Document:

Exhibit 4.6

 

  

General

Terms

Agreement

No. CFM-1-2377460475

PROPRIETARY INFORMATION NOTICE   The information contained in this document is CFM Proprietary Information and is disclosed in confidence. It is the property of CFM and shall not be used, disclosed to others, or reproduced without the express written consent of CFM. If consent is given for reproduction in whole or in part, this notice and the notice set forth on each page of this document shall appear on any such reproduction. Export control laws may also control the information contained in this document. Unauthorized export or re-export is prohibited.

  

 

  

GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

   

Table of Contents

	
·

	
Agreement

	  	
ARTICLE I

	
-

	
PRODUCTS

	  	
ARTICLE II

	
-

	
PRICES

	  	
ARTICLE III

	
-

	
ORDER PLACEMENT

	  	
ARTICLE IV

	
-

	
DELIVERY

	  	
ARTICLE V

	
-

	
PAYMENT

	  	
ARTICLE VI

	
-

	
TAXES

	  	
ARTICLE VII

	
-

	
CFM56 PRODUCT SUPPORT PLAN

	  	
ARTICLE VIII

	
-

	
EXCUSABLE DELAY

	  	
ARTICLE IX

	
-

	
PATENTS

	  	
ARTICLE X

	
-

	
INFORMATION AND DATA

	  	
ARTICLE XI

	
-

	
FAA AND EASA CERTIFICATION REQUIREMENTS

	  	
ARTICLE XII

	
-

	
TERMINATION FOR INSOLVENCY

	  	
ARTICLE XIII

	
-

	
LIMITATION OF LIABILITY

	  	
ARTICLE XIV

	
-

	
EXPORT SHIPMENT

	  	
ARTICLE XV

	
-

	
WAIVER OF IMMUNITY

	  	
ARTICLE XVI

	
-

	
GOVERNMENTAL AUTHORIZATION

	  	
ARTICLE XVII

	
-

	
NOTICES

	  	
ARTICLE XVIII

	
-

	
MISCELLANEOUS

	  	  	  
	
·

	
Exhibit A – Products

	  	  
	
·

	
Exhibit B – CFM56 Product Support Plan

	  	  	  
	  	
SECTION I

	
-

	
DEFINITIONS

	  	
SECTION II

	
-

	
WARRANTIES

	  	
SECTION III

	
-

	
SPARE PARTS PROVISIONING

	  	
SECTION IV

	
-

	
TECHNICAL DATA

	  	
SECTION V

	
-

	
TECHNICAL TRAINING

	  	
SECTION VI

	
-

	
CUSTOMER FACTORY AND FIELD SUPPORT

	  	
SECTION VII

	
-

	
PRODUCT SUPPORT ENGINEERING

	  	
SECTION VIII

	
-

	
OPERATIONS ENGINEERING

	  	
SECTION IX

	
-

	
GROUND SUPPORT EQUIPMENT

	  	
SECTION X

	
-

	
GENERAL CONDITIONS – CFM56 PRODUCT SUPPORT PLAN

	  	  	  
	
·

	
Exhibit C - Payment

	  	  	  
	
·

	
Exhibit D – Technical Data

  

  

CFM PROPRIETARY INFORMATION

(subject to restrictions on cover page)

  

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

    

THIS GENERAL TERMS AGREEMENT NO. CFM-1-2377460475 (hereinafter referred to as this "Agreement"), dated as of the 17th day of December, 2010, by and between CFM International, Inc. (hereinafter referred to as "CFM'), a Delaware corporation jointly owned by General Electric Company (hereinafter referred to as "GE"), a New York corporation and Societe Nationale D'Etude et de Construction de Moteurs d'Aviation (hereinafter referred to as "SNECMA"), a French Company, and LAN Airlines S.A. a corporation organized under the laws of Chile (hereinafter referred to as "Airline").

WITNESSETH

WHEREAS, Airline has acquired certain aircraft equipped with CFM56-5B installed engines, and

WHEREAS, the parties hereto desire to enter into this Agreement for the sale and support by CFM and the purchase by Airline from CFM of spare engines, related equipment and spare parts therefore.

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

ARTICLE I - PRODUCTS

CFM shall sell and Airline shall purchase, under the terms and subject to the conditions hereinafter set forth, the equipment identified in the attached Exhibit A, and hereinafter referred to as “Products”.

ARTICLE II - PRICES

	
A.

	
The selling prices of Products, including spare Parts, shall be the prices as quoted by CFM and as set forth in each Airline purchase order accepted by CFM, as evidenced by CFM acknowledgement. The selling prices of Engines and related equipment therefore shall be quoted by CFM as base prices subject to an adjustment for escalation. The appropriate escalation provisions will be set forth in each applicable letter agreement to this Agreement and CFM will advise Airline in writing [***] in advance of any change thereto.

	
B.

	
The selling price of spare Parts, except for those which may be quoted by CFM to Airline and which shall be the same then current standard CFM pricing quoted for similar sized orders to other airlines in similar circumstances, shall be those prices set forth in CFM's then current CFM56 Engine spare Parts price catalog ("Spare Parts Catalog") or in Procurement Data issued by CFM in accordance with Airline Transport Association of America (ATA) Specification (Spec) 200. The price of a new spare Part which is first listed by CFM in Procurement Data, may be changed by CFM in subsequent Procurement Data revisions until such time as the Part is included in CFM's Spare Parts Catalog as from time to time revised by CFM.

	
C.

	
CFM will advise Airline in writing [***] in advance of any changes in prices affecting the prices in CFM's Spare Parts Catalog. During such [***] period, CFM shall not be obligated to accept Airline purchase orders for quantities of spare Parts in excess of [***] normal usage beyond the effective date of the announced price change.

	
D.

	
The selling prices of all Products shall be expressed in U.S. Dollars.

ARTICLE III - ORDER PLACEMENT

	
A.

	
This Agreement shall constitute the terms and conditions applicable to all purchase orders which may hereafter be placed by Airline and accepted by CFM for Products in lieu of all printed terms and conditions appearing on Airline's purchase orders, except that the description of Products, price, quantity, delivery dates and shipping instructions shall be as set forth on each purchase order accepted by CFM.

  

  

CFM PROPRIETARY INFORMATION

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

	
B.

	
Airline shall place purchase orders for Products quoted by CFM, in accordance with CFM's quotation for said Products.

	
C.

	
Airline may place purchase orders for spare Parts using various electronic methods or Airline purchase order as prescribed in Spare Parts Catalog or CFM's quotation or any other method agreed to by Airline and CFM.

	
D.

	
Airline shall place purchase orders for initial provisioning quantities of spare Parts as provided in the attached Exhibit B within one [***] or as otherwise mutually agreed following receipt from CFM of Initial Provisioning Data relating thereto.

	
E.

	
CFM's acknowledgment of each purchase order shall constitute acceptance thereof.

ARTICLE IV - DELIVERY

	
A.

	
Except as otherwise provided under Section III.G. of Exhibit B herein, CFM shall deliver Products under each purchase order placed by Airline and accepted by CFM, on a schedule consistent with CFM's lead times or as otherwise mutually agreed and as set forth in each such purchase order. Delivery dates are subject to (1) prompt receipt by CFM of all information necessary to permit CFM to proceed with work immediately and without interruption, and (2) Airline's compliance with the payment terms set forth herein.

	
B.

	
[***]

	
C.

	
If any Product cannot be delivered when ready due to any cause within the control of Airline, CFM may make delivery by placing such Product in storage. In such event, (1) all expenses incurred by CFM for activities such as, but not limited to, preparation for and placement into storage and handling, storage, inspection, preservation and insurance shall be paid by Airline upon presentation of CFM's invoices, and (2) CFM shall assist and cooperate with Airline in any reasonable manner with respect to the removal of any such Product from storage. In all other cases, such expenses shall be borne by CFM.

	
D.

	
Unless otherwise instructed by Airline, CFM shall deliver each Product, except for spare Parts, packaged in accordance with CFM's normal standards for domestic shipment or export shipment. Any special boxing or preparation for shipment specified by Airline shall be for Airline's account and responsibility. The cost of any re-usable shipping stand or container is not included in the price of engines or of equipment and will be paid by Airline if the shipping stand is not returned by Airline, Ex Works the original point of shipment, in re-usable condition within [***] after shipment. CFM may, at its option, use non-reusable shipping stands or containers at no charge to Airline.

	
E.

	
CFM shall deliver spare Parts packaged and labeled in accordance with ATA Spec 300, Revision No. 4, or to a revision mutually agreed in writing between CFM and Airline. CFM shall notify Airline, when applicable, that certain spare Parts are packed in unit package quantities (UPQ's), or multiples thereof.

ARTICLE V - PAYMENT

Airline shall pay CFM with respect to Products purchased hereunder as set forth in the attached Exhibit C.

ARTICLE VI - TAXES

	
A.

	
The selling prices include and CFM shall be responsible for the payment of any imposts, duties, fees, taxes, dues or any charges whatsoever imposed or levied in connection with Products prior to their delivery.

  

  

CFM PROPRIETARY INFORMATION

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

  

	
B.

	
Upon delivery, Airline shall be responsible for the payment of all other imposts, duties, taxes, dues whatsoever imposed or levied in connection with such Products and Airline shall pay to CFM, upon demand, or furnish to CFM evidence of exemption there from, any taxes (including without limitation, sales, use, excise, turnover or value added tax) duties, fees, charges or assessments of any nature (but excluding any taxes in the nature of income taxes), legally assessed or levied by any governmental authority against CFM or its employees, its subsidiaries or their employees as a result of any sale, delivery, transfer, use, export, import or possession of such Product, or otherwise in connection with this Agreement ("Taxes"). If claim is made against CFM for any such duties, fees, charges, or assessments, CFM shall immediately notify Airline and, if requested by Airline, CFM shall not pay except under protest, and if payment be made, shall use all reasonable effort to obtain a refund thereof. If all or any part of any such taxes, duties, fees, charges or assessments be refunded, CFM shall repay to Airline such part thereof as Airline shall have paid. Airline shall pay to CFM, upon demand, all expenses (including penalties and interest) incurred by CFM in protesting payment and in endeavoring to obtain such refund. CFM will work with Airline to reduce or eliminate taxes if legally possible.

ARTICLE VII - CFM56 PRODUCT SUPPORT PLAN

The CFM56 Product Support Plan for Airline's operation of Products purchased by Airline from CFM or Engines installed on Airline's aircraft as original equipment, is set forth in the attached Exhibit B.

ARTICLE VIII - EXCUSABLE DELAY

CFM shall not be liable for delays in delivery or failure to perform due to (1) causes beyond its reasonable control, or [***].  As used herein, the term "CFM" shall be deemed to mean CFM, GE and SNECMA. In the event of any such delay, the date of delivery shall be extended for a period equal to the time lost by reason of the delay. This provision shall not, however, relieve CFM from using reasonable efforts to continue performance during the Excusable Delay period and from resuming performance as soon as reasonably practicable whenever such causes are removed. CFM shall promptly notify Airline when such delays occur or impending delays are likely to occur and shall continue to advise it of new shipping schedules and/or changes thereto.  In the event an excusable delay continues for a period of six months or more beyond the scheduled delivery date, Airline or CFM may, upon thirty days written notice to the other, cancel the part of any purchase order so delayed and CFM shall return to Airline all payments relative to the canceled part of the order and Airline shall, if the delay was caused by Airline, pay CFM its reasonable cancellation charges. In the event of a strike by the CFM workforce which causes a delay, any applicable escalation which was to be applied to Airline's payments in respect of such strike period shall be suspended for the period of the strike.

ARTICLE IX - PATENTS

	
A.

	
CFM shall handle all claims and defend any suit or proceeding brought against Airline insofar as based on a claim that without further combination, any Product furnished under this Agreement constitutes an infringement of any patent of the United States, France or of any patent of any other country that is signatory to the Convention on International Civil Aviation signed by the United States at Chicago on December 7, 1944, in which Airline is authorized to operate or in which another airline pursuant to lawful interchange, lease or similar arrangement, operates aircraft of Airline. This paragraph shall apply only to any Product manufactured to CFM's design.

	
B.

	
CFM's liability hereunder is conditioned upon Airline promptly notifying CFM in writing and giving CFM authority, information and assistance (at CFM's expense) for the defense of any suit or proceeding. In case such Product is held in such suit or proceeding to constitute infringement and the use of said Product is enjoined, CFM shall expeditiously, at its own expense and at its option, either (1) procure for Airline the right to continue using said Product; (2) replace same with satisfactory and non-infringing Product; or (3) modify same so it becomes satisfactory and non-infringing. CFM shall not be responsible to Airline or to said other airline, for incidental or consequential damages, including, but not limited to, costs, expenses, liabilities and/or loss of profits resulting from loss of use under this Article IX. CFM will reimburse Airline for damages assessed against Airline in a suit or proceeding based on a claim of patents infringement. CFM shall also take whatever reasonable steps are necessary to remove any injunction issued which prevents the usage of Products by Airline.

  

  

CFM PROPRIETARY INFORMATION

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

	
C.

	
The foregoing shall constitute the sole remedy of Airline and the sole liability of CFM for patent infringement.

ARTICLE X - INFORMATION AND DATA

	
A.

	
All information and data (including, but not limited to, designs, drawings, blueprints, tracings, plans, models, layouts, specifications, and memoranda) which may be furnished or made available to Airline directly or indirectly as the result of this Agreement shall remain the property of CFM, GE or SNECMA as the case may be. This information and data is proprietary to CFM and shall neither be used by Airline nor furnished by Airline to any other person, firm or corporation for the design or manufacture of any Product nor permitted out of Airline's possession nor divulged to any other person, firm or corporation, except as stated below, or otherwise agreed in writing. Subject to the conditions set forth in the preceding sentence, manuals furnished to Airline by CFM under this Agreement shall be the property of Airline. The above restriction shall not apply: (1) if the information contained in the Agreement or the information and data is rightfully received by Airline from a third party without any obligation of confidentiality being imposed upon such third party; (2) if this Agreement or any portion thereof or the information and data is (a) in the public domain at the time other than by breach of this Article X; (b) approved for release in writing by CFM; (c) required to be disclosed by Airline to any lending or financial institution or leasing company or other participant (collectively the "Financing Party") in any equipment trust, conditional sale, lease, security agreement, chattel mortgage or other arrangement for the financing or use of the Aircraft or Engines by Airline provided however that the Financing Party first agrees in writing to maintain the confidentiality of this Agreement and/or information and data on the same or similar terms and conditions as set forth herein; or (d) required to be disclosed in the normal course of Airline's business to Airline's attorneys, accountants, insurance brokers and advisors, financial advisors, auditors, rating agencies and underwrites (and underwriters' counsel) on a need-to-know basis provided, however, that such persons first agree in writing to maintain the confidentiality of this Agreement and/or information and data on the same conditions as set forth herein; (3) if this Agreement or any portion thereof or the information and data is required to be released pursuant to any applicable law, regulation, or legal process; provided however, (a) Airline receiving the legal process or subject to the regulation shall take all reasonable steps to preserve the confidentiality of the Agreement and/or information and data and to ensure that the Agreement and/or information and data will be treated confidentially, including without limitation if possible requesting that the Agreement and information and data not be released to the public; (b) Airline gives CFM prompt notice of the legal process or regulation so that CFM may seek an appropriate protective order or pursue such other legal action as is necessary in the opinion of CFM to preserve the confidentiality of the Agreement and information and data and (c) Airline provides reasonable assistance to and cooperates with CFM in its efforts to preserve the confidential nature of the Agreement and/or information and data. Nothing in this Agreement shall preclude Airline from using such information and data for the modification, overhaul, or maintenance work performed by Airline on Airline's Products; except that all repairs or repair processes that require substantiation (including, but not limited to, high technology repairs) will be the subject of a separate license and substantiated repair agreement between CFM and Airline. Airline shall take all steps necessary to ensure compliance by its employees, and agents with this Article X. Airline may provide the Engine Maintenance Manual to a party providing line maintenance for Airline provided such party agrees to return the manual to Airline and agrees in writing to protect such Manual as CFM proprietary information, agrees to preserve the confidentiality of the information and data, and agrees not to copy or otherwise provide the Manual to any third party. Airline shall request that the line maintenance provider enter into an agreement with CFM for the supply of the required data.

