airframe and Optional Features	 	 
	 
	 	 	 	 	 	 
	 

	 	CS1. 
	 	Customer Support Variables	 	 
	 
	 	 	 	 	 	 
	 

	 	EE1. 
	 	Engine Escalation/Engine Warranty and Patent Indemnity	 	 
	 
	 	 	 	 	 	 
	 

	 	SLP1. 
	 	Service Life Policy Components	 	 

 

					
	P.A. No. 3157
	 	i
	 	 

BOEING PROPRIETARY

 

 

 

	 	 	 	 	 
	LETTER AGREEMENTS
	 
	 	 	 	 
	 

	 	3157-01
	 	777 Spare Parts Initial Provisioning
	 

	 	3157-02
	 	Demonstration Flight Waiver
	 

	 	6-1162-RCN-1785
	 	[ * ]
	 

	 	6-1162-RCN-1789
	 	Option Aircraft
	 

	 	6-1162-RCN-1790
	 	Special Matters
	 

	 	6-1162-RCN-1791
	 	Performance Guarantees
	 

	 	6-1162-RCN-1792
	 	Liquidated Damages Non-Excusable Delay
	 

	 	6-1162-RCN-1793
	 	Open Configuration Matters
	 

	 	6-1162-RCN-1795
	 	AGTA Amended Articles
	 

	 	6-1162-RCN-1796
	 	777 First-Look Inspection Program
	 

	 	6-1162-RCN-1797
	 	Licensing and Customer Supplemental Type Certificates
	 

	 	6-1162-RCN-1798
	 	777 Boeing Converted Freighter

	*	 	Blank spaces 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, as amended.

 

					
	P.A. No. 3157
	 	ii
	 	 

BOEING PROPRIETARY

 

 

 

Purchase Agreement No. 3157

between

The Boeing Company

and

Federal Express Corporation

 

This Purchase Agreement No. 3157 dated as of November 7, 2006 between The Boeing Company
(Boeing) and Federal Express Corporation (Customer) relating to the purchase and sale of Model
777-FREIGHTER aircraft together with all tables, exhibits, supplemental exhibits, letter agreements
and other attachments thereto, if any, (Purchase Agreement) incorporates the terms and conditions
of the Aircraft General Terms Agreement dated as of November 7, 2006 between the parties,
identified as AGTA-FED together with all tables, exhibits, supplemental exhibits, letter agreements
and other attachments thereto, if any (AGTA).

Article 1. Quantity, Model and Description.

The aircraft to be delivered to Customer will be designated as Model 777-FREIGHTER aircraft
(the Aircraft). Boeing will manufacture and sell to Customer Aircraft conforming to the
configuration described in Exhibit A in the quantities listed in Table 1 to the Purchase Agreement.

Article 2. Delivery Schedule.

The scheduled months of delivery of the Aircraft are listed in the attached Table 1. Exhibit
B describes certain responsibilities for both Customer and Boeing in order to accomplish the
delivery of the Aircraft.

Article 3. Price.

3.1 Aircraft Basic Price. The Aircraft Basic Price is listed in Table 1 in
subject-to-escalation dollars.

3.2 Advance Payment Base Prices. The Advance Payment Base Prices listed in Table 1
were calculated utilizing the latest escalation factors available to Boeing on the date of this
Purchase Agreement projected to the month of scheduled delivery.

 

					
	P.A. No. 3157
	 	1
	 	 

BOEING PROPRIETARY

 

 

 

Article 4. Payment.

4.1 Boeing acknowledges receipt of a deposit in the amount shown in Table 1 for each Aircraft
(Deposit).

4.2 The standard advance payment schedule for the Model 777-FREIGHTER aircraft requires
Customer to make certain advance payments, expressed in a percentage of the Advance Payment Base
Price of each Aircraft beginning with a payment of 1%, less the Deposit, on the effective date of
the Purchase Agreement for the Aircraft. Additional advance payments for each Aircraft are due as
specified in and on the first business day of the months listed in the attached Table 1.

4.3 Customer will pay the balance of the Aircraft Price of each Aircraft at delivery.

Article 5. Additional Terms.

5.1 Aircraft Information Table. Table 1 consolidates information contained in
Articles 1, 2, 3 and 4 with respect to (i) quantity of Aircraft, (ii) applicable Detail
Specification, (iii) month and year of scheduled deliveries, (iv) Aircraft Basic Price, (v)
applicable escalation factors and (vi) Advance Payment Base Prices and advance payments and their
schedules.

5.2 Escalation Adjustment/Airframe and Optional Features. Supplemental Exhibit AE1
contains the applicable airframe and optional features escalation formula.

5.3 Buyer Furnished Equipment Variables. Supplemental Exhibit BFE1 contains vendor
selection dates and other variables applicable to the Aircraft.

5.4 Customer Support Variables. Information, training, services and other things
furnished by Boeing in support of introduction of the Aircraft into Customer’s fleet are described
in Supplemental Exhibit CS1. The level of support to be provided under Supplemental Exhibit CS1
(the Entitlements) assumes that at the time of delivery of Customer’s first Aircraft under the
Purchase Agreement, Customer has not taken possession of a 777 Freighter aircraft whether such 777
Freighter aircraft was purchased, leased or otherwise obtained by Customer from Boeing or another
party. If prior to the delivery of Customer’s first Aircraft, Customer has taken possession of a
777 Freighter aircraft, Boeing will revise the Entitlements to reflect the level of support
normally provided by Boeing to operators already operating such aircraft. Under no circumstances
under the Purchase Agreement or any other agreement will Boeing provide the Entitlements more than
once to support Customer’s operation of 777 Freighter aircraft.

 

					
	P.A. No. 3157
	 	2
	 	 

BOEING PROPRIETARY

 

 

 

5.6 Engine Escalation Variables. Supplemental Exhibit EE1 describes the applicable
engine escalation formula and contains the engine warranty and the engine patent indemnity for the
Aircraft.

5.7 Service Life Policy Component Variables. Supplemental Exhibit SLP1 lists the
airframe and landing gear components covered by the Service Life Policy for the Aircraft (Covered
Components).

5.8 Public Announcement. Boeing reserves the right to make a public announcement
regarding Customer’s purchase of the Aircraft upon approval of Boeing’s press release by Customer’s
public relations department or other authorized representative.

5.9 Negotiated Agreement; Entire Agreement. This Purchase Agreement, including the
provisions of Article 8.2 of the AGTA relating to insurance, and Article 11 of Part 2 of Exhibit C
of the AGTA relating to DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER
DAMAGES, has been the subject of discussion and negotiation and is understood by the parties;
the Aircraft Price and other agreements of the parties stated in this Purchase Agreement were
arrived at in consideration of such provisions. This Purchase Agreement, including the AGTA,
contains the entire agreement between the parties and supersedes all previous proposals,
understandings, commitments or representations whatsoever, oral or written, and may be changed only
in writing signed by authorized representatives of the parties.

DATED AS OF November 7, 2006

	 	 	 	 	 	 	 	 	 
	FEDERAL EXPRESS CORPORATION	 	 	 	THE BOEING COMPANY
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Phillip C. Blum
	 	 
	 	By:
	 	/s/ R.C. Nelson
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its:

	 	Vice President — Aircraft
	 	 	 	Its:
	 	Attorney-In-Fact
	 

	 	 	 	 	 	 	 	 
	 

	 	Acquisitions/SAO	 	 	 	 	 	 

 

					
	P.A. No. 3157
	 	3
	 	 

BOEING PROPRIETARY

 

 

 

Table 1 to

Purchase Agreement No. 3157

Aircraft Delivery, Description, Price and Advance Payments

Purchase of 15 firm + 15 options

 

	 	 	 	 	 	 	 	 	 	 	 
	Airframe Model/MTOW:	 	777-Freighter	 	766000 pounds	 	Detail Specification:	 	D019W007-NEW (7/24/2006)

	Engine Model/Thrust:

	 	GE90-110B1L
	 	110000 pounds
	 	Airframe Price Base Year/Escalation Formula:
	 	Jul-06 
	 	ECI-MFG/CPI
	Airframe Price:

	 	 	 	[ * ]
	 	Engine Price Base Year/Escalation Formula:
	 	N/A
	 	N/A
	Optional Features:

	 	 	 	[ * ]	 	 	 	 	 	 
	Sub-Total of Airframe and Features:	 	[ * ]	 	Airframe Escalation Data:	 	 	 	 
	Engine Price (Per Aircraft):	 	$0 	 	Base Year Index (ECI):	 	180.3 

	Aircraft Basic Price (Excluding BFE/SPE):	 	[ * ]	 	Base Year Index (CPI):	 	195.4 

	Buyer Furnished Equipment (BFE) Estimate:	 	[ * ]	 	 	 	 	 	 
	Seller Purchased Equipment (SPE) Estimate:	 	$0 	 	 	 	 	 	 
	Refundable Deposit/Aircraft at Proposal Accept:	 	[ * ]	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Escalation	 	 	 	 	 	Escalation Estimate	 	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
	Delivery	 	Number of	 	Factor	 	 	 	 	 	Adv Payment Base	 	At Signing	 	24 Mos.	 	21/18/15/12/9/6 Mos.	 	Total
	Date	 	Aircraft	 	(Airframe)	 	 	 	 	 	Price Per A/P	 	1%	 	4%	 	5%	 	35%
	[ * ]
	 	1	 	1.0845	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	1	 	1.0918	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	1	 	1.0939	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	1	 	1.0971	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	1	 	1.1037	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	1	 	1.111	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	1	 	1.1158	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	1	 	1.1189	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	1	 	1.121	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	1	 	1.1231	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	1	 	1.125	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	1	 	1.1281	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	1	 	1.1314	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	1	 	1.1348	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	1	 	1.1375	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]

 

	 	 	 	 	 
	FED
	 	 	 	 
	42904-1F.TXT

	 	Boeing Proprietary
	 	Page 1

 

 

 

AIRCRAFT CONFIGURATION

between

THE BOEING COMPANY

and

FEDERAL EXPRESS CORPORATION

Exhibit A to Purchase Agreement Number 3157

 

					
	P.A. No. 3157
	 	A
	 	 

BOEING PROPRIETARY

 

 

 

AIRCRAFT CONFIGURATION

Dated November 7, 2006

relating to

BOEING MODEL 777-FREIGHTER AIRCRAFT

The Customer Aircraft Description is based on Boeing Configuration Specification D019W007-NEW
dated as of July 24, 2006. Such Aircraft Description will be comprised of Boeing Configuration
Specification D019W007-NEW dated as of July 24, 2006, any changes applicable to the basic model
777-Freighter aircraft and as amended to incorporate the Options to be selected by Customer later.

Basic Price does not include the price effects of any Buyer Furnished Equipment or Seller Purchased
Equipment.

 

					
	P.A. No. 3157
	 	A-1
	 	 

BOEING PROPRIETARY

 

 

 

AIRCRAFT DELIVERY REQUIREMENTS AND RESPONSIBILITIES

between

THE BOEING COMPANY

and

FEDERAL EXPRESS CORPORATION

Exhibit B to Purchase Agreement Number 3157

 

					
	P.A. No. 3157
	 	B
	 	 

BOEING PROPRIETARY

 

 

 

Exhibit B to

Purchase Agreement No. 3157

Page 1

AIRCRAFT DELIVERY REQUIREMENTS AND RESPONSIBILITIES

relating to

BOEING MODEL 777-FREIGHTER AIRCRAFT

Both Boeing and Customer have certain documentation and approval responsibilities at
various times during the construction cycle of Customer’s Aircraft that are critical to
making the delivery of each Aircraft a positive experience for both parties. This
Exhibit B documents those responsibilities and indicates recommended completion deadlines
for the actions to be accomplished.

1. GOVERNMENT DOCUMENTATION REQUIREMENTS.

Certain actions are required to be taken by Customer in advance of the scheduled delivery
month of each Aircraft with respect to obtaining certain government issued documentation.

1.1 Airworthiness and Registration Documents.

Not later than 6 months prior to delivery of each Aircraft, Customer will notify
Boeing of the registration number to be painted on the side of the Aircraft. In
addition, and not later than 3 months prior to delivery of each Aircraft, Customer will,
by letter to the regulatory authority having jurisdiction, authorize the temporary use of
such registration numbers by Boeing during the pre-delivery testing of the Aircraft.

Customer is responsible for furnishing any Temporary or Permanent Registration
Certificates required by any governmental authority having jurisdiction to be displayed
aboard the Aircraft after delivery.

1.2 Certificate of Sanitary Construction.

1.2.1 U.S. Registered Aircraft. Boeing will obtain from the United States
Public Health Service, a United States Certificate of Sanitary Construction to be
displayed aboard each Aircraft after delivery to Customer.

1.2.2 Non-U.S. Registered Aircraft. If Customer requires a United States
Certificate of Sanitary Construction at the time of delivery of the Aircraft,
Customer will give written notice thereof to Boeing at least 3 months prior to delivery.
Boeing will then use its reasonable best efforts to obtain the Certificate from the
United States Public Health Service and present it to Customer at the time of Aircraft
delivery.

	 	 	 	 	 
	P.A. No. 3157

	 	B-1
	 	BOEING PROPRIETARY

 

 

 

Exhibit B to

Purchase Agreement No. 3157

Page 2

1.3 Customs Documentation.

1.3.1 Import Documentation. If the Aircraft is intended to be exported from
the United States, Customer must notify Boeing not later than 3 months prior to delivery
of each Aircraft of any documentation required by the customs authorities or by any other
agency of the country of import.

1.3.2 General Declaration — U.S. If the Aircraft is intended to be exported
from the United States, Boeing will prepare Customs Form 7507, General Declaration, for
execution by U.S. Customs immediately prior to the ferry flight of the Aircraft. For this
purpose, Customer will furnish to Boeing not later than 20 days prior to delivery all
information required by U.S. Customs or U.S. Immigration and Naturalization Service,
including without limitation (i) a complete crew and passenger list identifying the
names, birth dates, passport numbers and passport expiration dates of all crew and
passengers and (ii) a complete ferry flight itinerary, including point of exit from the
United States for the Aircraft.

If Customer intends, during the ferry flight of an Aircraft, to land at a U.S. airport
after clearing Customs at delivery, Customer must notify Boeing not later than 20 days
prior to delivery of such intention. If Boeing receives such notification, Boeing will
provide to Customer the documents constituting a Customs permit to proceed, allowing such
Aircraft to depart after any such landing. Sufficient copies of completed Form 7507,
along with passenger manifest, will be furnished to Customer to cover U.S. stops
scheduled for the ferry flight.

1.3.3 Export Declaration — U.S. If the Aircraft is intended to be exported
from the United States, Boeing will prepare Form 7525V and, immediately prior to the
ferry flight, will submit such Form to U.S. Customs in Seattle in order to obtain
clearance for the departure of the Aircraft, including any cargo, from the United States.
U.S. Customs will deliver the Export Declaration to the U.S. Department of Commerce
after export.

2. INSURANCE CERTIFICATES.

Unless provided earlier, Customer will provide to Boeing not later than 30 days
prior to delivery of the first Aircraft, a copy of the requisite annual insurance
certificate in accordance with the requirements of Article 8 of the AGTA.

 

					
	P.A. No. 3157
	 	B-2
	 	BOEING PROPRIETARY

 

 

 

Exhibit B to

Purchase Agreement No. 3157

Page 3

3. NOTICE OF FLYAWAY CONFIGURATION.

Not later than 20 days prior to delivery of the Aircraft, Customer will provide to
Boeing a configuration letter stating the requested “flyaway configuration” of the
Aircraft for its ferry flight. This configuration letter should include:

(i) the name of the company which is to furnish fuel for the ferry flight
and any scheduled post-delivery flight training, the method of payment for such
fuel, and fuel load for the ferry flight;

(ii) the cargo to be loaded and where it is to be stowed on board the
Aircraft, the address where cargo is to be shipped after flyaway and
notification of any hazardous materials requiring special handling;

(iii) any BFE equipment to be removed prior to flyaway and returned to
Boeing BFE stores for installation on Customer’s subsequent Aircraft;

(iv) a complete list of names and citizenship of each crew member and
non-revenue passenger who will be aboard the ferry flight; and

(v) a complete ferry flight itinerary.

4. DELIVERY ACTIONS BY BOEING.

4.1 Schedule of Inspections. All FAA, Boeing, Customer and, if required,
U.S. Customs Bureau inspections will be scheduled by Boeing for completion prior to
delivery or departure of the Aircraft. Customer will be informed of such schedules.

4.2 Schedule of Demonstration Flights. All FAA and Customer demonstration
flights will be scheduled by Boeing for completion prior to delivery of the Aircraft.

4.3 Schedule for Customer’s Flight Crew. Boeing will inform Customer of the
date that a flight crew is required for acceptance routines associated with delivery of
the Aircraft.

 

					
	P.A. No. 3157
	 	B-3
	 	BOEING PROPRIETARY

 

 

 

Exhibit B to

Purchase Agreement No. 3157

Page 4

4.4 Fuel Provided by Boeing. Boeing will provide to Customer, without
charge, the amount of fuel shown in U.S. gallons in the table below for the model of
Aircraft being delivered and full capacity of engine oil at the time of delivery or prior
to the ferry flight of the Aircraft.

	 	 	 
	Aircraft Model	 	Fuel Provided
	737
	 	1,000
	747
	 	4,000
	757
	 	1,600
	767
	 	2,000
	777
	 	3,000

4.5 Flight Crew and Passenger Consumables. Boeing will provide
reasonable quantities of food, coat hangers, towels, toilet tissue, drinking cups and
soap for the first segment of the ferry flight for the Aircraft.

4.6 Delivery Papers, Documents and Data. Boeing will have available at the
time of delivery of the Aircraft certain delivery papers, documents and data for
execution and delivery. If title for the Aircraft will be transferred to Customer
through a Boeing sales subsidiary and if the Aircraft will be registered with the FAA,
Boeing will pre-position in Oklahoma City, Oklahoma, for filing with the FAA at the time
of delivery of the Aircraft an executed original Form 8050-2, Aircraft Bill of Sale,
indicating transfer of title to the Aircraft from Boeing’s sales subsidiary to Customer.

4.7 Delegation of Authority. If specifically requested in advance by
Customer, Boeing will present a certified copy of a Resolution of Boeing’s Board of
Directors, designating and authorizing certain persons to act on its behalf in
connection with delivery of the Aircraft.

5. DELIVERY ACTIONS BY CUSTOMER.

5.1 Aircraft Radio Station License. At delivery Customer will provide its
Aircraft Radio Station License to be placed on board the Aircraft following delivery.

5.2. Aircraft Flight Log. At delivery Customer will provide the Aircraft
Flight Log for the Aircraft.

5.3 Delegation of Authority. Customer will present to Boeing at delivery
of the Aircraft an original or certified copy of Customer’s Delegation of Authority
designating and authorizing certain persons to act on its behalf in connection with
delivery of the specified Aircraft.

 

					
	P.A. No. 3157
	 	B-4
	 	BOEING PROPRIETARY

 

 

 

ESCALATION ADJUSTMENT

AIRFRAME AND OPTIONAL FEATURES

between

THE BOEING COMPANY

and

FEDERAL EXPRESS CORPORATION

Supplemental Exhibit AE1 to Purchase Agreement Number 3157

(For Model 777-F, the Airframe Price Includes the Engine Price at its basic thrust level.)

 

					
	P.A. No. 3157
	 	AE1

BOEING PROPRIETARY
	 	 

 

 

 

1. Formula.

Airframe and Optional Features price adjustments (Airframe Price Adjustment) are used to allow
prices to be stated in current year dollars at the signing of this Purchase Agreement and to adjust
the amount to be paid by Customer at delivery for the effects of economic fluctuation. The
Airframe Price Adjustment will be determined at the time of Aircraft delivery in accordance with
the following formula:

Pa = (P) (L + M) — P

Where:

	 	 	 	 	 
	 

	 	Pa =
	 	Airframe Price Adjustment. (For Model 777-F, the Airframe Price
includes the Engine Price at its basic thrust level.)
	 
	 	 	 	 
	 

	 	P =
	 	Airframe Price plus the price of the Optional Features
(as set forth in Table 1 of this Purchase Agreement).

	 	 	 
	 

	 	L = .65 x [(ECI   x (ECI-R
	 

	 	                              ECIb)          ECI-Rb)]

Where:

ECIb is the base year airframe escalation index (as set
forth in Table 1 of this Purchase Agreement);

ECI is the three-month arithmetic average value of 181.3 for
October, November, and December 2005, using ECI —MFG (BLS Series
ID ECU12402I);

ECI-Rb is the three-month arithmetic average value of
100.0 for October, November, and December 2005, using the ECI —
NAICS Manufacturing (BLS Series ID CIU2013000000000I); and

 

					
	P.A. No. 3157
	 	AE1-1

BOEING PROPRIETARY
	 	 

 

 

 

ECI-R is a value determined using the U.S. Department of Labor,
Bureau of Labor Statistics, Employment Cost Index for
NAICS Manufacturing — Total Compensation (BLS Series ID
CIU2013000000000I), calculated by establishing a three-month
arithmetic average value (expressed as a decimal and rounded to the
nearest tenth) using the values for the 11th,
12th, and 13th months prior to the month of
scheduled delivery of the applicable Aircraft. As the Employment
Cost Index values are only released on a quarterly basis, the value
released for the first quarter will be used for the months of
January, February, and March; the value released for the second
quarter will be used for the months of April, May, and June; the
value released for the third quarter will be used for the months of
July, August, and September; the value released for the fourth
quarter will be used for the months of October, November, and
December.

	 	 	 
	 

	 	M =.35 x (CPI
	 

	 	                              CPIb )

Where:

CPIb is the base year airframe escalation index (as set
forth in Table 1 of this Purchase Agreement); and

CPI is a value determined using the U.S. Department of Labor, Bureau
of Labor Statistics, Consumer Price Index — All Urban Consumers
(BLS Series ID CUUR0000SA0), calculated as a 3-month arithmetic
average of the released monthly values (expressed as a decimal and
rounded to the nearest tenth) using the values for the
11th, 12th, and 13th months prior
to the month of scheduled delivery of the applicable Aircraft.

As an example, for an Aircraft scheduled to be delivered in the month of July,
the months of June, July, and August of the preceding year will be utilized in
determining the value of ECI-R and CPI.

			
	Note:	 	i. In determining the values of L and M, all calculations and resulting values will be
expressed as a decimal rounded to the nearest ten-thousandth.

 

					
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BOEING PROPRIETARY
	 	 

 

 

 

ii. .65 is the numeric ratio attributed to labor in the Airframe Price Adjustment
formula.

iii. .35 is the numeric ratio attributed to materials in the Airframe Price Adjustment
formula.

iv. The denominators (base year indices) are the actual average values reported by the
U.S. Department of Labor, Bureau of Labor Statistics. The actual average values are
calculated as a 3-month arithmetic average of the released monthly values (expressed as a
decimal and rounded to the nearest tenth) using the values for the 11th,
12th, and 13th months prior to the airframe base year. The
applicable base year and corresponding denominator is provided by Boeing in Table 1 of
this Purchase Agreement.

v. The final value of Pa will be rounded to the nearest dollar.

vi. The Airframe Price Adjustment will not be made if it will result in a decrease in the
Aircraft Basic Price.

2. Values to be Utilized in the Event of Unavailability.

2.1 If the Bureau of Labor Statistics substantially revises the methodology used for the
determination of the values to be used to determine the ECI-R and CPI values (in contrast to
benchmark adjustments or other corrections of previously released values), or for any reason has
not released values needed to determine the applicable Airframe Price Adjustment, the parties will,
prior to the delivery of any such Aircraft, select a substitute from other Bureau of Labor
Statistics data or similar data reported by non-governmental organizations. Such substitute will
result in the same adjustment, insofar as possible, as would have been calculated utilizing the
original values adjusted for fluctuation during the applicable time period. However, if within 24
months after delivery of the Aircraft, the Bureau of Labor Statistics should resume releasing
values for the months needed to determine the Airframe Price Adjustment, such values will be used
to determine any increase or decrease in the Airframe Price Adjustment for the Aircraft from that
determined at the time of delivery of the Aircraft.

2.2 Notwithstanding Article 2.1 above, if prior to the scheduled delivery month of an Aircraft
the Bureau of Labor Statistics changes the base year for determination of the ECI-R and
CPI values as defined above, such re-based values will be incorporated in the Airframe Price
Adjustment calculation.

 

					
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	 	AE1-3

BOEING PROPRIETARY
	 	 

 

 

 

2.3 In the event escalation provisions are made non-enforceable or otherwise rendered void by
any agency of the United States Government, the parties agree, to the extent they may lawfully do
so, to equitably adjust the Aircraft Price of any affected Aircraft to reflect an allowance for
increases or decreases consistent with the applicable provisions of paragraph 1 of this
Supplemental Exhibit AE1 in labor compensation and material costs occurring since August of the
year prior to the price base year shown in the Purchase Agreement.

2.4 If within 12 months of Aircraft delivery, the published index values are revised due to an
acknowledged error by the Bureau of Labor Statistics, the Airframe Price Adjustment will be
re-calculated using the revised index values (this does not include those values noted as
preliminary by the Bureau of Labor Statistics). A credit memorandum or supplemental invoice will be
issued for the Airframe Price Adjustment difference. Interest charges will not apply for the period
of original invoice to issuance of credit memorandum or supplemental invoice.

	 	 	 
	Note:

	 	i. The values released by the Bureau of Labor Statistics and available to Boeing 30
days prior to the first day of the scheduled delivery month of an Aircraft will be used to
determine the ECI-R and CPI values for the applicable months (including those noted as
preliminary by the Bureau of Labor Statistics) to calculate the Airframe Price Adjustment for
the Aircraft invoice at the time of delivery. The values will be considered final and no
Airframe Price Adjustments will be made after Aircraft delivery for any subsequent changes in
published Index values, subject always to paragraph 2.4 above.

	 

	 	ii. The maximum number of digits to the right of the decimal after rounding utilized in
any part of the Airframe Price Adjustment equation will be 4, where rounding of the
fourth digit will be increased to the next highest digit when the 5th digit is equal to 5
or greater.

 

					
	P.A. No. 3157
	 	AE1-4

BOEING PROPRIETARY
	 	 

 

 

 

CUSTOMER SUPPORT VARIABLES

between

THE BOEING COMPANY

and

FEDERAL EXPRESS CORPORATION

Supplemental Exhibit CS1 to Purchase Agreement Number 3157

 

					
	P.A. No. 3157
	 	CS1

BOEING PROPRIETARY
	 	 

 

 

 

CUSTOMER SUPPORT VARIABLES

relating to

BOEING MODEL 777-FREIGHTER AIRCRAFT

Customer and Boeing will conduct planning conferences approximately 12 months prior to delivery of
the first Aircraft, or as mutually agreed, in order to develop and schedule a customized Customer
Support Program to be furnished by Boeing in support of the Aircraft.

The customized Customer Services Program will be based upon and equivalent to the entitlements
summarized below.

1. Maintenance Training.

	 	1.1	 	Airplane General Familiarization Course; 2 classes of 24 students;
	 
	 	1.2	 	Mechanical/Electrical Systems Course (Instructor); 1 class of 15 students;
	 
	 	1.3	 	Avionics Systems Course (Instructor); 1 class of 15 students;
	 
	 	1.4	 	Mechanical/Electrical Systems Course (Line and Base); 2 classes of 15 students;
	 
	 	1.5	 	Avionics Systems Course (Line and Base); 1 class of 15 students;

	 
	 	1.6	 	Engine Run-Up Course; 2 classes of 3 students;

	 
	 	1.7	 	Corrosion Prevention & Control Course; 1 class of 10 students;

	 
	 	1.8	 	Aircraft Rigging Course; 1 class of 6 students;
	 
	 	1.9	 	
Composite Repair for Technicians, 1 class of 8 students;

	 
	 	1.10	 	Digital Data Familiarization Course; 1 class of 15 students;
	 
	 	1.11	 	Cabin Management System (CMS) Configuration Database Generator (CDG)
Familiarization Course; 1 class of 6 students;

 

					
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	 	CS1-1

BOEING PROPRIETARY
	 	 

 

 

 

	 	1.12	 	Training materials will be provided to each student. In addition, one set of
training materials as used in Boeing’s training program, including visual aids,
Computer Based Training Courseware, instrument panel wall charts, text/graphics, video
programs, etc. will be provided for use in Customer’s own training program.

2. Flight Training.

	 	2.1	 	Transition training for 8 flight crews (16 pilots) in 2 classes; The training
will consist of ground school (utilizing computer based training), fixed base
simulator, full flight simulator and actual aircraft training on Customer’s Aircraft.
	 
	 	2.2	 	Flight Dispatcher training; 2 classes of 6 students;
	 
	 	2.3	 	Flight Attendant training; 2 classes of 12 students;
	 
	 	2.4	 	Performance Engineer training in Boeing’s regularly scheduled courses;
schedules are published twice yearly.
	 
	 	2.5	 	Training materials will be provided to each student. In addition, one set of
training materials as used in Boeing’s training program, including visual aids,
Computer Based Training Courseware, instrument panel wall charts, text/graphics, video
programs, Flight Attandant Manuals, etc. will be provided for use in Customer’s own
training program.
	 
	 	2.6	 	Additional Flight Operations Services:

	 	a.	 	Boeing flight crew personnel to assist in ferrying the first
aircraft to Customer’s main base;
	 
	 	b.	 	Instructor pilots for 90 calendar days for revenue service
training assistance;
	 
	 	c.	 	An instructor pilot to visit Customer 6 months after revenue
service training to review Customer’s flight crew operations for a 2 week
period.

3. Planning Assistance.

 

					
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BOEING PROPRIETARY
	 	 

 

 

 

	 	3.1	 	Maintenance and Ground Operations.
	 
	 	 	 	Upon request, Boeing will visit Customer’s main base to evaluate aircraft
maintenance facilities, develop recommendations and assist in maintenance planning.
	 
	 	3.2	 	Spares.

	 	a)	 	Recommended Spares Parts List (RSPL)

A customized RSPL, data and documents will be provided to identify spare
parts required for Customer’s support program.
	 
	 	b)	 	Illustrated Parts Catalog (IPC)

A customized IPC in accordance with ATA 100 will be provided.
	 
	 	c)	 	Provisioning Training

Provisioning training will be provided for Customer’s personnel at Boeing’s
facilities, where documentation and technical expertise are available.
Training is focused on the initial provisioning process and calculations
reflected in the Boeing RSPL.
	 
	 	d)	 	Spares Provisioning Conference

A provisioning conference will be conducted, normally at Boeing’s facilities
where technical data and personnel are available.

4. Technical Data and Documents.

	 	4.1	 	Flight Operations.

Airplane Flight Manual

Operations Manual and Checklist

Planning and Performance Manual

Weight and Balance Manual

Dispatch Deviation Procedures Guide

Flight Crew Training Manual

Fault Reporting Manual

Performance Engineer’s Manual

Jet Transport Performance Methods

FMC Supplemental Data Document

Operational Performance Software

 

					
	P.A. No. 3157
	 	CS1-3

BOEING PROPRIETARY
	 	 

 

 

 

	 	 	 	Baggage/Cargo Loading Manual

ETOPS Guide Vol. III

Flight Planning and Performance Manual

	 
	 	4.2	 	Maintenance.

Maintenance Manual

Wiring Diagram Manual

Systems Schematics Manual

Structural Repair Manual

Component Maintenance Manual

Standard Overhaul Practices Manual

Standard Wiring Practices Manual

Non-Destructive Test Manual

Service Bulletins and Index

Corrosion Prevention Manual

Fault Isolation Manual

Interior Reconfiguration Document

Power Plant Buildup Manual (except Rolls Royce)

In Service Activity Report

Significant Service Item Summary

All Operators Letters

Service Letters

Structural Item Interim Advisory

Combined Index

Maintenance Tips

Configuration Data Base Generator User Guide

Production Management Data Base

Baggage/Cargo Loading Manual
	 
	 	4.3	 	Maintenance Planning.

Maintenance Planning Data Document

Maintenance Task Cards and Index

Maintenance Inspection Intervals Report

ETOPS Guide Vol. II

Configuration Maintenance and Procedures for Extended Range Operations
	 
	 	4.4	 	Spares.

Illustrated Parts Catalog

Standards Books

 

					
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	 	CS1-4

BOEING PROPRIETARY
	 	 

 

 

 

	 	4.5	 	Facilities and Equipment Planning.

Facilities and Equipment Planning Document

Special Tool & Ground Handling Equipment Drawings & Index

Supplementary Tooling Documentation

Illustrated Tool and Equipment List/Manual

Aircraft Recovery Document

Airplane Characteristics for Airport Planning Document

Airplane Rescue and Fire Fighting Document

Engine Handling Document

ETOPS Guide Vol. I
	 
	 	4.6	 	Supplier Technical Data.

Service Bulletins

Ground Support Equipment Data

Provisioning Information

Component Maintenance Manuals and Index

Publications Index

Product Support Supplier Directory

 

					
	P.A. No. 3157
	 	CS1-5

BOEING PROPRIETARY
	 	 

 

 

 

ENGINE ESCALATION,

ENGINE WARRANTY AND PATENT INDEMNITY

between

THE BOEING COMPANY

and

FEDERAL EXPRESS CORPORATION

Supplemental Exhibit EE1 to Purchase Agreement Number 3157

 

					
	P.A. No. 3157
	 	EE1

BOEING PROPRIETARY
	 	 

 

 

 

ENGINE ESCALATION,

ENGINE WARRANTY AND PATENT INDEMNITY

relating to

BOEING MODEL 777-FREIGHTER AIRCRAFT

1. ENGINE ESCALATION. No separate engine escalation methodology is defined for the
777-FREIGHTER Aircraft. Pursuant to the AGTA, the engine prices for these Aircraft are included in
and will be escalated in the same manner as the Airframe.

2. ENGINE WARRANTY AND PRODUCT SUPPORT PLAN. Boeing has obtained from General Electric
Company (GE) GE’s guarantee that GE will extend directly to Customer GE’s warranty, special
guarantees and product support services (hereinafter collectively referred to as the “Warranty”);
subject, however, to Customer’s acceptance of the conditions set forth in the Warranty.

In consideration for Boeing’s having obtained GE’s guarantee to provide the Warranty directly to
the Customer, Customer hereby releases and discharges Boeing from any and all claims, obligations
and liabilities whatsoever arising out of the purchase or use of such Engines and Customer hereby
waives, releases and renounces all its rights in all such claims, obligations and liabilities. THE
WARRANTY GE EXTENDS DIRECTLY TO CUSTOMER IS EXCLUSIVE, AND IS IN LIEU OF ALL OTHER WARRANTIES
WHETHER WRITTEN, ORAL OR IMPLIED. THERE ARE NO IMPLIED WARRANTIES OF FITNESS OR MERCHANTABILITY.

 

					
	P.A. No. 3157
	 	EE1

BOEING PROPRIETARY
	 	 

 

 

 

SERVICE LIFE POLICY COMPONENTS

between

THE BOEING COMPANY

and

FEDERAL EXPRESS CORPORATION

Supplemental Exhibit SLP1 to Purchase Agreement Number 3157

 

					
	P.A. No. 3157
	 	SLP1

BOEING PROPRIETARY
	 	 

 

 

 

COVERED SERVICE LIFE COMPONENTS

relating to

BOEING MODEL 777 AIRCRAFT

This is the listing of Covered Components for the Aircraft which relate to Part 3, Boeing
Service Life Policy of Exhibit C, Product Assurance Document to the AGTA and is a part
of Purchase Agreement No. 3157.

1. Wing.

	 	(a)	 	Upper and lower wing skins and stiffeners between the forward and rear
wing spars.
	 
	 	(b)	 	Wing spar webs, chords and stiffeners.
	 
	 	(c)	 	Inspar wing ribs.
	 
	 	(d)	 	Inspar splice plates and fittings.
	 
	 	(e)	 	Upper wing fold hinge, end ribs and lower latch lugs.
	 
	 	(f)	 	Main landing gear support structure.
	 
	 	(g)	 	Wing center section lower beams, spanwise beams and floor beams, but
not the seat tracks attached to the beams.
	 
	 	(h)	 	Wing-to-body structural attachments.
	 
	 	(i)	 	Engine strut support fittings attached directly to wing primary
structure.
	 
	 	(j)	 	Support structure in the wing for spoilers and spoiler actuators; for
aileron hinges and reaction links; and for leading edge devices and trailing edge
flaps.
	 
	 	(k)	 	Leading edge device and trailing edge flap support system.
	 
	 	(l)	 	Aileron leading edge device and trailing edge flap internal, fixed
attachment and actuator support structure.

 

					
	P.A. No. 3157
	 	SLP1-1

BOEING PROPRIETARY
	 	 

 

 

 

2. Body.

	 	(a)	 	External surface skins and doublers, longitudinal stiffeners, longerons
and circumferential rings and frames between the forward pressure bulkhead and the
vertical stabilizer rear spar bulkhead, and structural support and enclosure for
the APU but excluding all system components and related installation and connecting
devices, insulation, lining, and decorative panels and related installation and
connecting devices.
	 
	 	(b)	 	Window and windshield structure but excluding the windows and
windshields.
	 
	 	(c)	 	Fixed attachment structure of the passenger doors, cargo doors and
emergency exits, excluding door mechanisms and movable hinge components. Sills and
frames around the body openings for the passenger doors, cargo doors and emergency
exits, excluding scuff plates and pressure seals.
	 
	 	(d)	 	Nose wheel well structure, including the wheel well walls, pressure
deck, forward and aft bulkheads, and the gear support structure.
	 
	 	(e)	 	Main gear wheel well structure including pressure deck, bulkheads and
landing gear beam support structure.
	 
	 	(f)	 	Floor beams and support posts in the control cab and passenger cabin
area, but excluding seat tracks.
	 
	 	(g)	 	Forward and aft pressure bulkheads.
	 
	 	(h)	 	Keel structure between the wing front spar bulkhead and the main gear
wheel well aft bulkhead, including splices.
	 
	 	(i)	 	Wing front and rear spar support bulkheads, and vertical and horizontal
stabilizer front and rear spar support bulkheads including terminal fittings but
excluding all system components and related installation and connecting devices,
insulation, lining, and decorative panels and related installation and connecting
devices.
	 
	 	(j)	 	Support structure in the body for the stabilizer pivot and stabilizer
screw.

3. Vertical Stabilizer.

	 	(a)	 	External skins between front and rear spars.
	 
	 	(b)	 	Front and rear spars including stiffeners.

 

					
	P.A. No. 3157
	 	SLP1-2

BOEING PROPRIETARY
	 	 

 

 

 

	 	(c)	 	Attachment fittings between vertical stabilizer and body.
	 
	 	(d)	 	Inspar ribs.
	 
	 	(e)	 	Support structure in the vertical stabilizer for rudder hinges,
reaction links and actuators.
	 
	 	(f)	 	Rudder internal, fixed attachment and actuator support structure.
	 
	 	(g)	 	Rudder hinges and supporting ribs, excluding bearings.

4. Horizontal Stabilizer.

	 	(a)	 	External skins between front and rear spars.
	 
	 	(b)	 	Front and rear spars including splices and stiffeners.
	 
	 	(c)	 	Inspar ribs.
	 
	 	(d)	 	Stabilizer splice fittings and pivot and screw support structure.
	 
	 	(e)	 	Support structure in the horizontal stabilizer for the elevator hinges,
reaction links and actuators.
	 
	 	(f)	 	Elevator internal, fixed attachment and actuator support structure.
	 
	 	(g)	 	Elevator hinges and supporting ribs, excluding bearings.

5. Engine Strut.

	 	(a)	 	Strut external surface skin and doublers and stiffeners.
	 
	 	(b)	 	Internal strut chords, frames and bulkheads.
	 
	 	(c)	 	Strut to wing fittings and diagonal brace.
	 
	 	(d)	 	Engine mount support fittings attached directly to strut structure.
	 
	 	(e)	 	For Aircraft equipped with General Electric or Pratt & Whitney engines
only, the engine mounted support fittings.

	6.	 	Main Landing Gear.

	 	(a)	 	Outer cylinder.
	 
	 	(b)	 	Inner cylinder.

 

					
	P.A. No. 3157
	 	SLP1-3

BOEING PROPRIETARY
	 	 

 

 

 

	 	(c)	 	Upper and lower side strut, including spindles and universals.
	 
	 	(d)	 	Upper and lower drag strut, including spindles and universals.
	 
	 	(e)	 	Orifice support tube.
	 
	 	(f)	 	Downlock links including spindles and universals.
	 
	 	(g)	 	Torsion links.
	 
	 	(h)	 	Bogie beam.
	 
	 	(i)	 	Axles.
	 
	 	(j)	 	Steering crank arm.
	 
	 	(k)	 	Steering rod.

7. Nose Landing Gear.

	 	(a)	 	Outer cylinder.
	 
	 	(b)	 	Inner cylinder, including axles.
	 
	 	(c)	 	Orifice support tube.
	 
	 	(d)	 	Upper and lower drag strut, including lock links.
	 
	 	(e)	 	Steering plates and steering collar.
	 
	 	(f)	 	Torsion links.
	 
	 	(g)	 	Actuator support beam and hanger.

			
	NOTE:	 	The Service Life Policy does not cover any bearings, bolts, bushings, clamps,
brackets, actuating mechanisms or latching mechanisms used in or on the Covered Components.

 

					
	P.A. No. 3157
	 	SLP1-4

BOEING PROPRIETARY
	 	 

 

 

 

3157-01

Federal Express Corporation

Suite 300

942 S Shady Grove

Memphis TN 38120

	 	 	 	 	 
	Subject:	 	Spare Parts Initial Provisioning
	 
	 	 	 	 
	Reference:

	 	a)
	 	Purchase Agreement No. 3157 (the Purchase
Agreement) to between The Boeing Company
(Boeing) and Federal Express Corporation
(Customer) relating to Model
777-FREIGHTER aircraft (the Aircraft)
	 
	 	 	 	 
	 

	 	b)
	 	Customer Services General Terms Agreement No. S2-2 (CSGTA)
between Boeing and Customer

This letter agreement (Letter Agreement) is entered into on the date below and amends and
supplements the CSGTA. All capitalized terms used but not defined in this Letter Agreement have
the same meaning as in the CSGTA, except for “Aircraft” which will have the meaning as defined in
the Purchase Agreement.

In order to define the process by which Boeing and Customer will (i) identify those Spare Parts and
Standards critical to Customer’s successful introduction of the Aircraft into service and its
continued operation, (ii) place Orders under the provisions of the CSGTA as supplemented by the
provisions of this Letter Agreement for those Spare Parts and Standards, and (iii) manage the
return of certain of those Spare Parts which Customer does not use, the parties agree as follows.

1. Definitions.

“Provisioning Data” means the documentation provided by Boeing to Customer, including but not
limited to the Recommended Spare Parts List (RSPL), identifying all Boeing initial provisioning
requirements for the Aircraft.

“Provisioning Items” means the Spare Parts and Standards identified by Boeing as initial
provisioning requirements in support of the Aircraft, excluding special tools, ground support
equipment (GSE), engines and engine parts.

Page 2

 

 

 

Federal
Express Corporation

3157-01 Page 2

“Provisioning Products Guide” means the Boeing Manual D6-81834 entitled “Spares Provisioning
Products Guide”.

2. Phased Provisioning.

2.1 Provisioning Products Guide. Prior to the initial provisioning meeting Boeing
will furnish to Customer a copy of the Provisioning Products Guide.

2.2 Initial Provisioning Meeting. On or about twelve (12) months prior to delivery of
the first Aircraft the parties will conduct an initial provisioning meeting where the procedures,
schedules, and requirements for training will be established to accomplish phased provisioning of
Spare Parts and Standards for the Aircraft in accordance with the Provisioning Products Guide. If
the lead time from execution of the Purchase Agreement until delivery of the first Aircraft is less
than twelve (12) months, the initial provisioning meeting will be established as soon as reasonably
possible after execution of the Purchase Agreement.

2.3 Provisioning Data. During the initial provisioning meeting Customer will provide
to Boeing the operational parameter information described in Chapter 6 of the Provisioning Products
Guide. After review and acceptance by Boeing of such Customer information, Boeing will prepare the
Provisioning Data. Such Provisioning Data will be furnished to Customer on or about ninety (90)
days after Boeing finalizes the engineering drawings for the Aircraft. The Provisioning Data will
be as complete as possible and will cover Provisioning Items selected by Boeing for review by
Customer for initial provisioning of Spare Parts and Standards for the Aircraft. Boeing will
furnish to Customer revisions to the Provisioning Data until approximately ninety (90) days
following delivery of the last Aircraft or until the delivery configuration of each of the Aircraft
is reflected in the Provisioning Data, whichever is later.

2.4 Buyer Furnished Equipment (BFE) Provisioning Data.
Unless otherwise advised by Boeing, Customer will provide or insure its BFE
suppliers provide to Boeing the BFE data in scope and format acceptable to Boeing, in accordance
with the schedule established during the initial provisioning meeting.

	3.	 	Purchase from Boeing of Spare Parts and Standards as Initial Provisioning for the
Aircraft.

3.1 Schedule. In accordance with schedules established during the initial
provisioning meeting, Customer may place Orders for Provisioning Items and any GSE, special tools
or engine spare parts which Customer determines it will initially require for maintenance, overhaul
and servicing of the Aircraft and/or engines.

P.A. No. 3157

Spare_Parts_Initial_Provisioning

BOEING PROPRIETARY

 

 

 

Federal
Express Corporation

3157-01 Page 3

3.2 Prices of Initial Provisioning Spare Parts.

3.2.1 Boeing Spare Parts. The Provisioning Data will set forth the prices for those
Provisioning Items other than items listed in Article 3.3, below, that are Boeing Spare Parts, and
such prices will be firm and remain in effect for ninety (90) days from the date the price is first
quoted to Customer in the Provisioning Data.

3.2.2 Supplier Spare Parts. Boeing will provide estimated prices in the Provisioning
Data for Provisioning Items other than items listed in Article 3.3, below, that are Supplier Spare
Parts. The price to Customer for any Supplier Spare Parts that are Provisioning Items or for any
items ordered for initial provisioning of GSE, special tools manufactured by suppliers, or engine
spare parts will be one hundred twelve percent (112%) of the supplier’s list price for such items.

3.3 QEC Kits, Standards Kits, Raw Material Kits, Bulk Materials Kits and Service
Bulletin Kits. In accordance with schedules established during the initial provisioning
meeting, Boeing will furnish to Customer a listing of all components which could be included in
the quick engine change (QEC) kits, Standards kits, raw material kits, bulk materials kits and
service bulletin kits which may be purchased by Customer from Boeing. Customer will select, and
provide to Boeing its desired content for the kits. Boeing will furnish to Customer as soon as
practicable thereafter a statement setting forth a firm price for such kits. Customer will place
Orders with Boeing for the kits in accordance with schedules established during the initial
provisioning meeting.

4. Delivery.

For Spare Parts and Standards ordered by Customer in accordance with Article 3 of this Letter
Agreement, Boeing will, insofar as reasonably possible, deliver to Customer such Spare Parts and
Standards on dates reasonably calculated to conform to Customer’s anticipated needs in view of the
scheduled deliveries of the Aircraft. Customer and Boeing will agree upon the date to begin
delivery of the provisioning Spare Parts and Standards ordered in accordance with this Letter
Agreement. Where appropriate, Boeing will arrange for shipment of such Spare Parts and Standards
which are manufactured by suppliers directly to Customer from the applicable supplier’s facility.
The routing and method of shipment for initial deliveries and all subsequent deliveries of such
Spare Parts and Standards will be as established at the initial provisioning meeting and thereafter
by mutual agreement.

P.A. No. 3157

Spare_Parts_Initial_Provisioning

BOEING PROPRIETARY

 

 

 

Federal
Express Corporation

3157-01 Page 4

5. Substitution for Obsolete Spare Parts.

5.1 Obligation to Substitute Pre-Delivery. In the event that, prior to delivery of
the first Aircraft, any Spare Part purchased by Customer from Boeing in accordance with this Letter
Agreement as initial provisioning for the Aircraft is rendered obsolete or
unusable due to the redesign of the Aircraft or of any accessory, equipment or part thereof (other
than a redesign at Customer’s request) Boeing will deliver to Customer at no charge new and usable
Spare Parts in substitution for such obsolete or unusable Spare Parts and, upon such delivery,
Customer will return the obsolete or unusable Spare Parts to Boeing.

5.2 Delivery of Obsolete Spare Parts and Substitutes. Obsolete or unusable
Spare Parts returned by Customer pursuant to this Article 5 will be
delivered to Boeing F.O.B. at its Seattle Distribution Center or such other destination as Boeing
may reasonably designate. Spare Parts substituted for such returned obsolete or unusable Spare
Parts will be delivered to Customer in accordance with the CSGTA. Boeing will pay the freight
charges for the shipment from Customer to Boeing of any such obsolete or unusable Spare Part and
for the shipment from Boeing to Customer of any such substitute Spare Part.

6. Repurchase of Provisioning Items.

6.1 Obligation to Repurchase. During a period commencing one (1) year after delivery
of the first Aircraft added to the Purchase Agreement by the Supplemental Agreement, and ending
five (5) years after such delivery, Boeing will, upon receipt of Customer’s written request and
subject to the exceptions in Article 6.2, repurchase unused and undamaged Provisioning Items which
(i) were recommended by Boeing in the Provisioning Data as initial provisioning for the Aircraft,
(ii) were purchased by Customer from Boeing, and (iii) are surplus to Customer’s needs.

6.2 Exceptions. Boeing will not be obligated under Article 6.1 to repurchase any of
the following: (i) quantities of Provisioning Items in excess of those quantities recommended by
Boeing in the Provisioning Data for the Aircraft, (ii) QEC kits, bulk material kits, raw material
kits, service bulletin kits, Standards kits and components thereof (except those components listed
separately in the Provisioning Data), (iii) Provisioning Items for which an Order was received by
Boeing more than five (5) months after delivery of the last Aircraft added to the Purchase
Agreement by the Supplemental Agreement, (iv) Provisioning Items which have become obsolete or have
been replaced by other Provisioning Items as a result of Customer’s modification of the Aircraft,
and (v) Provisioning Items which become excess as a result of a change in Customer’s operating
parameters, as provided to Boeing pursuant to the initial provisioning meeting and which were the
basis of Boeing’s initial provisioning recommendations for the Aircraft.

P.A. No. 3157

Spare_Parts_Initial_Provisioning

BOEING PROPRIETARY

 

 

 

Federal
Express Corporation

3157-01 Page 5

6.3 Notification and Format. Customer will notify Boeing, in writing when Customer
desires to return Provisioning Items under the provisions of this Article 6. Customer’s
notification will include a detailed summary, in part number sequence, of the Provisioning Items
Customer desires to return. Such
summary will be in the form of listings, tapes, diskettes or other media as may be mutually agreed
between Boeing and Customer and will include part number, nomenclature, purchase order number,
purchase order date and quantity to be returned. Within five (5) business days after receipt of
Customer’s notification, Boeing will advise Customer in writing when Boeing’s review of such
summary will be completed.

6.4 Review and Acceptance by Boeing. Upon completion of Boeing’s review of any
detailed summary submitted by Customer pursuant to Article 6.3, Boeing will issue to Customer a
Material Return Authorization (MRA) for those Provisioning Items Boeing agrees are eligible for
repurchase in accordance with this Article 6. Boeing will advise Customer of the reason that any
Provisioning Item included in Customer’s detailed summary is not eligible for return. Boeing’s MRA
will state the date by which Provisioning Items listed in the MRA must be redelivered to Boeing,
and Customer will arrange for shipment of such Provisioning Items accordingly.

6.5 Price and Payment. The price of each Provisioning Item repurchased by Boeing
pursuant to this Article 6 will be an amount equal to 100% of the original invoice price thereof
except that the repurchase price of Provisioning Items purchased pursuant to Article 3.2.2 will not
include Boeing’s 12% handling charge. Boeing will pay the repurchase price by issuing a credit
memorandum in favor of Customer which may be applied against amounts due Boeing for the purchase of
Spare Parts or Standards.

6.6 Delivery of Repurchased Provisioning Items. Provisioning Items repurchased by
Boeing pursuant to this Article 6 will be delivered to Boeing F.O.B. at its Seattle Distribution
Center or such other destination as Boeing may reasonably designate.

P.A. No. 3157

Spare_Parts_Initial_Provisioning

BOEING PROPRIETARY

 

 

 

Federal
Express Corporation

3157-01 Page 6

7. Title and Risk of Loss.

Title and risk of loss of any Spare Parts or Standards delivered to Customer by Boeing in
accordance with this Letter Agreement will pass from Boeing to Customer in accordance with the
applicable provisions of the CSGTA. Title to and risk of loss of any Spare Parts or Standards
returned to Boeing by Customer in accordance with this Letter Agreement will pass to Boeing upon
delivery of such Spare Parts or Standards to Boeing in accordance with the provisions of Article
5.2 or Article 6.6, herein, as appropriate.

8. Termination for Excusable Delay.

In the event of termination of the Purchase Agreement pursuant to Article 7 of the AGTA with
respect to any Aircraft /added to the Purchase Agreement by the Supplemental Agreement/, such
termination will, if Customer so requests by written notice received by Boeing within fifteen (15)
days after such termination, also discharge and terminate all obligations and liabilities of the
parties as to any Spare Parts or Standards which Customer had ordered pursuant to the provisions of
this Letter Agreement as initial provisioning for such Aircraft and which are undelivered on the
date Boeing receives such written notice.

9. Order of Precedence.

In the event of any inconsistency between the terms of this Letter Agreement and the terms of any
other provisions of the CSGTA, the terms of this Letter Agreement will control.

Very truly yours,

THE BOEING COMPANY

	 	 	 	 	 
	By

	 	/s/ R.C. Nelson
 

	 	 
	 
	 	 	 	 
	Its

	 	Attorney-In-Fact
 

	 	 

ACCEPTED AND AGREED TO this

Date: November 7, 2006

FEDERAL EXPRESS CORPORATION

	 	 	 	 	 
	By

	 	/s/ Phillip C. Blum
 

	 	 

Its Vice President — Aircraft Acquisitions/SAO

P.A. No. 3157

Spare_Parts_Initial_Provisioning

BOEING PROPRIETARY

 

 

 

3157-02

Federal Express Corporation

Suite 300

942 S Shady Grove

Memphis TN 38120

	 	 	 
	Subject:

	 	Demonstration Flight Waiver
	 
	 	 
	Reference:

	 	Purchase Agreement No. 3157 (the Purchase Agreement) between
The Boeing Company (Boeing) and Federal Express Corporation
(Customer) relating to Model 777-FREIGHTER aircraft (the
Aircraft)

This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms
used but not defined in this Letter Agreement shall have the same meaning as in the Purchase
Agreement.

Definition of Terms:

Correction Costs: Customer’s direct labor costs and the cost of any material required to correct a
Flight Discrepancy where direct labor costs are equal to the warranty labor rate in effect between
the parties at the time such labor is expended.

Flight Discrepancy: A failure or malfunction of an Aircraft, or the accessories, equipment or
parts installed on the Aircraft which results from a defect in the Aircraft, Boeing Product, engine
or Supplier Product or a nonconformance to the Detail Specification for the Aircraft.

The AGTA provides that each aircraft will be test flown prior to delivery for the purpose of
demonstrating the functioning of such Aircraft and its equipment to Customer; however, Customer may
elect to waive this test flight. For each test flight waived, Boeing agrees to provide Customer an
amount of jet fuel at delivery that, including the standard fuel entitlement, totals the following
amount of fuel:

	 	 	 
	Aircraft	 	Total Fuel Entitlement
	Model	 	(U.S. Gallons)
	737
	 	Full tanks
	747
	 	26,000
	767
	 	11,000
	777
	 	10,300
	787
	 	Full tanks

Further, Boeing agrees to reimburse Customer for any Correction Costs incurred as a result of
the discovery of a Flight Discrepancy during the first flight of the aircraft by Customer following
delivery to the extent such Correction Costs are not covered under a warranty provided by Boeing,
the engine manufacturer or any of Boeing’s suppliers.

Page 1

 

 

 

Federal Express Corporation

3157-02 Page 2

Should a Flight Discrepancy be detected by Customer which requires the return of the Aircraft to
Boeing’s facilities at Seattle, Washington, so that Boeing may correct such Flight Discrepancy,
Boeing and Customer agree that title to and risk of loss of such Aircraft will remain with
Customer. In addition, it is agreed that Boeing will have responsibility for the Aircraft while it
is on the ground at Boeing’s facilities in Seattle, Washington, as is chargeable by law to a bailee
for mutual benefit, but Boeing shall not be chargeable for loss of use.

To be reimbursed for Correction Costs, Customer shall submit a written itemized statement
describing any flight discrepancies and indicating the Correction Cost incurred by Customer for
each discrepancy. This request must be submitted to Boeing’s Contracts Regional Director at
Renton, Washington, within ninety (90) days after the first flight by Customer.