  

  

CFM PROPRIETARY INFORMATION

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

	
B.

	
In the event Airline transfers or leases any Product provided by CFM hereunder, the instrument by which Airline transfers any such Product may permit the use of the information and data by its transferee, subject to the same limitations set forth in paragraph A above, and shall preserve to CFM the right to enforce such limitations.

	
C.

	
Nothing in this Agreement shall convey to Airline the right to reproduce or cause the reproduction of any Product of a design identical or similar to that of the Product purchased hereunder or give to Airline a license under any patents or rights owned or controlled by CFM, GE or SNECMA.

	
D.

	
If computer software is provided by CFM to Airline under this Agreement, it is understood that only CFM owns and/or has the right to license such software product(s) and that Airline shall have no rights in such software; except, as may be explicitly set forth in a separate  written agreement between CFM and Airline.

CFM shall also handle all claims and defend any suit or proceeding against Airline insofar as such claims, suits or proceedings result from any infringement or alleged infringement by CFM of any copyright in respect of any computer software provided to Airline by CFM as part of or in connection with any Product furnished under this Agreement, provided that CFM's obligations in this regard shall be limited to infringements or alleged infringements in any country which at the time of such infringement or alleged infringement is a member of the Berne Union and recognizes computer software as a "work" under the Berne Convention.

ARTICLE XI - FAA AND EASA CERTIFICATION REQUIREMENTS

	
A.

	
All Products, when required by the U.S. and/or foreign Governments, shall, at time of delivery:

	
  

	
1.

	
Conform to a Type Certificate issued by the FAA and EASA; (CFM will assist Airline in obtaining a Type Certificate from the Chilean DGAC) at no cost to Airline.

	
  

	
2.

	
Conform to applicable regulations issued by the FAA and EASA at the time of delivery of such Products.

	
B.

	
However, if, subsequent to the date of acceptance of the purchase order for such Products but prior to their delivery by CFM to Airline, the FAA and/or EASA issue changes in regulations covering Products sold under this Agreement and such changes in regulations are promulgated after the date of Airline purchase orders for such Products and such changes were not reasonably foreseeable by CFM and/or were not caused by defects in the Product, then all costs associated with any Product modifications necessitated thereby will be shared equally by CFM and Airline; provided however, that costs associated with any modifications to the airframe required by such Product modifications shall not be borne by CFM.

	
C.

	
Any delay occasioned by complying with such regulations set forth in Paragraph B above shall be deemed an Excusable Delay under Article VIII hereof, and, in addition, appropriate adjustments shall be made in the specifications to reflect the effect of compliance with such regulations. In the event of such delay, any applicable escalation which was to be applied to Airline's payments in respect of such delay, shall be suspended for the period of such delay.

  

  

CFM PROPRIETARY INFORMATION

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

 

ARTICLE XII - TERMINATION FOR INSOLVENCY

	
A.

	
Upon the commencement of any bankruptcy or reorganization proceeding by or against either party hereto (the "Defaulting Party"), the other party hereto may, upon written notice to the Defaulting Party, cease to perform any and all of its obligations under this Agreement and the purchase orders hereunder (including, without limitation, continuing work in progress and making deliveries or progress payments or down payments) unless the Defaulting Party shall provide adequate assurance, in the reasonable opinion of the other party hereto, that the Defaulting Party will continue to perform all of its obligations under this Agreement and the purchase orders hereunder in accordance with the terms hereof, and will promptly compensate the other party hereto for any actual pecuniary loss resulting from the Defaulting Party being unable to perform in full its obligations hereunder and under the purchase orders. If the Defaulting Party or the trustee thereof shall fail to promptly provide such adequate assurance, upon notice to the Defaulting Party by the other party hereto, this Agreement and all purchase orders hereunder shall be canceled without prejudice to any and all antecedent rights and obligations.

	
B.

	
Either party, at its option, may cancel this Agreement or any purchase order hereunder with respect to any or all of the Products to be furnished hereunder which are undelivered or not furnished on the effective date of such cancellation by giving the other party written notice, as hereinafter provided, at any time after a receiver of the other's assets is appointed on account of insolvency, or the other makes a general assignment for the benefit of its creditors and such appointment of a receiver shall remain in force undismissed, unvacated or unstayed for a period of sixty days thereafter. Such notice of cancellation shall be given thirty days prior to the effective date of cancellation, except that, in the case of a voluntary general assignment for the benefit of creditors, such notice need not precede the effective date of cancellation. Any such cancellation shall take effect without prejudice to any and all antecedent rights and obligations.

ARTICLE XIII - LIMITATION OF LIABILITY

The liability of CFM to Airline arising out of, connected with, or resulting from the manufacture, sale, possession, use or handling of any Product and Engines installed on Airline's aircraft as original equipment whether in contract, tort (including negligence but excluding gross negligence and willful misconduct) or otherwise, shall be as set forth in this Agreement and the Product Support Plan included in Exhibit B hereof, and shall not in any event exceed [***]. The liability of CFM to Airline for a delay in delivering Products which is not considered an Excusable Delay shall be governed by the Uniform Commercial Code of New York. The foregoing shall constitute the sole remedy of Airline and the sole liability of CFM. In no event shall CFM be liable for special or consequential damages. As used herein, the term "CFM" shall be deemed to include GE, SNECMA and CFM. THE WARRANTIES AND GUARANTEES SET FORTH IN THE PRODUCT SUPPORT PLAN ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES AND GUARANTEES WHETHER WRITTEN, STATUTORY, ORAL, OR IMPLIED (INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR PURPOSE).

ARTICLE XIV - EXPORT SHIPMENT

CFM agrees upon Airline's written request, to assist Airline to arrange for export shipment of Products, Airline shall pay CFM for all fees and expenses including, but not limited to, those covering preparation of consular invoices, freight, storage, and Warehouse to Warehouse (including war risk) insurance, within thirty (30) days of receipt of CFM's invoices. In such event, CFM will assist Airline in applying for any required Export License and in preparing consular documents according to. Airline's instructions or in the absence thereof, according to its best judgment but without liability for error or incorrect declarations including, but not limited to, liability for fines or other charges but excepting errors due to CFM's gross negligence.

  

  

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

ARTICLE XV - WAIVER OF IMMUNITY

To the extent that Airline or any of its property is or becomes entitled at any time to any immunity on the grounds of sovereignty or otherwise from any legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any competent court, from service of process, from attachment prior to judgment, from attachment in aid of execution, or from execution prior to judgment, or other legal process in any jurisdiction, Airline for itself and its property does hereby irrevocably and unconditionally waive, and agree not to plead or claim, any such immunity with respect to its obligations, liabilities or any other matter under or arising out of or in connection with this Agreement or the subject matter hereof. Such agreement shall be irrevocable and not subject to withdrawal in any and all jurisdictions including, without limitation, under the Foreign Sovereign Immunities Act of 1976 of the United States of America.

ARTICLE XVI - GOVERNMENTAL AUTHORIZATION

Airline shall be responsible for obtaining any required authorization such as an Export License, Import License, Exchange Permit or any other required governmental authorization. Airline shall restrict disclosure of all information and data furnished in connection with such authorization and shall ship the subject matter of the authorization only those destinations which are authorized by the U.S. and/or French Governments. At the request of Airline, CFM will provide Airline with a list of such authorized destinations. CFM shall not be liable if any authorization is delayed, denied, revoked, restricted or not renewed and Airline shall not be relieved of its obligation to pay CFM. It is understood that the Airline is not responsible for obtaining FAA or EASA certification of Products sold by CFM.

ARTICLE XVII - NOTICES

Any acknowledgements by CFM or notices by either party under this Agreement shall become effective upon receipt and shall be in writing and be delivered or sent by personal service, mail or fax to the respective parties at the following addresses, which may be changed by written notice:

	
To: LAN AIRLINES S.A.

	
To:

	
CFM International, Inc.

	
 Av. Presidente Riesco 5711, 20th Floor,

	  	
One Neumann Way, Room 450

	
Las Condes

	  	
Cincinnati, Ohio 45215-1988

	
Santiago, Chile

	  	  
	
[***]

	  	  
	
Attention:

	
Attention:

	
[***]

	  	  

 

ARTICLE XVIII - MISCELLANEOUS

 

	
A.

	
This Agreement may not be assigned, in whole or in part, by either party without the prior written consent of the other party, except that Airline's consent shall not be required for the substitution of any other company jointly owned by GE and SNECMA in place of CFM as the contracting party (at no cost to Airline and without changing the rights and duties of Airline herein) and the recipient of any or all payments and/or for the assignment of CFM's payment rights to CFM's suppliers. [***]

 

	
B.

	
The rights herein granted and this Agreement are for the benefit of the parties hereto and are not for the benefit of any third person, firm or corporation, except as expressly provided herein with respect to GE and SNECMA, and nothing herein contained shall be construed to create any rights in any third parties under, as the result of, or in connection with this Agreement. However, CFM and Airline recognize that Aircraft covered under this Agreement may be operated by an affiliated airline of Airline. In such an event, CFM, Airline and the affiliated airline shall enter into an appropriate agency agreement.

  

  

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

     

	
C.

	
This Agreement contains information specifically for Airline and CFM and nothing herein contained shall be divulged by Airline or CFM to any third person, firm or corporation, without the prior written consent of the other party which consent shall not be unreasonably withheld; except that Airline may disclose this Agreement to professional advisors, auditors and insurers, provided such professional advisors and insurers agree in writing not to disclose the Agreement to third parties.

 

	
D.

	
This Agreement shall be construed, interpreted and applied in accordance with the law of the State of New York without reference to its conflict of laws principles. Both parties agree to waive a trial by jury. The Vienna Convention on Contracts for the International Sale of Goods shall not apply to this Agreement.

 

	
E.

	
This Agreement and all Letter Agreements relating hereto contain the entire and only agreement between the parties, and it supersedes all pre-existing agreements between such parties, respecting the subject matter hereof; and any representation, promise or condition in connection therewith not incorporated herein shall not be binding upon either party. No modification, renewal, extension, waiver, or termination of this Agreement or any of the provisions herein contained shall be binding upon the party against whom enforcement of such modification, renewal, extension, waiver or termination (except as provided in Article XII hereof) is sought, unless it is made in writing and signed on behalf of CFM and Airline by duly authorized executives.

 

	
F.

	
This Agreement shall remain in full force and effect until (1) Airline ceases to operate [***] powered by Products set forth herein, (2) [***] aircraft powered by such Products are in commercial airline service, (3) this Agreement is terminated in whole or in part under either the provisions of Excusable Delay or Termination for Insolvency herein, or (4) by mutual consent of the parties, whichever occurs first.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and the year first above written.

	
LAN AIRLINES S.A.

	
CFM INTERNATIONAL, INC.

	  	  	  
	 
By:

	
 

	  	  	 
By:

	
 

	  	  
	  	  	  	  	  	  
	
Typed Name:

	  	  	
Typed Name:

	  	  
	  	  	  	  	  	  
	 
Title:

	
 

	  	  	 
Title:

	
 

	  	  
	  	  	  	  	  	  
	 
Date:

	
 

	  	  	 
Date:

	
 

	  	  

  

  

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

     

EXHIBIT A

 

CFM56 SERIES PRODUCTS APPLICABLE TO

AIRLINE'S A320 FAMILY AIRCRAFT

[***]

  

  

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

EXHIBIT B

 

CFM56 PRODUCT SUPPORT PLAN

 

SECTION I - DEFINITIONS

 

These definitions shall apply for all purposes of this Agreement unless the context otherwise requires.

 

	
1.

	
"Aircraft" means the aircraft on which the CFM Engine listed in the applicable letter agreement to this Agreement is (are) installed.

 

	
2.

	
"Agreement" means the General Terms Agreement between CFM and Airline to which this Exhibit B is attached.

 

	
3.

	
"Engine" means the Engine(s) described in the applicable letter agreement(s) to this Agreement.

 

	
4.

	
"Expendable Parts" means those parts which must routinely be replaced during Inspection, repair, or maintenance, whether or not such parts have been damaged, and other Parts which are customarily replaced at each such Inspection and maintenance period such as filter inserts and other short-lived items which are not dependent on wear out but replaced at predetermined intervals.

 

	
5.

	
"Failed Parts" means those Parts and Expendable Parts suffering a Failure or mutually determined to have caused the Engine to be unserviceable and incapable of continued operation without requiring corrective action and shall include any Part or Expendable Part with a defect in material or workmanship discovered prior to the initial use of a Part or Expendable Part.

 

	
6.

	
[***]

 

	
7.

	
"Flight Cycle" means the complete running of an Engine from start through any condition of flight and ending at Engine shutdown. A "touch and go landing" used during pilot training shall be considered as a "Flight Cycle."

 

	
8.

	
"Flight Hours" means the cumulative number of airborne hours in operation of each Engine computed from the time an aircraft leaves the ground until it touches the ground at the end of a flight.

 

	
9.

	
[***]

 

	
10.

	
"Inspection" means the observation of an Engine or Parts thereof, through disassembly or other means, for the purpose of determining serviceability.

  

  

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

   

	
11.

	
"Labor Allowance" means a CFM credit calculated by multiplying the established labor rate by man-hours for disassembly, reassembly (when applicable), and for Parts repair. If aLabor Allowance is granted for a repair, it shall not exceed the credit which would have been quoted if the Part had not been repairable. The established labor rate means either (a) the labor rate of [***] (which has been agreed between CFM and Airline) if the work has been performed by Airline or, if Airline elects to establish a new labor rate and CFM does not consent to such increase (such consent not to be unreasonably withheld), the labor rate shall be the rate normally quoted by CFM for such disassembly, reassembly and parts repair or (b) the then current labor rate agreed between CFM and the CFM authorized repair and overhaul shop if the work has been performed by such repair and overhaul shop.

 

	
12.

	
"Module" means the Engine Modules described in Exhibit A.

 

	
13.

	
"Part" means only those new Engine and Engine Module parts which have been sold originally to Airline by CFM for Airline's commercial use. The term excludes parts which were furnished on new Engines and Modules but are procured directly from vendors by Customer. Such parts are covered by the vendor warranty and the CFM "Vendor Warranty Back Up." Also excluded are Expendable Parts and customary short-lived items such as igniters and filter inserts.

 

	
14.

	
"Parts Credit Allowance" means the credit granted by CFM to Airline in connection with the Failure of a Part based on the price of a replacement Part, [***] point of manufacture at the time the Part is removed. This credit may take the form of a replacement Part at CFM's option. Parts Credit Allowance shall be adjusted to include applicable sales, use, VAT and import taxes levied or assessed in connection with a replacement Part upon submittal by Airline of proper documentation therefore; [***].

 

	
15.

	
"Part Cycles" means the total number of Flight Cycles accumulated by a Part.

 

	
16.

	
"Parts Repair" means the CFM recommended rework or restoration of Failed Parts to a serviceable condition.

 

	
17.

	
"Part Time" means the total number of Flight Hours flown by a Part.

 

	
18.

	
"Scheduled Inspection" means the inspection of an Engine conducted when an Engine has approximately completed a planned operating interval.

  

  

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

  

	
19.

	
"Scrapped Parts" means those Parts determined to be unserviceable and not economically repairable provided always that any such repair does not adversely affect the future reliability or performance of that Part. Such Parts shall be considered as scrapped if they bear a scrap tag duly countersigned by a CFM representative. [***].

 

	
20.

	
“Spare Parts Catalog” shall have the meaning as defined Article II, Section B.

 

	
21.

	
"Ultimate Life" of a Part means the approved limitation on use of a Part, in cumulative Flight Hours or Flight Cycles, which either CFM or a U.S. and/or EASA authority establish as the maximum period of allowed operational time for such Parts in Airline service, with any required periodic repair and restoration. The term does not include individual Failure from wear and tear or other cause not related to the total usage capability of all such Parts in Airline service.

SECTION II - WARRANTIES

 

	
A. 

	
New Engine Warranty

 

	
  

	
1.

	
CFM warrants each new Engine and Module against Failure for the initial [***] Flight Hours as follow:

 

	
  

	
a.

	
Parts Credit Allowance will be granted for any Failed Parts and for vendor parts, Expendable Parts, and Parts which are damaged as a result of the Failed Part.

 

	
  

	
b.

	
Labor Allowance for disassembly, reassembly, test and Parts repair of any new Engine Part will be granted for replacement of Failed Parts and to parts (vendor or Expendable Parts) and Parts which are damaged as a result of the Failed Part.

 

	
  

	
c.

	
Such Parts Credit Allowance, test and Labor Allowance will be: [***] from new to [***] Flight Hours and decreasing pro rata from [***] at [***] Flight Hours to zero percent at [***] Flight Hours.

 

	
  

	
2.

	
As an alternative to the above allowances, CFM shall, upon request of Airline:

 

	 	
a.

	
Promptly arrange to have the Failed Engines and Modules repaired, as appropriate, at a facility mutually agreed to by CFM and Airline, at no charge to Airline for the first [***] Flight Hours and at a charge to Airline increasing pro rata from [***] of CFM’s repair costs at [***] Flight Hours to [***] of such CFM repair costs at [***] Flight Hours.

 

	
  

	
b.

	
Transportation to and from the designated facility shall be at Airline's expense.

 

	
B. 

	
New Parts Warranty

 

In addition to the warranty granted for new Engines and new Modules, CFM warrants Engine and Module Parts as follows:

 

	
  

	
1.

	
During the first [***] Flight Hours for such Parts and Expendable Parts, CFM will grant [***] Parts Credit Allowance or Labor Allowance for repair labor for Failed Parts and for Parts and Expendable Parts which are within their respective New Engine or New Parts Warranty coverage period and which suffer damage because of a Failed Part.

  

  

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

	
  

	
2.

	
CFM will grant a pro rata Parts Credit Allowance for Scrapped Parts decreasing from [***] Flight Hours Part Time to zero percent at the applicable hours designated in Table 1.

 

	
C. 

	
Ultimate Life Warranty

 

	
  

	
1.

	
CFM warrants Ultimate Life limits on the following Parts which are more specifically defined in Chapter 5 of the CFM56 Engine Shop manual:

 

a.      [***]

 

	
  

	
2.

	
CFM will grant a pro rata Parts Credit Allowance decreasing from [***] when new to zero percent at [***] Flight Hours or [***] flight Cycles, whichever comes earlier. Credit will be granted only when such Parts are permanently removed from service by a CFM or a FAA and/or EASA imposed Ultimate Life limitation of less than [***].

 

	
D. 

	
Campaign Change Warranty

 

	
  

	
1.

	
A campaign change will be declared by CFM when a new Part design introduction, Part modification, Part Inspection, or premature replacement of an Engine or Module is required by a time compliance CFM Service Bulletin or FAA or EASA Airworthiness Directive. Campaign change may also be declared for CFM Service Bulletins requesting new Part introduction no later than the next Engine or Module shop visit. CFM will grant following Parts Credit Allowances:

  

  

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

   

Engines and Modules

 

	
  

	
(i)

	
[***] for Parts in inventory or removed from service when new or with [***] Flight Hours or less total Part Time.

 

	
  

	
(ii)

	
[***] for Parts in inventory or removed from service with over [***] Flight Hours since new, regardless of warranty status.

 

	 	
2.

	
Labor Allowance - CFM will grant [***] Labor Allowance for disassembly, reassembly, modification, testing, or Inspection of CFM supplied Engines, Modules, or Parts therefore when such action is required to comply with a mandatory time compliance CFM Service Bulletin or FAA or EASA Airworthiness Directive. A Labor Allowance will be granted by CFM for other CFM issued Service Bulletins if so specified in such Service Bulletins.

 

	
  

	
3.

	
Life controlled rotating Parts which are set forth in the Ultimate Life Warranty and which are retired by Ultimate Life limits including FAA and/or EASA Airworthiness Directive, are excluded from Campaign Change Warranty.

 

	
E. 

	
Warranty Pass-On

If requested by Airline and agreed to by CFM in writing which consent shall not be unreasonably withheld, CFM will extend warranty support for Engines sold or leased by Airline to commercial Airline operators, or to other aircraft operators. Such warranty support will be limited to the unexpired portion of the New Engine Warranty, New Parts Warranty, Ultimate Life Warranty and Campaign Change Warranty and will require such operator(s) to agree, in writing, to be bound by, and comply with, all the terms and conditions, including the limitations, applicable to such warranties as set forth in this Agreement. It is agreed by Airline that Airline will reimburse CFM for the reasonable cost incurred by CFM in producing any legal opinions associated with CFM's consent to the above Warranties.

  

  

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

TABLE 1

A320

CFM56 WARRANTY PARTS LIST

                                                         [***]

  

  

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

TABLE 1

A320

CEM56 WARRANTY PARTS LIST

Continue

[***]

  

  

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

	
F. 

	
Vendor Warrant Back-Up

 

	
  

	
1.

	
CFM controls and accessories vendors provide a warranty on their products used on CFM Engines. This warranty applies to controls and accessories sold to CFM for delivery on installed or spare Engines, and controls and accessories sold by the vendor to the Airlines on a direct purchase basis. In the event the controls and accessories suffer a failure during the vendors warranty period, the Airline will submit a claim directly to the vendor in accordance with the terms and conditions of the vendor’s warranty.

 

	 	
2.

	
In the event a controls and accessories vendor fails to provide a warranty at least as favorable as the CFM New Engine Warranty (for complete controls and accessories) or New Parts Warranty (for components thereof), or if provided, rejects a proper claim from the Airline, CFM will promptly intercede on behalf of the Airline to resolve the claim with the vendor. In the event CFM is unable to resolve a proper claim with the vendor, CFM will honor a claim from the Airline under the provisions and limitations of CFM's New Engine or New Parts Warranty, as applicable.

 

	
G. 

	
Vendor Interface Warranty

 

Should any CFM control or accessory develop a problem due to its environment or interface with other controls and accessories or with the Engine, reverser, or equipment supplied by the aircraft manufacturer, CFM will be responsible for initiating prompt corrective action at no cost to Airline. If the vendor disclaims warranty responsibility for parts requiring replacement, CFM will apply the provisions of its New Parts Warranty to such part whether it was purchased originally from CFM or directly from the vendor.

 

	
H. 

	
[***]

 

	
I. 

	
[***]

 

SECTION III - SPARE PARTS PROVISIONING

 

	
A.

	
Provisioning Data

 

	
  

	
1.

	
In connection with Airline's initial provisioning of spare Parts, CFM shall furnish Airline with data in accordance with ATA 200 Specification using a revision mutually agreed to in writing by CFM and Airline.

 

	
  

	
2.

	
It is the intention of the parties hereto to comply with the requirements of the ATA 200 Specification and any future changes thereto, except that the Parties shall negotiate in good faith reasonable changes in the procedures or requirements of the Specification which procedures or requirements, if complied with exactly, would result in an undue operating burden or unnecessary economic penalty.

 

	
  

	
The data to be provided by CFM to Airline shall encompass all Parts listed in CFM's Illustrated Parts Catalogs. CFM further agrees to become total supplier of Initial Provisioning Data for all vendor spare Parts in accordance with Paragraph 1. above.

  

  

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

	
  

	
3.

	
Beginning on a date no earlier than [***] months and no later than [***] months prior to delivery of Airline's first Aircraft, or within [***] weeks of execution of this GTA, or as mutually agreed, CFM shall provide to Airline a complete set of Initial Provisioning Data and shall progressively revise this data until [***] days after delivery of the last spare Engine specified in its initial Purchase Order or as mutually agreed. A status report will be issued periodically. Provisioning data will be reinstituted for subsequent spare Engines reflecting the latest modification status. CFM will make available a list of major suppliers as requested by Airline. CFM will provide, or cause to be provided on behalf of its vendors, the same service detailed in this clause.

 

	
B.

	
Pre-Provisioning Conference

 

	
  

	
A pre-provisioning conference, attended by CFM and Airline personnel directly responsible for initial provisioning of spare Parts hereunder, will be held at a mutually agreed time and place prior to the placing by Airline of initial provisioning purchase orders. The purpose of this conference is to discuss systems, procedures and documents available to the Airline for the initial provisioning cycle of the Products.

 

	
C. 

	
Changes

 

	
  

	
CFM shall have the right to make corrections and changes in the Initial Provisioning Data is accordance with Chapter 2 (Initial Provisioning) of ATA 200 Specification or Chapter 1 o ATA 2000 Specification using a revision mutually agreed to in writing by CFM and Airline So long as Airline operates one (1) aircraft powered by CFM56 Engines and there are five (5) such aircraft powered by CFM56 Engines in commercial airline service, CFM will progressively revise Airline's Procurement Data tape in accordance with Chapter 3 (Order Administration) of ATA 200 Specification or Chapter 2 of ATA 2000 Specification entitle( "Integrated Data Processing Supply" using a revision mutually agreed to in writing by CFM and Airline.

 

	
D.

	
Return Of Parts

 

	
  

	
Airline shall have the right to return to CFM, at CFM's expense, any new or unused Par which has been shipped in excess of the quantity ordered or which is not the Part number ordered or which is in a discrepant condition except for damage in transit unless the damage in transit was caused directly by defective packaging on the Part of CFM.

 

	
E.

	
Parts Buy-Back

 

	
  

	
[***]

 

	
F.

	
Parts of Modified Design

 

	
  

	
1.

	
CFM shall have the right to make modifications to design or changes in the spare Parts sold to Airline hereunder.

  

  

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

	
  

	
2.

	
CFM will from time to time inform Airline in accordance with the means set forth in ATA 200 Specification, when such spare Parts of modified design become available for shipment hereunder.

 

	
  

	
3.

	
Spare Parts of the modified design will be supplied unless Airline advises CFM in writing of its contrary desire within ninety (90) days of the issuance of the Service Bulletin specifying the change to the modified Parts. CFM will continue to provide the premodified design Part at then current Spare Parts Catalog prices until the stock is exhausted.

 

	
G. 

	
[***]

 

SECTION IV - TECHNICAL DATA

 

	
A.

	
CFM shall make available to Airline the technical data, including revisions thereof, at no charge, in the quantities as specified in Exhibit E and at a time and to a location as mutually agreed. If and when such technical data becomes available in CD-Rom format, such will be provided to Airline at no cost.

 

	
  

	
Such technical data shall be prepared by CFM in accordance with the applicable provisions of ATA 100 or 2100 Specification (including necessary deviations) as the same may be revised from time to time.

 

	 	
If Airline requires CFM to furnish the technical data in a form different from that normally furnished by CFM' pursuant to ATA 100 or 2100 Specification, or in quantities greater than those specified in Exhibit E, CFM will, upon written request from Airline, furnish Airline with a written quotation for furnishing such technical data.

 

	
  

	
Revisions to the above technical data shall be furnished by CFM to Airline at no charge for quantities equivalent to the quantities specified in Exhibit E for as long as Airline operates [***] powered aircraft and there [***] CFM56 powered aircraft in commercial airline service. Such quantities of revisions may be mutually modified in order to reflect any change in Airline's CFM56 operation.

 

	
  

	
CFM shall incorporate in the Engine Illustrated Parts Catalog and Engine Shop Manual all appropriate CFM service bulletins for as long as Airline receives revisions to technical data. Premodified and post modified configurations shall be included by CFM unless Airline informs CFM that a configuration is no longer required.

 

	
B.

	
CFM will require each vendor to furnish technical data consisting of copies of a component maintenance manual and service bulletins. Such vendor publications shall be furnished by' CFM to Airline in accordance with and subject to the same provisions as those set forth in Paragraph A. above.

 

	
C.

	
CFM will also require its ground support equipment vendors, where appropriate, to furnish to Airline, at no charge, technical data determined by CFM to be necessary for Airline to maintain, overhaul and calibrate special tools and test equipment. Such vendor-furnished technical data shall be furnished in accordance with and subject to the same provisions as those set forth in Paragraph A. above, except that the technical data shall be prepared in accordance with the applicable provisions of ATA 101 Specification, as the same may be revised from time to time.

  

  

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

	
D.

	
The following technical data, not covered by ATA Specifications, shall be furnished by CFM to Airline in the quantities and at a time and to a location as mutually agreed:

• Installation Manual (if required)

• General Facility Study

• Parts serialization records

 

	
E.

	
Where applicable, technical data as described in the above Paragraphs A., B, C and D furnished by CFM or by CFM vendors to Airline hereunder, shall be printed in the simplified English language as defined by AECMA (Association Europeenne des Constructeurs de Material Aerospatial).

 

	
F.

	
All technical data furnished herein by CFM to Airline shall be subject to the provisions of Article X, "Information and Data", of this Agreement.

 

SECTION V - TECHNICAL TRAINING

 

	
1. 

	
General

 

This part describes the current maintenance training to be provided by CFM at CFM's training facility in [***]. CFM will provide [***], except as otherwise provided herein, a number of student days* for maintenance training as defined hereunder:

-      [***]

-      [***]

These days will be selected from the list given in (3), "Standard Maintenance Training Program" on the next page. Any additional training beyond this threshold shall be at Airline's cost.

 

All instruction, examinations and materials shall be prepared and presented in the English language and in the units of measure used by CFM. Airline will provide interpreters, if required, for Airline's personnel.

[***]

 

	
2.

	
Maintenance Training Conference

 

CFM and Airline will conduct a maintenance training conference call in order to schedule and discuss the maintenance training or, the Airline is welcome to visit CFM's training facilities and discuss training. During the maintenance training conference call or visit, the Airline will indicate the courses selected and arrange a mutually acceptable schedule.

 

* Student days = # of students X # of class days

  

  

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

	
3.

	
Standard Maintenance Training

 

Standard Maintenance Training will consist of computer based training or classroom presentations supported by training materials and, when applicable, hands-on practice. Training material will be based on ATA 104 guidelines.

[***]

 

	
4.

	
Optional Maintenance Training

 

	
  

	
Non-standard maintenance training courses are described in the current CFM Training Course Syllabus and CFM will provide a quote upon request.

 

	
5.

	
Training at a Facility Other Than CFMI's

 

	
  

	
If requested prior to the conclusion of the maintenance training planning conference call or visit, CFM will conduct the classroom training described in (3), "Standard Maintenance Training" at a mutually acceptable alternate training site, subject to the following conditions.