Very truly yours,

THE BOEING COMPANY

	 	 	 	 	 
	By

	 	/s/ R.C. Nelson
 

	 	 
	 
	 	 	 	 
	Its

	 	Attorney-In-Fact
 

	 	 

ACCEPTED AND AGREED TO this

Date: November 7, 2006

FEDERAL EXPRESS CORPORATION

	 	 	 	 	 
	By

	 	/s/ Phillip C. Blum
 

	 	 

Its Vice President — Aircraft Acquisitions/SAO

P.A. No. 3157

Demonstration_Flight_Waiver

BOEING PROPRIETARY

 

 

 

6-1162-RCN-1785

Federal Express Corporation

Suite 300

942 S Shady Grove

Memphis TN 38120

	 	 	 
	Subject:

	 	Performance Guarantees, [ * ]
	 
	 	 
	Reference:

	 	Purchase Agreement No. 3157 (the Purchase Agreement) between
The Boeing Company (Boeing) and Federal Express Corporation
(Customer) relating to Model 777-FREIGHTER aircraft (the
Aircraft)

This Letter Agreement amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement have the same meaning as in the Purchase Agreement.

The Performance Guarantees for the Aircraft are set forth in Letter Agreement Number
6-1162-RCN-1791.

[ * ]

			
	*	 	Blank spaces 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, as amended.

P.A. No. 3157

Performance Guarantees, [ * ]

BOEING PROPRIETARY

 

 

 

6-1162-RCN-1785

Page 2

10. Assignment.

Neither party may assign this Letter Agreement without the express written approval of the
other party.

11. Confidential Treatment.

Customer understands that certain commercial and financial information contained in this
Letter Agreement are considered by Boeing as confidential. Customer agrees that they will treat
this Letter Agreement and the information contained herein as confidential and will not, without
the prior written consent of Boeing, disclose this Letter Agreement or any information contained
herein to any other person or entity

If the foregoing correctly sets forth your understanding of our agreement with respect to the
matters treated above, please indicate your acceptance and approval below.

Very truly yours,

THE BOEING COMPANY

	 	 	 	 	 
	By

	 	/s/ R.C. Nelson
 

	 	 
	 
	 	 	 	 
	Its

	 	Attorney-In-Fact	 	 
	 

	 	 	 	 
	 

	 	 	 	 

ACCEPTED AND AGREED TO this

Date: November 7, 2006

FEDERAL EXPRESS CORPORATION

	 	 	 	 	 
	By

	 	/s/ Phillip C. Blum
 

	 	 

Its Vice President — Aircraft Acquisitions/SAO

P.A. No. 3157

Performance Guarantees, [ * ]

BOEING PROPRIETARY

 

 

 

Attachment A to 6-1162-RCN-1785

Page 1

[ * ]

			
	*	 	Blank spaces 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, as amended.

P.A. No. 3157

Performance Guarantees, [ * ]

BOEING PROPRIETARY

 

 

 

Attachment B to 6-1162-RCN-1785

Page 1

[ * ]

			
	*	 	Blank spaces 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, as amended.

P.A. No. 3157

Performance Guarantees, [ * ]

BOEING PROPRIETARY

 

 

 

Attachment
C to 6-1162-RCN-1785

Page 1

[ * ]

			
	*	 	Blank spaces 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, as amended.

P.A. No. 3157

Performance Guarantees, [ * ]

BOEING PROPRIETARY

 

 

 

6-1162-RCN-1789

Federal Express Corporation

Suite 300

942 S Shady Grove

Memphis TN 38120

	 	 	 
	Subject:

	 	Option Aircraft
	 
	 	 
	Reference:

	 	Purchase Agreement 3157 (the Purchase Agreement) between The
Boeing Company (Boeing) and Federal Express Corporation
(Customer) relating to Model 777-FREIGHTER aircraft (the
Aircraft)

This Letter Agreement amends the Purchase Agreement. All terms used but not defined in this Letter
Agreement have the same meaning as in the Purchase Agreement.

Boeing agrees to manufacture and sell to Customer additional Model 777-FREIGHTER aircraft as Option
Aircraft. The delivery months, number of aircraft, Advance Payment Base Price per aircraft and
advance payment schedule are listed in the Attachment to this Letter Agreement. The Airframe Price
shown includes the Engine Price.

1. Aircraft Description and Changes

1.1 Aircraft Description: The Option Aircraft are described by the Detail
Specification listed in the Attachment.

1.2 Changes: The Detail Specification will be revised to include:

	 	(i)	 	Changes applicable to the basic Model 777
aircraft which are developed by Boeing between the date of the Detail
Specification and the signing of the amendment to the definitive
agreement to add the the Option Aircraft;
	 
	 	(ii)	 	Changes required to obtain required regulatory
certificates; and
	 
	 	(iii)	 	Changes mutually agreed upon.

1.3 [ * ]

			
	*	 	Blank spaces 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, as amended.

P.A. No. 3157

Option_Aircraft

BOEING PROPRIETARY

 

 

 

6-1162-RCN-1789

Page 2

2. Price

2.1 The pricing elements of the Option Aircraft are listed in the Attachment.

2.2 Price Adjustments.

2.2.1 Changes. The price of the Option Aircraft will be adjusted to reflect changes
discussed in paragraph 1.2 above, provided that the price for changes in 1.2 (ii) are subject to
the terms of section 3.2.2 of the AGTA.

2.2.2 Optional Features. The Optional Aircraft will contain the same Optional
Features and price as the initial firm Aircraft.

2.2.3 Escalation Adjustments. The Airframe Price and the price of Optional Features
for Option Aircraft will be escalated on the same basis as the Aircraft.

3. Payment.

3.1 Customer will pay a deposit to Boeing in the amount shown in the Attachment for each
Option Aircraft (Deposit) upon execution of the Purchase Agreement. If Customer exercises an
option, the Deposit will be credited against the first advance payment due. [ * ]

3.2 Following option exercise, advance payments in the amounts and at the dates pursuant to
the appropriate advance payment schedule as discussed in the Purchase Agreement will be payable for
the Option Aircraft. The remainder of the Aircraft Price for the Option Aircraft will be paid at
the time of delivery.

4. Option Exercise.

4.1 Customer may exercise an option by giving written notice to Boeing on or before the date [ * ] months prior to the delivery dates listed in the Attachment (Option Exercise Date). Upon
option exercise, Boeing will have the right to adjust the scheduled delivery by [ * ].

4.2 [ * ]

			
	*	 	Blank spaces 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, as amended.

P.A. No. 3157

Option_Aircraft

BOEING PROPRIETARY

 

 

 

6-1162-RCN-1789

Page 3

5. Contract Terms.

Boeing and Customer will use their best efforts amend the the definitive agreement to add the
exercised Option Aircraft as an Aircraft within 30 days following option exercise.

Confidential Treatment. Customer understands that certain commercial and financial
information contained in this Letter Agreement is considered by Boeing as confidential. Customer
agrees that it will treat this Letter Agreement and the information contained herein as
confidential and will not, without the prior written consent of Boeing, disclose this Letter
Agreement or any information contained herein to any other person or entity.

Very truly yours,

THE BOEING COMPANY

	 	 	 	 	 
	By

	 	/s/ R.C. Nelson
 

	 	 
	 
	 	 	 	 
	Its

	 	Attorney-In-Fact
 

	 	 

ACCEPTED AND AGREED TO this

Date: November 7, 2006

FEDERAL EXPRESS CORPORATION

	 	 	 	 	 
	By

	 	/s/ Phillip C. Blum
 

	 	 

Its Vice President — Aircraft Acquisitions/SAO

Attachment

P.A. No. 3157

Option_Aircraft

BOEING PROPRIETARY

 

 

 

Attachment to

Letter 6-1162-RCN-1789

Option Aircraft Delivery, Description, Price and Advance Payments

Purchase of 15 firm + 15 options

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Airframe Model/MTOW:	 	777-Freighter	 	766000 pounds
	 	Detail Specification:	 	D019W007-NEW (7/24/2006)

	Engine Model/Thrust:

	 	GE90-110B1L
	 	110000 pounds
	 	Airframe Price Base Year/Escalation Formula:
	 	Jul-06 
	 	ECI-MFG/CPI
	Airframe Price:

	 	 	 		[ * ]	 	 	Engine Price Base Year/Escalation Formula:
	 	N/A
	 	N/A
	Optional Features:

	 	 	 		[ * ]	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	Sub-Total of Airframe and Features:	 		[ * ]	 	 	Airframe Escalation Data:	 	 	 	 
	Engine Price (Per Aircraft):	 	 	 	$	 0	 	 	Base Year Index (ECI):	 	180.3 

	Aircraft Basic Price (Excluding BFE/SPE):	 		[ * ]	 	 	Base Year Index (CPI):	 	195.4 

	 

	 	 	 	 	 	 	 	 	 	 	 	 
	Buyer Furnished Equipment (BFE) Estimate:	 		 [ * ]	 	 	 	 	 	 	 
	Seller Purchased Equipment (SPE) Estimate:	 	$	 0	 	 	 	 	 	 	 
	Non-Refundable Deposit/Aircraft at Def Agreemt:	 		 [ * ]	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Escalation	 	 	 	 	 	Escalation Estimate	 	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
	Delivery	 	Number of	 	Factor	 	 	 	 	 	Adv Payment Base	 	At Signing	 	24 Mos.	 	21/18/15/12/9/6 Mos.	 	Total
	Date	 	Aircraft	 	(Airframe)	 	 	 	 	 	Price Per A/P	 	1%	 	4%	 	5%	 	35%
	[ * ]
	 	1	 	[ * ]	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	2	 	[ * ]	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	2	 	[ * ]	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	1	 	[ * ]	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	1	 	[ * ]	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	1	 	[ * ]	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	2	 	[ * ]	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	1	 	[ * ]	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	1	 	[ * ]	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	2	 	[ * ]	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]
	[ * ]
	 	1	 	[ * ]	 	 	 	 	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]	 	[ * ]

			
	*	 	Blank spaces 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, as amended.

 

 

 

6-1162-RCN-1790

Federal Express Corporation

Suite 300

942 S Shady Grove

Memphis TN 38120

	 	 	 
	Subject:

	 	Special Matters
	 
	 	 
	Reference:

	 	Purchase Agreement No. 3157 (the Purchase Agreement) between
The Boeing Company (Boeing) and Federal Express Corporation
(Customer) relating to Model 777-FREIGHTER aircraft (the
Aircraft)

This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms
used but not defined in this Letter Agreement have the same meaning as in the Purchase Agreement.

[ * ]

7. ADVANCE PAYMENT SETOFF RIGHTS

Customer agrees that if it defaults on any monetary obligation under the Purchase Agreement
then Boeing may apply any/all advance payments paid by Customer to cure, in part or in whole, any
default made with respect to any Aircraft or other obligation in the Purchase Agreement. In the
event that Boeing exercises such setoff rights and applies any advance payments to cure any such
default by Customer with respect to an Aircraft or other obligation in the Purchase Agreement,
Boeing will be entitled to require Customer to replace within ten days of written notice, the
amount of advance payments applied to cure such default such that the total amount of advance
payments will be restored to the aggregate amount of advance payments owed at that time by
Customer.

8. ASSIGNMENT

[ * ]

	*	 	Blank spaces 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, as amended.

P.A. No. 3157

BOEING PROPRIETARY

 

 

 

6-1162-RCN-1790

Page 2

[ * ]

10. FLIGHT TEST PROCEDURES

As of the date of this Letter Agreement, Boeing has not yet developed the flight test
procedures for the model 777F aircraft. Boeing will develop flight test procedures for Customer’s
model 777F Aircraft. Such procedures will be based on Boeing document D540W001 (previously
provided to Customer). Boeing will include in any reasonable request for specific flight test
procedures for Customer’s Aircraft, provided such request(s) are made at least 6 months prior to
delivery of the respective Aircraft.

[ * ]

14. SIMULATOR DATA PACKAGE

Boeing currently does not have a simulator data package for the Model 777-FREIGHTER aircraft.
Upon request, Boeing will offer to Customer a simulator package proposal satisfying Customer’s
requirments, such proposal to include price and other terms and conditions for such Model
777-FREIGHTER aircraft.

15. PUBLIC ANNOUNCEMENT

Notwithstanding the terms in the Purchase Agreement, neither Party shall in any manner
advertise or make any public statement regarding Customer’s purchase of the Aircraft without the
prior written consent of the other Party. Neither Party shall disclose any details of this
Agreement to any third party except as may be authorized in writing by an authorized officer of the
other Party.

			
	*	 	Blank spaces 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, as amended.

P.A. No. 3157

BOEING PROPRIETARY

 

 

 

6-1162-RCN-1790

Page 3

Confidential Treatment. Customer understands that certain commercial and financial
information contained in this Letter Agreement /and attachment(s) hereto is considered by Boeing as
confidential. Customer agrees that it will treat this Letter Agreement and the information
contained herein as confidential and will not, without the prior written consent of Boeing,
disclose this Letter Agreement or any information contained herein to any other person or entity.

If the foregoing correctly sets forth your understanding of our agreement with respect to matters
described above, please indicate your acceptance and approval below.

Very truly yours,

THE BOEING COMPANY

	 	 	 	 	 
	By

	 	/s/ R.C. Nelson
 

	 	 
	 
	 	 	 	 
	Its

	 	Attorney-In-Fact
 

	 	 

ACCEPTED AND AGREED TO this

Date: November 7, 2006

FEDERAL
EXPRESS CORPORATION

	 	 	 	 	 
	By

	 	/s/ Phillip C. Blum
 

	 	 

Its Vice President — Aircraft Acquisitions/SAO

P.A. No. 3157

BOEING PROPRIETARY

 

 

 

Attachment to Letter Agreement

6-1162-RCN-1790

777 Training, Documentation, and Simulator Data

	 	 	 	 	 	 	 
	[ * ]
	 	[  *  ]	 	 	[  *  ]	 
	[ * ]
	 	[  *  ]	 	 	[  *  ]	 
	[ * ]
	 	[  *  ]	 	 	[  *  ]	 
	[ * ]
	 	[  *  ]	 	 	[  *  ]	 
	[ * ]
	 	[  *  ]	 	 	[  *  ]	 
	[ * ]
	 	[  *  ]	 	 	[  *  ]	 
	[ * ]
	 	[  *  ]	 	 	[  *  ]	 
	[ * ]
	 	[  *  ]	 	 	[  *  ]	 
	[ * ]
	 	[  *  ]	 	 	[  *  ]	 
	[ * ]
	 	[  *  ]	 	 	[  *  ]	 
	[ * ]
	 	[  *  ]	 	 	[  *  ]	 
	[ * ]
	 	[  *  ]	 	 	[  *  ]	 

			
	*	 	Blank spaces 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, as amended.

PAGE 1

 

 

 

6-1162-RCN-1791

Federal Express Corporation

Suite 300

942 S Shady Grove

Memphis TN 38120

	 	 	 
	Subject:

	 	Aircraft Performance Guarantees
	 
	 	 
	Reference:

	 	Purchase Agreement No. 3157 (the Purchase Agreement) between
The Boeing Company (Boeing) and Federal Express Corporation
(Customer) relating to Model 777-FREIGHTER aircraft (the
Aircraft)

This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms
used but not defined in this Letter Agreement have the same meaning as in the Purchase Agreement.

Boeing agrees to provide Customer with the performance guarantees in the Attachment. These
guarantees are exclusive and expire upon delivery of the Aircraft to Customer.

Customer agrees not to disclose this Letter Agreement, attachments, or any other information
related to this Letter Agreement without prior written consent by Boeing.

Very truly yours,

THE BOEING COMPANY

	 	 	 	 	 
	By

	 	/s/ R.C. Nelson
 

	 	 
	 
	 	 	 	 
	Its

	 	Attorney-In-Fact
 

	 	 

ACCEPTED AND AGREED TO this

Date: November 7, 2006

FEDERAL EXPRESS CORPORATION

	 	 	 	 	 
	By

	 	/s/ Phillip C. Blum
 

	 	 

ItsVice President — Aircraft Acquisitions/SAO

P.A. No. 3157

Performance_Guarantees

BOEING PROPRIETARY

 

 

 

Attachment to Letter Agreement

No. 6-1162-RCN-1791

GE90-110B1L Engines

Page 1

MODEL 777F PERFORMANCE GUARANTEES

FOR FEDERAL EXPRESS CORPORATION

	 	 	 	 	 
	SECTION	 	CONTENTS
	 	 	 	 	 

	 	1	 	 	AIRCRAFT MODEL APPLICABILITY

	 	 	 	 	 

	 	2	 	 	FLIGHT PERFORMANCE

	 	 	 	 	 

	 	3	 	 	MANUFACTURER’S EMPTY WEIGHT

	 	 	 	 	 

	 	4	 	 	AIRCRAFT CONFIGURATION

	 	 	 	 	 

	 	5	 	 	GUARANTEE CONDITIONS

	 	 	 	 	 

	 	6	 	 	GUARANTEE COMPLIANCE

	 	 	 	 	 

	 	7	 	 	EXCLUSIVE GUARANTEES

	 	 	 
	P.A. No. 3157
	 	 

 

 

 

Attachment to Letter Agreement

No. 6-1162-RCN-1791

GE90-110B1L Engines

Page 2

[ * ]

			
	*	 	Blank spaces 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, as amended.

	 	 	 
	P.A. No. 3157
	 	 

 

 

 

6-1162-RCN-1792

Federal Express Corporation

Suite 300

942 S Shady Grove

Memphis TN 38120

	 	 	 
	Subject:

	 	Liquidated Damages — Non-Excusable Delay
	 
	 	 
	Reference:

	 	Purchase Agreement No. 3157 (the Purchase Agreement) between
The Boeing Company (Boeing) and Federal Express Corporation
(Customer) relating to Model 777-FREIGHTER aircraft (the
Aircraft)

This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms
used but not defined in this Letter Agreement have the same meaning as in the Purchase Agreement.

[ * ]

			
	*	 	Blank spaces 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, as amended.

P.A. No. 3157

BOEING PROPRIETARY

 

 

 

			
	6-1162-RCN-1792
	 	Page 2

7. Confidential Treatment

Customer understands that certain commercial and financial information contained in this
Letter Agreement is considered by Boeing as confidential. Customer agrees that it will treat this
Letter Agreement and the information contained herein as confidential and will not, without the
prior written consent of Boeing, disclose this Letter Agreement or any information contained herein
to any other person or entity.

Very truly yours,

THE BOEING COMPANY

	 	 	 	 	 
	By

	 	/s/ R.C. Nelson
 

	 	 
	 
	 	 	 	 
	Its

	 	Attorney-In-Fact
 

	 	 

ACCEPTED AND AGREED TO this

Date: November 7, 2006

FEDERAL EXPRESS CORPORATION

	 	 	 	 	 
	By

	 	/s/ Phillip C. Blum
 

	 	 

Its Vice President — Aircraft Acquisitions/SAO

P.A. No. 3157

Liquidated_Damages_Non-Excusable_Delay

BOEING PROPRIETARY

 

 

 

6-1162-RCN-1793

Federal Express Corporation

Suite 300

942 S Shady Grove

Memphis TN 38120

	 	 	 
	Subject:

	 	Open Configuration Matters
	 
	 	 
	Reference:

	 	Purchase Agreement No. 3157 (the Purchase Agreement) between
The Boeing Company (Boeing) and Federal Express Corporation
(Customer) relating to Model 777-FREIGHTER aircraft (the
Aircraft)

This Letter Agreement amends the Purchase Agreement. All terms used but not defined in this Letter
Agreement have the same meaning as in the Purchase Agreement.

1. Aircraft Configuration.

1.1 Initial Configuration. The initial configuration of Customer’s Model
777-FREIGHTER Aircraft has is based on Boeing Configuration Specification D019W007-NEW as described
in Article 1 and Exhibit A of the Purchase Agreement (the Aircraft Configuration).

1.2 Final Configuration Schedule. No later than [ * ], Boeing will
provide to Customer a configuration development schedule for the aircraft.

1.3 BFE. Customer and Boeing have not determined the specific items of BFE. When the
specific BFE is determined, the parties will mutually agree on the vendor select dates and on-dock
dates required to support the in production installation of the BFE into the Aircraft.

[ * ]

1.6 Change Request Pricing. Boeing agrees to use its standard pricing policy and
procedures to price any of Customers unique change requests.

			
	*	 	Blank spaces 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, as amended.

P.A. No. 3157

Open_Configuration_Matters

BOEING PROPRIETARY

 

 

 

Federal Express Corporation

6-1162-RCN-1793 Page 2

2. Effect on Purchase Agreement.

2.1 Basic Specification. Changes applicable to the basic Model 777-FREIGHTER
aircraft which are developed by Boeing between the date of signing of the Purchase Agreement and
completion of the final configuration review described in paragraph 1.2 above will be incorporated
into the Aircraft Configuration by written amendment.

2.2 Exhibit A. The effects of all Options which are mutually agreed upon between
Boeing and Customer for incorporation into the Aircraft Configuration will be incorporated into
Exhibit A of the Purchase Agreement by written amendment.

2.3 Performance Guarantees. Within 90 days after Customer’s acceptance of any
Options, Boeing will provide to Customer revisions to the Performance Guarantees to reflect the
effects, if any, of the incorporation of such Options on Aircraft performance. Such revisions will
be incorporated by written amendment.

[ * ]

3. Purchase Agreement Amendment.

Within 30 days after reaching agreement as to the final Aircraft Configuration, Boeing will
provide Customer an amendment to the Purchase Agreement reflecting the effects of the configuration
changes agreed to by the parties.

			
	*	 	Blank spaces 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, as amended.

P.A. No. 3157

Open_Configuration_Matters

BOEING PROPRIETARY

 

 

 

Federal Express Corporation

6-1162-RCN-1793 Page 3

Very truly yours,

THE BOEING COMPANY

	 	 	 	 	 
	By

	 	/s/ R.C. Nelson
 

	 	 
	 
	 	 	 	 
	Its

	 	Attorney-In-Fact
 

	 	 

ACCEPTED AND AGREED TO this

Date:November 7, 2006

Federal Express Corporation

	 	 	 	 	 
	By

	 	/s/ Phillip C. Blum
 

	 	 

Its Vice President — Aircraft Acquisitions/SAO

P.A. No. 3157

Open_Configuration_Matters

BOEING PROPRIETARY

 

 

 

6-1162-RCN-1795

Federal Express Corporation

Suite 300

942 S Shady Grove

Memphis TN 38120

	 	 	 
	Subject:

	 	Aircraft General Terms Agreement — Amended Terms
	 
	 	 
	Reference:

	 	Aircraft General Terms Agreement No. AGTA-FED (the AGTA)
between The Boeing Company (Boeing) and Federal Express
Corporation (Customer)

This letter agreement (Letter Agreement) amends and supplements the AGTA. All terms used but not
defined in this Letter Agreement have the same meaning as in the AGTA.

[ * ]

			
	*	 	Blank spaces 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, as amended.

AGTA-FED

BOEING PROPRIETARY

 

 

 

			
	6-1162-RCN-1795
	 	Page 2

Confidential Treatment. Customer understands that certain commercial and financial
information contained in this Letter Agreement /and attachment(s) hereto is considered by Boeing as
confidential. Customer agrees that it will treat this Letter Agreement and the information
contained herein as confidential and will not, without the prior written consent of Boeing,
disclose this Letter Agreement or any information contained herein to any other person or entity.

Very truly yours,

THE BOEING COMPANY

	 	 	 	 	 
	By

	 	/s/ R.C. Nelson
 

	 	 
	 
	 	 	 	 
	Its

	 	Attorney-In-Fact
 

	 	 

ACCEPTED AND AGREED TO this

Date: November 7, 2006

FEDERAL EXPRESS CORPORATION

	 	 	 	 	 
	By

	 	/s/ Phillip C. Blum
 

	 	 

Its Vice President — Aircraft Acquisitions/SAO

AGTA-FED

BOEING PROPRIETARY

 

 

 

6-1162-RCN-1796

Federal Express Corporation

Suite 300

942 S. Shady Grove

Memphis, TN 38120

	 	 	 
	Subject:

	 	Product Assurance — First-Look Inspection Program
	 
	 	 
	Reference:

	 	Purchase Agreement No. 3157 (the Purchase Agreement) between
The Boeing Company (Boeing) and Federal Express Corporation
(Customer) relating to Customer Model 777F aircraft (the
Aircraft)

This Letter Agreement amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement have the same meaning as in the Aircraft General Terms Agreement
No. AGTA-FED (the AGTA).

[ * ]

			
	*	 	Blank spaces 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, as amended.

P.A. No. 3157

Product Assurance — First-Look Inspection Program

BOEING PROPRIETARY

 

 

 

	 	 	 
	Federal Express Corporation
	 	 
	6-1162-RCN-1796

	 	Page 2

Confidential Treatment. Customer understands that certain commercial and financial
information contained in this Letter Agreement /and attachment(s) hereto is considered by Boeing as
confidential. Customer agrees that it will treat this Letter Agreement and the information
contained herein as confidential and will not, without the prior written consent of Boeing,
disclose this Letter Agreement or any information contained herein to any other person or entity.

If the foregoing correctly sets forth your understanding of our agreement with respect to matters
described above, please indicate your acceptance and approval below.

Very truly yours,

THE BOEING COMPANY

	 	 	 	 	 
	By

	 	/s/ R.C. Nelson
 

	 	 
	 
	 	 	 	 
	Its

	 	Attorney-In-Fact
 

	 	 

ACCEPTED AND AGREED TO this

Date: November 7, 2006

FEDERAL EXPRESS CORPORATION

	 	 	 	 	 
	By

	 	/s/ Phillip C. Blum
 

	 	 

Its Vice President — Aircraft Acquisitions/SAO

P.A. No. 3157

Product Assurance — First-Look Inspection Program

BOEING PROPRIETARY

 

 

 

6-1162-RCN-1797

Federal Express Corporation

Suite 300

942 S. Shady Grove

Memphis, TN 38120

	 	 	 
	Subject:

	 	Licenses and Customer Supplemental Type Certificates
	 
	 	 
	Reference:

	 	Purchase Agreement No. 3157 (the Purchase Agreement) between
The Boeing Company (Boeing) and Federal Express Corporation
(Customer) relating to Customer Model 777F aircraft (the
Aircraft)

This Letter Agreement amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement have the same meaning as in the Aircraft General Terms Agreement
No. AGTA-FED (the AGTA), the Customer Services and General Terms Agreement No. CSGTA S2-2 (the
CSGTA) and the Hardware, Material Services General Terms Agreement No. FED (the HMSGTA).

[ * ]

	6.0	 	Confidential Treatment. Customer understands that certain commercial and financial
information contained in this Letter Agreement /and attachment(s) hereto is considered by
Boeing as confidential. Customer agrees that it will treat this Letter Agreement and the
information contained herein as confidential and will not, without the prior written consent
of Boeing, disclose this Letter Agreement or any information contained herein to any other
person or entity.

			
	*	 	Blank spaces 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, as amended.

P.A. No. 3157

777BCF

BOEING PROPRIETARY

 

 

 

Federal Express Corporation

6-1162-RCN-1797

page 2

If the foregoing correctly sets forth your understanding of our agreement with respect to
matters described above, please indicate your acceptance and approval below.

Very truly yours,

THE BOEING COMPANY

 

	 	 	 	 	 
	By

	 	/s/ R.C. Nelson
 

	 	 
	 
	 	 	 	 
	Its

	 	Attorney-In-Fact
 

	 	 

ACCEPTED AND AGREED TO this

Date: November 7, 2006

FEDERAL EXPRESS CORPORATION

 

	 	 	 	 	 
	By

	 	/s/ Phillip C. Blum
 

	 	 

Its Vice President  — Aircraft Acquisitions/SAO

P.A. No. 3157

777BCF

BOEING PROPRIETARY

 

 

 

6-1162-RCN-1798

Federal Express Corporation

Suite 300

942 S. Shady Grove

Memphis, TN 38120

	 	 	 
	Subject:

	 	777 Boeing Converted Freighter
	 
	 	 
	Reference:

	 	Purchase Agreement No. 3157 (the Purchase Agreement) between
The Boeing Company (Boeing) and Federal Express Corporation
(Customer) relating to Customer Model 777F aircraft (the
Aircraft)

This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms
used but not defined in this Letter Agreement have the same meaning as in the Aircraft General
Terms Agreement No. AGTA-FED (the AGTA).

[ * ]

	8.0	 	Confidential Treatment.
	 
	 	 	Customer understands that certain commercial and financial information contained in this
Letter Agreement /and attachment(s) hereto is considered by Boeing as confidential.
Customer agrees that it will treat this Letter Agreement and the information contained
herein as confidential and will not, without the prior written consent of Boeing, disclose
this Letter Agreement or any information contained herein to any other person or entity.