 

	
  

	
5.1

	
Airline will be responsible for providing acceptable classroom space and training equipment required to present the CFM courseware.

 

	
  

	
5.2

	
Airline will pay CFM's travel and living charges for each CFM instructor for each day,   or fraction thereof, such instructor is away from [***], including travel time.

 

	
  

	
5.3

	
Airline will reimburse CFM for round-trip transportation for CFM's instructors and training materials between [***], and such alternate training site.

 

	
  

	
5.4

	
Those portions of the training that require the use of CFM's training devices shall be conducted at CFM designated facilities.

 

	
6. 

	
Supplier Training

 

	
  

	
The standard maintenance training includes sufficient information on the location, operation and servicing of engine equipment, accessories and parts provided by suppliers to support line maintenance functions.

  

  

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

If Airline requires additional maintenance training with respect to any supplier-provided equipment, accessories or parts, Airline will schedule such training directly with the supplier.

 

	
7. 

	
Student Training Material

 

	
  

	
7.1

	
Manuals

 

When required, CFM will provide, at the beginning of each maintenance training  course, one set of training manuals, or equivalent, for each student attending such  course.

 

	 	
7.2 

	
Other Training Material

 

CFM will provide one set of training material, per course, as applicable and as selected by Airline.

 

SECTION VI - CUSTOMER SERVICE

 

	
A.

	
CFM shall assign to Airline at no charge, a Customer Support Manager located at CFM's factory to provide and coordinate appropriate liaison between the Airline and CFM's factory personnel.

 

	
B.

	
CFM shall also make available to Airline, [***], a Field Service Representative as CFM's representative at Airline's maintenance base plus a Shop Specialist to be assigned by CFM to the engine shop facility selected by Airline. The Field Service Representative will be based [***], and his primary responsibility will be assisting Airline. These specialists will assist Airline in areas of unscheduled maintenance action and scrap approval, will provide rapid communication between Airline's maintenance base and CFM's factory personnel. It is agreed that Airline and CFM will continually monitor the reasonable requirements of Airline for a Field Service Representative [***] and that the parties will mutually determine if and when such a Field Service Representative is no longer needed to be based [***].

 

	
C.

	
CFM will take reasonable steps to improve the response time to technical questions posed by Airline.

 

SECTION VII - PRODUCT SUPPORT ENGINEERING

 

Factory based engineers who are specialized in power plant engineering problems are avail no charge to Airline, to make visits to Airline as mutually agreed when problems encountered. These engineers will coordinate with the CFM56 design engineers and Airline’s power plant engineering group. Where specific design problems require a better understanding Airline's experience, design engineers will work directly with Airline's power plant engineering personnel to solve the problem.

  

  

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

SECTION VIII - OPERATIONS ENGINEERING

 

Operations Engineering survey teams are available, at no charge to Airline, to make surveys mutually agreed by Airline maintenance and operating procedures. These survey teams able to provide service to all Airlines operating CFM56 Engines. This group will included experienced operations engineers who will be available for flying jump-seat on CFM56-powered aircraft, and discussing operating procedures with the crews.

 

SECTION IX - GROUND SUPPORT EQUIPMENT

[***]

 

SECTION X - GENERAL CONDITIONS - CFM56 PRODUCT SUPPORT PLAN

 

	
A.

	
Airline will maintain operational and maintenance records in accordance with FAA or EASA requirements and in accordance with normal industry practices, and make these available for CFM inspection.

 

	
B.

	
The warranty and guarantee provisions of this CFM56 Product Support Plan will not apply to any damage to a Product if it has been reasonably determined by CFM that such was caused because the Product:

 

	
  

	
o

	
Has not been properly installed or maintained unless it has not been properly installed or maintained by CFM; or

 

	
  

	
o

	
Has been operated contrary to applicable CFM recommendations as contained in its Manual, Bulletins, or other written instructions; or

 

	
  

	
o

	
Has been repaired or altered outside of CFM facilities in such a way as to impair its safety of operation or efficiency; or

 

	
  

	
o

	
Has been subjected to misuse, neglect or accident; or

 

	
  

	
o

	
Has sustained Foreign Object Damage; or

 

	
  

	
o

	
[***]

 

	
  

	
o

	
[***]

 

Furthermore, the warranty and guarantee provisions of this CFM56 Product Support Plan will only apply to Products which have been sold originally by CFM under this Agreement to Airline or Airline's maintenance facility for commercial use.

 

	
C.

	
THE EXPRESS PROVISIONS OF THIS CFM56 PRODUCT SUPPORT PLAN SET FORTH THE MAXIMUM LIABILITY OF CFM WITH RESPECT TO CLAIMS OF ANY KIND ARISING OUT OF OR IN CONNECTION WITH THE RIGHTS AND OBLIGATIONS CONTAINED WITH THIS CFM56 PRODUCT SUPPORT PLAN, INCLUDING NEGLIGENCE BUT EXCLUDING GROSS NEGLIGENCE AND WILFUL MISCONDUCT, AND ALSO ARISING OUT OF MANUFACTURE, SALE, POSSESSION, USE OR HANDLING OF THE PRODUCTS OR PARTS THEREOF OR THEREFOR.

  

  

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

	
D.

	
Except as provided in the Vendor Warranty Back-up provisions in Paragraph F. of Section II hereof, no Parts Credit Allowance will be granted and no claim for loss or liability will be recognized by CFM for Parts of the Engine whether original, repair, replacement, or otherwise, unless sold originally by CFM to Airline for commercial use; except for Parts purchased by Airline's repair facility from CFM, and for Parts or Expendable Parts suffering resultant damage during the period of the New Engine and Module Warranty, New Parts Warranty or Extended New Engine and New Parts Guarantee, in accordance with such warranty and guarantees.

 

	
E.

	
Airline shall apprise CFM of any Failure subject to the conditions of this CFM56 Product Support Plan within sixty (60) days after the discovery of such Failure. Any Part for which a Parts Credit Allowance is requested by Airline shall be returned to CFM upon specific request by CFM. Upon return to CFM, such Part shall become the property of CFM unless CFM directs otherwise. Transportation expenses shall be borne by CFM.

 

	
F.

	
The warranty applicable to a replacement Part provided under the terms of the New Engine Warranty or New Parts Warranty shall be the same as the warranty on the original Part. The unexpired portion of the applicable warranty will apply to Parts repaired under the terms of such warranty.

 

	
G.

	
Airline will cooperate with all reasonable requests of CFM in the development of Engine operating practices, repair procedures, and the like with the objective of improving Engine operating costs.

 

	
H.

	
Except as provided in the Warranty Pass-On provisions in Paragraph E. of Section II hereof, this Product Support Plan applies only to the original purchaser of the CFM56 Engine, except that installed Engines supplied to Airline through the aircraft manufacturer shall be considered as original Airline purchases covered by this Product Support Plan.

 

	
1.

	
Airline will provide CFM a report identifying serialized rotating parts which have been scrapped by Airline. Format and frequency of reporting will be mutually agreed to by Airline and CFM.

  

  

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GENERAL TERMS AGREEMENT NO. CFM-1-2377460475

EXHIBIT C

 

PAYMENT TERMS

[***]

  

  

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LETTER AGREEMENT NO. 1

TO GTA No. CFM-1-2377460475

LAN AIRLINES S.A.

Ave. Presidente Riesco No. 5711,

Las Condes,

Santiago,

Chile

WHEREAS, CFM International, Inc. (hereinafter individually referred to as “CFM”) and LAN AIRLINES S.A. (hereinafter referred to as “Airline”) (CFM and Airline being hereinafter collectively referred to as the “Parties”) have entered into General Terms Agreement CFM-1-2377460475 dated December 17, 2010 (hereinafter referred to as “GTA”);

WHEREAS, the GTA contains the applicable terms and conditions governing the sale by CFM and the purchase by Airline of spare engines, related equipment and spare parts therefore in support of Airline’s CFM powered fleet of aircraft from Airbus S.A.S (“Airbus” or “Airframer”);

WHEREAS, Airline decided to expand its fleet with the purchase of seventy (70) new CFM 56-5B powered (the “Installed Engines”) A320 family aircraft (the “Aircraft”) from Airframer in accordance with the delivery schedule set forth in Attachment A-1 (the “Aircraft Delivery Schedule”, therefore the Parties intend to further supplement the GTA with this Letter Agreement No. 1 (hereinafter the “Agreement”); and

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

	
  

	
1.

	
Airline agrees to purchase and take delivery of seventy (70) new firm CFM56-5B powered A320 family aircraft and up to ten (10) new CFM56-5B powered (the “Option Engines”) option A320 family aircraft (the “Option Aircraft”) direct from Airframer in accordance with the delivery schedule set forth in Attachment A-1 hereto.

	
  

	
2.

	
Airline agrees to purchase and take delivery of fourteen (14) CFM56-5B spare engines (“Spare Engines” and together with the Installed Engines hereinafter referred to as the “Engines”) from CFM according to the delivery schedule set forth in Attachment A-2 hereto (the “Spare Engine Delivery Schedule”) and has agreed with CFM to maintain a Spare Engine to Installed Engine ratio of not less than [***] in support of its fleet size during the term of the Agreement, as defined in the GTA, Article XVIII, Paragraph F. If Airline firms up any or all of the Option Aircraft, Airline has agreed to purchase and take delivery of additional spare engines (“Option Spare Engines”) from CFM according to the delivery schedule set forth in Attachment A-2 hereto and has agreed with CFM to maintain a spare engine ratio of not less than [***] from during the term of the Agreement.

During the first [***] following delivery of first Aircraft, the installable Spare Engine to Installed Engine ratio shall be reduced to a minimum of [***] (“Spare Engine Ratio”).

 

  

PROPRIETARY INFORMATION NOTICE   The information contained in this document is CFM Proprietary Information and is disclosed in confidence. It is the property of CFM and shall not be used, disclosed to others, or reproduced without the express written consent of CFM. If consent is given for reproduction in whole or in part, this notice and the notice set forth on each page of this document shall appear on any such reproduction. Export control laws may also control the information contained in this document. Unauthorized export or re-export is prohibited.

 

  

 

  

LETTER AGREEMENT NO. 1

	
  

	
3.

	
The obligations set forth in this Agreement are in addition to the obligations set forth in the GTA, except as otherwise provided.  In the event of conflict between the terms of this Agreement and the terms of the GTA, the terms of this Agreement shall take precedence. Terms which are capitalized but not otherwise defined herein shall have the meaning given to them in Section I of Exhibit B of the GTA.

	
  

	
4.

	
In consideration of the above, CFM agrees to the following:

	
A. 

	
Special Allowances

	
  

	
CFM agrees to provide the following allowances to Airline subject to the conditions set forth in Attachment D hereto:

	
  

	
(i)

	
Aircraft Allowance

	
  

	
For each of the Aircraft scheduled to be delivered by Airframer to Airline pursuant to the Aircraft Delivery Schedule CFM will provide Airline with a per aircraft allowance (“Aircraft Allowance”) for each such Aircraft in the amount of:

 

	
  

	
[***]

 

Such Aircraft Allowance is stated in [***], and shall be [***] in accordance with the escalation formula set forth in Attachment D hereto.

[***]. A “Day” shall mean a calendar day (excluding Saturday and Sunday) unless expressly stated otherwise in writing.  If performance is due in a country on a day where that day is a public holiday performance will be postponed until the next day which is not a public holiday or a Saturday or Sunday.

[***].

[***].

	
  

	
(ii)

	
Additional Special Allowance

For each of the Aircraft scheduled to be delivered to Airline by Airframer pursuant to the Aircraft Delivery Schedule, CFM will provide Airline with an additional per aircraft allowance for each Aircraft (“Additional Special Allowance”) in the amount of:

[***]

[***]

[***].

[***].

  

     

  

CFM PROPRIETARY INFORMATION

(subject to restrictions on cover page)

  

2

  

LETTER AGREEMENT NO. 1

[***].

	
  

	
(iii)

	
Initial Provisioning Allowance

CFM agrees to provide Airline with an initial provisioning allowance (“Initial Provisioning Allowance”) in the amount of [***] for each Aircraft.  Such allowance is not subject to adjustment for escalation, and will be made available to Airline within [***] Days following delivery of each of the Aircraft as a credit against purchases of goods from CFM.

Option Aircraft: CFM agrees to provide Airline with the same Initial Provisioning Allowance for each of the firmed-up Option Aircraft.

	 	
(iv) 

	
Spare Engine Allowance

 

CFM agrees to provide Airline with a Spare Engine Allowance in the form of a credit of [***] of the Net Basic Spare Engine Program Price as per Attachment C, that credit to be deducted from the final invoice issued by CFM for each of the up to and including [***] Spare Engines purchased by Airline.

 

[***].

	
  

	
(v)

	
[***]

	
  

	
(vi)

	
[***]

	
B.

	
Spare Engine Base Price

Base prices for Spare Engines and Option Spare Engines delivered according to the Spare Engine Delivery Schedule, shall be as set forth in Attachment C hereto, and shall be subject to adjustment for escalation in accordance with the escalation formula set forth in Attachment D hereto.

	
C.

	
Special Guarantees

	
  

	
[***]

	
  

	
1.

	
[***]

	
  

	
2.

	
[***]

	
  

	
3.

	
[***]

	
  

	
4.

	
[***]

	
  

	
5.

	
[***]

	
  

	
6.

	
[***]

	
  

	
7.

	
[***]

	
  

	
8.

	
[***]

  

  

CFM PROPRIETARY INFORMATION

(subject to restrictions on cover page)

  

3

  

LETTER AGREEMENT NO. 1

	
  

	
9.

	
[***]

	 	
10. 

	
[***]

	
  

	
11.

	
[***]

	
  

	
12.

	
[***]

	
5.

	
Miscellaneous

 

A. [***]

 

B. [***].

 

C. Confidentiality of Information. This Agreement contains information specifically for Airline and CFM, and nothing herein contained shall be divulged by Airline or CFM to any third person, firm or corporation, without the prior written consent of the other Party, which consent shall not be unreasonably withheld; except (i) that Airline’s consent shall not be required for disclosure by CFM of this Agreement to an Engine program participant, joint venture participant, engineering service provider or consultant to CFM so as to enable CFM to perform its obligations under this Agreement; (ii) to the extent required by Government agencies, by law, or to enforce this Agreement; and (iii) to the extent necessary for disclosure to the Parties’ respective insurers, accountants or other professional advisors who must likewise agree to be bound by the provisions of this paragraph.  In the event (i) or (iii) occur, suitable restrictive legends limiting further disclosure shall be applied.  In the event this Agreement, or other information or data exchanged under this Agreement is required to be disclosed or filed by government agencies by law, or by court order, the requested Party shall notify the other Party at least thirty (30) days in advance of such disclosure or filing and shall cooperate fully with such other Party in seeking confidential treatment of sensitive terms of this Agreement.

   

  

CFM PROPRIETARY INFORMATION

(subject to restrictions on cover page)

  

4

  

LETTER AGREEMENT NO. 1

Please indicate your agreement with the foregoing by signing two (2) duplicate originals as provided below.

 

	  	
Very truly yours,

	  	  
	
LAN Airlines S.A.

	
CFM INTERNATIONAL, INC. 

	  	  
	
By:

	  	  	
By:

	  
	  	  	  	  	  
	
Typed Name:

	  	  	
Typed Name:

	  
	  	  	  	  	  
	
Title:

	  	  	
Title:

	  
	 	 	 	 	 
	 	 	 	 	 
	  	  	  	  	  
	
Date:

	  	  	
Date:

	  
	  	  	  	  	  
	
LAN Airlines S.A.