			
	*	 	Blank spaces 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, as amended.

P.A. No. 3157

777BCF

BOEING PROPRIETARY

 

 

 

Federal Express Corporation

6-1162-RCN-1798

Page 2

If the foregoing correctly sets forth your understanding of our agreement with respect to
matters described above, please indicate your acceptance and approval below.

Very truly yours,

THE BOEING COMPANY

 

	 	 	 	 	 
	By

	 	/s/ R.C. Nelson
 

	 	 
	 
	 	 	 	 
	Its

	 	Attorney-In-Fact
 

	 	 

ACCEPTED AND AGREED TO this

Date: November 7, 2006

FEDERAL EXPRESS CORPORATION

 

	 	 	 	 	 
	By

	 	/s/ Phillip C. Blum
 

	 	 

Its Vice President — Aircraft Acquisitions/SAO

P.A. No. 3157

777BCF

BOEING PROPRIETARY

 

 

 

AIRCRAFT GENERAL TERMS AGREEMENT

AGTA-FED

between

THE BOEING COMPANY

and

FEDERAL EXPRESS CORPORATION

 

AGTA-FED

BOEING PROPRIETARY

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	PAGE
	ARTICLES	 	 	 	NUMBER
	 	 	 	 	 
	 	 	 	 
	 	1.	 	 	Subject Matter of Sale

	 	 	1	 
	 	 	 	 	 
	 	 	 	 
	 	2.	 	 	Price, Taxes and Payment

	 	 	1	 
	 	 	 	 	 
	 	 	 	 
	 	3.	 	 	Regulatory Requirements and Certificates

	 	 	3	 
	 	 	 	 	 
	 	 	 	 
	 	4.	 	 	Detail Specification; Changes

	 	 	4	 
	 	 	 	 	 
	 	 	 	 
	 	5.	 	 	Representatives, Inspection, Demonstration Flights,
Test Data and Performance Guarantee Compliance

	 	 	4	 
	 	 	 	 	 
	 	 	 	 
	 	6.	 	 	Delivery

	 	 	5	 
	 	 	 	 	 
	 	 	 	 
	 	7.	 	 	Excusable Delay

	 	 	5	 
	 	 	 	 	 
	 	 	 	 
	 	8.	 	 	Risk Allocation/Insurance

	 	 	7	 
	 	 	 	 	 
	 	 	 	 
	 	9.	 	 	Assignment, Resale or Lease

	 	 	8	 
	 	 	 	 	 
	 	 	 	 
	 	10.	 	 	Termination for Certain Events

	 	 	9	 
	 	 	 	 	 
	 	 	 	 
	 	11.	 	 	Notices

	 	 	10	 
	 	 	 	 	 
	 	 	 	 
	 	12.	 	 	Miscellaneous

	 	 	10	 
	 	 	 	 	 
	 	 	 	 
	EXHIBITS
	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	A	 	 	Buyer Furnished Equipment Provisions Document
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	B	 	 	Customer Support Document
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	C	 	 	Product Assurance Document
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	APPENDICES
	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	I	 	 	Insurance Certificate
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	II
	 	Purchase Agreement Assignment
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	III
	 	Post-Delivery Sale Notice
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	IV
	 	Post-Delivery Lease Notice
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	V	 	 	Purchaser’s/Lessee’s Agreement
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	VI
	 	Owner Appointment of Agent — Warranties
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	VII
	 	Contractor Confidentiality Agreement
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	VIII
	 	Post-Delivery Sale with Lease to Seller
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	IX
	 	Sale with Lease
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	X	 	 	Post-Delivery Security
	 	 	 	 
	 	 	 	 	 
	 	 	 	 

					
	 	 	 	 	 
	AGTA-FED
	 	- i -
	 	 

BOEING PROPRIETARY

 

 

 

AIRCRAFT GENERAL TERMS AGREEMENT NUMBER AGTA-FED

between

The Boeing Company

and

Federal Express Corporation

Relating to

BOEING AIRCRAFT

This Aircraft General Terms Agreement Number AGTA-FED (AGTA) between The Boeing Company
(Boeing) and Federal Express Corporation (Customer) will apply to all Boeing aircraft contracted
for purchase from Boeing by Customer after the effective date of this AGTA.

			
	Article 1.	 	Subject Matter of Sale.

1.1 Aircraft. Boeing will manufacture and sell to Customer and Customer will purchase
from Boeing aircraft under purchase agreements that incorporate the terms and conditions of this
AGTA.

1.2 Buyer Furnished Equipment. Exhibit A, Buyer Furnished Equipment Provisions
Document to the AGTA, contains the obligations of Customer and Boeing with respect to equipment
purchased and provided by Customer, which Boeing will receive, inspect, store, and install in an
aircraft before delivery to Customer. This equipment is defined as Buyer Furnished Equipment
(BFE).

1.3 Customer Support. Exhibit B, Customer Support Document to the AGTA, contains the
obligations of Boeing relating to Materials (as defined in Part 3 thereof), training, services, and
other things in support of aircraft.

1.4 Product Assurance. Exhibit C, Product Assurance Document to the AGTA, contains
the obligations of Boeing and the suppliers of equipment installed in each aircraft at delivery
relating to warranties, patent indemnities, software copyright indemnities, and service life
policies.

			
	Article 2.	 	Price, Taxes, and Payment.

2.1 Price.

2.1.1 Airframe Price is defined as the price of the airframe for a specific model of aircraft
described in a purchase agreement. The Airframe Price includes the engine price at its basic
thrust level.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	-1-
	 	 

BOEING PROPRIETARY

 

 

 

2.1.2 Optional Features Prices are defined as the prices for optional features selected by
Customer for a specific model of aircraft described in a purchase agreement.

2.1.3 Aircraft Basic Price is defined as the sum of the Airframe Price and the Optional
Features Prices.

2.1.4 Escalation Adjustment is defined as the price adjustment to the Airframe Price and the
Optional Features Prices resulting from the calculation using the economic price formula contained
in the Airframe and Optional Features Escalation Adjustment supplemental exhibit to the applicable
purchase agreement.

2.1.5 Advance Payment Base Price is defined as the estimated price of an aircraft rounded to
the nearest thousand U.S. dollars, as of the date of signing a purchase agreement, for the
scheduled month of delivery of such aircraft using commercial forecasts of the Escalation
Adjustment.

2.1.6 Aircraft Price is defined as the total amount Customer is to pay for an aircraft at the
time of delivery, which is the sum of the Aircraft Basic Price, the Escalation Adjustment, and
other price adjustments made pursuant to the purchase agreement.

2.2 Taxes.

2.2.1 Taxes. Taxes are defined as all taxes, fees, charges, or duties and any
interest, penalties, fines, or other additions to tax, including, but not limited to sales, use,
value added, gross receipts, stamp, excise, transfer, and similar taxes imposed by any domestic or
foreign taxing authority, arising out of or in connection with the performance of the applicable
purchase agreement or the sale, delivery, transfer, or storage of any aircraft, BFE, or other
things furnished under the applicable purchase agreement. Except for U.S. federal or California
State income taxes imposed on Boeing or Boeing’s assignee, and Washington State business and
occupation taxes imposed on Boeing or Boeing’s assignee, Customer will be responsible for and pay
all Taxes. Customer is responsible for filing all tax returns, reports, declarations and payment of
any taxes related to or imposed on BFE.

2.2.2 Reimbursement of Boeing. Customer will promptly reimburse Boeing on demand, net
of additional taxes thereon, for any Taxes that are imposed on and paid by Boeing or that Boeing is
responsible for collecting.

2.3 Payment.

2.3.1 Advance Payment Schedule. Customer will make advance payments to Boeing for
each aircraft in the amounts and on the dates indicated in the schedule set forth in the applicable
purchase agreement.

2.3.2 Payment at Delivery. Customer will pay any unpaid balance of the Aircraft Price
at the time of delivery of each aircraft.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	-2-
	 	 

BOEING PROPRIETARY

 

 

 

2.3.3 Form of Payment. Customer will make all payments to Boeing by unconditional
wire transfer of immediately available funds in United States Dollars in a bank account in the
United States designated by Boeing.

2.3.4 Monetary and Government Regulations. Customer is responsible for complying with
all monetary control regulations and for obtaining necessary governmental authorizations related to
payments.

			
	Article 3.	 	Regulatory Requirements and Certificates.

3.1 Certificates. Boeing will manufacture each aircraft to conform to the appropriate
Type Certificate issued by the United States Federal Aviation Administration (FAA) for the specific
model of aircraft and will obtain from the FAA and furnish to Customer at delivery of each aircraft
either a Standard Airworthiness Certificate or an Export Certificate of Airworthiness issued
pursuant to Part 21 of the Federal Aviation Regulations.

3.2 FAA or Applicable Regulatory Authority Manufacturer Changes.

3.2.1 A Manufacturer Change is defined as any change to an aircraft, data relating to an
aircraft, or testing of an aircraft required by the FAA to obtain a Standard Airworthiness
Certificate, or by the country of import and/or registration to obtain an Export Certificate of
Airworthiness.

3.2.2 Boeing will bear the cost of incorporating all Manufacturer Changes into the aircraft:

(i) resulting from requirements issued by the FAA prior to the date of the Type Certificate
for the applicable aircraft;

(ii) resulting from requirements issued by the FAA prior to the date of the applicable
purchase agreement; and

(iii) for any aircraft delivered during the 18 month period immediately following the date of
the applicable purchase agreement (regardless of when the requirement for such change was issued by
the FAA).

3.2.3 Customer will pay Boeing’s charge for incorporating all other Manufacturer Changes into
the aircraft, including all changes for validation of an aircraft required by any governmental
agency of the country of import and/or registration.

3.3 FAA Operator Changes.

3.3.1 An Operator Change is defined as a change in equipment that is required by Federal
Aviation Regulations which (i) is generally applicable to transport category aircraft to be used in
United States certified air carriage and (ii) the required compliance date is on or before the
scheduled delivery month of the aircraft.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	-3-
	 	 

BOEING PROPRIETARY

 

 

 

3.3.2 Boeing will deliver each aircraft with Operator Changes incorporated or, at Boeing’s
option, with suitable provisions for the incorporation of such Operator Changes, and Customer will
pay Boeing’s applicable charges.

3.4 Export License. If an export license is required by United States law or
regulation for any aircraft or any other things delivered under the purchase agreement, it is
Customer’s obligation to obtain such license. If requested, Boeing will assist Customer in
applying for any such export license. Customer will furnish any required supporting documents.

			
	Article 4.	 	Detail Specification; Changes.

4.1 Configuration Changes. The Detail Specification is defined as the Boeing document
that describes the configuration of each aircraft purchased by Customer. The Detail Specification
for each aircraft may be amended (i) by Boeing to reflect the incorporation of Manufacturer Changes
and Operator Changes or (ii) by the agreement of the parties. In either case the amendment will
describe the particular changes to be made and any effect on design, performance, weight, balance,
scheduled delivery month, Aircraft Basic Price, Aircraft Price, and/or Advance Payment Base Price.

4.2 Development Changes. Development Changes are defined as changes to aircraft that
do not affect the Aircraft Price or scheduled delivery month, and do not adversely affect
guaranteed weight, guaranteed performance, or compliance with the interchangeability or
replaceability requirements set forth in the applicable Detail Specification or the functionality
of the aircraft systems as described in the applicable Detail Specification. Boeing may
incorporate Development Changes into the Detail Specification and into an aircraft prior to
delivery to Customer. Boeing will provide advance notice of any Developmental Changes planned for
incorporation in Customer’s model 777 Aircraft. Boeing will discuss any concerns Customer may have
regarding such Developmental Changes and reasonably consider any requests made by Customer with
respect to the incorporation of Developmental Changes.

4.3 Notices. Boeing will promptly notify Customer of any proposed amendments to a
Detail Specification.

			
	Article 5.	 	Representatives, Inspection, Demonstration Flights, Test Data and Performance
Guarantee Compliance.

5.1 Office Space. Twelve months before delivery of the first aircraft purchased, and
continuing until the delivery of the last aircraft on firm order, Boeing will furnish, free of
charge, suitable office space and equipment for the accommodation of up to three representatives of
Customer in or conveniently located near the assembly plant.

5.2 Inspection. Customer’s representatives may inspect each aircraft at any
reasonable time, provided such inspection does not unreasonably interfere with Boeing’s
performance.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	-4-
	 	 

BOEING PROPRIETARY

 

 

 

5.3 Demonstration Flights. Prior to delivery, Boeing will fly each aircraft up to 4
hours to demonstrate to Customer the function of the aircraft and its equipment using Boeing’s
production flight test procedures. Customer may designate up to five representatives to
participate as observers.

5.4 Test Data; Performance Guarantee Compliance. Performance Guarantees are defined
as the written guarantees in a purchase agreement regarding the operational performance of an
aircraft. Boeing will furnish to Customer flight test data obtained on an aircraft of the same
model to evidence compliance with the Performance Guarantees. Performance Guarantees will be met
if reasonable engineering interpretations and calculations based on the flight test data establish
that the particular aircraft being delivered under the applicable purchase agreement would, if
actually flown, comply with the guarantees.

5.5 Special Aircraft Test Requirements. Boeing may use an aircraft for flight and
ground tests prior to delivery, without reduction in the Aircraft Price, if the tests are
considered necessary by Boeing (i) to obtain or maintain the Type Certificate or Certificate of
Airworthiness for the aircraft or (ii) to evaluate potential improvements that may be offered for
production or retrofit incorporation.

			
	Article 6.	 	Delivery.

6.1 Notices of Delivery Dates. Boeing will notify Customer of the approximate
delivery date of each aircraft at least 30 days before the scheduled month of delivery and again at
least 14 days before the scheduled delivery date.

6.2 Place of Delivery. Each aircraft will be delivered at a facility selected by
Boeing in the same state as the primary assembly plant for the aircraft.

6.3 Bill of Sale. At delivery of an aircraft, Boeing will provide Customer a bill of
sale conveying good title, free of encumbrances.

6.4 Delay. If Customer delays acceptance of an aircraft beyond the scheduled delivery
date, Customer will reimburse Boeing for all costs incurred by Boeing as a result of the delay.

			
	Article 7.	 	Excusable Delay.

7.1 General. Boeing will not be liable for any delay in the scheduled delivery month
of an aircraft or other performance under a purchase agreement caused by (i) acts of God; (ii) war
or armed hostilities; (iii) government acts or priorities; (iv) fires, floods, or earthquakes; (v)
strikes or labor troubles causing cessation, slowdown, or interruption of work; (vi) inability,
after due and timely diligence, to procure materials, systems, accessories, equipment or parts;
(vii) inability, after due and timely diligence, to obtain type certification; or (viii) any other
cause to the extent such cause is beyond Boeing’s control and not occasioned by Boeing’s fault or
negligence. A delay resulting from any such cause is defined as an Excusable Delay.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	-5-
	 	 

BOEING PROPRIETARY

 

 

 

7.2 Notice. Boeing will give written notice to Customer (i) of a delay as soon as
Boeing concludes that an aircraft will be delayed beyond the scheduled delivery month due to an
Excusable Delay and, when known, (ii) of a revised delivery month based on Boeing’s appraisal of
the facts.

7.3 Delay in Delivery of Twelve Months or Less. If the revised delivery month is 12
months or less after the scheduled delivery month, Customer will accept such aircraft when tendered
for delivery, subject to the following:

7.3.1 The calculation of the Escalation Adjustment will be based on the previously scheduled
delivery month.

7.3.2 The advance payment schedule will be adjusted to reflect the revised delivery month.

7.3.3 All other provisions of the applicable purchase agreement, including the BFE on-dock
dates for the delayed aircraft, are unaffected by an Excusable Delay.

7.4 Delay in Delivery of More Than Twelve Months. If the revised delivery month is
more than 12 months after the scheduled delivery month, either party may terminate the applicable
purchase agreement with respect to such aircraft within 30 days of the notice. If the applicable
purchase agreement is not terminated with respect to such aircraft, all terms and conditions of the
applicable purchase agreement will remain in effect.

7.5 Aircraft Damaged Beyond Repair. If an aircraft is destroyed or damaged beyond
repair for any reason before delivery, Boeing will give written notice to Customer specifying the
earliest month possible, consistent with Boeing’s other contractual commitments and production
capabilities, in which Boeing can deliver a replacement. Customer will have 30 days from receipt
of such notice to elect to have Boeing manufacture a replacement aircraft under the same terms and
conditions of purchase, except that the calculation of the Escalation Adjustment will be based upon
the scheduled delivery month in effect immediately prior to the date of such notice, or, failing
such election, the applicable purchase agreement will terminate with respect to such aircraft.
Boeing will not be obligated to manufacture a replacement aircraft if reactivation of the
production line for the specific model of aircraft would be required.

7.6 Termination. Termination under this Article will discharge all obligations and
liabilities of Boeing and Customer with respect to any aircraft and all related undelivered
Materials (as defined in Exhibit B, Customer Support Document), training, services, and other
things terminated under the applicable purchase agreement, except that Boeing will return to
Customer, without interest, an amount equal to all advance payments including deposits paid by
Customer for the respective aircraft. If Customer terminates the applicable purchase agreement as
to any aircraft, Boeing may elect, by written notice to Customer within 30 days, to purchase from
Customer any BFE related to the aircraft at the invoice prices paid, or contracted to be paid, by
Customer.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	-6-
	 	 

BOEING PROPRIETARY

 

 

 

7.7 Exclusive Rights. The termination rights in this Article are in substitution for
all other rights of termination or any claim arising by operation of law due to the excusable
delays in performance covered by this Article.

			
	Article 8.	 	Risk Allocation/Insurance.

8.1 Title and Risk with Boeing.

8.1.1 Boeing’s Indemnification of Customer. Until transfer of title to an aircraft to
Customer, Boeing will indemnify and hold harmless Customer and Customer’s observers from and
against all claims and liabilities, including all expenses and attorneys’ fees incident thereto or
incident to establishing the right to indemnification, for injury to or death of any person(s),
including employees of Boeing but not employees of Customer, or for loss of or damage to any
property, including an aircraft, arising out of or in any way related to the operation of an
aircraft during all demonstration and test flights conducted under the provisions of the applicable
purchase agreement, whether or not arising in tort or occasioned by the negligence of Customer or
any of Customer’s observers.

8.1.2 Definition of Customer. For the purposes of this Article, “Customer” is defined
as FedEx Corporation, its divisions and subsidiaries including Federal Express Corporation,
affiliates, the assignees of each, and their respective directors, officers, employees, and agents.

8.2 Insurance.

8.2.1 Insurance Requirements. Customer will purchase and maintain insurance acceptable
to Boeing and will provide a certificate of such insurance that names Boeing as an additional
insured for any and all claims and liabilities for injury to or death of any person or persons,
including employees of Customer but not employees of Boeing, or for loss of or damage to any
property, including any aircraft, arising out of or in any way relating to Materials, training,
services, or other things provided under Exhibit B of the AGTA, which will be incorporated by
reference into the applicable purchase agreement, whether or not arising in tort or occasioned by
the negligence of Boeing, except with respect to legal liability to persons or parties other than
Customer or Customer’s assignees arising out of an accident caused solely by a product defect in an
aircraft. Customer will provide such certificate of insurance at least thirty (30) days prior to
the scheduled delivery of the first aircraft under a purchase agreement. The insurance certificate
will reference each aircraft delivered to Customer pursuant to each applicable purchase agreement.
Annual renewal certificates will be submitted to Boeing before the expiration of the policy
periods. The form of the insurance certificate, attached as Appendix I, states the terms, limits,
provisions, and coverages required by this Article 8.2.1. The failure of Boeing to demand
compliance with this 8.2.1 in any year will not in any way relieve Customer of its obligations
hereunder nor constitute a waiver by Boeing of these obligations.

					
	 	 	 	 	 
	 	 	 	 	 
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8.2.2 Noncompliance with Insurance Requirements. If Customer fails to comply with any
of the insurance requirements of Article 8.2.1 or if any of the insurers fails to pay a claim
covered by the insurance or otherwise fails to meet any of insurer’s obligations required by
Appendix I, Customer will provide the same protection to Boeing as that required by Article 8.2.1
above.

8.2.3 Definition of Boeing. For purposes of this article, “Boeing” is defined as The
Boeing Company, its divisions, subsidiaries, affiliates, assignees of each, and their respective
directors, officers, employees, and agents.

			
	Article 9.	 	Assignment, Resale, or Lease.

9.1 Assignment. This AGTA and each applicable purchase agreement are for the benefit
of the parties and their respective successors and assigns. No rights or duties of either party
may be assigned or delegated, or contracted to be assigned or delegated, without the prior written
consent of the other party, except:

9.1.1 Either party may assign its interest to a corporation that (i) results from any merger,
reorganization, or acquisition of such party and (ii) acquires substantially all the assets of such
party;

9.1.2 Boeing may assign its rights to receive money; and

9.1.3 Boeing may assign any of its rights and duties to any wholly-owned subsidiary of Boeing.

9.2 Transfer by Customer at Delivery. Boeing will take any requested action
reasonably required for the purpose of causing an aircraft, at time of delivery, to be subject to
an equipment trust, conditional sale, lien, or other arrangement for Customer to finance the
aircraft. However, no such action will require Boeing to divest itself of title to or possession
of the aircraft until delivery of and payment for the aircraft. A sample form of assignment
acceptable to Boeing is attached as Appendix II.

9.3 Sale or Lease by Customer After Delivery. If, following delivery of an
aircraft, Customer sells or leases the aircraft (including any sale and lease-back to seller for
financing purposes), Customer may assign some or all of its rights with respect to the aircraft
under the applicable purchase agreement to the purchaser or lessee of such aircraft, and all such
rights will inure to the benefit of such purchaser or lessee effective upon Boeing’s receipt of the
written agreement of the purchaser or lessee, in a form satisfactory to Boeing, to comply with all
applicable terms and conditions of the applicable purchase agreement. Sample forms of notice to
Boeing of such assignments giving examples of language acceptable to Boeing are attached as
Appendices III, IV, VIII, IX and X.

9.4 Notice of Sale or Lease After Delivery. Customer will give notice to Boeing as
soon as practicable of the sale or lease of an aircraft, including in the notice the name of the
entity or entities with title and/or possession of such aircraft.

					
	 	 	 	 	 
	 	 	 	 	 
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9.5 Exculpatory Clause in Post-Delivery Sale or Lease. If, following the delivery of
an aircraft, Customer sells or leases such aircraft and obtains from the transferee any form of
exculpatory clause protecting Customer from liability for loss of or damage to the aircraft, and/or
related incidental or consequential damages, including without limitation loss of use, revenue, or
profit, Customer shall obtain for Boeing the purchaser’s or lessee’s written agreement to be bound
by terms and conditions substantially as set forth in Appendix V. This Article 9.5 applies only if
purchaser or lessee has not provided to Boeing the written agreement described in Article 9.3
above.

9.6 Appointment of Agent — Warranty Claims. If, following delivery of an aircraft,
Customer appoints an agent to act directly with Boeing for the administration of claims relating to
the warranties under the applicable purchase agreement, Boeing will deal with the agent for that
purpose, effective upon Boeing’s receipt of the agent’s written agreement, in a form satisfactory
to Boeing, to comply with all applicable terms and conditions of the applicable purchase agreement.
A sample form of agreement acceptable to Boeing is attached as Appendix VI.

9.7 No Increase in Boeing Liability. No action taken by Customer or Boeing relating
to the resale or lease of an aircraft or the assignment of Customer’s rights under the applicable
purchase agreement will subject Boeing to any liability beyond that in the applicable purchase
agreement or modify in any way Boeing’s obligations under the applicable purchase agreement.

			
	Article 10.	 	Termination of Purchase Agreements for Certain Events.

10.1 Termination. If either party

(i) ceases doing business as a going concern, or suspends all or
substantially all its business operations, or makes an assignment for the
benefit of creditors, or generally does not pay its debts as they become
due, or admits in writing its inability to pay its debts; or

(ii) petitions for or acquiesces in the appointment of any receiver,
trustee or similar officer to liquidate or conserve its business or any
substantial part of its assets; commences any legal proceeding such as
bankruptcy, reorganization, readjustment of debt, dissolution, or
liquidation available for the relief of financially distressed debtors; or
becomes the object of any such proceeding, unless the proceeding is
dismissed or stayed within a reasonable period, not to exceed 60 days,

the other party may terminate any purchase agreement with respect to any undelivered aircraft,
Materials, training, services, and other things by giving written notice of termination.

10.2 Repayment of Advance Payments. If Customer terminates the applicable purchase
agreement under this Article, Boeing will repay to Customer,
without interest, an amount equal to any advance payments received by Boeing from Customer with
respect to undelivered aircraft.

					
	 	 	 	 	 
	 	 	 	 	 
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	Article 11.	 	Notices.

All notices required by this AGTA or by any applicable purchase agreement will be written in
English, will be effective on the date of receipt, and will be delivered or transmitted by any
customary means to the appropriate address or number listed below:

	 	 	 	 	 
	Customer

	 	Delivery or Courier:
	 	Federal Express Corporation

3610 Hacks Cross Road
	 
	 	 	 	 
	 

	 	 	 	Memphis TN 38125

Attn: Senior Vice President,
	 

	 	Mail:
	 	Air Operations
	 
	 	 	 	 
	 

	 	 	 	Federal Express Corporation

3610 Hacks Cross Road

Memphis TN 38125

Attn: Senior Vice President,

Air Operations
	 
	 	 	 	 
	 

	 	 	 	With a copy to:
	 
	 	 	 	 
	 

	 	 	 	Federal Express Corporation

Legal Department

Attn: Vice President, Business

Transactions and Risk Management

3620 Hacks Cross Road

Memphis, TN 38125
	 

	 	Facsimile:
	 	(901)434-9054
	 

	 	Telephone:
	 	(901)434-8440

					
	 	 	 	 	 
	 	 	 	 	 
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	Boeing	 	Delivery or Courier:	 	Boeing Commercial Airplanes

1901 Oakesdale Avenue S.W.

Renton, Washington 98055

U.S.A.
	 
	 	 	 	 	 	 
	 

	 	 	 	Attention:
	 	Vice President - Contracts

Mail Code 21-34
	 
	 	 	 	 	 	 
	 	 	Mail:	 	Boeing Commercial Airplanes

P.O. Box 3707

Seattle, Washington 98124-2207

U.S.A.
	 
	 	 	 	 	 	 
	 

	 	 	 	Attention:
	 	Vice President - Contracts

Mail Code 21-34
	 
	 	 	 	 	 	 
	 	 	Facsimile:	 	425 237-1706
	 	 	Telephone:	 	206 766-2400

			
	Article 12.	 	Miscellaneous.

12.1 Government Approval. Boeing and Customer will assist each other in obtaining any
governmental consents or approvals required to effect certification and sale of aircraft under the
applicable purchase agreement.

12.2 Headings. Article and paragraph headings used in this AGTA and in any purchase
agreement are for convenient reference only and are not intended to affect the interpretation of
this AGTA or any purchase agreement.

12.3 GOVERNING LAW. THIS AGTA AND ANY PURCHASE AGREEMENT WILL BE INTERPRETED UNDER
AND GOVERNED BY THE LAWS OF THE STATE OF WASHINGTON, U.S.A., EXCEPT THAT WASHINGTON’S CHOICE OF LAW
RULES SHALL NOT BE INVOKED FOR THE PURPOSE OF APPLYING THE LAW OF ANOTHER JURISDICTION.

12.4 Waiver/Severability. Failure by either party to enforce any provision of this
AGTA or any purchase agreement will not be construed as a waiver. If any provision of this AGTA or
any provision of any purchase agreement is held unlawful or otherwise ineffective by a court of
competent jurisdiction, the remainder of the AGTA or the applicable purchase agreement will remain
in effect.

12.5 Information Releases. Neither party will make a news release, publish articles,
brochures, advertisements, issue prepared speeches or make any other information releases
concerning this AGTA, or any Purchase Agreement entered into underneath this AGTA, without the
prior written consent of the other party. Once such consent is obtained, the party making such
disclosure will in each instance obtain the prior written approval of the other party concerning
the exact test and timing of news
releases, articles, brochures, advertisements, prepared speeches and other information releases
concerning this AGTA or an applicable Purchase Agreement.

					
	 	 	 	 	 
	 	 	 	 	 
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12.6 Customer’s Data. The parties acknowledge that in conjunction with a Purchase
Agreement under this AGTA, Customer may disclose to Boeing certain valuable, confidential and
proprietary information. Accordingly, prior to such disclosure, Customer will notify Boeing in
writing of the proprietary status of such data and Boeing will agree to protect Customer’s interest
in the data by not further disclosing the data to any other party without the prior written consent
of the Customer.