	  	  
	  	  	  
	
By:

	  	  	  	  
	  	  	  	  	  
	
Typed Name:

	  	  	  	  
	  	  	  	  	  
	
Title:

	  	  	  	  
	 	 	 	 	 
	 	 	 	 	 
	  	  	  	  	  
	
Date:

	  	  	  	  

  

  

CFM PROPRIETARY INFORMATION

(subject to restrictions on cover page)

  

5

  

LETTER AGREEMENT NO. 1

ATTACHMENT A-1

                                              Aircraft Delivery Schedule

 

[***]

 

                                                        Option Aircraft Delivery Schedule

[***]

  

  

CFM PROPRIETARY INFORMATION

(subject to restrictions on cover page)

  

A-1

  

LETTER AGREEMENT NO. 1

ATTACHMENT A-2

Spare Engine Delivery Schedule

[***]

Option Spare Engine Delivery Schedule

[***]

  

  

CFM PROPRIETARY INFORMATION

(subject to restrictions on cover page)

  

A-2

  

LETTER AGREEMENT NO. 1

ATTACHMENT B

CONDITIONS FOR SPECIAL ALLOWANCES/DELAY/CANCELLATION

	
1.

	
Allowance for Initial Aircraft Sale Only

	
  

	
Any allowance described herein applies only to the [***] new firm Aircraft equipped with Installed Engines purchased by Airline directly from the Airframer.

	
2.

	
Allowance Not Paid

	
  

	
Allowances described herein will become unearned and will not be paid if Installed Engines have been delivered to the Airframer for installation in Aircraft and, thereafter, for any reason within control of Airline, Airline's purchase order with the Airframer is terminated, canceled or revoked, or for any reason delivery of the Aircraft will be prevented or delayed beyond [***] months of the delivery period described in the Aircraft Delivery Schedule herein (“Delivery Period”).

	
3.

	
Termination of Special Allowances

Airline agrees that all of the Special Allowances, as described in Article 4.a. herein shall expire [***] after delivery of last Aircraft as set forth in the Aircraft Delivery Schedule (the “Expiration Date”).

	
  

	
[***]

 

	
4.

	
Adjustment of Allowances

	
  

	
[***]

  

  

CFM PROPRIETARY INFORMATION

(subject to restrictions on cover page)

  

B-1

  

LETTER AGREEMENT NO. 1

[***]

	
5.

	
Assignability of Allowance

	
  

	
Any allowance described herein is exclusively for the benefit of Airline and is not assignable without CFM's written consent.

	
6. 

	
Set Off for Outstanding Balance

	
  

	
CFM shall be entitled, with [***] days written notice, to set off any amounts that are due and owing from Airline to CFM (and not subject to a good faith dispute) for goods or services (whether or not in connection with this Letter Agreement and/or GTA), against any amount payable by CFM to Airline in connection with this Letter Agreement and/or GTA.

	
7.

	
Cancellation of Installed or Spare Engines

[***]

	
8. 

	
Delay Charge for Installed or Spare Engines

	
  

	
In the event Airline delays the scheduled delivery date of a Spare Engine, or causes the delay of the scheduled delivery date of an installed Engine, for which CFM has received a purchase order from the aircraft manufacturer or Airline, as appropriate, for a period, or cumulative period, of more that [***], such delay shall be considered a cancellation and the applicable provisions hereof regarding the effect of cancellation shall apply.

 

	
9. 

	
Offset Requirements

	
  

	
Any allowance described herein is predicated on the assumption that no offset or countertrade requirement will be imposed on CFM in connection with this Agreement [***] the Aircraft are incorporated. If such requirement is imposed, then CFM reserves the right to reduce the allowance commensurate with the cost to CFM of performing such offset or countertrade obligation(s).

	
10. 

	
Aircraft Not Operated for Minimum Period

	
  

	
If, within the first [***] following delivery of each Aircraft for which a special allowance, of any nature, was provided by CFM pursuant to this Agreement or any resulting GTA/Letter Agreement (the “Minimum Period”), Airline sells, transfers, trades, exchanges, leases, [***] or Airline otherwise fails to operate such Aircraft, the special allowances earned and/or paid on such Aircraft will be proportionately reduced. Airline will reimburse CFM an amount equal to the proportionate share of the special allowances paid with respect to such Aircraft and CFM will cancel a proportion of an earned but not paid special allowance. In each case, the proportion of the special allowance to be reimbursed or canceled will be the percentage of the Minimum Period the Aircraft was owned and operated by Airline with interest on the reimbursed amount.  [***]

  

  

CFM PROPRIETARY INFORMATION

(subject to restrictions on cover page)

  

B-2

  

LETTER AGREEMENT NO. 1

   

ATTACHMENT C

 

	
 

BASE PRICES FOR CFM56-5B SPARE ENGINES

 

Prices Applicable to Deliveries through December 31, 2017

 

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

  

Program Pricing – General Terms and Conditions, applicable to additional spare engines per Attachment C, Paragraph D. above

[***]

	
1.

	
[***]

	
2.

	
[***]

 

CFM PROPRIETARY INFORMATION

  

C-1

  

LETTER AGREEMENT NO. 1

    

ATTACHMENT D

  

CFM56-5B ESCALATION FORMULA

Spare Engines and Allowances

[***]

	
I.

	
The base price for Products purchased hereunder shall be adjusted pursuant to the provisions of this Exhibit.

	
II.

	
For the purpose of this adjustment:

	
  

	
A.

	
Base price shall be the price(s) set forth in the applicable Letter Agreement.

	
  

	
B.

	
The Composite Price Index (CPI) shall be calculated, to the second decimal place, using the following formula:

[***]

[***].

[***].

	
  

	
C.

	
[***]

	 	
D.

	
[***]

	
III.

	
[***]:

	
IV.

	
[***].

	
V.

	
[***].

	
VI.

	
[***]:

	
  

	
a)

	
[***].

	
  

	
b)

	
[***].

	
  

	
c)

	
[***].

	
  

	
d)

	
[***].

	 	
Note:

	
[***].

 

  

CFM PROPRIETARY INFORMATION

(subject to restrictions on cover page)

  

D-1

  

LETTER AGREEMENT NO. 1

ATTACHMENT E

BASIS AND CONDITIONS FOR SPECIAL GUARANTEES

	
A. 

	
General Conditions

	
  

	
The Special Guarantees have been developed specifically for Airline's Engines.  The General Conditions described in Section X of Exhibit B of the GTA between CFM and Airline apply to the guarantees and such guarantees are offered to Airline contingent upon:

	
  

	
1.

	
Airline accepting delivery of a minimum of [***] CFM56-5B Engine powered Aircraft as per the Aircraft Delivery Schedule;

	
  

	
2.

	
Airline procuring and maintaining the CFM recommended number of Spare Engines;

	
  

	
3.

	
Airline's Engines being identified and maintained separately from other operators' engines at the repair agency, except in the case where the Engines are being maintained by a CFM Designated Repair Station;

	
  

	
4.

	
Agreement between Airline and CFM regarding administration of the guarantees;

	
  

	
5.

	
[***];

	
  

	
6.

	
Airline and CFM agreement upon the Engine restoration workscope necessary during each shop visit. Engine operation and maintenance will be performed in accordance with CFM manuals, bulletins, or other written instructions; and,

  

CFM PROPRIETARY INFORMATION

(subject to restrictions on cover page)

  

E-1

  

LETTER AGREEMENT NO. 1

	 	
7.

	
Available on-wing maintenance and performance restoration procedures, including CFM recommendations, if applicable, for Engine water wash, being used to the extent reasonably practicable to avoid unnecessary shop visits.

	 	
8.

	
Service bulletins agreed to between Airline and CFM being incorporated in a timely manner.

	
B. 

	
Exclusions

[***].

	
C. 

	
Administration

The Special Guarantees are not assignable by either Party without the written consent of  the other Party, such consent not to be unreasonably withheld.

If compensation becomes available to Airline under more than one Special Guarantee, warranty or other engine program consideration, Airline will not receive duplicate compensation but will receive the compensation most beneficial to Airline under a single Special Guarantee, warranty or other program consideration. Unless otherwise stated, the Special Guarantee compensation will be in the form of credits to be used by Airline against the purchase from CFM of Spare Engines, spare Parts, and/or Engine services.

  

CFM PROPRIETARY INFORMATION

(subject to restrictions on cover page)

  

E-2

  

LETTER AGREEMENT NO. 1

ATTACHMENT F

[***]

  

CFM PROPRIETARY INFORMATION

(subject to restrictions on cover page)

  

F-1

  

LETTER AGREEMENT NO. 1

ATTACHMENT G

Performance Retention Guarantee Calculation Method

 

[***]

  

CFM PROPRIETARY INFORMATION

(subject to restrictions on cover page)

  

G-1Exhibit 4.7

RATE PER FLIGHT HOUR

ENGINE SHOP MAINTENANCE SERVICES AGREEMENT

BETWEEN

CFM INTERNATIONAL, INC.

AND

LAN AIRLINES S.A.

Service Agreement Number : 1-2227720021

Dated: December 17, 2010

	
PROPRIETARY INFORMATION NOTICE

	
The information contained in this document is CFM International, Inc. ("CFM") Proprietary Information and is disclosed in confidence.  It is the property of CFM and will not be used, disclosed to others or reproduced without the express written consent of CFM.  If consent is given for reproduction in whole or in part, this notice and the notice set forth on each page of this document will appear in any such reproduction.  U.S. export control laws may also control the information contained in this document.  Unauthorized export or re-export is prohibited.

  

  

  

TABLE OF CONTENTS

	
1.

	
DEFINITIONS

	
1

	
2.

	
SCOPE OF THE SERVICE AGREEMENT

	
1

	
3.

	
TERM OF THE SERVICE AGREEMENT

	
1

	
4.

	
ENGINES AND OPERATING PARAMETERS

	
1

	
5.

	
CFM SERVICE PROGRAM

	
2

	
6.

	
ENGINE SHOP VISIT

	
5

	
7.

	
PRICES

	
7

	
8.

	
INVOICING AND PAYMENT TERMS

	
9

	
9.

	
WARRANTY AND LIMITATION OF LIABILITY

	
9

	
10.

	
DELIVERY – REDELIVERY

	
11

	
11.

	
TURN AROUND TIME

	
12

	
12.

	
ADDITION TO/ REMOVAL FROM SERVICE AGREEMENT

	
12

	
13.

	
COMMUNICATION

	
13

	
14.

	
GENERAL TERMS AND CONDITIONS

	
13

CFM PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

  

  

  

 

This Agreement (“Service Agreement”) is made as of December 17, 2010 by and between LAN AIRLINES S.A.  having its principal place of business at Av. Presidente Riesco No. 5711, 20th Floor, Las Condes, Santiago, Chile, (“LAN” or “Customer”) and CFM International, Inc., having its principal place of business at 111 Merchant Street, Cincinnati, Ohio 45246 USA (“CFM”); (Customer and CFM are each a “Party” and collectively the “Parties”).

 

	
  

	
1.

	
DEFINITIONS

 

Capitalized terms used in this Service Agreement and not otherwise defined have the meanings set forth in Exhibit A hereto.

 

	
  

	
2.

	
SCOPE OF THE SERVICE AGREEMENT

 

This Service Agreement contains the terms and conditions applicable to the sale by CFM and the purchase by LAN of the CFM Service Program that includes Covered Services and Supplemental Services.

Covered Services are charged:

	
  

	
a.

	
on a monthly basis, by multiplying the applicable Popular Rate per Engine Flight Hour by the number of Engine Flight Hours flown during the preceding month of the Term; and

	
  

	
b.

	
at the time of a Qualified Shop Visit in respect of each Engine, by multiplying the applicable Restored Rate per Engine Flight Hour by the number of Engine Flight Hours flown by that Engine since its Entry Into Service or since its previous Qualified Shop Visit (whichever is later),

During the Term of this Service Agreement, CFM shall be the exclusive provider of the CFM Service Program and materials for the Engines.

 

	
  

	
3.

	
TERM OF THE SERVICE AGREEMENT

 

This Service Agreement will commence on the date hereof (the “Commencement Date”).

Each Engine will be covered by this Service Agreement for [***], unless sooner terminated as provided herein, commencing on the date of its Entry Into Service (the “Term”).

[***]

[***].

 

[***].

[***].

 

	
  

	
4.

	
ENGINES AND OPERATING PARAMETERS

 

The Engines covered by this Service Agreement are set forth in Exhibit B hereto.

The Popular Rate per Engine Flight Hour and the Restored Rate per Engine Flight Hour are predicated on the operating parameters set forth in Exhibit B hereto. For the avoidance of doubt, this Service Agreement shall cover operations by LAN or its affiliates of the Engines identified in Exhibit B (and Exhibit B-1, as applicable), during the Term.

CFM PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

  

1

  

	
  

	

 

	
  

	
5.

	
CFM SERVICE PROGRAM

 

	
5.1 

	
Covered Services

	
5.1.1

	
(i) Qualified Shop Visits

A Qualified Shop Visit is any maintenance or repair of an Engine that, [***] cannot be performed on-wing, in order to:

	
  

	
a.

	
Correct a deficiency or performance deterioration which has created an existing or imminent Unserviceable condition according to criteria defined in the Aircraft Maintenance Manual (“AMM”), and/or the Fault Isolation Manual (“FIM”), and/or the Troubleshooting Manual (“TSM”) and/or CFM Service Bulletins. For the avoidance of doubt, this does include a removal required due to Major FOD,

	
  

	
b.

	
Comply with an Airworthiness Directive (“AD”) issued by the FAA or EASA, and any other off-wing maintenance needed to be carried out on the Engine in order to fully comply with the relevant AD and its requirements,

	
  

	
c.

	
Install LLP due to life expiration,

	
  

	
d.

	
Comply with a written recommendation of the CFM Program Manager, including, but not limited to, incorporation of any published Category 1 to 6 Service Bulletins (as defined in CFM56-5B Service Bulletin SB72-0000) and Campaign Change, that enhance Engine reliability or extend maintenance intervals,

[***].

If an Engine delivered to CFM by LAN is not deemed to be covered as a Qualified Shop Visit the shop visit will be charged to LAN as Supplemental Services.

(ii) The Covered Services for a Qualified Shop Visit include:

	
  

	
a.

	
All labor, material (excluding Life Limited Parts) and material handling charges, taxes and duties for which CFM is responsible per Exhibit I, Article 3, and any vendor fees required to perform Engine reconditioning and repair to return a Serviceable Engine to LAN,

	
  

	
b.

	
Engine test, oil and fuel,

	
  

	
c.

	
Incorporation of Airworthiness Directives, Category 1 to 6 Service Bulletins and Campaign Change items, as referred to in paragraph (i)b and (i)d above,

	
  

	
d.

	
Labor involved in the inspection, replacement and repair of Life Limited Parts,

	
  

	
e.

	
Removal, visual inspection, repair if non-Serviceable, and reinstallation of the LRUs,

	
  

	
f.

	
Removal, visual inspection and reinstallation, if Serviceable, of Quick Engine Change (“QEC”) components that are removed from the Engine for access reasons,

	
  

	
g.

	
Subject to paragraphs c) and d) of the example set out at the end of Article 5.3, correction of Major FOD, which shall include all labor, materials and parts necessary to return the Engine to Serviceable condition, up to a maximum amount for each Engine equal to the lesser of any insurance deductible covering such Major FOD event [***].

	
5.1.2

	
Transportation

LAN will ensure Engine transportation both ways to CFM at Miami International Airport, from where CFM will ensure transportation to the CFM Designated Repair Station for each Qualified Shop Visit and back to Miami International Airport. All costs incurred in transportation, storage, or any other cost incurred after Delivery in Miami shall be borne entirely by CFM. For avoidance of doubt, risk of loss shall pass in accordance with the definitions of Delivery and Redelivery.

CFM PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

  

2

  

	
  

	

	
5.1.3

	
Engine Management Services and Diagnostic Services

CFM will provide the following diagnostics services during the Term:

	
  

	
a.

	
Engine condition data will be automatically processed by diagnostics software 24 hours a day, 7 days a week (“24x7”) when received at the designated CFM facility.  CFM will be responsible for operating and maintaining the diagnostics software and the necessary facilities. LAN shall have access to the web-based tools for reviewing Engine condition data and assessing Engine health.

	
  

	
b.

	
Customer Notification Reports (“CNR”) for Engine condition monitoring trend shift observation, including engineering review, analysis, and recommendations will be provided to LAN, as required, on a 24-hours, 7-days a week basis.

	
  

	
c.

	
Monthly Engine thrust derate report.

	
  

	
d.

	
Access to diagnostics engineers for Engine diagnostic support and consultation as required.

	
  

	
e.

	
Periodic teleconference to review reports and program status as reasonably required by LAN.

	
  

	
f.

	
Weekly Engine health trend summary and analysis reports.

Any information provided to LAN by CFM for use in troubleshooting and managing operations is the responsibility of CFM and is only advisory to LAN. CFM is not responsible for line maintenance, including other actions or consequences, resulting from implementation of such advice. LAN is solely responsible for identifying and resolving any Aircraft or Engine faults or adverse trends. [***].

	
5.1.4

	
Lease Engine Coverage

	
  

	
CFM shall use reasonable efforts to provide the following lease engine coverage:

	
  

	
a.

	
If LAN has an aircraft on ground (“AOG”) situation, or will have an AOG situation within the next five (5) days, because the number of Engines which are undergoing or will undergo within five (5) days Qualified Shop Visits or are Unserviceable exceeds the required quantity of spare Engines according to Exhibit B of this Service Agreement, LAN is eligible for the lease engine coverage described in this Article 5.1.4,

	
  

	
b.

	
Within twenty-four (24) hours of being notified by LAN that the above described AOG situation exists, CFM shall use all reasonable efforts to locate an available lease engine and, within that period, shall notify LAN of the location of the closest available lease engine or that no such lease engine is available,

	
  

	
c.

	
CFM shall use reasonable efforts to deliver or cause to be delivered, any such available lease engine to LAN, Ex Works (Incoterms 2000), at the nearest CFM housekeeping facility or other mutually agreed location.  CFM shall endeavor to provide this engine in a neutral QEC configuration.  All transportation costs will be LAN’s responsibility,

	
  

	
d.

	
CFM’s obligation to use reasonable efforts to provide such lease engine will terminate when the AOG condition is corrected by the Redelivery of an Engine to LAN, subject to LAN’s obligation to return the lease engine set forth below,

	
  

	
e.

	
[***] 

	
  

	
f.

	
LAN is not required to pay the applicable Rate Per Engine Flight Hour prices for the EFH incurred by the lease engine.

	
  

	
5.1.4.1

	
Lease Engine Condition

CFM’s provision of such lease engine is predicated upon the following:

	
  

	
a.

	
The Parties have established a Removal Schedule,

	
  

	
b.

	
LAN has shipped the Engines for a Qualified Shop Visit within five (5) Days following removal from the aircraft,

	
  

	
c.

	
LAN is in full compliance with the records requirements of below Article 6.2(c),

	
  

	
d.

	
Existing Master Equipment Lease Agreement dated October 20, 2000, between CFM and LAN, reference CFMI-00-0002, continues to be in place or LAN has formally accepted IATA Document No. 5016-00, MASTER SHORT-TERM ENGINE LEASE AGREEMENT, dated December 1, 2002, and

	
  

	
e.

	
LAN is not in material breach of this Service Agreement.

CFM PROPRIETARY INFORMATION – SUBJECT TO RESTRICTIONS ON THE FIRST PAGE

  

3

  

	
  

	

	
5.1.5

	
Engine BER

In the event that an Engine is BER due to reason other than those listed in Article 5.3.h, [***].

In the event that LAN requires the repair of the Engine, the Engine will be repaired as Supplemental Services. CFM will bear the cost of repair, up to a maximum of [***]. The remaining cost or repair will be borne by LAN.

[***].

	
  

	
(i)

	
[***].

CFM’s total liability for all BER events for all Engines during the Term shall not exceed [***].

	 	
5.2

	
Additional Services

	
  

	
5.2.1

	
On-Site Support

CFM will provide or cause to be provided, at no cost to LAN, on-site support (“OSS”, as described in Exhibit J hereto) for scheduled or unscheduled line maintenance Services that are not otherwise considered to be Covered Services, up to a maximum of [***] per installed Engine per year during the term of the Service Agreement. LAN may carry over a [***] of the unused hours from each year to the next year.  LAN shall be entitled to apply the man hours available to it under this Article 5.2.1 in settlement of non-labor related expenses (e.g., travel time, shipping, materials, etc.) incurred by CFM OSS. For this purpose, [***] accrued in such non-labor related expenses shall be deemed to be equivalent to one OSS man hour.

Any OSS Services provided in excess of the hours described in this paragraph will be invoiced at the prices listed in Exhibit J hereto.

	
  

	
5.3

	
Supplemental Services

Supplemental Services include, but are not limited to:

	
  

	
a.

	
Any and all Services not specifically included as Popular/Restored Rate per Engine Flight Hour Services,

	
  

	
b.

	
Replacement of Life Limited Parts [***],

	
  

	
c.

	
Any Services provided for an Engine shop visit that is not a Qualified Shop Visit,

	
  

	
d.

	
Any labor, material, material handling charges to repair or replace any QEC,

	
  

	
e.

	
Any material, material handling charges and any fees associated with the replacement of LRUs,

	
  

	
f.

	
Subject to Article 5.1.1(ii)g, any correction of Foreign Object Damage over the stated deductible of [***],

	
  

	
g.

	
Any labor, material, material handling charges and any fees associated with upgrade programs or conversion to another thrust rating,

	
  

	
h.

	
Services required as a result of:

	
  

	
i.

	
An Aircraft Accident or Aircraft Incident,

	
  

	
ii.

	
An Act of God, military action or terrorist activity,

	
  

	
iii.

	
Improper or negligent installation, operation, removal, storage or maintenance of an Engine not in conformance with the AMM or CFM manuals unless such improper or negligent act or omission was performed by CFM [***],

	
  

	
iv.

	
Experimental test applied to the Engine, unless performed by CFM [***],

	
  

	
v.

	
The use of a non-CFM approved LRU, part or repair [***], and

	
  

	
i.

	
Maintenance or repair of Engine transportation stands and container.

	
  

	
Supplemental Services will be charged in accordance with Article 7.2.1 of this Service Agreement.

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[***]

 

	
  

	
6.

	
ENGINE SHOP VISIT

 

	
6.1 

	
CFM Fulfillment

CFM may in CFM’s sole discretion delegate to or purchase from any CFM Designated Repair Station, part or all of any obligation, right or benefit of CFM for the performance of the CFM Service Program in conformance with the Repair Specification. However, such delegation or purchase shall not relieve CFM of any of its obligations under this Service Agreement.

CFM will use GE Celma and Snecma America Engine Services (SAMES) as the primary CFM Designated Repair Stations for this Service Agreement. [***].

CFM will provide the requirements of the Repair Specification to the CFM Designated Repair Station and allow LAN reasonable access to such facilities to perform its duties as the airline operator certificate holder.

The CFM Designated Repair Station shall be any of CFM’s overhaul facilities as set forth in Exhibit H hereto, and appointed as indicated therein. Following execution of this Services Agreement and prior to the entry into service of the first Aircraft, subject to CFM complying with any requirements of the DGAC or any other AAA, LAN shall obtain any approvals and qualifications required from LAN by the DGAC or any other AAA at the primary and secondary GE Engine Services and Snecma facilities being used under this Service Agreement. LAN’s obligations under this Service Agreement will not change wherever the appointed DRS is located.

	
6.2

	
Procedure

	
  

	
a)

	
LAN shall Deliver the Engine to CFM as indicated in section 5.1.2 of this Service Agreement.

	
  

	
b)

	
LAN shall issue a purchase order to CFM and, to the extent CFM accepts the purchase order [***], CFM shall carry out the Services in accordance with the LAN requirements specified in such purchase order, provided that, in any event, the terms and conditions of this Service Agreement shall take precedence over any terms and conditions set forth on such purchase order.

	
  

	
c)

	
LAN shall provide all applicable Engine records, as required by the AAA or as reasonably requested by CFM, and the shop visit data listed in Exhibit C hereto.

	
  

	
d)

	
Following Delivery of each Engine by LAN, together with the documents described in Paragraphs (b), and (c) above CFM will inform LAN as to whether the shop visit meets the criteria for a Qualified Shop Visit as soon as reasonably practicable.

	
  

	
e)

	
CFM shall perform or cause to be performed the induction of the Engine and will notify LAN of any components or LRUs missing from the Engine.  CFM will replace such missing items at LAN’s expense as Supplemental Services, unless (i) LAN notifies CFM in writing [***] Days after receiving CFM’s notice that LAN wishes to furnish such missing items; and (ii) LAN delivers such missing items to the CFM Designated Repair Station within [***].

	
  

	
f)

	
CFM shall proceed with the Services requested by such purchase order in accordance with Paragraph (b) above.

	
  

	
g)

	
CFM shall Redeliver the Engine to LAN complying with the Workscope.

	
  

	
h)

	
CFM will prepare and package the Engine in shipping stands or containers provided by LAN at the time of Delivery in accordance with CFM’s standard commercial practices.

	
  

	
i)

	
CFM shall provide LAN with copies of all work records required by AAA and/or as agreed to in writing by CFM and LAN.

	
6.3

	
Workscope

For each Qualified Shop Visit, CFM will develop a Workscope consistent with the CFM Workscope Planning Guide [***]. Such Workscope shall include any applicable reliability and performance enhancements and AAA approved repairs. CFM will incorporate additional Workscope elements during the Term to improve Engine operating characteristics and incorporate CFM-approved repairs. CFM may charge LAN for any Workscope requirements from LAN, LAN's specific maintenance manuals or Repair Specifications, if applicable, which exceed the requirements stated in the CFM Workscope Planning Guide, as Supplemental Services.

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LLP Minimum Build will be [***] cycles.

	
6.4

	
Title and Risk of Loss to Parts or Material

CFM furnished parts and material incorporated into an Engine will be deemed to have been sold to LAN and title to such parts and material will pass to LAN upon incorporation into such Engine.  Risk of loss or damage to such parts and material will pass to LAN upon Redelivery of the Engine.

Title to and risk of loss of any Repairable parts removed from the Engine that are replaced by other parts will pass to CFM upon incorporation of replacement parts into the Engine. [***]. The cost for any transportation requested by LAN for the removed LLP shall be LAN’s responsibility. [***].

	
6.5

	
Engine Configuration

LAN shall Deliver the Engine as indicated in section 5.1.2 in a basic engine configuration, as defined in Exhibit A of the General Terms Agreement CFM-[***] entered into between LAN and CFM ("GTA"), equipped with the LRUs listed in Exhibit F to this Service Agreement. CFM shall Redeliver the Engine in the same basic engine configuration. In the event an Engine is Delivered with parts or components or QEC equipment in addition to the basic configuration, such Engine shall be Redelivered in the same configuration as Delivered, unless otherwise mutually agreed by the Parties.  Any work performed to return such parts or components or QEC equipment in a Serviceable condition will be charged to LAN as Supplemental Services.

CFM may elect to use used Rotable Parts, and/or repaired parts in Serviceable condition in Engines Redelivered to LAN, and such Rotable Parts and/or repaired parts [***].

	
6.6

	
[***]

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6

  

	
  

	

 

	
  

	
7.

	
PRICES

 

	
7.1

	
Covered Services Pricing

CFM will charge LAN for the Covered Services as indicated in Article 2 of the Service Agreement, at the following rates:

	
  

	
a.

	
on a monthly basis by multiplying the applicable Popular Rate per Engine Flight Hour by the number of Engine Flight Hours flown during each month; and

	
  

	
b.

	
at the time of a Qualified Shop Visit in respect of each Engine, by multiplying the applicable Restored Rate per Engine Flight Hour by the number of Engine Flight Hours flown by that Engine since its Entry Into Service or  since its previous Qualified Shop Visit (whichever is the later).

	
Covered Services Rate

	 	
Rate per EFH (January 2010)

	
[***]

	 	
[***]

	
[***]

	 	
[***]

	
[***]

	 	
[***]

	
[***]

	 	
[***]

	
[***]

	 	
[***]

	
[***]

	 	
[***]

CFM will charge LAN for the Flightline LRU Services on a monthly basis at the Popular Rate multiplied by the Engine Flight Hours accumulated during the month, as follows:

	
Flightline LRU Services Rate

	 	
Rate per EFH (January 2010)

	
[***]

	 	
[***]

The Popular Rate(s) shall be adjusted, as set forth in Exhibit D hereto, [***].

The Restored Rate shall be adjusted, as set forth in Exhibit D hereto, at the time of each Qualified Shop Visit.

[***].

In order to facilitate implementation and administration of the CFM Service Program, LAN shall promptly provide data and records as reasonably requested by the CFM Program Manager and provide the CFM Program Manager or his delegate reasonable access, on giving reasonable notice, to such records for inspection or audit [***].

The Popular Rate and Restored Rate shall escalate [*** ]in accordance with the formula set forth in Exhibit E hereto.

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7.2

	
Supplemental Services Pricing

	
7.2.1

	
CFM will charge LAN for Supplemental Services in accordance with the pricing set forth in Exhibit G hereto. The pricing for Supplemental Services shall escalate [***] in accordance with the formula set forth in Exhibit G hereto.

	
7.3

	
[***]

	
7.4

	
[***]

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8.

	
INVOICING AND PAYMENT TERMS

 

	
8.1

	
Invoicing for Popular and Restored Rate Services

For Popular Rate Services, no later than the fifth (5th) Day of each month, LAN will provide to CFM the time since new, cycles since new and average derate for each Engine serial number.  CFM will provide LAN an invoice no later than the fifteenth (15th) Day of the month for the prior month for services covered under the Popular Rates.

In addition, LAN will pay CFM for services covered and invoiced, in relation to each Engine, under a Restored Rate pursuant to Article 7.1 above [***].

8.2           Invoicing for Supplemental Services

CFM will invoice LAN for Supplemental Services as follows:

Following Redelivery, CFM will issue an invoice to LAN for the actual charges to complete the Supplemental Services.

	
8.3.

	
Payment terms

LAN will pay all invoices within [***] from the date of the invoice. All payments shall be transmitted electronically to CFM’s bank account as indicated on the invoice. Payment shall be effective upon receipt thereof.

Should LAN fail to make any payment when due, unless reasonably contested, CFM may charge a fee for late payment at a rate equal to the U.S. prime rate, as published in [***], plus [***], compounded daily on any unpaid balance commencing on the next Day after the payment due date until such time as the payment plus the late payment charges are received by CFM in full. Payments will be applied to any late payment fees then to the oldest outstanding amounts in order of succession. If LAN fails to make any payment, which is not the subject of a good faith dispute, when due, and does not cure such failure within [***] of such due date, CFM may terminate or suspend performance of all or any portion of this Service Agreement.  [***]

Should CFM fail to make a cash payment (if any) owed by CFM to LAN under the terms of this Services Agreement when due, unless reasonably contested, LAN may charge for such late payment at a rate equal to the U.S. prime rate, as published in [***], plus [***], compounded daily on any unpaid balance commencing on the next Day after the payment due date until such time as the payment plus the late payment charges are received by LAN in full.