12.7 Survival of Obligations. The Articles and Exhibits of this AGTA including but
not limited to those relating to insurance, DISCLAIMER AND RELEASE and the EXCLUSION OF
CONSEQUENTIAL AND OTHER DAMAGES will survive termination or cancellation of any purchase agreement
or part thereof.

12.8 AGTA Changes. The intent of the AGTA is to simplify the standard contracting
process for terms and conditions which are related to the sale and purchase of all Boeing aircraft.

This AGTA has been mutually agreed to by the parties as of the date indicated below. From time to
time the parties may elect, by mutual agreement to update, or modify the existing articles as
written. If such changes are made, any existing executed Purchase Agreement(s) will be governed by
the terms and conditions of the Revision level of the AGTA in effect on the date of the executed
Purchase Agreement.

DATED AS OF November 7, 2006

	 	 	 	 	 	 	 
	FEDERAL EXPRESS CORPORATION	 	THE BOEING COMPANY
	 
	 	 	 	 	 	 
	By

	 	/s/ Phillip C. Blum
	 	By
	 	/s/ R.C. Nelson
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Its

	 	Vice President – Aircraft Acquisitions/SAO
	 	Its
	 	Attorney-In-Fact

					
	 	 	 	 	 
	 	 	 	 	 
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EXHIBIT A

to

AIRCRAFT GENERAL TERMS AGREEMENT

AGTA-FED

between

THE BOEING COMPANY

and

FEDERAL
EXPRESS CORPORATION

BUYER FURNISHED EQUIPMENT PROVISIONS DOCUMENT

					
	 	 	 	 	 
	 	 	 	 	 
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BUYER FURNISHED EQUIPMENT PROVISIONS DOCUMENT

	1.	 	General.

Certain equipment to be installed in the Aircraft is furnished to Boeing by Customer at
Customer’s expense. This equipment is designated “Buyer Furnished Equipment” (BFE) and is listed
in the Detail Specification. Boeing will provide to Customer a BFE Requirements On-Dock/Inventory
Document (BFE Document) or an electronically transmitted BFE Report which may be periodically
revised, setting forth the items, quantities, on-dock dates and shipping instructions relating to
the in sequence installation of BFE as described in the applicable Supplemental Exhibit to this
Exhibit A in a purchase agreement at the time of aircraft purchase.

	2.	 	Supplier Selection.

Customer will:

2.1 Select and notify Boeing of the suppliers of BFE items by those dates appearing in
Supplemental Exhibit BFE1 to the applicable purchase agreement at the time of aircraft purchase.

2.2 Meet with Boeing and such selected BFE suppliers promptly after such selection to:

2.2.1 complete BFE configuration design requirements for such BFE; and

2.2.2 confirm technical data submittal requirements for BFE certification.

	3.	 	Customer’s Obligations.

Customer will:

3.1 comply with and cause the supplier to comply with the provisions of the BFE Document or
BFE Report; including, without limitation,

3.1.1 deliver technical data (in English) to Boeing as required to support installation and
FAA certification in accordance with the schedule provided by Boeing or as mutually agreed upon
during the BFE meeting referred to above;

3.1.2 deliver BFE including production and/or flight training spares and BFE Aircraft Software
to Boeing in accordance with the quantities, schedule, and other instructions provided therein; and

					
	 	 	 	 	 
	 	 	 	 	 
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3.1.3 assure that all BFE Aircraft Software is delivered in compliance with Boeing’s
then-current Standards for Loadable Systems;

3.1.4 assure that all BFE parts are delivered to Boeing with appropriate quality assurance
documentation;

3.2 authorize Boeing to discuss all details of the BFE directly with the BFE suppliers;

3.3 authorize Boeing to conduct or delegate to the supplier quality source inspection and
supplier hardware acceptance of BFE at the supplier location;

3.3.1 require supplier’s contractual compliance to Boeing defined quality assurance
requirements, source inspection programs and supplier delegation programs, including availability
of adequate facilities for Boeing resident personnel; and

3.3.2 assure that all BFE supplier’s quality systems are approved to Boeing’s then current
standards for such systems;

3.4 obtain from supplier a non-exclusive, perpetual, royalty-free, irrevocable license for
Boeing to copy BFE Aircraft Software. The license is needed to enable Boeing to load the software
copies in (i) the aircraft’s mass storage device (MSD), (ii) media (e.g., diskettes, CD-ROMs,
etc.), (iii) the BFE hardware and/or (iv) an intermediate device or other media to facilitate
copying of the BFE Aircraft Software into the aircraft’s MSD, BFE hardware and/or media, including
media as Boeing may deliver to Customer with the aircraft;

3.5 grant Boeing a license, extending the same rights set forth in paragraph 3.4 above, to
copy: a) BFE Aircraft Software and data Customer has modified and/or b) other software and data
Customer has added to the BFE Aircraft Software;

3.6 provide reasonably necessary field service representation at Boeing’s facilities to
support Boeing on all issues related to the installation and certification of BFE;

3.7 deal directly with all BFE suppliers to obtain overhaul data, provisioning data, related
product support documentation and any warranty provisions applicable to the BFE;

3.8 work with Boeing and the BFE suppliers to resolve any difficulties, including defective
equipment, that arise;

3.9 be responsible for modifying, adjusting and/or calibrating BFE as required for FAA
approval and for all related expenses;

					
	 	 	 	 	 
	 	 	 	 	 
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3.10 assure that a proprietary information agreement is in place between Boeing and BFE
suppliers prior to Boeing providing any documentation to such suppliers,

3.11 warrant that the BFE will comply with all applicable FARs and the U.S. Food and Drug
Administration (FDA) sanitation requirements for installation and use in the Aircraft at the time
of delivery. Customer will be responsible for supplying any data and adjusting, calibrating,
re-testing or updating such BFE and data to the extent necessary to obtain applicable FAA and FDA
approval and shall bear the resulting expenses.

3.12 warrant that the BFE will meet the requirements of the Detail Specification; and

3.13 be responsible for providing equipment which is FAA certifiable at time of Aircraft
delivery, or for obtaining waivers from the applicable regulatory agency for non-FAA certifiable
equipment.

	4.	 	Boeing’s Obligations.

Other than as set forth below, Boeing will provide for the installation of and install the BFE
and obtain certification of the Aircraft with the BFE installed.

	5.	 	Nonperformance by Customer.

If Customer’s nonperformance of obligations in this Exhibit or in the BFE Document causes a
delay in the delivery of the Aircraft or causes Boeing to perform out-of-sequence or additional
work, Customer will reimburse Boeing for all resulting expenses and be deemed to have agreed to any
such delay in Aircraft delivery. In addition Boeing will have the right to:

5.1 provide and install specified equipment or suitable alternate equipment and increase the
price of the Aircraft accordingly; and/or

5.2 deliver the Aircraft to Customer without the BFE installed.

	6.	 	Return of Equipment.

BFE not installed in the Aircraft will be returned to Customer in accordance with Customer’s
instructions and at Customer’s expense.

	7.	 	Title and Risk of Loss.

7.1 With respect to Aircraft manufactured in the State of Washington, title to and risk of
loss of BFE provided for such Aircraft will at all times remain with Customer
or other owner. Boeing will have only such liability for BFE as a bailee for mutual benefit would
have, but will not be liable for loss of use.

					
	 	 	 	 	 
	 	 	 	 	 
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7.2 With respect to Aircraft manufactured in the State of California, Customer agrees to sell
and Boeing agrees to purchase each item of BFE concurrently with its delivery to Boeing. A
reasonable shipset price for the BFE shall be established with Customer. Customer and Boeing agree
that the Aircraft Price will be increased by the amount of said shipset price and such amount will
be included on Boeing’s invoice at time of Aircraft delivery. Boeing’s payment for the purchase of
each shipset of BFE from Customer will be made at the time of delivery of the Aircraft in which the
BFE is installed.

	8.	 	Interchange of BFE

To properly maintain Boeing’s production flow and to preserve Boeing’s delivery commitments,
Boeing reserves the right, if necessary, due to equipment shortages or failures, to interchange new
items of BFE acquired from or for Customer with new items of the same part numbers acquired from or
for other customers of Boeing. Used BFE acquired from Customer or from other customers of Boeing
will not be interchanged.

	9.	 	Indemnification of Boeing.

After transfer of title of the Aircraft, Customer hereby indemnifies and holds harmless Boeing
from and against all claims and liabilities, including costs and expenses (including attorneys’
fees) incident thereto or incident to successfully establishing the right to indemnification, for
injury to or death of any person or persons, including employees of Customer but not employees of
Boeing, or for loss of or damage to any property, including any Aircraft, arising out of or in any
way connected with any nonconformance or defect in any BFE and whether or not arising in tort or
occasioned by the negligence of Boeing. This indemnity will not apply with respect to any
nonconformance or defect caused solely by Boeing’s installation of the BFE.

	10.	 	Patent Indemnity.

Customer hereby indemnifies and holds harmless Boeing from and against all claims, suits,
actions, liabilities, damages and costs arising out of any actual or alleged infringement of any
patent or other intellectual property rights by BFE or arising out of the installation, sale or use
of BFE by Boeing.

	11.	 	Definitions.

For the purposes of the above indemnities, the term “Boeing” includes The Boeing Company, its
divisions, subsidiaries and affiliates, the assignees of each, and their directors, officers,
employees and agents.

					
	 	 	 	 	 
	 	 	 	 	 
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EXHIBIT B

to

AIRCRAFT GENERAL TERMS AGREEMENT

AGTA-FED

between

THE BOEING COMPANY

and

FEDERAL EXPRESS CORPORATION

CUSTOMER SUPPORT DOCUMENT

This document contains:

			
	Part 1:	 	Maintenance and Flight Training Programs; Operations
Engineering Support

			
	Part 2:	 	Field Services and Engineering Support
Services

			
	Part 3:	 	Technical Information and Materials

			
	Part 4:	 	Alleviation or Cessation of Performance

			
	Part 5:	 	Protection of Proprietary Information and
Proprietary Materials

					
	 	 	 	 	 
	 	 	 	 	 
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CUSTOMER SUPPORT DOCUMENT

PART 1:       BOEING MAINTENANCE AND FLIGHT TRAINING

PROGRAMS; OPERATIONS ENGINEERING SUPPORT

	1.	 	Boeing Training Programs.

1.1 Boeing will provide maintenance training and flight training programs to support the
introduction of a specific model of aircraft into service. The training programs will consist of
general and specialized courses and will be described in a Supplemental Exhibit to the applicable
purchase agreement.

1.2 Boeing will conduct all training at Boeing’s primary training facility for the model of
aircraft purchased unless otherwise agreed.

1.3 All training will be presented in the English language. If translation is required,
Customer will provide interpreters.

1.4 Customer will be responsible for all expenses of Customer’s personnel. Boeing will
transport Customer’s personnel between their local lodging and Boeing’s training facility.

	2.	 	Training Planning Conferences.

Customer and Boeing will conduct planning conferences approximately 12 months before the
scheduled delivery month of the first aircraft of a model to define and schedule the maintenance
and flight training programs.

	3.	 	Operations Engineering Support.

3.1 As long as an aircraft purchased by Customer from Boeing is operated by Customer in
scheduled revenue service, Boeing will provide operations engineering support. Such support will
include:

3.1.1 assistance with the analysis and preparation of performance data to be used in
establishing operating practices and policies for Customer’s operation of aircraft;

3.1.2 assistance with interpretation of, the minimum equipment list, the definition of, the
configuration deviation list and the analysis of individual aircraft performance;

					
	 	 	 	 	 
	 	 	 	 	 
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3.1.3 assistance with solving operational problems associated with delivery and route-proving
flights;

3.1.4 information regarding significant service items relating to aircraft performance or
flight operations; and

3.1.5 if requested by Customer, Boeing will provide operations engineering support during an
aircraft ferry flight.

	4.	 	Training at a Facility Other Than Boeing’s.

If requested by Customer, Boeing will conduct the classroom portions of the maintenance and
flight training (except for the Performance Engineer training courses) at a mutually acceptable
alternate training site, subject to the following conditions:

4.1 Customer will provide acceptable classroom space, simulators (as necessary for flight
training) and training equipment required to present the courses;

4.2 Customer will pay Boeing’s then-current per diem charge for each Boeing instructor for
each day, or fraction thereof, that the instructor is away from their home location, including
travel time;

4.3 Customer will reimburse Boeing for the actual costs of round-trip transportation for
Boeing’s instructors and the shipping costs of training Materials between the primary training
facility and the alternate training site;

4.4 Customer will be responsible for all taxes, fees, duties, licenses, permits and similar
expenses incurred by Boeing and its employees as a result of Boeing’s providing training at the
alternate site or incurred as a result of Boeing providing revenue service training; and

4.5 Those portions of training that require the use of training devices not available at the
alternate site will be conducted at Boeing’s facility or at some other alternate site.

	5.	 	General Terms and Conditions.

5.1 Boeing flight instructor personnel will not be required to work more than 5 days per week,
or more than 8 hours in any one 24-hour period, of which not more than 5 hours per 8-hour workday
will be spent in actual flying. These foregoing restrictions will not apply to ferry assistance or
revenue service training services, which will be governed by FAA rules and regulations.

					
	 	 	 	 	 
	 	 	 	 	 
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5.2 Normal Line Maintenance is defined as line maintenance that Boeing might reasonably be
expected to furnish for flight crew training at Boeing’s facility, and will include ground support
and aircraft storage in the open, but will not include provision of spare parts. Boeing will
provide Normal Line Maintenance services for any aircraft while the aircraft is used for flight
crew training at Boeing’s facility in accordance with the Boeing Maintenance Plan (Boeing document
D6-82076) and the Repair Station Operation and Inspection Manual (Boeing document D6-25470).
Customer will provide such services if flight crew training is conducted elsewhere. Regardless of
the location of such training, Customer will be responsible for providing all maintenance items
(other than those included in Normal Line Maintenance) required during the training, including, but
not limited to, fuel, oil, landing fees and spare parts.

5.3 If the training is based at Boeing’s facility, and the aircraft is damaged during such
training, Boeing will make all necessary repairs to the aircraft as promptly as possible. Customer
will pay Boeing’s reasonable charge, including the price of parts and materials, for making the
repairs. If Boeing’s estimated labor charge for the repair exceeds $25,000, Boeing and Customer
will enter into an agreement for additional services before beginning the repair work.

5.4 If the flight training is based at Boeing’s facility, several airports in surrounding
states may be used, at Boeing’s option. Unless otherwise agreed in the flight training planning
conference, it will be Customer’s responsibility to make arrangements for the use of such airports.

5.5 If Boeing agrees to make arrangements on behalf of Customer for the use of airports for
flight training, Boeing will pay on Customer’s behalf any landing fees charged by any airport used
in conjunction with the flight training. At least 30 days before flight training, Customer will
provide Boeing an open purchase order against which Boeing will invoice Customer for any landing
fees Boeing paid on Customer’s behalf. The invoice will be submitted to Customer approximately 60
days after flight training is completed, when all landing fee charges have been received and
verified. Customer will pay to Boeing within 30 days of the date of the invoice.

5.6 If requested by Boeing, in order to provide the flight training or ferry flight
assistance, Customer will make available to Boeing an aircraft after delivery to familiarize Boeing
instructor or ferry flight crew personnel with such aircraft. If flight of the aircraft is
required for any Boeing instructor or ferry flight crew member to maintain an FAA license for
flight proficiency or landing currency, Boeing will be responsible for the costs of fuel, oil,
landing fees and spare parts attributable to that portion of the flight.

5.7 If any part of the training described in Article 1.1 of this Exhibit is not used by
Customer within 12 months after the delivery of the last aircraft under the relevant purchase
agreement, Boeing will not be obligated to provide such training.

					
	 	 	 	 	 
	 	 	 	 	 
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CUSTOMER SUPPORT DOCUMENT

PART 2:       FIELD AND ENGINEERING SUPPORT SERVICES

	1.	 	Field Service Representation.

Boeing will furnish field service representation to advise Customer with respect to the
maintenance and operation of an aircraft (Field Service Representatives).

1.1 Field Service representation will be available at or near Customer’s main maintenance or
engineering facility beginning before the scheduled delivery month of the first aircraft and ending
12 months after delivery of the last aircraft covered by a specific purchase agreement.

1.2 Customer will provide, at no charge to Boeing, suitable furnished office space and office
equipment at the location where Boeing is providing Field Service Representatives. As required,
Customer will assist each Field Service Representative with visas, work permits, customs, mail
handling, identification passes and formal introduction to local airport authorities.

1.3 Boeing Field Service Representatives are assigned to various airports around the world.
Whenever Customer’s aircraft are operating through any such airport, the services of Boeing’s Field
Service Representatives are available to Customer.

	2.	 	Engineering Support Services.

Boeing will, if requested by Customer, provide technical advisory assistance for any aircraft
and Boeing Product (as defined in Part I of Exhibit C). Technical advisory assistance, provided
from the Seattle area or at a base designated by Customer as appropriate, will include:

2.1 Operational Problem Support. If Customer experiences operational problems with an
aircraft, Boeing will analyze the information provided by Customer to determine the probable nature
and cause of the problem and to suggest possible solutions.

2.2 Schedule Reliability Support. If Customer is not satisfied with the schedule
reliability of a specific model of aircraft, Boeing will analyze information provided by Customer
to determine the nature and cause of the problem and to suggest possible solutions.

					
	 	 	 	 	 
	 	 	 	 	 
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2.3 Maintenance Cost Reduction Support. If Customer is concerned that actual
maintenance costs of a specific model of aircraft are excessive, Boeing will analyze information
provided by Customer to determine the nature and cause of the problem and to suggest possible
solutions.

2.4 Aircraft Structural Repair Support. If Customer is designing structural repairs
and desires Boeing’s support, Boeing will analyze and comment on Customer’s engineering releases
relating to structural repairs not covered by Boeing’s Structural Repair Manual.

2.5 Aircraft Modification Support. If Customer is designing aircraft modifications
and requests Boeing’s support, Boeing will analyze and comment on Customer’s engineering proposals
for changes in, or replacement of, systems, parts, accessories or equipment manufactured to
Boeing’s detailed design. Boeing will not analyze or comment on any major structural change unless
Customer’s request for such analysis and comment includes complete detailed drawings,
substantiating information (including any information required by applicable government agencies),
all stress or other appropriate analyses, and a specific statement from Customer of the substance
of the review and the response requested.

2.6 Facilities, Ground Equipment and Maintenance Planning Support. Boeing will, at
Customer’s request, evaluate Customer’s technical facilities, tools and equipment for servicing and
maintaining aircraft, to recommend changes where necessary and to assist in the formulation of an
initial maintenance plan for the introduction of the aircraft into service.

2.7 Post-Delivery Service Support. Boeing will, at Customer’s request, perform work
on an aircraft after delivery but prior to the initial departure flight or upon the return of the
aircraft to Boeing’s facility prior to completion of that flight. In that event the following
provisions will apply.

2.7.1 Boeing may rely upon the commitment authority of the Customer’s personnel requesting the
work.

2.7.2 As title and risk of loss has passed to Customer, the insurance provisions of Article
8.2 of the AGTA apply.

2.7.3 The provisions of the Boeing Warranty in Part 2 of Exhibit C of this AGTA apply.

2.7.4 Customer will pay Boeing for requested work not covered by the Boeing Warranty, if any.

					
	 	 	 	 	 
	 	 	 	 	 
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2.7.5 The DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER
DAMAGES provisions in Article 11 of Part 2 of Exhibit C of this AGTA apply.

2.8 Additional Services. Boeing may, at Customer’s request, provide additional
services for an aircraft after delivery, which may include, but not be limited to, retrofit kit
changes (kits and/or information), training, flight services, maintenance and repair of aircraft.
Such additional services will be subject to a mutually acceptable price, schedule, scope of work
and other applicable terms and conditions. The DISCLAIMER AND RELEASE and the EXCLUSION OF
CONSEQUENTIAL AND OTHER DAMAGES provisions in Article 11 of Part 2 of Exhibit C of this AGTA and
the insurance provisions in Article 8.2 of this AGTA will apply to any such work. Title to and
risk of loss of any such aircraft will always remain with Customer.

					
	 	 	 	 	 
	 	 	 	 	 
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CUSTOMER SUPPORT DOCUMENT

PART 3:       TECHNICAL INFORMATION AND MATERIALS

	1.	 	General.

Materials are defined as any and all items that are created by Boeing or a third party, which
are provided directly or indirectly from Boeing and serve primarily to contain, convey or embody
information. Materials may include either tangible embodiments (for example, documents or
drawings), or intangible embodiments (for example, software and other electronic forms) of
information but excludes Aircraft Software. Aircraft Software is defined as software that is
installed on and used in the operation of the aircraft.

Boeing will furnish to Customer certain Materials to support the maintenance and operation of
the aircraft at no additional charge to Customer, except as otherwise provided herein. Such
Materials will, if applicable, be prepared generally in accordance with Air Transport Association
of America (ATA) Specification No. 100, entitled “Specification for Manufacturers’ Technical Data”.
Materials will be in English and in the units of measure used by Boeing to manufacture an
aircraft.

Digitally-produced Materials will, if applicable, be prepared generally in accordance with ATA
Specification No. 2100, dated January 1994, “Digital Data Standards for Aircraft Support.”

	2.	 	Materials Planning Conferences.

Customer and Boeing will conduct planning conferences approximately 12 months before the
scheduled delivery month of the first aircraft of a model in order to mutually determine the proper
format and quantity of Materials to be furnished to Customer in support of the aircraft.

When available, Customer may select one Boeing digital format as the delivery medium. Should a
Boeing digital format not be chosen, Customer may select a reasonable quantity of printed and 16mm
microfilm formats, with the exception of the Illustrated Parts Catalog, which will be provided in
one selected format only.

	3.	 	Information and Materials — Incremental Increase.

Until one year after the month of delivery of the last aircraft covered by a specific purchase
agreement, Customer may annually request in writing a reasonable increase in
the quantity of Materials with the exception of microfilm master copies, digital formats, and
others for which a specified number of copies are provided. Boeing will provide the additional
quantity at no additional charge beginning with the next normal revision cycle. Customer may
request a decrease in revision quantities at any time.

					
	 	 	 	 	 
	 	 	 	 	 
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	4.	 	Advance Representative Copies.

All advance representative copies of Materials will be selected by Boeing from available
sources. Such advance copies will be for advance planning purposes only.

	5.	 	Customized Materials.

All customized Materials will reflect the configuration of each aircraft as delivered.

	6.	 	Revisions.

6.1 Revision Service. Boeing will provide revisions free of charge to certain
Materials to be identified in the planning conference conducted for a specific model of aircraft,
reflecting changes developed by Boeing, as long as Customer operates an aircraft of that model.

6.2 Revisions Based on Boeing Service Bulletin Incorporation. If Boeing receives
written notice that Customer intends to incorporate, or has incorporated, any Boeing service
bulletin in an aircraft, Boeing will at no charge issue revisions to Materials with revision
service reflecting the effects of such incorporation into such aircraft.

	7.	 	Supplier Technical Data.

7.1 For supplier-manufactured programmed airborne avionics components and equipment classified
as Seller Furnished Equipment (SFE) or Seller Purchased Equipment (SPE) or Buyer Designated
Equipment (BDE) which contain computer software designed and developed in accordance with Radio
Technical Commission for Aeronautics Document No. RTCA/DO-178 dated January 1982, No. RTCA/DO-178A
dated March 1985, or later as available, Boeing will request that each supplier of the components
and equipment make software documentation available to Customer.

7.2 The provisions of this Article will not be applicable to items of BFE.

7.3 Boeing will furnish to Customer a document identifying the terms and conditions of the
product support agreements between Boeing and its suppliers requiring
the suppliers to fulfill Customer’s requirements for information and services in support of the
specific model of aircraft.

					
	 	 	 	 	 
	 	 	 	 	 
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	8.	 	Buyer Furnished Equipment Data.

Boeing will incorporate BFE information into the customized Materials providing Customer makes
the information available to Boeing at least nine months prior to the scheduled delivery month of
Customer’s first aircraft of a specific model. Customer agrees to furnish the information in
Boeing standard digital format if Materials are to be delivered in Boeing standard digital format.

	9.	 	Materials Shipping Charges.

Boeing will pay the reasonable transportation costs of the Materials. Customer is responsible
for any customs clearance charges, duties, and taxes.

	10.	 	Customer’s Shipping Address.

The Materials furnished to Customer hereunder are to be sent to a single address to be
specified. Customer will promptly notify Boeing of any change to the address.

					
	 	 	 	 	 
	 	 	 	 	 
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CUSTOMER SUPPORT DOCUMENT

PART 4:       ALLEVIATION OR CESSATION OF PERFORMANCE

Boeing will not be required to provide any Materials, services, training or other things at a
facility designated by Customer if any of the following conditions exist:

1. a labor stoppage or dispute in progress involving Customer;

2. wars or warlike operations, riots or insurrections in the country where the facility is
located;

3. any condition at the facility which, in the opinion of Boeing, is detrimental to the
general health, welfare or safety of its personnel or their families;

4. the United States Government refuses permission to Boeing personnel or their families to
enter into the country where the facility is located, or recommends that Boeing personnel or their
families leave the country; or

5. the United States Government refuses permission to Boeing to deliver Materials, services,
training or other things to the country where the facility is located.

After the location of Boeing personnel at the facility, Boeing further reserves the right, upon the
occurrence of any of such events, to immediately and without prior notice to Customer relocate its
personnel and their families.

					
	 	 	 	 	 
	 	 	 	 	 
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CUSTOMER SUPPORT DOCUMENT

PART 5:       PROTECTION OF PROPRIETARY INFORMATION

AND PROPRIETARY MATERIALS

	1.	 	General.

All Materials provided by Boeing to Customer and not covered by a Boeing CSGTA or other
agreement between Boeing and Customer defining Customer’s right to use and disclose the Materials
and included information will be covered by, and subject to the terms of this AGTA. Title to all
Materials containing, conveying or embodying confidential, proprietary or trade secret information
(Proprietary Information) belonging to Boeing or a third party (Proprietary Materials), will at all
times remain with Boeing or such third party. Customer will treat all Proprietary Materials and
all Proprietary Information in confidence and use and disclose the same only as specifically
authorized in this AGTA.

	2.	 	License Grant.

Boeing grants to Customer a worldwide, non-exclusive, non-transferable license to use and
disclose Proprietary Materials in accordance with the terms and conditions of this AGTA. Customer
is authorized to make copies of Materials (except for Materials bearing the copyright legend of a
third party), and all copies of Proprietary Materials will belong to Boeing and be treated as
Proprietary Materials under this AGTA. Customer will preserve all proprietary legends, and all
copyright notices on all Materials and insure the inclusion of those legends and notices on all
copies.

	3.	 	Use of Proprietary Materials and Proprietary Information.

Customer is authorized to use Proprietary Materials and Proprietary Information for the
purpose of: (a) operation, maintenance, repair, or modification of Customer’s aircraft for which
the Proprietary Materials and Proprietary Information have been specified by Boeing and (b)
development and manufacture of training devices and maintenance tools for use by Customer.

					
	 	 	 	 	 
	 	 	 	 	 
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	4.	 	Providing of Proprietary Materials to Contractors.

Customer is authorized to provide Proprietary Materials to Customer’s contractors for the sole
purpose of maintenance, repair, or modification of Customer’s aircraft for which the Proprietary
Materials have been specified by Boeing. In addition, Customer may provide Proprietary Materials
to Customer’s contractors for the sole purpose of
developing and manufacturing training devices and maintenance tools for Customer’s use. Before
providing Proprietary Materials to its contractor, Customer will first obtain a written agreement
from the contractor by which the contractor agrees (a) to use the Proprietary Materials only on
behalf of Customer, (b) to be bound by all of the restrictions and limitations of this Part 5, and
(c) that Boeing is a third party beneficiary under the written agreement. Customer agrees to
provide copies of all such written agreements to Boeing upon request and be liable to Boeing for
any breach of those agreements by a contractor. A sample agreement acceptable to Boeing is
attached as Appendix VII.

	5.	 	Providing of Proprietary Materials and Proprietary Information to Regulatory
Agencies.

When and to the extent required by a government regulatory agency having jurisdiction over
Customer or an aircraft, Customer is authorized to provide Proprietary Materials and to disclose
Proprietary Information to the agency for use in connection with Customer’s operation, maintenance,
repair, or modification of such aircraft. Customer agrees to take all reasonable steps to prevent
the agency from making any distribution, disclosure, or additional use of the Proprietary Materials
and Proprietary Information provided or disclosed. Customer further agrees to notify Boeing
immediately upon learning of any (a) distribution, disclosure, or additional use by the agency, (b)
request to the agency for distribution, disclosure, or additional use, or (c) intention on the part
of the agency to distribute, disclose, or make additional use of Proprietary Materials or
Proprietary Information.