In the event of a bona fide dispute regarding any the amount to be paid pursuant to any invoice, or any portion thereof, LAN shall within [***] of receipt of such invoice give written notice to CFM of such disputed invoice, or dispute portion thereof, together with reasonable substantiation of such dispute and any supporting documentation. CFM and LAN shall use their respective best efforts and allocate sufficient resources to resolve such dispute within [***] or as soon as practicable thereafter.  In the event the Parties fail to resolve any such dispute invoice within such period, the dispute shall be resolved by designating senior managers to reach a resolution. In the event of a resolution, CFM shall credit LAN, or LAN shall pay to CFM, as applicable, settled amount of the disputed portion of the invoice within [***] calendar days. [***].

 

	
  

	
9.

	
WARRANTY AND LIMITATION OF LIABILITY

 

For this Article 9, the term “CFM” shall be deemed to include CFM, GE and Snecma, the CFM Designated Repair Station and CFM’s subsidiaries, assigns, Services providers, and their respective directors, officers, employees, and agents.

	
9.1 

	
Workmanship Warranties.

	
9.1.1 

	
Services Warranty

All Services performed under this Service Agreement shall be free from defects in workmanship.

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For Engines repaired and Redelivered within [***] calendar months preceding expiration of this Service Agreement, if LAN claims a defect in workmanship within either [***] calendar months or [***] EFH following Redelivery, whichever comes first, and (a) LAN provides written notice to CFM of such defect within [***] of its discovery, and (b) LAN ships to CFM the part or component which gives rise to the claim, or, in cases in which shipment is commercially impracticable, makes such part or component reasonably available to CFM’s personnel; and (c) [***], CFM will provide or cause to provide the following:

	
  

	
i.

	
Repair or replacement of such defective workmanship or, at LAN’s election [***],

	
  

	
ii.

	
Pay LAN’s reasonable direct costs for such repairs, but in no event shall such costs exceed CFM’s internal costs of repair and,

	
  

	
iii.

	
Reimburse LAN for transportation expenses reasonably incurred and adequately documented by LAN in connection with the warranty claim.

[***].

	
9.1.2 

	
Conditions and Limitation of Liability

This Services Warranty is applicable only if: the Engine, following Redelivery, (a) has been transported, stored, installed, operated, handled, maintained and repaired in accordance with the then-current AMM or CFM manuals, Airworthiness Directives, Service Bulletins or other relevant written instructions; (b) has not been altered, modified or repaired by anyone other than the CFM Designated Repair Station and its subcontractors; and (c) has not been subjected to accident, misuse, abuse or neglect [***].

Any warranty for Engines or parts, LRUs, components and material thereof, including the design, material or engineering defects of a manufacturer, will be the warranty, if any, of the manufacturer of such Engines or parts, LRUs, components or material thereof. For the avoidance of doubt, the warranties per Exhibit B, Section II of the GTA and the special guarantees per Section C.8 of Letter Agreement #1 to the GTA shall apply to Parts installed by the CFM DRS or its subcontractors under this Service Agreement.

The foregoing will constitute the sole remedy of LAN and the sole liability of CFM for defective workmanship relative to the Engines. The liability of CFM connected with or resulting from the Services warranty shall not in any event exceed the cost of correcting the defect as provided above, and, upon the expiration of the shortest period described therein ([***]), all such liability will terminate.  In no event shall CFM be liable for any special, expectation, consequential, incidental, resultant, indirect, punitive or exemplary damages (including loss of use, loss of profit or loss of revenue in connection with the Engines), other than in any case of gross negligence or willful misconduct on the part of CFM.

THE SERVICES WARRANTY SET FORTH HEREIN IS EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES AND GUARANTEES WHETHER WRITTEN, STATUTORY, ORAL OR IMPLIED (INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY IMPLIED WARRANTY ARISING FROM COURSE OF DEALING, COURSE OF PERFORMANCE, OR USAGE OF TRADE), [***].

	
9.2 

	
Assignment of Warranties

LAN may not assign the Services warranty without CFM’s prior written consent. However, CFM will consent to a Services warranty assignment to LAN’s lessor and/or lender upon written request, subject to the terms and conditions of a mutually agreed warranty assignment letter.

	
9.3 

	
Designation of CFM as Warranty Claims Administrator and Beneficiary

LAN will designate CFM as a claims administrator and beneficiary for all applicable Engine warranties and guarantees using the designation letter attached as Exhibit L. Such designation letter will automatically terminate upon the termination of the Agreement.

	
9.4 

	
Pre-existing Warranties.

LAN will assure that any requested repair of an Engine, accessory or component that is covered under a third party warranty that is not assigned to CFM will be performed directly by that person at no expense to CFM.  Notwithstanding the above, CFM may accept a purchase order for the time and material repair of a warranted item from LAN or the person giving the warranty.

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9.5 

	
Superseding Warranties.

During the Term of this Service Agreement, LAN acknowledges that the obligations undertaken by CFM hereunder supersede any warranties or other commercial obligations undertaken by CFM in any other agreement with LAN, including but not limited to the GTA. Upon termination of this Service Agreement, any such warranties or commercial obligations with remaining life will be restored to LAN.

 

	
  

	
10.

	
DELIVERY – REDELIVERY

 

	
10.1 

	
Delivery

All Engines to be Serviced will be Delivered by LAN to [***] to be designated by CFM or another mutually agreed upon location. Such Engines will shipped within [***] following removal from the aircraft.  LAN will not Deliver parts or components for repair separate from an Engine without CFM’s written consent ([***]).

	
10.2 

	
Packaging

LAN is responsible for all packaging, labeling and associated documentation of the Engine at Delivery, in accordance with the International Civil Aviation Organization’s (ICAO) Technical Instructions for the Safe Transport of Dangerous Goods by Air, and if the Engine is to be transported over the United States of America, the US Department of Transport Regulations 48 CFR 171-180.  If required by applicable law or regulations, LAN will further provide a material safety data sheet to CFM at Delivery of the Engine indicating any substances contained within the Engine to be consigned.  LAN will indemnify, defend and hold harmless CFM from all or any claims, liabilities, damages, judgments, costs, penalties, fines and/or any punitive damages imposed, alleged, or assessed by any third party against CFM and caused by and to the extent of LAN’s non-compliance with this Article 10.2.

	
10.3 

	
Shipping Stands

LAN will provide and maintain all shipping stands, shipping containers, mounting adapters, inlet plugs and covers, required to package the Engine for Delivery and CFM will Redeliver the Engines with the shipping stands, shipping containers, mounting adapters, inlet plugs and covers provided by LAN.

	
10.4 

	
Redelivery

CFM will prepare and package the Engine for Redelivery to LAN and provide a Services records package that complies with AAA regulations. CFM is responsible for all packaging, labeling and associated documentation of the Engine at Redelivery, in accordance with the International Civil Aviation Organizations (ICAO) Technical Instructions for the Safe Transport of Dangerous Goods by Air, and if the Engine is to be transported over the United States of America, the US Department of Transport Regulations 48 CFR 171-180.  If required by applicable law or regulations, CFM will further provide a material safety data sheet to Customer at Redelivery of the Engine indicating any substances contained within the Engine to be consigned. CFM will indemnify, defend and hold harmless LAN from all or any claims, liabilities, damages, judgments, costs, penalties, fines and/or any punitive damages imposed, alleged, or assessed by any third party against LAN and caused by and to the extent of CFM’s non-compliance with this Article 10.4.

Redelivery dates are based upon (i) receipt by CFM of all information from LAN necessary to permit CFM to proceed with the Services immediately and without interruption; and (ii) LAN’s compliance with the payment terms of this Service Agreement.

In the event Redelivery of an Engine cannot occur due to any act or failure to act by LAN, CFM may place such Engine into storage. In such event, CFM will notify LAN and CFM’s Redelivery obligations will be deemed fulfilled and all risk of loss or damage to the Engine shall pass to LAN on the date of such storage (save as to any such loss or damage caused by CFM’s gross negligence or willful misconduct). Any amounts payable to CFM upon Redelivery will be payable [***] days after the date of receipt of CFM’s invoice. Promptly upon receipt of CFM’s invoice, LAN will reimburse CFM for all expenses incurred by CFM, including, but not limited to, preparation for and placement into storage, handling, inspections, preservation and insurance of the Engine. Upon payment of all amounts due hereunder, CFM will assist and cooperate with LAN in the removal of Engine that has been placed in storage.

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11.

	
TURN AROUND TIME

 

	
11.1 

	
Qualified Shop Visits

For Qualified Shop Visits, CFM will exercise all reasonable efforts to meet a Turn Around Time (“TAT”) of [***] Days. The Parties agree that there shall be an additional [***] Days to allow for the shipment of the Engine from the point of Delivery to the CFM Designated Repair Station and back, except in case of any delays outside of CFM’s control, including, but not limited, to customs clearance.

	
11.2 

	
Supplemental Services

The TAT shall be extended by the time taken to perform any Supplemental Services, which cannot be reasonably performed in conjunction with the Covered Services described in Article 5.1.1.(ii) of this Service Agreement. [***] shall be added to the TAT for Engines received with QEC attached.

 

	
11.3

	
[***]

	
11.3.1

	
[***]

	
11.3.2

	
[***]

 

	
  

	
12.

	
ADDITION TO/ REMOVAL FROM SERVICE AGREEMENT

 

	
12.1 

	
Addition of Engines

LAN and CFM may agree to amend Exhibit B to add engines to the Service Agreement after the Commencement Date. For each added engine, LAN will provide information, including, but not limited to, the engine serial number, aircraft tail number (if applicable), previous operator (if any), current owner, operating time and flight cycles since new and, if applicable, the operating time and flight cycles since the last shop visit, shop visit reports, historic thrust and derate information and applicable thrust rating. CFM will evaluate [***] the effect on the Rate Per Flight Hour pricing for that engine, taking into consideration effects on the fleet size, age and condition of the engines and other commercial considerations and may adjust the Rate Per Flight Hour pricing for that engine accordingly.

	
12.1.1

	
 [***]

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12.2 

	
Removal of Engines

LAN may remove Engines from this Service Agreement upon advance written notice, only if LAN is no longer operating the Engines and is no longer responsible for maintenance of the Engines for the following reasons:

[***]

Any Engine removal will be subject to the reconciliation provisions set forth below, except if otherwise expressly provided.

[***]

Maximum Removals.  If the number of Engines decreases to less than [***] of the number of Engines expected to have been delivered to LAN in accordance with Exhibit B as at the time of any Engine removal, CFM may terminate this Service Agreement upon written notice to LAN. [***].

	
12.3

	
EFH Minimum

[***].

 

	
  

	
13.

	
COMMUNICATION

 

CFM will assign a program manager, at no cost to LAN, who will be the point of contact for LAN with respect to implementation of the CFM Service Program (the “CFM Program Manager”).

LAN will also designate a point of contact to communicate with the CFM Program Manager.

The CFM Program Manager will:

	
  

	
a.

	
Draft a Procedures Manual following execution of this Service Agreement and prior to first Aircraft delivery to LAN and submit it to LAN for approval, such approval not to be unreasonably withheld;

	
  

	
b.

	
Work with LAN, on a monthly basis, to develop a Removal Schedule which will identify by serial number the Engine(s) to be removed during the following six (6) month period, the anticipated reason for removal of each, and the schedule for Delivery.

	
  

	
c.

	
Work with LAN, on a quarterly basis, to develop the Repair Specification.

	
  

	
d.

	
[***].

	
  

	
e.

	
[***].

 

	
  

	
14.

	
GENERAL TERMS AND CONDITIONS

 

General terms and conditions provided in Exhibit I are an integral part of this Service Agreement.

Counterparts: This Service Agreement may be signed by the Parties in separate counterparts, and any single counterpart or set of counterparts, when signed and delivered to the other Parties shall together constitute one and the same document and be an original Service Agreement for all purposes.

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IN WITNESS WHEREOF, the Parties hereto have executed this Service Agreement as of the day and the year first above written.

	  	  	  
	
CFM INTERNATIONAL, Inc.

	  	
LAN AIRLINES S.A.

	  	  	  
	
BY: _______________________________

	  	
BY: ______________________________

	  	  	  
	
___________________________________

	  	
__________________________________

	  	  	  
	
PRINTED NAME: ____________________

	  	
PRINTED NAME: ___________________

	  	  	  
	
___________________________________

	  	
__________________________________

	  	  	  
	
TITLE: _____________________________

	  	
TITLE: ___________________________

	  	  	  
	
___________________________________

	  	
__________________________________

	  	  	  
	  	  	
LAN AIRLINES S.A.

	  	  	  
	  	  	
BY: ______________________________

	 	 	 
	  	  	
__________________________________

	  	  	  
	  	  	
PRINTED NAME: ___________________

	  	  	
__________________________________

	  	  	  
	  	  	
TITLE: ___________________________

	 	 	 
	 	 	
__________________________________

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EXHIBITS

	
EXHIBIT A:

	
DEFINITIONS

	  	  
	
EXHIBIT B:

	
ENGINES COVERED AND OPERATIONAL PARAMETERS

	  	  
	
EXHIBIT B-1:

	
OPTION AIRCRAFT

	  	  
	
EXHIBIT C:

	
SHOP VISIT DATA

	  	  
	
EXHIBIT D:

	
PRICE ADJUSTMENT MATRIX

	  	  
	
EXHIBIT E:

	
ESCALATION – RATE PER ENGINE FLIGHT HOUR

	  	  
	
EXHIBIT F:

	
LRU

	  	  
	
EXHIBIT G:

	
SUPPLEMENTAL SERVICES PRICING

	  	  
	
EXHIBIT H:

	
CFM DESIGNATED REPAIR STATION

	  	  
	
EXHIBIT I:

	
GENERAL TERMS AND CONDITIONS

	  	  
	
EXHIBIT J:

	
ON-SITE SUPPORT

	  	  
	
EXHIBIT K:

	
FLIGHTLINE LRU SUPPORT

	  	  
	
EXHIBIT L:

	
DESIGNATION LETTER

 

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EXHIBIT A: DEFINITIONS

Capitalized terms used in the recitals and elsewhere in the Service Agreement but not otherwise defined in this Service Agreement will have the following meanings:

“Act of God” – An event that directly and exclusively results from the occurrence of natural causes beyond the reasonable control of the Parties.

“Additional Services” - The Services described in Article 5.2.

“Aircraft Accident” - An occurrence caused by the operation of an aircraft in which any person suffers a fatal injury or serious injury as a result of being in or upon the aircraft or by direct contact with the aircraft or anything attached to the aircraft, or in which the aircraft receives damage or a third party’s property is damaged in any way.

“Aircraft Incident” - An occurrence, other than an Aircraft Accident, caused by the operation of an aircraft that affects or could affect the safety of operations and that is investigated and reported. [***].

“Airworthiness Directive” or "AD" - A document issued by the AAA having jurisdiction over the Engines, identifying an unsafe condition relating to such Engines and, as appropriate, prescribing inspections and the conditions and limitations, if any, under which the Engines may continue to operate.

“AMM” – Aircraft Maintenance Manual.

“Approved Aviation Authority” or “AAA” - As applicable, the Federal Aviation Administration of the United States (“FAA”), the European Aviation Safety Authority (“EASA”), the DGAC of Chile (“DGAC”) or such other equivalent foreign aviation authority, [***].