					
	 	 	 	 	 
	 	 	 	 	 
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EXHIBIT C

to

AIRCRAFT GENERAL TERMS AGREEMENT

AGTA-FED

between

THE BOEING COMPANY

and

FEDERAL EXPRESS CORPORATION

PRODUCT ASSURANCE DOCUMENT

This document contains:

			
	Part 1:	 	Exhibit C Definitions

			
	Part 2:	 	Boeing Warranty

			
	Part 3:	 	Boeing Service Life Policy

			
	Part 4:	 	Supplier Warranty Commitment

			
	Part 5:	 	Boeing Interface Commitment

			
	Part 6:	 	Boeing Indemnities against Patent and Copyright
Infringement

					
	 	 	 	 	 
	 	 	 	 	 
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PRODUCT ASSURANCE DOCUMENT

PART 1:       EXHIBIT C DEFINITIONS

Authorized Agent — Agent appointed by Customer to perform corrections and to
administer warranties (see Appendix VI to the AGTA for a form acceptable to Boeing).

Average Direct Hourly Labor Rate — the average hourly rate (excluding all fringe
benefits, premium-time allowances, social charges, business taxes and the like) paid by Customer to
its Direct Labor employees.

Boeing Product — any system, accessory, equipment, part or Aircraft Software that is
manufactured by Boeing or manufactured to Boeing’s detailed design with Boeing’s authorization.

Correct(s) — to repair, modify, provide modification kits or replace with a new
product.

Correction — a repair, a modification, a modification kit or replacement with a new
product.

Corrected Boeing Product — a Boeing Product which is free of defect as a result of a
Correction.

Direct Labor - Labor spent by Customer’s direct labor employees to access, remove,
disassemble, modify, repair, inspect and bench test a defective Boeing Product, and to reassemble,
reinstall a Corrected Boeing Product and perform final inspection and testing.

Direct Materials - Items such as parts, gaskets, grease, sealant and adhesives,
installed or consumed in performing a Correction, excluding allowances for administration,
overhead, taxes, customs duties and the like.

Rogue Unit - A Boeing Product, on which an unscheduled removal due to breach of
warranty occurs three (3) or more times both (i) within the warranty period and (ii) within either
twelve (12) consecutive months or one thousand (1,000) consecutive operating hours.

Service Life Policy (SLP) Component/Item Any primary structural element (excluding
industry standard parts), such as landing gear, wing, fuselage, vertical, or horizontal stabilizer,
listed in the applicable purchase agreement for a specific model of aircraft, either installed in
the aircraft at the time of delivery or purchased from Boeing by Customer as a spare part. The
detailed (SLP) Component/Item list is contained in Supplemental Exhibit SLP1 to the applicable
Purchase Agreement.

					
	 	 	 	 	 
	 	 	 	 	 
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Specification Control Drawing (SCD) — a Boeing document defining specifications for
certain Supplier Products.

Supplier — the manufacturer of a Supplier Product.

Supplier Product — any system, accessory, equipment, part or Aircraft Software that is
not manufactured to Boeing’s detailed design. This includes but is not limited to parts
manufactured to a SCDrawing, all standards, and other parts obtained from non-Boeing sources.

					
	 	 	 	 	 
	 	 	 	 	 
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PRODUCT ASSURANCE DOCUMENT

PART 2:       BOEING WARRANTY

	1.	 	Applicability.

This warranty applies to all Boeing Products. Warranties applicable to Supplier Products are
in Part 4. Warranties applicable to engines will be provided by Supplemental Exhibits to
individual purchase agreements.

	2.	 	Warranty.

2.1 Coverage. Boeing warrants that at the time of delivery:

	 	(i)	 	the aircraft will conform to the Detail Specification except
for portions stated to be estimates, approximations or design objectives;

	 
	 	(ii)	 	all Boeing Products will be free from defects in material,
process of manufacture and workmanship, including the workmanship utilized to
install Supplier Products, engines and BFE, and;

	 
	 	(iii)	 	all Boeing Products will be free from defects in design,
including selection of materials and the process of manufacture, in view of
the state of the art at the time of design

2.2 Exceptions. The following conditions do not constitute a defect under this
warranty:

	 	(i)	 	conditions resulting from normal wear and tear;

	 
	 	(ii)	 	conditions resulting from acts or omissions of Customer; and

	 
	 	(iii)	 	conditions resulting from failure to properly service and
maintain a Boeing Product.

	3.	 	Warranty Periods.

3.1 Warranty. The warranty period begins on the date of aircraft, or Boeing Product,
delivery (Delivery) and ends 48 months after Delivery.

					
	 	 	 	 	 
	 	 	 	 	 
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3.2 Warranty on Corrected Boeing Products. The warranty period applicable to a
Corrected Boeing Product shall begin on the date of delivery of the Corrected Boeing
Product or date of delivery of the kit or kits furnished to Correct the Boeing Product and
shall be for the period specified immediately below:

	 	(i)	 	For Corrected Boeing Products which have been Corrected because of a defect in
material, the applicable warranty period is the remainder of the initial warranty period
for the defective Boeing Product.

	 
	 	(ii)	 	For Corrected Boeing Products which have been Corrected because of defect in
workmanship, the applicable warranty period is the remainder of the initial warranty or 12
months following the date of delivery of the Corrected Boeing Product, whichever is longer.

	 
	 	(iii)	 	For Corrected Boeing Products which have been Corrected because of a defect in
design, the applicable warranty period is 18 months or the remainder of the initial
warranty period, whichever is longer.

3.3 Survival of Warranties. All warranty periods are stated above. The Performance
Guarantees will not survive delivery of the aircraft.

	4.	 	Remedies.

4.1 Correction Options. Customer may, at its option, either perform a Correction of a
defective Boeing Product or return the Boeing Product to Boeing for Correction. During the
warranty period, Boeing will not charge Customer for tests on Boeing Products returned to Boeing
for Correction on which Boeing is unable to confirm the failure claimed, provided:

	 	(i)	 	Boeing’s written instructions were followed by the Customer
for testing the Boeing Product prior to its return to Boeing, and

	 	(ii)	 	Customer’s claim includes all applicable documentation of
such tests with the returned Boeing Product, including but not limited to:
Central Maintenance Computer (CMC), Flight Maintenance Computer System,
(FMCS), Flight Isolation Manual (FIM), Engine Indicating and Crew Alerting
System (EICAS) or Built In Test Equipment (BITE) messages.

4.2 Warranty Inspections. In addition to the remedies to Correct defects in Boeing
Products described in Article 7.3, below, Boeing will reimburse Customer for the cost of Direct
Labor to perform certain inspections of the aircraft to determine the occurrence of a condition
Customer has claimed and Boeing has identified as a covered defect, provided the inspections are
recommended by a service bulletin or service letter issued by Boeing during the warranty period.

					
	 	 	 	 	 
	 	 	 	 	 
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Such reimbursement will not apply to any inspections performed after a Correction is available to
Customer and Customer has had a reasonable time to incorporate the Correction, given the Customer’s
fleet size and maintenance schedule.

4.3 Rogue Units.

4.3.1 Upon written request, Boeing will lend Customer at no charge an interchangeable
Boeing Product in exchange for a Rogue Unit. Within ten (10) calendar days of its receipt
of the loaned Boeing Product, Customer will ship the Rogue Unit to Boeing. Customer will
provide with the Rogue Unit verification of the following requirements:

	 	(i)	 	The removed Boeing Product failed three (3) times within
twelve (12) consecutive months or one thousand (1000) consecutive operating
hours during the warranty period following initial delivery,

	 	(ii)	 	Removals were performed in compliance with flight or
maintenance manuals approved by the FAA or the comparable regulatory agency
for the country in which the aircraft is registered, and

	 	(iii)	 	Any Corrections or tests to the Boeing Product were
performed by Customer according to the latest revision of the Boeing Component
Maintenance Manual (CMM), according to written instructions from Boeing, or by
Boeing.

4.3.2 Upon receipt of a Rogue Unit and the required verifications, Boeing will, at
no-charge to Customer, either replace the Rogue Unit with a new Boeing Product or, if
otherwise agreed, allow Customer to retain the loaned, Boeing Product.

	5.	 	Discovery and Notice.

5.1 For notice to be effective:

	 	(i)	 	the defect, failure or in-service problem must be discovered
during the warranty period; and

	 	(ii)	 	Boeing Warranty must receive written notice of the discovery
no later than 180 days after expiration of the warranty period. The notice
must include sufficient information to substantiate the claim.

					
	 	 	 	 	 
	 	 	 	 	 
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5.2 Receipt of Customer’s or its Authorized Agent’s notice of the discovery of a defect
secures Customer’s rights to remedies under this Exhibit C, even though a Correction is performed
after the expiration of the warranty period.

5.3 Once Customer has given valid notice of the discovery of a defect, a claim will be
submitted as soon as practicable after performance of the Correction.

5.4 Boeing may release service bulletins or service letters advising Customer of the
availability of certain warranty remedies. When such advice is provided, Customer will be deemed to
have fulfilled the requirements for discovery of the defect or failure and submittal of notice
under this Exhibit C as of the in-warranty date specified in industry support information in a
service bulletin or service letter

	6.	 	Filing a Claim.

6.1 Authority to File. Claims may be filed by Customer or its Authorized Agent.
Appointment of an Authorized Agent will only be effective upon Boeing’s receipt of the Authorized
Agent’s express written agreement, in a form satisfactory to Boeing, to be bound by and to comply
with all applicable terms and conditions of this Aircraft General Terms Agreement.

6.2 Claim Information.

6.2.1 Claimant is responsible for providing sufficient information to substantiate
Customer’s rights to remedies under this Exhibit C. Boeing may reject a claim for lack of
sufficient information. At a minimum, such information must include:

	 	(i)	 	identity of claimant;

	 
	 	(ii)	 	serial or block number of the aircraft on which the defective
Boeing Product was delivered;

	 
	 	(iii)	 	part number and nomenclature of the defective Boeing
Product;

	 
	 	(iv)	 	purchase order number and date of delivery of the defective
spare part;

	 
	 	(v)	 	description and substantiation of the defect;

	 
	 	(vi)	 	date the defect was discovered;

					
	 	 	 	 	 
	 	 	 	 	 
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	 	(vii)	 	date the Correction was completed;

	 
	 	(viii)	 	the total flight hours or cycles accrued, if applicable;

	 
	 	(ix)	 	an itemized account of direct labor hours expended in
performing the Correction; and

	 
	 	(x)	 	an itemized account of any direct materials incorporated in
the Correction.

6.2.2 Additional information may be required based on the nature of the defect and the
remedies requested.

6.3 Boeing Claim Processing.

6.3.1 Any claim for a Boeing Product returned by Customer or its Authorized Agent to
Boeing for Correction must accompany the Boeing Product. Any claim not associated with the
return of a Boeing Product must be submitted signed and in writing directly by Customer or
its Authorized Agent to Boeing Warranty by any of the methods identified in Article 11,
“Notice,” of the AGTA or through an internet portal and process specified by Boeing.

6.3.2 Boeing will promptly review the claim and will give notification of claim
approval or rejection. If the claim is rejected, Boeing will provide a written
explanation.

	7.	 	Corrections Performed by Customer or Its Authorized Agent.

7.1 Facilities Requirements. Provided Customer, its Authorized Agent or its third
party contractor, as appropriate, are certified by the appropriate Civil Aviation Authority or
Federal Aviation Authority, Customer or its Authorized Agent may, at its option, Correct defective
Boeing Products at its facilities or may subcontract Corrections to a third party contractor.

7.2 Technical Requirements. All Corrections done by Customer, its Authorized Agent or
a third party contractor must be performed in accordance with Boeing’s applicable service manuals,
bulletins or other written instructions, using parts and materials furnished or approved by Boeing.

7.3 Reimbursement.

7.3.1 Boeing will reimburse Customer’s reasonable costs of Direct Materials and Direct
Labor by credit memorandum (excluding labor hours expended for overhaul) at Customer’s
Warranty Labor Rate to Correct a defective
Boeing Product. Claims for reimbursement must contain sufficient information to
substantiate Direct Labor hours expended and Direct Materials consumed. Customer or its
Authorized Agent may be required to produce invoices for materials.

					
	 	 	 	 	 
	 	 	 	 	 
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7.3.2 Customer’s established Warranty Labor Rate will be the greater of the standard
labor rate or 150% of Customer’s Average Direct Hourly Labor Rate. The standard labor rate
paid by Boeing to its customers is established and published annually. Prior to or
concurrently with submittal of Customer’s first claim for Direct Labor reimbursement,
Customer may notify Boeing of Customer’s then-current Average Direct Hourly Labor Rate and
thereafter notify Boeing of any material change in such rate. Boeing will require
information from Customer to substantiate such rates.

7.3.3 Reimbursement for Direct Labor hours to perform Corrections stated in a service
bulletin will be based on the labor estimates in the service bulletin.

7.3.4 Boeing will provide to Customer a single, lump sum credit memorandum for
Customer’s Direct Labor hours expended to incorporate the Corrections (other than of random
anomalies) identified in service bulletins and service letters in all in-warranty aircraft
covered by such service bulletins or service letters after Customer’s submission of a
warranty claim and verification of the incorporation of such Corrections with respect to
the first affected in-warranty aircraft. Such credit memoranda will not be provided in
response to any other requests for reimbursement including, without limitation, those
arising out of program letters or other special offers provided by Boeing.

7.3.5 Boeing will reimburse Customer’s freight charges associated with a Correction of
a defect on a Boeing Product performed by its Authorized Agent or a third party contractor,
including but not limited to, kits provided to Customer at no additional cost.

7.3.6 Maximum Reimbursement. Unless previously agreed in writing, the maximum
reimbursement for Direct Labor and Direct materials for repair of a defective Boeing
Product will not exceed 65% of Boeing’s then-current sales price for a new replacement
Boeing Product. Inspection, removal, reinstallation labor, final testing, inspection and
transportation costs are separate and are not to be included in the cost elements used to
determine the 65% limit. By mutual agreement between Customer and Boeing, Boeing may
provide a replacement Product to Customer in lieu of credit reimbursement.

					
	 	 	 	 	 
	 	 	 	 	 
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7.4 Disposition of Defective Boeing Products Beyond Economical Repair.

7.4.1 A defective Boeing Product found to be beyond economical repair (see Para.
7.3.6) will be retained for a period of 30 days from the date Boeing receives Customer’s
claim. During the 30 day period, Boeing may request return of such Boeing Products for
inspection and confirmation of a defect.

7.4.2 After the 30 day period, a defective Boeing Product with a value of U.S. $4,000
or less may be scrapped without notification to Boeing. Boeing will reimburse Customer or
its Authorized Agent for the charge for any item determined to be defective under this
Aircraft General Terms Agreement. If such Boeing Product has a value greater than U.S,
$4,000, Customer must obtain confirmation of unrepairability by Boeing’s on-site Customer
Services Representative prior to scrapping. Confirmation may be in the form of the
Representative’s signature on Customer’s claim or through direct communication between the
Representative and Boeing Warranty.

	8.	 	Corrections Performed by Boeing.

8.1 Freight Charges. Customer or its Authorized Agent will pre-pay freight charges to
return a Boeing Product to Boeing. If during the period of the applicable warranty Boeing
determines the Boeing Product to be defective, Boeing will pre-pay shipping charges to return the
Corrected Boeing Product. Boeing will reimburse Customer or its Authorized Agent for freight
charges for Boeing Products returned to Boeing for Correction and determined to be defective.

8.2 Customer Instructions. The documentation shipped with the returned defective
Boeing Product may include specific technical instructions for additional work to be performed on
the Boeing Product. The absence of such instructions will evidence Customer’s authorization for
Boeing to perform all necessary Corrections and work required to return the Boeing Product to a
serviceable condition.

8.3 Correction Time Objectives.

8.3.1 Boeing’s objective for making Corrections is 10 working days for avionics and
electronic Boeing Products, 30 working days for Corrections of other Boeing Products
performed at Boeing’s facilities and 40 working days for Corrections of other Boeing
Products performed at a Boeing subcontractor’s facilities. The objectives are measured
from the date Boeing receives the defective Boeing Product and a valid claim to the date
Boeing ships the Corrected Boeing Product.

8.3.2 If Customer has a critical parts shortage because Boeing has exceeded a
Correction time objective and Customer has procured spare Boeing Products for the defective
or failed Boeing Product in quantities shown in Boeing’s Recommended Spare Parts List, then
Boeing will either expedite the
Correction or provide an interchangeable Boeing Product, on a no charge loan basis,
until the Corrected Boeing Product is returned.

					
	 	 	 	 	 
	 	 	 	 	 
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8.4 Title Transfer and Risk of Loss.

8.4.1 Title to and risk of loss of any Boeing Product returned to Boeing will at all
times remain with Customer or any other title holder of such Boeing Product. While Boeing
has possession of the returned Boeing Product, Boeing will have only such liabilities as a
bailee for mutual benefit would have but will not be liable for loss of use.

8.4.2 If a Correction requires shipment of a new Boeing Product, then at the time
Boeing ships the new Boeing Product, title to and risk of loss for the returned Boeing
Product will pass to Boeing, and title to and risk of loss for the new Boeing Product will
pass to Customer.

	9.	 	Returning an Aircraft.

9.1 Conditions. An aircraft may be returned to Boeing’s facilities for Correction
only if:

	 	(i)	 	Boeing and Customer agree a covered defect exists;

	 	(ii)	 	Customer lacks access to adequate facilities, equipment or
qualified personnel to perform the Correction; and

	 
	 	(iii)	 	it is not practical, in Boeing’s estimation, to dispatch Boeing personnel to
perform the Correction at a remote site.

9.2 Correction Costs. Boeing will perform the Correction at no charge to Customer.
Subject to the conditions of Article 9.1, Boeing will reimburse Customer for the costs of fuel,
oil, other required fluids and landing fees incurred in ferrying the aircraft to Boeing and back to
Customer’s facilities. Customer will minimize the length of both flights.

9.3 Separate Agreement. Prior to the return of an aircraft to Boeing, Boeing and
Customer will enter into a separate agreement covering return of the aircraft and performance of
the Correction. Authorization by Customer for Boeing to perform additional work that is not part
of the Correction must be received within 24 hours of Boeing’s request. If such authorization is
not received within 24 hours, Customer will be invoiced for work performed by Boeing that is not
part of the Correction.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	C
	 	 
	 
	 	2-8	 	 

BOEING PROPRIETARY

 

 

 

	10.	 	Insurance.

The provisions of Article 8.2 “Insurance”, of this AGTA, will apply to any work performed by
Boeing in accordance with Customer’s specific technical instructions to the extent any legal
liability of Boeing is based upon the content of such instructions.

	11.	 	Disclaimer and Release; Exclusion of Liabilities.

11.1 DISCLAIMER AND RELEASE. THE WARRANTIES, OBLIGATIONS AND LIABILITIES OF BOEING AND
THE REMEDIES OF CUSTOMER IN THIS EXHIBIT C ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND CUSTOMER
HEREBY WAIVES, RELEASES AND RENOUNCES, ALL OTHER WARRANTIES, OBLIGATIONS AND LIABILITIES OF BOEING
AND ALL OTHER RIGHTS, CLAIMS AND REMEDIES OF CUSTOMER AGAINST BOEING, EXPRESS OR IMPLIED, ARISING
BY LAW OR OTHERWISE, WITH RESPECT TO ANY NONCONFORMANCE OR DEFECT IN ANY AIRCRAFT, MATERIALS,
TRAINING, SERVICES OR OTHER THING PROVIDED UNDER THIS AGTA AND THE APPLICABLE PURCHASE AGREEMENT,
INCLUDING, BUT NOT LIMITED TO:

	 	(A)	 	ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS;

	 	(B)	 	ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE,
COURSE OF DEALING OR USAGE OF TRADE;

	 	(C)	 	ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT,
WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF BOEING; AND

	 	(D)	 	ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF
OR DAMAGE TO ANY AIRCRAFT.

11.2 EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES. BOEING WILL HAVE NO OBLIGATION OR
LIABILITY, WHETHER ARISING IN CONTRACT (INCLUDING WARRANTY), TORT, WHETHER OR NOT ARISING FROM THE
NEGLIGENCE OF BOEING, OR OTHERWISE, FOR LOSS OF USE, REVENUE OR PROFIT, OR FOR ANY OTHER INCIDENTAL
OR CONSEQUENTIAL DAMAGES WITH RESPECT TO ANY NONCONFORMANCE OR DEFECT IN ANY AIRCRAFT, MATERIALS,
TRAINING, SERVICES OR OTHER THING PROVIDED UNDER THIS AGTA AND THE APPLICABLE PURCHASE AGREEMENT.

11.4 Definitions. For the purpose of this Article, “BOEING” or “Boeing” is defined as
The Boeing Company, its divisions, subsidiaries, affiliates, the assignees of each, and their
respective directors, officers, employees and agents.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	C
	 	 
	 
	 	2-9	 	 

BOEING PROPRIETARY

 

 

 

PRODUCT ASSURANCE DOCUMENT

PART 3:       BOEING SERVICE LIFE POLICY

	1.	 	Definitions.

Service Life Policy (SLP) Component/Item — any of the primary structural elements (excluding
industry standard parts), such as landing gear, wing, fuselage, vertical or horizontal stabilizer,
listed in the applicable purchase agreement for a specific model of aircraft, either installed in
the aircraft at time of delivery or purchased from Boeing by Customer as a spare part. The
detailed SLP Component listing will be in Supplemental Exhibit SLP1 to each Purchase Agreement.

	2.	 	Service Life Policy.

2.1 SLP Commitment. If a failure is discovered in a SLP Component/Item within the time
periods specified in Article 2.2 below, Boeing will provide Customer a replacement SLP
Component/Item at the price calculated pursuant to Article 3.1, below. If requested by Customer as
an alternative remedy, Boeing will reimburse Customer in accordance with the provisions of Exhibit
C, Part 2, Article 7.3, for Direct Labor and Direct Material for repair of a failed SLP
Component/Item an amount not to exceed the difference between Boeing’s then current spare parts
price for such SLP Component/Item and the price determined pursuant to Article 3, below.

2.2 SLP Policy Periods.

2.2.1 The policy period for SLP Components initially installed on an aircraft is 12
years after the date of delivery of the aircraft except that for SLP Components initially
installed on a 787 aircraft the policy period is 15 years after the date of delivery of the
aircraft.

2.2.2 The policy period for SLP Components purchased from Boeing by Customer as spare
parts is 12 years from delivery of such SLP Component or 12 years from the date of delivery
of the last aircraft produced by Boeing of a specific model, whichever first expires.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	C
	 	 
	 
	 	3-1	 	 

BOEING PROPRIETARY

 

 

 

	3.	 	Price.

The price Customer will pay for replacement of a failed SLP Component/Item will be calculated
pursuant to the following formula:

	 	 	 	 	 	 	 
	P

	 	=
	 	CT

	 

	 	 	 	 	144	 

where:

	 	 	 	 	 
	P

	 	=
	 	price to Customer for the replacement part
	C

	 	=
	 	SLP Component sales price at time of replacement
	T

	 	=
	 	total age in months of the failed SLP Component from the
date of delivery to Customer to the date of discovery of such condition.

	4.	 	Conditions.

Boeing’s obligations under this Part 3 of Exhibit C, “Boeing Service Life Policy,” (Policy)
are conditioned upon the following:

4.1 Customer must notify Boeing in writing of the failure within three months after it is
discovered.

4.2 Customer must provide reasonable evidence that the claimed failure is covered by this
Policy and if requested by Boeing, that such failure was not the result of:

	 	(i)	 	a defect or failure in a component not covered by this
Policy,

	 
	 	(ii)	 	an extrinsic force,

	 
	 	(iii)	 	an act or omission of Customer, or

	 
	 	(iv)	 	operation or maintenance contrary to applicable governmental
regulations or Boeing’s instructions.

4.3 If return of a failed SLP Component/Item is practicable and requested by Boeing, Customer
will return such SLP Component/Item to Boeing at Boeing’s expense.

4.4 Customer’s rights and remedies under this Policy are limited to the receipt of a
Correction pursuant to Article 2 above.

	5.	 	Disclaimer and Release; Exclusion of Liabilities.

This Part 3 and the rights and remedies of Customer and the obligations of Boeing are subject
to the DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES provisions of
Article 11 of Part 2 of this Exhibit C.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	C
	 	 
	 
	 	3-2	 	 

BOEING PROPRIETARY

 

 

 

PRODUCT ASSURANCE DOCUMENT

PART 4:       SUPPLIER WARRANTY COMMITMENT

	1.	 	Supplier Warranties and Supplier Patent and Copyright Indemnities.

Boeing will use commercially reasonable efforts to obtain warranties and indemnities against
patent and copyright infringement enforceable by Customer from Suppliers of Supplier Products
(except for BFE and engines) installed on the aircraft at the time of delivery that were selected
and purchased by Boeing, but not manufactured to Boeing’s detailed design. Boeing will furnish
copies of the warranties and patent and copyright indemnities to Customer contained in Supplier
Product Support and Assurance Agreements, prior to the scheduled delivery month of the first
aircraft under the initial purchase agreement to the AGTA.

	2.	 	Boeing Assistance in Administration of Supplier Warranties.

Customer will be responsible for submitting warranty claims directly to Suppliers; however, if
Customer experiences problems enforcing any Supplier warranty obtained by Boeing for Customer,
Boeing will conduct an investigation of the problem and assist Customer in the resolution of those
claims.

	3.	 	Boeing Support in Event of Supplier Default.

3.1 If the Supplier defaults in the performance of a material obligation under its warranty,
and Customer provides evidence to Boeing that a default has occurred, then Boeing will furnish the
equivalent warranty terms as provided by the defaulting Supplier.

3.2 At Boeing’s request, Customer will assign to Boeing, and Boeing will be subrogated to, its
rights against the Supplier provided by the Supplier warranty.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	C
	 	 
	 
	 	4-1	 	 

BOEING PROPRIETARY

 

 

 

PRODUCT ASSURANCE DOCUMENT

PART 5:       BOEING INTERFACE COMMITMENT

	1.	 	Interface Problems.

An Interface Problem is defined as a technical problem in the operation of an aircraft or its
systems experienced by Customer, the cause of which is not readily identifiable by Customer but
which Customer believes to be attributable to either the design characteristics of the aircraft or
its systems or the workmanship used in the installation of Supplier Products. In the event Customer
experiences an Interface Problem, Boeing will, without additional charge to Customer, promptly
conduct an investigation and analysis to determine the cause or causes of the Interface Problem.
Boeing will promptly advise Customer at the conclusion of its investigation of Boeing’s opinion as
to the causes of the Interface Problem and Boeing’s recommendation as to corrective action.

	2.	 	Boeing Responsibility.

If Boeing determines that the Interface Problem is primarily attributable to the design or
installation of any Boeing Product, Boeing will Correct the design or workmanship to the extent of
any then-existing obligations of Boeing under the provisions of the applicable Boeing Warranty.

	3.	 	Supplier Responsibility.

If Boeing determines that the Interface Problem is primarily attributable to the design or
installation of a Supplier Product, Boeing will assist Customer in processing a warranty claim
against the Supplier.

	4.	 	Joint Responsibility.

If Boeing determines that the Interface Problem is partially attributable to the design or
installation of a Boeing Product and partially to the design or installation of a Supplier Product,
Boeing will seek a solution to the Interface Problem through the cooperative efforts of Boeing and
the Supplier and will promptly advise Customer of the resulting corrective actions and
recommendations.

	5.	 	General.

Customer will, if requested by Boeing, assign to Boeing any of its rights against any supplier
as Boeing may require to fulfill its obligations hereunder.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	C
	 	 
	 
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BOEING PROPRIETARY

 

 

 

	6.	 	Disclaimer and Release; Exclusion of Liabilities.

This Part 5 and the rights and remedies of Customer and the obligations of Boeing herein are
subject to the DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES provisions
of Article 11 of Part 2 of this Exhibit C.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	C
	 	 
	 
	 	5-2	 	 

BOEING PROPRIETARY

 

 

 

PRODUCT ASSURANCE DOCUMENT

PART 6:       BOEING INDEMNITIES AGAINST PATENT

AND COPYRIGHT INFRINGEMENT

	1.	 	Indemnity Against Patent Infringement.

Boeing will defend and indemnify Customer with respect to all claims, suits and liabilities
arising out of any actual or alleged patent infringement through Customer’s use, lease or resale of
any aircraft or any Boeing Product installed on an aircraft at delivery.

	2.	 	Indemnity Against Copyright Infringement.

Boeing will defend and indemnify Customer with respect to all claims, suits and liabilities
arising out of any actual or alleged copyright infringement through Customer’s use, lease or resale
of any Boeing created Materials and Aircraft Software installed on an aircraft at delivery.

	3.	 	Exceptions, Limitations and Conditions.

3.1 Boeing’s obligation to indemnify Customer for patent infringement will extend only to
infringements in countries which, at the time of the infringement, were party to and fully bound by
either (a) Article 27 of the Chicago Convention on International Civil Aviation of December 7,
1944, or (b) the International Convention for the Protection of Industrial Property (Paris
Convention).

3.2 Boeing’s obligation to indemnify Customer for copyright infringement is limited to
infringements in countries which, at the time of the infringement, are members of The Berne Union
and recognize computer software as a “work” under The Berne Convention.

3.3 The indemnities provided under this Part 6 will not apply to any BFE engines, Supplier
Product, Boeing Product used other than for its intended purpose, or Aircraft Software not created
by Boeing.

3.4 Customer must deliver written notice to Boeing (i) within 10 days after Customer first
receives notice of any suit or other formal action against Customer and (ii) within 20 days after
Customer first receives any other allegation or written claim of infringement covered by this Part
6.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	C
	 	 
	 
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BOEING PROPRIETARY

 

 

 

3.5 At any time, Boeing will have the right at its option and expense to: (i) negotiate with
any party claiming infringement, (ii) assume or control the defense of any infringement allegation,
claim, suit or formal action provided that Boeing will not agree to any settlement or agreement
which would have the effect of preventing Customer from using any Boeing Product or Aircraft
Software or replacement therefore as provided in (iv) below, (iii) intervene in any infringement
suit or formal action, and/or (iv) attempt to resolve any claim of infringement by replacing an
allegedly infringing Boeing Product or Aircraft Software with a noninfringing equivalent.

3.6 Customer will promptly furnish to Boeing all information, records and assistance within
Customer’s possession or control which Boeing considers relevant or material to any alleged
infringement covered by this Part 6.

3.7 Except as required by a final judgment entered against Customer by a court of competent
jurisdiction from which no appeals can be or have been filed, Customer will obtain Boeing’s written
approval prior to paying, committing to pay, assuming any obligation or making any material
concession relative to any infringement covered by these indemnities.

3.8 BOEING WILL HAVE NO OBLIGATION OR LIABILITY UNDER THIS PART 6 FOR LOSS OF USE, REVENUE OR
PROFIT, OR FOR ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES (THE FOREGOING SENTENCE DOES NOT APPLY
TO ANY CLAIM MADE AGAINST CUSTOMER FOR LOSS OF USE, REVENUE OR PROFIT, OR FOR ANY OTHER INCIDENTAL
OR CONSEQUENTIAL DAMAGES BY THE PATENT OR COPYRIGHT OWNER OR ANY PARTY PROPERLY CLAIMING A LEGAL
CAUSE OF ACTION THROUGH AN INTEREST GRANTED BY SUCH OWNER). THE OBLIGATIONS OF BOEING AND REMEDIES
OF CUSTOMER IN THIS PART 6 ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND CUSTOMER HEREBY WAIVES,
RELEASES AND RENOUNCES ALL OTHER INDEMNITIES, OBLIGATIONS AND LIABILITIES OF BOEING AND ALL OTHER
RIGHTS, CLAIMS AND REMEDIES OF CUSTOMER AGAINST BOEING, EXPRESS OR IMPLIED, ARISING BY LAW OR
OTHERWISE, WITH RESPECT TO ANY ACTUAL OR ALLEGED PATENT, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY
INFRINGEMENT OR THE LIKE BY ANY AIRCRAFT, AIRCRAFT SOFTWARE, MATERIALS, TRAINING, SERVICES OR OTHER
THING PROVIDED UNDER THIS AGTA AND THE APPLICABLE PURCHASE AGREEMENT.

3.9 For the purposes of this Part 6, “BOEING or Boeing” is defined as The Boeing Company, its
divisions, subsidiaries, affiliates, the assignees of each and their respective directors,
officers, employees and agents.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	C
	 	 
	 
	 	6-2	 	 

BOEING PROPRIETARY

 

 

 

SAMPLE

Insurance Certificate

BROKER’S LETTERHEAD

[ date ]

Certificate of Insurance

			
	ISSUED TO:	 	The Boeing Company

Post Office Box 3707

Mail Stop 13-57

Seattle, Washington 98124

Attn: Manager — Aviation Insurance for
Vice President — Employee Benefits,
Insurance and Taxes

	 	 	 
	CC:	 	Boeing Commercial Airplanes

P.O. Box 3707

Mail Stop 21-34

Seattle, Washington 98124-2207

U.S.A.

Attn: Vice President — Contracts

	 	 	 
	NAMED INSURED:	 	Federal Express Corporation

We hereby certify that in our capacity as Brokers to the Named Insured, the following described
insurance is in force on this date:

	 	 	 	 	 
	Insurer
	 	Policy No.
	 	Participation
	 
	 	 
	 	 

			
	POLICY PERIOD:	 	From [date and time of inception of the Policy(ies)] to [date and time of expiration].

			
	GEOGRAPHICAL LIMITS:	 	Worldwide (however, as respects “Aircraft Hull War and
Allied Perils” Insurance, as agreed by Boeing).

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. I
	 	 
	 
	 	1	 	 

 

 

 

SAMPLE

Insurance Certificate

			
	AIRCRAFT INSURED:	 	All Boeing manufactured aircraft owned or operated by the Named
Insured which are the subject of the following purchase
agreement(s), entered into between The Boeing Company and
_________________ (hereinafter “Aircraft”):

 

Purchase Agreement No. ____ dated ______

Purchase Agreement No. ____ dated ______

COVERAGES:

	1.	 	Aircraft “all risks” Hull (Ground and Flight)

	 
	2.	 	Airline Liability

Including, but not limited to, Bodily Injury, Property Damage, Aircraft Liability, Liability War
Risks, Passenger Legal Liability, Premises/Operations Liability, Completed Operations/Products
Liability, Baggage Legal Liability (checked and unchecked), Cargo Legal Liability, Contractual
Liability and Personal Injury.

The above-referenced Airline Liability insurance coverage is subject to War and Other Perils
Exclusion Clause (AV48B) but all sections, other than section (b) are reinstated as per AV52C, or
their successor endorsements.

LIMITS OF LIABILITY:

To the fullest extent of the Policy limits that the Named Insured carries from the time of delivery
of the first Aircraft under the first Purchase Agreement listed under “Aircraft Insured” and
thereafter at the inception of each policy period, but in any event no less than the following:

Combined Single Limit Bodily Injury and Property Damage: U.S.$ any one occurrence each Aircraft
(with aggregates as applicable).

	 	 	 	 	 
	(737-500/600)
	 	US$	350,000,000	 
	(737-300/700)
	 	US$	400,000,000	 
	(737-400)
	 	US$	450,000,000	 
	(737-800/900)
	 	US$	500,000,000	 
	(757-200)
	 	US$	525,000,000	 
	(757-300)
	 	US$	550,000,000	 
	(767-200)
	 	US$	550,000,000	 
	(767-300)
	 	US$	700,000,000	 
	(767-400ERX)
	 	US$	750,000,000	 
	(787)
	 	US$	700,000,000	 
	(777)
	 	US$	800,000,000	 
	(747)
	 	US$	900,000,000	 

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. I
	 	 
	 
	 	2	 	 

 

 

 

SAMPLE

Insurance Certificate

(In regard to all other models and/or derivatives, to be specified by Boeing).

(In regard to Personal Injury coverage, limits are US$25,000,000 any one offense/aggregate.)

DEDUCTIBLES / SELF-INSURANCE

Any deductible and/or self-insurance amount (other than standard market deductibles) are to be
disclosed to Boeing.

SPECIAL PROVISIONS APPLICABLE TO BOEING:

It is certified that Insurers are aware of the terms and conditions of AGTA-FED and the following
purchase agreements:

PA ___dated ___

PA ___dated ___

PA ___dated ___

Each Aircraft manufactured by Boeing which is delivered to the Insured pursuant to the applicable
purchase agreement during the period of effectivity of the policies represented by this Certificate
will be covered to the extent specified herein.

Insurers have agreed to the following:

A. In regard to Aircraft “all risks” Hull Insurance and Aircraft Hull War and Allied Perils
Insurance, Insurers agree to waive their rights of subrogation or recourse against Boeing in
accordance with AGTA-FED which was incorporated by reference into the applicable purchase
agreement.

B. In regard to Airline Liability Insurance, Insurers agree:

(1) To include Boeing as an additional insured in accordance with Customer’s undertaking in
Article 8.2.1 of AGTA-FED which was incorporated by reference into the applicable purchase
agreement.

(2) To provide that such insurance will be primary and not contributory nor excess with
respect to any other insurance available for the protection of Boeing;

(3) To provide that with respect to the interests of Boeing, such insurance shall not be
invalidated or minimized by any action or inaction, omission or misrepresentation by the Insured or
any other person or party (other than Boeing)
regardless of any breach or violation of any warranty, declaration or condition contained in such
policies;

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. I
	 	 
	 
	 	3	 	 

 

 

 

SAMPLE

Insurance Certificate

(4) To provide that all provisions of the insurance coverages referenced above, except the
limits of liability, will operate to give each Insured or additional insured the same protection as
if there were a separate Policy issued to each.

C. In regard to all of the above referenced policies:

(1) Boeing will not be responsible for payment, set-off, or assessment of any kind or any
premiums in connection with the policies, endorsements or coverages described herein;

(2) If a policy is canceled for any reason whatsoever, or any substantial change is made
which would amend the coverage evidenced hereunder and require the reissuance of this certificate
or if a policy is allowed to lapse for nonpayment of premium, such cancellation, change or lapse
shall not be effective as to Boeing for thirty (30) days (in the case of war risk and allied perils
coverage seven (7) days after sending, or such other period as may from time to time be customarily
obtainable in the industry) after receipt by Boeing of written notice from the Insurers or the
authorized representatives or Broker of such cancellation, change or lapse; and

(3) For the purposes of the Certificate, “Boeing” is defined as The Boeing Company, its
divisions, subsidiaries, affiliates, the assignees of each and their respective directors,
officers, employees and agents.

Subject to the terms, conditions, limitations and exclusions of the relative policies.

(signature)

(typed name)

(title)

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. I
	 	 
	 
	 	4	 	 

 

 

 

SAMPLE

Purchase Agreement Assignment

THIS
PURCHASE AGREEMENT ASSIGNMENT (Assignment) dated as of
___20___between Federal Express
Corporation, a company organized under the laws of ___(Assignor) and
___, a company organized under the laws of ___(Assignee).
Capitalized terms used herein without definition will have the same meaning as in the Boeing
Purchase Agreement.

Assignor and The Boeing Company, a Delaware corporation (Boeing), are parties to the Boeing
Purchase Agreement, providing, among other things, for the sale by Boeing to Assignor of certain
aircraft, engines and related equipment, including the Aircraft.

Assignee wishes to acquire the Aircraft and certain rights and interests under the Boeing
Purchase Agreement and Assignor, on the following terms and conditions, is willing to assign to
Assignee certain of Assignor’s rights and interests under the Boeing Purchase Agreement. Assignee
is willing to accept such assignment.

It is agreed as follows:

1. For all purposes of this Assignment, the following terms will have the following meanings:

Aircraft — one Boeing Model ___aircraft, bearing manufacturer’s serial number
___, together with all engines and parts installed on such aircraft on the Delivery Date.

Boeing — Boeing shall include any wholly-owned subsidiary of Boeing, and its
successors and assigns.

Boeing Purchase Agreement — Purchase Agreement No. ___dated as of ___
between Boeing and Assignor, as amended, but excluding ___, providing, among other
things, for the sale by Boeing to Assignor of the Aircraft, as said agreement may be further
amended to the extent permitted by its terms. The Purchase Agreement incorporated by reference
Aircraft General Terms Agreement AGTA/___(AGTA).

Delivery Date — the date on which the Aircraft is delivered by Boeing to Assignee
pursuant to and subject to the terms and conditions of the Boeing Purchase Agreement and this
Assignment.

2. Assignor does hereby assign to Assignee all of its rights and interests in and to the
Boeing Purchase Agreement, as and to the extent that the same relate to the Aircraft and the
purchase and operation thereof, except as and to the extent expressly reserved below, including,
without limitation, in such assignment: [TO BE COMPLETED BY THE PARTIES.]

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. II
	 	 
	 
	 	1	 	 

 

 

 

SAMPLE

Purchase Agreement Assignment

{EXAMPLES

	 	(a)	 	the right upon valid tender to purchase the Aircraft pursuant to the Boeing
Purchase Agreement subject to the terms and conditions thereof and the right to take
title to the Aircraft and to be named the “Buyer” in the bill of sale for the Aircraft;

	 
	 	(b)	 	the right to accept delivery of the Aircraft;

	 	(c)	 	all claims for damages arising as a result of any default under the Boeing
Purchase Agreement in respect of the Aircraft;

	 	(d)	 	all warranty and indemnity provisions contained in the Boeing Purchase
Agreement, and all claims arising thereunder, in respect of the Aircraft; and

	 	(e)	 	any and all rights of Assignor to compel performance of the terms of the Boeing
Purchase Agreement in respect of the Aircraft.}

Reserving exclusively to Assignor, however:

{EXAMPLES

	 	(i)	 	all Assignor’s rights and interests in and to the Boeing Purchase Agreement as
and to the extent the same relates to aircraft other than the Aircraft, or to any other
matters not directly pertaining to the Aircraft;

	 	(ii)	 	all Assignor’s rights and interests in or arising out of any advance or other
payments or deposits made by Assignor in respect of the Aircraft under the Boeing
Purchase Agreement and any amounts credited or to be credited or paid or to be paid by
Boeing in respect of the Aircraft;

	 	(iii)	 	the right to obtain services, training, information and demonstration and test
flights pursuant to the Boeing Purchase Agreement; and

	 	(iv)	 	the right to maintain plant representatives at Boeing’s plant pursuant to the
Boeing Purchase Agreement.}

Assignee hereby accepts such assignment.

3. Notwithstanding the foregoing, so long as no event of default or termination under [specify
document] has occurred and is continuing, Assignee hereby authorizes Assignor, to the exclusion of
Assignee, to exercise in Assignor’s name all rights and powers of Customer under the Boeing
Purchase Agreement in respect of the Aircraft.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. II
	 	 
	 
	 	2	 	 

 

 

 

SAMPLE

Purchase Agreement Assignment

4. For all purposes of this Assignment, Boeing will not be deemed to have knowledge of or need
recognize the occurrence, continuance or the discontinuance of any event of default or termination
under [specify document] unless and until Boeing receives from Assignee written notice thereof,
addressed to its Vice President — Contracts, Boeing Commercial Airplanes at P.O. Box 3707, Seattle,
Washington 98124, if by mail, or to 32-9430 Answerback BOEINGREN RNTN, if by telex. Until such
notice has been given, Boeing will be entitled to deal solely and exclusively with Assignor.
Thereafter, until Assignee has provided Boeing written notice that any such events no longer
continue, Boeing will be entitled to deal solely and exclusively with Assignee. Boeing may act
with acquittance and conclusively rely on any such notice.

5. It is expressly agreed that, anything herein contained to the contrary notwithstanding:
(a) prior to the Delivery Date Assignor will perform its obligations with respect to the Aircraft
to be performed by it on or before such delivery, (b) Assignor will at all times remain liable to
Boeing under the Boeing Purchase Agreement to perform all obligations of Customer thereunder to the
same extent as if this Assignment had not been executed, and (c) the exercise by Assignee of any of
the assigned rights will not release Assignor from any of its obligations to Boeing under the
Boeing Purchase Agreement, except to the extent that such exercise constitutes performance of such
obligations.

6. Notwithstanding anything contained in this Assignment to the contrary (but without in any
way releasing Assignor from any of its obligations under the Boeing Purchase Agreement), Assignee
confirms for the benefit of Boeing that, insofar as the provisions of the Boeing Purchase Agreement
relate to the Aircraft, in exercising any rights under the Boeing Purchase Agreement, or in making
any claim with respect to the Aircraft or other things (including, without limitation, Material,
training and services) delivered or to be delivered, the terms and conditions of the Boeing
Purchase Agreement, including, without limitation, the DISCLAIMER AND RELEASE and
EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES in Article 11 of Part 2 of Exhibit C to the
Aircraft General Terms Agreement which was incorporated by reference into the Boeing Purchase
Agreement and the insurance provisions in Article 8.2 of the Aircraft General Terms Agreement which
was incorporated by reference into the Boeing Purchase Agreement therein, will apply to and be
binding on Assignee to the same extent as if Assignee had been the original “Customer” thereunder.
Assignee further agrees, expressly for the benefit of Boeing, upon the written request of Boeing,
Assignee will promptly execute and deliver such further assurances and documents and take such
further action as Boeing may reasonably request in order to obtain the full benefits of Assignee’s
agreements in this paragraph.

7. Nothing contained herein will subject Boeing to any liability to which it would not
otherwise be subject under the Boeing Purchase Agreement or modify in any respect the contract
rights of Boeing thereunder, or require Boeing to divest itself of title to or possession of the
Aircraft or other things until delivery thereof and payment therefor as provided therein.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. II
	 	 
	 
	 	3	 	 

 

 

 

SAMPLE

Purchase Agreement Assignment

8. Notwithstanding anything in this Assignment to the contrary, after receipt of notice of any
event of default or termination under [specify document], Boeing will continue to owe to Assignor
moneys in payment of claims made or obligations arising before such notice, which moneys may be
subject to rights of set-off available to Boeing under applicable law. Similarly, after receipt of
notice that such event of default or termination no longer continues, Boeing will continue to owe
to Assignee moneys in payment of claims made or obligations arising before such notice, which
moneys may be subject to rights of set-off available to Boeing under applicable law.

9. Effective at any time after an event of default has occurred, and for so long as such event
of default is continuing, Assignor does hereby constitute Assignee, Assignor’s true and lawful
attorney, irrevocably, with full power (in the name of Assignor or otherwise) to ask, require,
demand, receive, and give acquittance for any and all moneys and claims for moneys due and to
become due under or arising out of the Boeing Purchase Agreement in respect of the Aircraft, to the
extent assigned by this Assignment.

10. Assignee agrees, expressly for the benefit of Boeing and Assignor that it will not
disclose, directly or indirectly, any terms of the Boeing Purchase Agreement; provided, that
Assignee may disclose any such information (a) to its special counsel and public accountants, (b)
as required by applicable law to be disclosed or to the extent that Assignee may have received a
subpoena or other written demand under color of legal right for such information, but it will
first, as soon as practicable upon receipt of such requirement or demand, furnish an explanation of
the basis thereof to Boeing, and will afford Boeing reasonable opportunity, to obtain a protective
order or other reasonably satisfactory assurance of confidential treatment for the information
required to be disclosed, and (c) to any bona fide potential purchaser or lessee of the Aircraft.
Any disclosure pursuant to (a) and (c) above will be subject to execution of a confidentiality
agreement substantially similar to this paragraph 10.

11. This Assignment may be executed by the parties in separate counterparts, each of which
when so executed and delivered will be an original, but all such counterparts will together
constitute but one and the same instrument.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. II
	 	 
	 
	 	4	 	 

 

 

 

SAMPLE

Purchase Agreement Assignment

12. This Assignment will be governed by, and construed in accordance with, the laws of
[___].

	 	 	 	 	 	 	 
	 	 	 
	 	 	 
	as Assignor	 	as Assignee
	 
	 	 	 	 	 	 
	By

	 	 	 	By	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Name:

	 	 	 	Name:	 	 
	 
	 	 	 	 	 	 
	Title:

	 	 	 	Title:	 	 

[If the Assignment is further assigned by Assignee in connection with a financing, the following
language needs to be included.]

Attest:

The undersigned, as [Indenture Trustee/Agent for the benefit of the Loan Participants/Mortgagee]
and as assignee of, and holder of a security interest in, the estate, right, and interest of the
Assignee in and to the foregoing Purchase Agreement Assignment and the Purchase Agreement pursuant
to the terms of a certain [Trust Indenture/Mortgage] dated as of ___, agrees to the terms
of the foregoing Purchase Agreement Assignment and agrees that its rights and remedies under such
[Trust Indenture/Mortgage] shall be subject to the terms and conditions of the foregoing Purchase
Agreement Assignment, including, without limitation, paragraph 6.

	 	 	 	 	 	 	 
	[Name of Entity],

as Indenture Trustee/Agent	 	 
	 
	 	 	 	 	 	 
	By:

	 	 	 	 
	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Name:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. II
	 	 
	 
	 	5	 	 

 

 

 

SAMPLE

Purchase Agreement Assignment

CONSENT AND AGREEMENT OF

THE BOEING COMPANY

THE BOEING COMPANY, a Delaware corporation (Boeing), hereby acknowledges notice of and
consents to the foregoing Purchase Agreement Assignment (Assignment) as it relates to Boeing in
respect of the Aircraft. Boeing confirms to Assignee that: all representations, warranties,
indemnities and agreements of Boeing under the Boeing Purchase Agreement with respect to the
Aircraft will, subject to the terms and conditions thereof and of the Assignment, inure to the
benefit of Assignee to the same extent as if Assignee were originally named “Customer” therein.

This Consent and Agreement will be governed by, and construed in accordance with, the law of
the State of Washington, excluding the conflict of laws principles thereof.

Dated as of ___, 20___.

THE BOEING COMPANY

	 	 	 
	By

	 	 
	 

	 	 
	Name:
	 	 
	Title:

	 	Attorney-in-Fact

Aircraft Manufacturer’s Serial Number(s) ____________

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. II
	 	 
	 
	 	6	 	 

 

 

 

SAMPLE

Post-Delivery Sale Notice

Boeing Commercial Airplanes

P.O. Box 3707

Seattle, Washington 98124-2207

U.S.A.

By Courier

1901 Oakesdale Ave. SW

Renton, WA 98055

U.S.A.

			
	Attention:	 	Vice President - Contracts

Mail Code 21-34

Ladies and Gentlemen:

In connection with the sale by Federal Express Corporation (Seller) to ___(Purchaser) of the
aircraft identified below, reference is made to Purchase Agreement No. ___dated as of
___, 20___, between The Boeing Company (Boeing) and Seller (the Purchase Agreement) under
which Seller purchased certain Boeing Model ___aircraft, including the aircraft bearing
Manufacturer’s Serial No.(s) ___(the Aircraft). The Purchase Agreement
incorporated by reference Aircraft General Terms Agreement AGTA-FED (AGTA).

Capitalized terms used herein without definition will have the same meaning as in the Purchase
Agreement.

Seller has sold the Aircraft, including in that sale the assignment to Purchaser of all remaining
rights related to the Aircraft under the Purchase Agreement. To accomplish this transfer of
rights, as authorized by the provisions of the Purchase Agreement:

(1) Purchaser acknowledges it has reviewed those provisions of the Purchase Agreement related to
those rights assigned and agrees to be bound by and comply with all applicable terms and conditions
of the Purchase Agreement, including, without limitation, the DISCLAIMER AND RELEASE and
EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES in Article 11 of Part 2 of Exhibit C to the
AGTA and the insurance provisions in Article 8.2 of the AGTA. Purchaser further agrees upon the
written request of Boeing, to promptly execute and deliver such further assurances and documents
and take such further action as Boeing may reasonably request in order to obtain the full benefits
of Purchaser’s agreements in this paragraph; and

(2) Seller will remain responsible for any payments due Boeing as a result of obligations relating
to the Aircraft incurred by Seller to Boeing prior to the effective date of this letter.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. III
	 	 
	 
	 	1	 	 

 

 

 

SAMPLE

Post-Delivery Sale Notice

We request that Boeing acknowledge receipt of this letter and confirm the transfer of rights set
forth above by signing the acknowledgment and forwarding one copy of this letter to each of the
undersigned.

Very truly yours,

	 	 	 	 	 	 	 
	Federal Express Corporation	 	Purchaser
	 
	 	 	 	 	 	 
	By

	 	 
	 	By
	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Its

	 	 	 	Its	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Dated

	 	 	 	Dated	 	 
	 

	 	 
	 	 	 	 

Receipt of the above letter is acknowledged and the assignment of rights under the Purchase
Agreement with respect to the Aircraft described above is confirmed, effective as of this date.

THE BOEING COMPANY

	 	 	 	 	 	 	 
	By

	 	 
	 	 
	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Its

	 	Attorney-in-Fact	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Dated

	 	 
	 	 
	 	 
	 

	 	 	 	 	 	 

Aircraft Manufacturer’s Serial Number ____________

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. III
	 	 
	 
	 	2	 	 

 

 

 

SAMPLE

Post-Delivery Lease Notice

Boeing Commercial Airplanes

P.O. Box 3707

Seattle, Washington 98124-2207

U.S.A.

By Courier

1901 Oakesdale Ave. SW

Renton, WA 98055

U.S.A.

			
	Attention:	 	Vice President - Contracts

Mail Code 21-34

Ladies and Gentlemen:

In
connection with the lease by Federal Express Corporation (Lessor) to ___(Lessee) of the aircraft
identified below, reference is made to Purchase Agreement No. ___dated as of ___, 20___,
between The Boeing Company (Boeing) and Lessor (the Purchase Agreement) under which Lessor
purchased certain Boeing Model ___aircraft, including the aircraft bearing Manufacturer’s
Serial No.(s) ___(the Aircraft). The Purchase Agreement incorporated by reference
Aircraft General Terms Agreement AGTA-FED (AGTA).

Capitalized terms used herein without definition will have the same meaning as in the Purchase
Agreement.

Lessor has leased the Aircraft, including in that lease the transfer to Lessee of all remaining
rights related to the Aircraft under the Purchase Agreement. To accomplish this transfer of
rights, as authorized by the provisions of the Purchase Agreement:

(1) Lessor authorizes Lessee to exercise, to the exclusion of Lessor, all rights and powers of
Lessor with respect to the remaining rights related to the Aircraft under the Purchase Agreement.
This authorization will continue until Boeing receives written notice from Lessor to the contrary,
addressed to Vice President — Contracts, Mail Code 21-34, Boeing Commercial Airplanes, P.O. Box
3707, Seattle, Washington 98124-2207. Until Boeing receives such notice, Boeing is entitled to
deal exclusively with Lessee with respect to the Aircraft under the Purchase Agreement. With
respect to the rights and obligations of Lessor under the Purchase Agreement, all actions taken or
agreements entered into by Lessee during the period prior to Boeing’s receipt of this notice are
final and binding on Lessor. Further, any payments made by Boeing as a result of claims made by
Lessee will be made to the credit of Lessee.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. IV
	 	 
	 
	 	1	 	 

 

 

 

SAMPLE

Post-Delivery Lease Notice

(2) Lessee accepts the authorization above, acknowledges it has reviewed those provisions of the
Purchase Agreement related to the authority granted and agrees to be bound by and comply with all
applicable terms and conditions of the Purchase Agreement
including, without limitation, the DISCLAIMER AND RELEASE and EXCLUSION OF
CONSEQUENTIAL AND OTHER DAMAGES in Article 11 of Part 2 of Exhibit C AGTA and the insurance
provisions in Article 8.2 of the AGTA. Lessee further agrees, upon the written request of Boeing,
to promptly execute and deliver such further assurances and documents and take such further action
as Boeing may reasonably request in order to obtain the full benefits of Lessee’s agreements in
this paragraph.

(3) Lessor will remain responsible for any payments due Boeing as a result of obligations relating
to the Aircraft incurred by Lessor to Boeing prior to the effective date of this letter.

We request that Boeing acknowledges receipt of this letter and confirm the transfer of rights set
forth above by signing the acknowledgment and forwarding one copy of this letter to each of the
undersigned.

Very truly yours,

	 	 	 	 	 	 	 
	Federal Express Corporation	 	Lessee
	 
	 	 	 	 	 	 
	By

	 	 
	 	By
	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Its

	 	 	 	Its	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Dated

	 	 	 	Dated	 	 
	 

	 	 
	 	 	 	 

Receipt of the above letter is acknowledged and transfer of rights under the Purchase Agreement
with respect to the Aircraft described above is confirmed, effective as of this date.

THE BOEING COMPANY

	 	 	 	 	 	 	 
	By

	 	 
	 	 
	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Its
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Dated
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

Aircraft Manufacturer’s Serial Number ____________

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. IV
	 	 
	 
	 	2	 	 

 

 

 

SAMPLE

Purchaser’s/Lessee’s Agreement

Boeing Commercial Airplanes

P. O. Box 3707

Seattle, Washington 98124-2207

U.S.A.

By Courier

1901 Oakesdale Ave. SW

Renton, WA 98055

U.S.A.

			
	Attention	 	Vice President - Contracts

Mail Code 21-34

Ladies and Gentlemen:

In connection with the sale/lease by Federal Express Corporation (Seller/Lessor) to ___
(Purchaser/Lessee) of the aircraft identified below, reference is made to the following documents:

(i) Purchase Agreement No. ___dated as of ___, 20___, between The Boeing Company (Boeing)
and Seller/Lessor (the Purchase Agreement) under which Seller/Lessor purchased certain Boeing Model
___aircraft, including the aircraft bearing Manufacturer’s Serial No.(s)
___(the Aircraft); and

(ii) Aircraft Sale/Lease Agreement dated as of ___, 20___, between Seller/Lessor and
Purchaser/Lessee (the Aircraft Agreement) under which Seller/Lessor is selling/leasing the
Aircraft.

Capitalized terms used herein without definition will have the same meaning as in the Purchase
Agreement.

1. Seller/Lessor has sold/leased the Aircraft under the Aircraft Agreement, including therein a
form of exculpatory clause protecting Seller/Lessor from liability for loss of or damage to the
aircraft, and/or related incidental or consequential damages, including without limitation loss of
use, revenue or profit.

2. Disclaimer and Release; Exclusion of Consequential and Other Damages

2.1 In accordance with Seller/Lessor’s obligation under Article 9.5 of AGTA-FED which was
incorporated by reference into the Purchase Agreement, Purchaser/Lessee hereby agrees that:

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. V
	 	 
	 
	 	1	 	 

 

 

 

SAMPLE

Purchaser’s/Lessee’s Agreement

2.2 DISCLAIMER AND RELEASE. IN CONSIDERATION OF THE SALE/LEASE OF THE AIRCRAFT,
PURCHASER/LESSEE HEREBY WAIVES, RELEASES AND RENOUNCES ALL WARRANTIES, OBLIGATIONS AND
LIABILITIES OF BOEING AND ALL OTHER RIGHTS, CLAIMS AND REMEDIES OF PURCHASER/LESSEE AGAINST BOEING,
EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY NONCONFORMANCE OR DEFECT IN
ANY AIRCRAFT, BOEING PRODUCT, MATERIALS, TRAINING, SERVICES OR OTHER THING PROVIDED UNDER THE
AIRCRAFT AGREEMENT, INCLUDING, BUT NOT LIMITED TO:

	 	(A)	 	ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS;

	 	(B)	 	ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE,
COURSE OF DEALING OR USAGE OF TRADE;

	 	(C)	 	ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT,
WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF BOEING; AND

	 	(D)	 	ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF
OR DAMAGE TO ANY AIRCRAFT.

2.3 EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES. BOEING WILL HAVE NO OBLIGATION OR
LIABILITY, WHETHER ARISING IN CONTRACT (INCLUDING WARRANTY), TORT, WHETHER OR NOT ARISING FROM THE
NEGLIGENCE OF BOEING, OR OTHERWISE, FOR LOSS OF USE, REVENUE OR PROFIT, OR FOR ANY OTHER INCIDENTAL
OR CONSEQUENTIAL DAMAGES WITH RESPECT TO ANY NONCONFORMANCE OR DEFECT IN ANY AIRCRAFT, MATERIALS,
TRAINING, SERVICES OR OTHER THING PROVIDED UNDER THE AIRCRAFT AGREEMENT.

2.4 Definitions. For the purpose of this paragraph 2, “BOEING” or “Boeing” is defined
as The Boeing Company, its divisions, subsidiaries, affiliates, the assignees of each, and their
respective directors, officers, employees and agents.

	 	 	 	 	 	 	 
	Federal Express Corporation (Seller/Lessor)	 	Purchaser/Lessee
	 
	 	 	 	 	 	 
	By

	 	 
	 	By
	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Its

	 	 	 	Its	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Dated

	 	 	 	Dated	 	 
	 

	 	 
	 	 	 	 

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. V
	 	 
	 
	 	2	 	 

 

 

 

SAMPLE

Post-Delivery Owner Appointment of Agent - Warranties

Boeing Commercial Airplanes

P.O. Box 3707

Seattle, Washington 98124-2207

U.S.A.

By Courier

1901 Oakesdale Ave. SW

Renton, WA 98055

U.S.A.

			
	Attention:	 	Vice President - Contracts

Mail Code 21-34

Ladies and Gentlemen:

1. Reference is made to Purchase Agreement No. ___dated as of ___, 20___, between The
Boeing Company (Boeing) and Federal Express Corporation (Customer) (the Purchase Agreement), under which
Customer purchased certain Boeing Model ___aircraft including the aircraft bearing
Manufacturer’s Serial No.(s) ___(the Aircraft). The Purchase Agreement incorporated by
reference Aircraft General Terms Agreement AGTA-FED (AGTA).

Capitalized terms used herein without definition will have the same meaning as in the Purchase
Agreement.

To accomplish the appointment of an agent, Customer confirms:

A. Customer has appointed ___as agent (Agent) to act directly with Boeing with
respect to the remaining warranties under the Purchase Agreement and requests Boeing to treat Agent
as Customer for the administration of claims with respect to such warranties; provided however,
Customer remains liable to Boeing to perform the obligations of Customer under the Purchase
Agreement.

B. Boeing may continue to deal exclusively with Agent concerning the matters described herein
unless and until Boeing receives written notice from Customer to the contrary, addressed to Vice
President — Contracts, Mail Code 21-34, Boeing Commercial Airplanes, P.O. Box 3707, Seattle,
Washington 98124-2207, U.S.A. With respect to the rights and obligations of Customer under the
Purchase Agreement, all actions taken by Agent or agreements entered into by Agent during the
period prior to Boeing’s receipt of such notice are final and binding on Customer. Further, any
payments made by Boeing as a result of claims made by Agent will be made to the credit of Agent
unless otherwise specified when each claim is submitted.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. VI
	 	 
	 
	 	1	 	 

 

 

 

SAMPLE

Post-Delivery Owner Appointment of Agent - Warranties

C. Customer will remain responsible for any payments due Boeing as a result of obligations relating
to the Aircraft incurred by Customer to Boeing prior to the effective date of this letter.

We request that Boeing acknowledge receipt of this letter and confirm the appointment of Agent as
stated above by signing the acknowledgment and forwarding one copy of this letter to each of the
undersigned.

	 	 	 	 	 	 	 
	Very truly yours,	 	 	 	 
	 
	 	 	 	 	 	 
	Federal Express Corporation	 	 	 	 
	 
	 	 	 	 	 	 
	By

	 	 
	 	 
	 	 
	 

	 	 	 	 	 	 

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. VI
	 	 
	 
	 	2	 	 

BOEING PROPRIETARY

 

 

 

SAMPLE

Post-Delivery Owner Appointment of Agent - Warranties

AGENT’S AGREEMENT

Agent accepts the appointment as stated above, acknowledges it has reviewed the those portions of
the Purchase Agreement related to the authority granted it under the Purchase Agreement and agrees
that, in exercising any rights or making any claims thereunder, Agent will be bound by and comply
with all applicable terms and conditions of the Purchase Agreement including, without limitation,
the DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES in
Article 11 of Part 2 of Exhibit C to the AGTA. Agent further agrees, upon the written request of
Boeing, to promptly execute and deliver such further assurances and documents and take such further
action as Boeing may reasonably request in order to obtain the full benefits of the warranties
under the Purchase Agreement.

	 	 	 	 	 	 	 
	Very truly yours,	 	 	 	 
	 
	 	 	 	 	 	 
	Agent

	 	 
	 	 
	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	By
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Its
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Dated
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

Receipt of the above letter is acknowledged and the appointment of Agent with respect to the
above-described rights under the Purchase Agreement is confirmed, effective as of this date.

	 	 	 	 	 	 	 
	THE BOEING COMPANY	 	 	 	 
	 
	 	 	 	 	 	 
	By

	 	 
	 	 
	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Its
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Dated
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

Aircraft Manufacturer’s Serial Number __________

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. VI
	 	 
	 
	 	3	 	 

 

 

 

SAMPLE

Contractor Confidentiality Agreement

Boeing Commercial Airplanes

P.O. Box 3707

Seattle, Washington 98124-2207

			
	Attention:	 	Vice President - Contracts

Mail Stop 21-34

Ladies and Gentlemen:

This Agreement is entered into between ___(Contractor) and Federal Express Corporation
(Customer) and will be effective as of the date stated below.

In connection with Customer’s provision to Contractor of certain Materials, Proprietary Materials
and Proprietary Information, reference is made to Purchase Agreement No. ___dated as of ___, 20___between The Boeing Company (Boeing) and Customer.

Capitalized terms used herein without definition will have the same meaning as in the Purchase
Agreement.

Boeing has agreed to permit Customer to make certain Materials, Proprietary Materials and
Proprietary Information relating to Customer’s Boeing Model ___aircraft, Manufacturer’s
Serial Number ___, Registration No. ___(the Aircraft) available to Contractor in
connection with Customer’s contract with Contractor (the Contract) to maintain/repair/modify the
Aircraft. As a condition of receiving the Proprietary Materials and Proprietary Information,
Contractor agrees as follows:

	1.	 	For purposes of this Agreement:

“Aircraft Software” means software that is installed and used in the operation of an Aircraft.

“Materials” are defined as any and all items that are created by Boeing or a third party,
which are provided directly or indirectly from Boeing and serve primarily to contain, convey or
embody information. Materials may include either tangible embodiments (for example, documents or
drawings), or intangible embodiments (for example, software and other electronic forms) of
information but excludes Aircraft Software.

“Proprietary Information” means any and all proprietary, confidential and/or trade secret
information owned by Boeing or a Third Party which is contained, conveyed or embodied in
Proprietary Materials.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. VII
	 	 
	 
	 	1	 	 

BOEING PROPRIETARY

 

 

 

SAMPLE

Contractor Confidentiality Agreement

“Proprietary Materials” means Materials that contain, convey, or embody Proprietary
Information.

“Third Party” means anyone other than Boeing, Customer and Contractor.

2. Boeing has authorized Customer to grant to Contractor a worldwide, non-exclusive, personal and
nontransferable license to use Proprietary Materials and Proprietary Information, owned by Boeing,
internally in connection with performance of the Contract or as may otherwise be authorized by
Boeing in writing. Contractor will keep confidential and protect from disclosure to any person,
entity or government agency, including any person or entity affiliated with Contractor, all
Proprietary Materials and Proprietary Information. Individual copies of all Materials are provided
to Contractor subject to copyrights therein, and all such copyrights are retained by Boeing or, in
some cases, by Third Parties. Contractor is authorized to make copies of Materials (except for
Materials bearing the copyright legend of a Third Party) provided, however, Contractor preserves
the restrictive legends and proprietary notices on all copies. All copies of Proprietary Materials
will belong to Boeing and be treated as Proprietary Materials under this Agreement.

3. Contractor specifically agrees not to use Proprietary Materials or Proprietary Information in
connection with the manufacture or sale of any part or design. Unless otherwise agreed with Boeing
in writing, Proprietary Materials and Proprietary Information may be used by Contractor only for
work on the Aircraft for which such Proprietary Materials have been specified by Boeing. Customer
and Contractor recognize and agree that they are responsible for ascertaining and ensuring that all
Materials are appropriate for the use to which they are put.

4. Contractor will not attempt to gain access to information by reverse engineering, decompiling,
or disassembling any portion of any software provided to Contractor pursuant to this Agreement.

5. Upon Boeing’s request at any time, Contractor will promptly return to Boeing (or, at Boeing’s
option, destroy) all Proprietary Materials, together with all copies thereof and will certify to
Boeing that all such Proprietary Materials and copies have been so returned or destroyed.

6. To the extent required by a government regulatory agency having jurisdiction over Contractor,
Customer or the Aircraft, Contractor is authorized to provide Proprietary Materials and disclose
Proprietary Information to the agency for the agency’s use in connection with Contractor’s,
authorized use of such Proprietary Materials and/or Proprietary Information in connection with
Contractor’s maintenance, repair, or modification of the Aircraft. Contractor agrees to take
reasonable steps to prevent such agency from making any distribution or disclosure, or additional
use of the Proprietary Materials and Proprietary Information so provided or disclosed. Contractor
further agrees to promptly notify Boeing upon learning of any (i)
distribution, disclosure, or additional use by such agency, (ii) request to such agency for
distribution, disclosure, or additional use, or (iii) intention on the part of such agency to
distribute, disclose, or make additional use of the Proprietary Materials or Proprietary
Information.

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. VII
	 	 
	 
	 	2	 	 

BOEING PROPRIETARY

 

 

 

SAMPLE

Contractor Confidentiality Agreement

7. Boeing is a third-party beneficiary under this Agreement, and Boeing may enforce any and all of
the provisions of the Agreement directly against Contractor. Contractor hereby submits to the
jurisdiction of the Washington state courts and the United States District Court for the Western
District of Washington with regard to any claims Boeing may make under this Agreement. It is
agreed that Washington law (excluding Washington’s conflict-of-law principles) governs this
Agreement.

8. No disclosure or physical transfer by Boeing or Customer to Contractor, of any Proprietary
Materials or Proprietary Information covered by this Agreement will be construed as granting a
license, other than as expressly set forth in this Agreement or any ownership right in any patent,
patent application, copyright or proprietary information.

9. The provisions of this Agreement will apply notwithstanding any markings or legends, or the
absence thereof, on any Proprietary Materials.

10. This Agreement is the entire agreement of the parties regarding the ownership and treatment of
Proprietary Materials and Proprietary Information, and no modification of this Agreement will be
effective as against Boeing unless in writing signed by authorized representatives of Contractor,
Customer and Boeing.

11. Failure by either party to enforce any of the provisions of this Agreement will not be
construed as a waiver of such provisions. If any of the provision of this Agreement is held
unlawful or otherwise ineffective by a court of competent jurisdiction, the remainder of the
Agreement will remain in full force.

	 	 	 	 	 	 	 
	ACCEPTED AND AGREED TO this	 	 	 	 
	 
	 	 	 	 	 	 
	Date: _____________________, 20___	 	 	 	 
	 
	 	 	 	 	 	 
	Federal Express Corporation	 	Contractor
	 
	 	 	 	 	 	 
	By

	 	 
	 	By
	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Its

	 	 	 	Its	 	 
	 

	 	 
	 	 	 	 

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. VII
	 	 
	 
	 	3	 	 

BOEING PROPRIETARY

 

 

 

SAMPLE

Post-Delivery Sale with Lease to Seller

[Notice from Owner/Seller and subsequent Buyer regarding post-delivery sale and lease back of an
aircraft and transfer of all remaining Purchase Agreement rights.]

________________, 200_

Boeing Commercial Airplanes

P.O. Box 3707

Seattle, Washington 98124-2207

By Courier

1901 Oakesdale Ave. SW

Renton, WA ___

			
	Attention:	 	Vice President - Contracts

Mail Code 21-34

Ladies and Gentlemen:

In connection with ___’s (Seller’s) sale to and lease back from ___
(Buyer) of the aircraft identified below, reference is made to the following documents:

1. Purchase Agreement No. ___dated as of ___, between The Boeing Company
(Boeing) and Seller (the Agreement) under which Seller purchased certain Boeing Model ___
aircraft, including the aircraft bearing Manufacturer’s Serial No.(s) ___(the Aircraft). The
Agreement incorporates by reference the terms of AGTA-___dated ___, ___, between
Seller and Boeing.

2. Aircraft Sale Agreement dated as of ___, between Seller and

___(Buyer).

3. Aircraft Lease Agreement dated as of ___, between Buyer and Seller.

Capitalized terms used herein without definition will have the same meaning as in the Agreement.

Seller confirms for the benefit of Boeing it owns and controls the rights it purports to assign
herein.

Seller has sold the Aircraft, including in that sale the transfer to Buyer of all remaining rights
related to the Aircraft under the Agreement. To accomplish this transfer of rights, as authorized
by the provisions of the Agreement:

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. VIII
	 	 
	 
	 	1	 	 

BOEING PROPRIETARY

 

 

 

(1) Buyer acknowledges it has reviewed the Agreement and agrees that in exercising any rights
under the Agreement or asserting any claims with respect to the Aircraft or other things (
including without limitation, Materials, training and services) delivered or to be delivered, it is
bound by and will comply with all applicable terms, conditions, and limitations of the Agreement
including but not limited to those related to any exclusion or limitation of liabilities or
warranties, indemnity and insurance; and

(2) Buyer authorizes Seller to exercise, to the exclusion of Buyer all rights and powers of
“Customer” with respect to the remaining rights related to the Aircraft under the Agreement. This
authorization will continue until Boeing receives written notice from Buyer to the contrary,
addressed to Vice President — Contracts, Mail Code 21-34, Boeing Commercial Airplanes, P.O. Box
3707, Seattle, Washington 98124-2207 (if by mail) or (425)237-1706 (if by facsimile). Until
Boeing receives this notice, Boeing is entitled to deal exclusively with Seller as “Customer” with
respect to the Aircraft under the Agreement. With respect to the rights, powers, duties and
obligations of “Customer” under the Agreement, all actions taken by Seller or agreements entered
into by Seller during the period prior to Boeing’s receipt of that notice are final and binding on
Buyer. Further, any payments made by Boeing as a result of claims made by Seller prior to receipt
of such notice are to be made to the credit of Seller.

(3) Seller accepts the authorization set forth in paragraph (2) above, acknowledges it has reviewed
the Agreement and agrees that in exercising any rights under the Agreement or asserting any claims
with respect to the Aircraft or other things (including without limitation, Materials, training and
services) delivered or to be delivered, it is bound by and will comply with all applicable terms,
conditions, and limitations of the Agreement including but not limited to those relating to any
exclusion or limitation of liabilities or warranties, indemnity and insurance.

(4) Seller agrees to remain responsible for any payments due Boeing as a result of obligations
relating to the Aircraft incurred by Seller to Boeing prior to the effective date of this letter.

We request that Boeing acknowledge receipt of this letter and confirm the transfer of rights set
forth above by signing the acknowledgment and forwarding one copy of this letter to each of the
undersigned.

Very truly yours,

	 	 	 	 	 	 	 
	Seller	 	Buyer
	 
	 	 	 	 	 	 
	By

	 	 
	 	By
	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Its

	 	 	 	Its	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Dated

	 	 	 	Dated	 	 
	 

	 	 
	 	 	 	 

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. VIII
	 	 
	 
	 	2	 	 

BOEING PROPRIETARY

 

 

 

Receipt of the above letter is acknowledged and the transfers of rights under the Agreement with
respect to the Aircraft described above are confirmed, effective as of the date indicated below.

	 	 	 	 	 	 	 
	The Boeing Company	 	 	 	 
	 
	 	 	 	 	 	 
	By

	 	 
	 	 
	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Its

	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Dated

	 	 	 	 	 	 
	 

	 	 	 	 	 	 

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. VIII
	 	 
	 
	 	3	 	 

BOEING PROPRIETARY

 

 

 

SALE WITH LEASE

[Notice from 1st tier Owner/Seller and subsequent Buyer regarding post-delivery sale
and lease of an aircraft. Remaining PA rights have been assigned to the new owner; the new owner
authorizes a lessee to exercise such rights during the term of a lease. ]

[Date]

Boeing Commercial Airplanes

P.O. Box 3707

Seattle, Washington 98124-2207

			
	Attention:	 	Vice President - Contracts

Mail Code 21-34

Ladies and Gentlemen:

In connection with the sale by ___(Seller) to ___(Purchaser) and
subsequent lease of the aircraft identified below, reference is made to the following documents:

1. Purchase Agreement No. ___dated as of ___, ___, between The Boeing Company (Boeing)
and ___(Seller)(the Agreement) under which Seller purchased certain Boeing Model
___aircraft, including the aircraft bearing Manufacturer’s Serial No(s). ___(the
Aircraft).

2. Aircraft sale agreement dated as of ___, ___, between Seller and
___(Purchaser).

3. Aircraft lease agreement dated as of ___, ___, between ___Purchaser and ___
(Lessee)(Lease).

Capitalized terms used herein without definition will have the same meaning as in the Agreement.

Seller has sold the Aircraft, including in that sale the assignment to Purchaser of all remaining
rights related to the Aircraft under the Agreement. To accomplish this transfer of rights, as
authorized by the provisions of the Agreement:

(1) Seller confirms for the benefit of the Manufacturer it owns and controls the rights it purports
to have assigned.

(2) Purchaser agrees that in exercising any rights under the Agreement or asserting any claims with
respect to the Aircraft or other things (including without limitation, [data and
documents/Materials], training and services) delivered or to be delivered, it is bound by and will
comply with all applicable terms, conditions, and limitations of the Agreement including but not
limited to those related to any exclusion or limitation of liabilities or warranties, indemnity and
insurance; and

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. IX
	 	 
	 
	 	1	 	 

 

 

 

(2) Seller will remain responsible for any payment due Boeing as a result of obligations relating
to the Aircraft incurred by Seller to Boeing prior to the effective date of this letter.

(3) Purchaser authorizes Lessee during the term of the Lease to exercise, to the exclusion of
Purchaser all rights and powers of [“Buyer"/ “Customer"] with respect to the remaining rights
related to the Aircraft under the Agreement . This authorization will continue until Boeing
receives written notice from Purchaser to the contrary, addressed to Vice President — Contracts,
Mail Code 21-34, Boeing Commercial Airplanes, P.O. Box 3707, Seattle, Washington 98124-2207 (if by
mail) or (425)237-1706 (if by facsimile). Until Boeing receives this notice, Boeing is entitled to
deal exclusively with Lessee as [“Buyer"/ “Customer"] with respect to the Aircraft under the
Agreement. With respect to the rights, powers, duties and obligations of [“Buyer"/“Customer"]
under the Agreement, all actions taken by Lessee or agreements entered into by Lessee during the
period prior to Boeing’s receipt of that notice are final and binding on Purchaser. Further, any
payments made by Boeing as a result of claims made by Lessee prior to receipt of this notice are to
be made to the credit of Lessee.

(4) Lessee accepts the authorization set forth in paragraph (3) above, acknowledges it has reviewed
the Agreement and agrees that in exercising any rights under the Agreement or asserting any claims
with respect to the Aircraft or other things (including without limitation, [data and
documents/Materials], training and services) delivered or to be delivered, it is bound by and will
comply with all applicable terms, conditions, and limitations of the Agreement including but not
limited to those related to any exclusion or limitation of liabilities or warranties, indemnity and
insurance.

We request that Boeing acknowledge receipt of this letter and confirm the transfer of rights set
forth above by signing the acknowledgment and forwarding one copy of this letter to each of the
undersigned.

	 	 	 	 	 	 	 
	Very truly yours,	 	 	 	 
	 
	 	 	 	 	 	 
	____________________________________(Seller)	 	_______________________________________(Purchaser)
	 
	 	 	 	 	 	 
	By

	 	 	 	By	 	 
	 

	 	 

	 	 	 	 

	 
	 	 	 	 	 	 
	Its

	 	 	 	Its	 	 
	 

	 	 

	 	 	 	 

	 

	 	 

	 	 	 	 

	 
	 	 	 	 	 	 
	Dated

	 	 	 	Dated	 	 
	 

	 	 

	 	 	 	 

	 
	 	 	 	 	 	 
	 
	 	 	(Lessee)	 	 	 
	 
	 	 	 	 	 	 
	By
	 	 	 	 	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Its

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Dated
	 	 	 	 	 	 
	 

	 	 
	 	 	 	 

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. IX
	 	 
	 
	 	2	 	 

BOEING PROPRIETARY

 

 

 

Receipt of the above letter is acknowledged and the transfers of rights under the Agreement with
respect to the Aircraft described above are confirmed, effective as of the date indicated below.

	 	 	 	 	 	 	 
	The Boeing Company	 	 	 	 
	 
	 	 	 	 	 	 
	By

	 	 
	 	 
	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Its   Attorney-in-Fact	 	 
	 
	 	 	 	 	 	 
	Date

	 	 
	 	 
	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	MSN

	 	 	 	 	 	 
	 

	 	 	 	 	 	 

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. IX
	 	 
	 
	 	3	 	 

 

 

 

SAMPLE

Post-Delivery Security

_____________, 200_

Boeing Commercial Airplanes

P.O. Box 3707

Seattle, Washington 98124-2207

U.S.A.

By Courier

1901 Oakesdale Ave. SW

Renton, WA 98055

U.S.A.

			
	Attention:	 	Vice President - Contracts

Mail Code 21-34

Ladies and Gentlemen:

Reference is made to Purchase Agreement No. ___dated as of ___, (the
“Agreement”) between The Boeing Company (“Boeing”) and ___(“Borrower”)
pursuant to which Borrower purchased from Boeing one (1) Boeing model ___aircraft bearing
Manufacturer’s Serial Number ___(the “Aircraft”). The Agreement incorporates by reference the
terms of Aircraft General Terms Agreement AGTA — ___, dated ___, ___, between Borrower
and Boeing.

Capitalized terms used herein without definition will have the same meanings as in the
Agreement.

Borrower confirms for the benefit of Boeing it owns and controls the rights it purports to assign
herein.

In connection with Borrower’s financing of the Aircraft, Borrower is entering into a [trust
indenture/ mortgage], dated as of ___, 2003, between Borrower and [Indenture
Trustee/Mortgagee] [(the Trust Indenture/Mortgage)], which grants a security interest in [the
warranty rights/ all of its rights] contained in the Agreement related to the Aircraft (Assigned
Rights). Borrower is authorized to exercise the Assigned Rights until such time as the [Indenture
Trustee/ Mortgagee] notifies Boeing as provided below that an Event of Default under the [Trust
Indenture/ Mortgage] has occurred and is continuing. In connection with this assignment for
security purposes, as authorized by the provisions of the Agreement:

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. X
	 	 
	 
	 	1	 	 

 

 

 

1. [Indenture Trustee/Mortgagee], as assignee of, and holder of a security interest in, the
estate, right, and interest of the Borrower in and to the Agreement pursuant to the terms of a
certain [Trust Indenture/Mortgage], acknowledges that it has received copies of the applicable
provisions of the Agreement and agrees that in exercising any rights under the Agreement or
asserting any claims with respect to the Aircraft or other things (including without limitation,
Materials, training and services) delivered or to be delivered, its rights and remedies under the
[Trust Indenture/Mortgage] shall be subject to the terms and conditions of the Agreement including
but not limited to those related to any exclusion or limitation of liabilities or warranties,
indemnity and insurance.

2. Borrower is authorized to exercise, to the exclusion of [Indenture Trustee/Mortgagee] all rights
and powers of “Customer” under the Agreement, unless and until Boeing receives a written notice
from [Indenture Trustee/Mortgagee], addressed to its Vice President — Contracts, Boeing Commercial
Airplanes at P.O. Box 3707, Seattle, Washington 98124, Mail Code 21-34 (if by mail), or
(425)237-1706 (if by facsimile) that an event of default under the [Trust Indenture/Mortgage] has
occurred and is continuing. Until such notice has been given, Boeing will be entitled to deal
solely and exclusively with Borrower. Thereafter, until [Indenture Trustee/Mortgagee] has provided
Boeing written notice that any such event no longer continues, Boeing will be entitled to deal
solely and exclusively with [Indenture Trustee/Mortgagee]. Boeing may act with acquittance and
conclusively rely on any such notice.

Borrower will remain responsible to Boeing for any amounts due Boeing with respect to the Aircraft
under the Agreement prior to Boeing’s receipt of such notice. We request that Boeing acknowledge
receipt of this letter and confirm the transfer of rights set forth above by signing its
acknowledgment and forwarding one copy of this letter to each of the undersigned.

	 	 	 	 	 	 	 
	Very truly yours,	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 
	 	 	 
	 	 	 	 	Indenture Trustee / Mortgagee
	 
	 	 	 	 	 	 
	By:

	 	 
	 	By:
	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Its:

	 	 	 	Its:	 	 
	 
	 	 	 	 	 	 
	Receipt of the above letter is acknowledged and the transfer of rights under the Agreement with
respect to the Aircraft described above is confirmed, effective as of the date indicated below.
	 
	 	 	 	 	 	 
	THE BOEING COMPANY	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Its:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	MSN
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

					
	 	 	 	 	 
	 	 	 	 	 
	AGTA-FED
	 	App. X
	 	 
	 
	 	2

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