 

“ATA 300” shall mean Specification for packaging of airlines supplies. Published by the Air Transport Association.

“Beyond Economic Repair” or “BER” - When the cost, calculated on a Supplemental Services basis, to restore an Engine to the requirements of the Repair Specification exceeds [***].

“Campaign Change” – A campaign change will be declared by CFM when a new Part introduction (as a consequence of a design change), Part modification, Part inspection, or premature replacement of an Engine or Module is required by a time compliant CFM Service Bulletin or FAA or or EASA or DGAC Airworthiness Directive.

“CFM Designated Repair Station” or “CFM DRS” or “DRS” - The repair facilities designated by CFM, which are certified by the AAA to perform the Services hereunder and where Services are performed on Engines.

“CFM Service Program” - All off-wing work required on an Engine to restore the Engine to Serviceable condition in accordance with the Repair Specification, the Workscope and the terms of this Service Agreement, including Supplemental Services.

“CLP” - The manufacturer's Current catalog or manufacturer’s Current list price pertaining to a new Engine or part thereof.

“Commencement Date” – Has the meaning provided in Article 3.

“Contracted Hours” - the Annual Utilization, as described in Exhibit B of this Service Agreement, multiplied by number of Engines multiplied by the number of years in the Term for each Engine.

“Covered Services” - The Services described in Article 5.1.

“Current” - As of the time of the applicable Service or determination.

“Day” - Calendar day (excluding Saturday and Sunday) unless expressly stated otherwise in writing.  If performance is due in a country on a day where that day is a public holiday, performance will be postponed until the next day which is not a public holiday or a Saturday or Sunday.

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“Delivery” - The arrival of an Engine together with all applicable records and required data [***], International Chamber of Commerce, Incoterms 2000, [***] or as otherwise agreed by the Parties, whereby LAN fulfills the obligations of seller and CFM fulfills the obligations of buyer.  "Deliver" will mean the act by which LAN accomplishes Delivery.

 

“Delivery Point” – in the case of Flightline LRU Support, [***].

“Dollars” or "U.S. $" - The lawful currency of the United States of America.

“Engine” - Each bare engine assembly or, as applicable, Engine module, which is the subject of this Service Agreement and identified in Exhibit B, including its essential components as described in Exhibit F. For the avoidance of doubt this definition includes both installed engines and spare engines as identified in Exhibit B.

“Engine Flight Hour” or “EFH” - Engine flight hour expressed in hourly increments of aircraft flight [***].

“Entry Into Service” - The date when the Engine is delivered to LAN by the airframer or by CFM, as a New Engine.

“FIM” – Fault Isolation Manual.

[***].

“Induction” - The date work commences on the Engine at the CFM Designated Repair Station when all of the following have taken place: (i) arrival of the Engine and required data at the CFM DRS, (ii) Parties’ approval of the preliminary Workscope, [***].

“Life Limited Part” or "LLP"- A part with a limitation on use established by CFM or the AAA, stated in cumulative EFH or cycles, as listed in Exhibit A of the GTA.

“LLP Minimum Build” - The minimum quantity of cycles and/or EFH that every LLP must have remaining at the completion of a Performance Restoration Shop Visit. The LLP Minimum Build shall be the threshold used to determine which LLP are replaced at a Performance Restoration Shop Visit.

“Line Replaceable Unit” or “LRU” - A control or accessory that is mounted on the external portion of an Engine, as listed in Exhibit F.

“New Engine” - An Engine which has not undergone a shop visit, which has less than [***] EFH since new and which contains only CFM approved parts and CFM approved repairs.

“On-Site Support” or “OSS” - Has the meaning provided in Article 5.2.1.

“Part” - A part originally sold by CFM.

“Performance Restoration Shop Visit” – The Services performed during a shop visit in which, at a minimum, any one of the following modules is exposed, disassembled and subsequently refurbished: the high-pressure compressor, high-pressure turbine, combustor chamber or stage one low pressure turbine nozzle.

“Pool” – means the collective reference to Serviceable LRUs necessary for Standard Exchange as listed in Exhibit K.

“Popular Rate” or “Popular Rate per Engine Flight Hour“ – The Popular Rate per Engine Flight Hour provided in Article 5.1.

“Primary Hub” – The main airport where LAN performs the majority of its engine removal.

“Procedures Manual” - A separate document, not part of this Service Agreement, which provides detailed procedures and guidance for the administration of this Service Agreement.  In case of conflict between the Procedures Manual and this Service Agreement, this Service Agreement will prevail.

 

“Qualified Shop Visit” – Has the meaning provided in Article 5.1.1.

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“QEC” – Quick Engine Change.

“Rate” or “Rate Per Engine Flight Hour” – The rate for Covered Services or Additional Services as set forth in Article 7.

“Redelivery” - The shipment of a Serviceable Engine with legally required certifications, [***], International Chamber of Commerce, Incoterms 2000, at a location in [***] to be designated by CFM or as otherwise agreed by the Parties, whereby LAN fulfills the obligations of buyer and CFM fulfills the obligations of seller.  "Redeliver" will mean the act by which CFM completes Redelivery.

“Removal Schedule” - The schedule jointly developed by CFM and LAN for Engine removal off wing for Services or Engine removal from operation. [***].

[***]

“Repair Specification” - The LAN repair specification which establishes the minimum baseline to which an Engine or part thereof will be inspected, repaired, modified, reassembled and tested to make and Engine Serviceable.  Such Repair Specification will meet or exceed the recommendations of CFM's operational specifications, applicable CFM maintenance or overhaul manuals and LAN's maintenance plan that has been approved by the AAA. [***].

“Repairable” - Capable of being made Serviceable.

[***]

“Rotable Part” - A new or used Serviceable Part drawn from a common pool of Parts used to support one or more customers. A Rotable Part replaces a similar Part removed from an Engine when such removed Part requires repair.

“Scrapped Parts” - Those Parts or parts determined by CFM to be Unserviceable and BER.

“Service(s)” - With respect to an Engine or part thereof, all or any part of those maintenance, repair and overhaul services provided under this Service Agreement as either Covered Services or Supplemental Services.  “Serviced” will be construed accordingly.

“Service Agreement” - This Service Agreement, as the same may be amended or supplemented from time to time, including all its Exhibits.

“Service Bulletin” or "SB" - The document as issued by CFM to notify the operator of modifications, substitution of parts, special inspections, special checks, or conversion of an Engine from one model to another.

“Serviceable” - Meeting all specified standards for airworthiness prescribed by CFM, and AAA. This will also include the standards for airworthiness prescribed by the aviation authority having jurisdiction over the aircraft on which the Engine is installed.

“Standard Exchange” – In the case of Flightline LRU Support, means any exchange of an Unserviceable equipment with a Serviceable one which is available and fully interchangeable with such Unserviceable equipment.

“Supplemental Charges” – Has the meaning provided in Article 7.2.

“Supplemental Services” - Those Services provided pursuant to Article 5.3.

“Term” – Has the meaning provided in Article 3.

“Termination” - The ending of this Service Agreement before the expiration of the Term, as specified in Exhibit I, Article 2 Termination herein below.

“TSM” – Trouble Shooting Manual.

[***]

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“Unserviceable” - Not meeting all specified standards for airworthiness prescribed by CFM and AAA. This will also include the standards for airworthiness prescribed by the aviation authority having jurisdiction over the aircraft on which the Engine is installed.

“Workscope” - Has the meaning provided in Article 6.3.

“Workscope Planning Guide” - The document published by CFM which describes the “on condition” maintenance concept for the Engines.  This document communicates the timing and extent of work required to enable operators to achieve reliability, performance, and maintenance cost goals.

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EXHIBIT B:      ENGINES COVERED AND OPERATIONAL PARAMETERS

The Engines covered by this Service Agreement are set forth below.  [***].

Aircraft Delivery Schedule / Install + Spare Engine

[***]

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[***]

Installed Engines and Spare Engines Operating Parameters:

[***]

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EXHIBIT B-1:    [***]

 

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EXHIBIT C:   SHOP VISIT DATA

	
  

	
·

	
Engine Operator

	 

	
  

	
·

	
Engine Model

	
  

	
·

	
Engine Serial Number

	
  

	
·

	
Engine Time and Cycles Since New

	
  

	
·

	
Engine Time and Cycles Since last Shop Visit

	
  

	
·

	
Shop Visit Rank

	
  

	
·

	
Reason for Shop Visit

	
  

	
-

	
Prime cause,

	
  

	
-

	
Scheduled/unscheduled,

	
  

	
-

	
More detailed description

	
  

	
·

	
Engine Airworthiness Directive and/or Services Bulletin status

	
  

	
·

	
All Engine information and records, set forth in the Procedures Manual

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EXHIBIT D: PRICE ADJUSTMENT MATRIX

[***]

 

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[***]

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[***]

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[***]

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EXHIBIT E:  ESCALATION – Rate Per Engine Flight Hour

The Rate Per Engine Flight Hour will be adjusted on a yearly basis for fluctuation of the economy as described below:

[***].

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EXHIBIT F:  LRU

	
[***]

	
[***]

	 	 
	
[***]

	
[***]

	
[***]

	
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[***]

	
[***]

	
[***]

	
[***]

	
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[***]

	
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[***]

	
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[***]

	
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[***]

	
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[***]

	
[***]

	
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[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
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[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
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[***]

	
[***]

	
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[***]

	
[***]

	
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[***]

	
[***]

 

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EXHIBIT G:     SUPPLEMENTAL SERVICES PRICING

	
[***]

	 
	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
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[***]

	
[***]

	
[***]

	
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[***]

	
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[***]

	
[***]

	
[***]

	
[***]

	
[***]

	
[***]

 

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EXHIBIT G CONTINUED:  SUPPLEMENTAL SERVICES PRICING – [***]

	
1. Basis:

All prices are stated in 2010 United States Dollars [***].

	  
	
[***]

	
[***]

	
[***]

 

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EXHIBIT G CONTINUED:  SUPPLEMENTAL SERVICES PRICING – FIXED PRICE LABOR SCHEDULE

[***]

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EXHIBIT H:  CFM DESIGNATED REPAIR STATION

[***]

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EXHIBIT I: GENERAL TERMS AND CONDITIONS

Table of Contents

	
ARTICLE 1

	
-

	
LIMITATION OF LIABILITY AND INDEMNIFICATION

	  	  	  
	
ARTICLE 2

	
-

	
TERMINATION

	  	  	  
	
ARTICLE 3

	
-

	
TAXES

	  	  	  
	
ARTICLE 4

	
-

	
EXCUSABLE DELAY

	  	  	  
	
ARTICLE 5

	
-

	
PATENTS

	  	  	  
	
ARTICLE 6

	
-

	
INFORMATION AND DATA

	  	  	  
	
ARTICLE 7

	
-

	
GOVERNMENTAL AUTHORIZATION & EXPORT SHIPMENT

	  	  	  
	
ARTICLE 5

	
-

	
WAIVER OF IMMUNITY

	  	  	  
	
ARTICLE 9

	
-

	
NOTICES

	  	  	  
	
ARTICLE 10

	
-

	
LIENS

	  	  	  
	
ARTICLE 11

	
-

	
APPLICABLE LAW – DISPUTE RESOLUTION

	  	  	  
	
ARTICLE 12

	
-

	
MISCELLANEOUS

 

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ARTICLE 1 – LIMITATION OF LIABILITY AND INDEMNIFICATION

	
A.

	
Total Liability.  The total liability of CFM for any and all claims, whether in contract, warranty, tort (including negligence but excluding gross negligence and willful misconduct), product liability, patent infringement or otherwise, for any damages arising out of, connected with or resulting from the Service Agreement or the performance or non-performance of any Service or from the manufacture, sale, Redelivery, resale, repair, overhaul, replacement or use of the Engine or any item or part thereof, will not exceed [***] on which the Service giving rise to the claim was performed. Notwithstanding the foregoing, in no event will either Party have any liability hereunder, whether as a result of breach of contract, warranty, tort (including negligence but excluding gross negligence and willful misconduct), product liability, patent infringement or otherwise, for any special, consequential, incidental, resultant or indirect damages, (including, without limitation, loss of: use, profit, revenue or goodwill) or punitive or exemplary damages. [***].

In no event will CFM have any liability hereunder, whether as a result of breach of contract, warranty, tort (including negligence but excluding gross negligence and willful misconduct), product liability, patent liability, or otherwise, for the design, material, workmanship, engineering defects or product liability and any damages whatsoever, including damages to personal property and for personal injury or death, caused in any way by the manufacturer of the parts, LRU’s, components or material, thereof, or related thereto.

[***].

In the event LAN uses non-CFM parts or non-CFM approved LRU’s, parts or repairs in an Engine and such LRU’s, parts or repairs cause personal injury, death or property damage to third parties, LAN shall indemnify and hold harmless CFM from all claims and liabilities associated therewith. The preceding indemnity shall apply whether or not CFM was provided a right under this Service Agreement to remove such LRU’s, parts or repairs, and irrespective of the exercise by CFM of such right. [***].

	
B.

	
Definition.  For the purpose of this Article 1, the term "CFM" is deemed to include CFM and its parent and affiliated companies, the subcontractors and suppliers of any Services furnished hereunder, and the directors, officers, employees, agents and representatives of each.

ARTICLE 2 - TERMINATION

	
A.

	
Termination Events.  The Service Agreement may be terminated as follows:

Late Payment.  In the event that LAN fails to make payments to CFM within the time periods specified herein, CFM may terminate all or any portion of this Service Agreement upon [***] written notice to LAN, unless LAN cures such failure within such period following receipt of this notice.

Insolvency.  Either Party may terminate or suspend performance of all or any portion of this Service Agreement if the other Party: (A) makes any agreement with creditors due to its inability to make timely payments of its debts; (B) enters into bankruptcy or liquidation, whether compulsory or voluntary; (C) becomes insolvent; or (D) becomes subject to the appointment of a receiver of the whole or material part of its assets.

	
  

	
Material Breach.   Either Party may terminate this Service Agreement upon [***] Days written notice to the other for failure to comply with any material provision of this Service Agreement unless the failure has been cured or the Party in breach has substantially effected all acts required to cure the failure prior to such [***] (except for late payment, as described in Paragraph A.1 above).

	
  

	
Maximum Removals.  If at any time during the Term of this Service Agreement, the number of Engines decreases to less than eighty percent (80%) of the number of Engines listed in Exhibit B, CFM may terminate this Service Agreement immediately upon written notice to LAN.

	
B.

	
Activity After Termination.  In the event the Service Agreement is terminated, the following shall cumulatively apply, in addition to any other right or remedy allowable under this Service Agreement or applicable law:

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Payment for Services Performed.  In the event of termination of this Service Agreement for any reason, LAN will pay CFM for all Services or work performed by or caused to be performed by CFM up to the time of such termination under the applicable terms and prices of this Service Agreement including all costs, fees, and charges incurred by CFM in providing support and material under this Service Agreement, including lease engines to the extent that LAN is responsible for the payment of such sums in accordance with this Service Agreement.  [***].

Reconciliation. In addition to the above, the terms of the reconciliation under the removal of Engines provisions of Article 12 of the Service Agreement will apply.

Work in Process, Redelivery of  LAN’s Engines.  Upon the termination or expiration of this Service Agreement, CFM will complete all work in process in a diligent manner and Redeliver all Engines, parts and related documentation, provided that LAN (a) has paid in full all charges for all such Services and material, plus all costs, fees and penalties, incurred by CFM in providing support, including any lease engines, to the extent that LAN is responsible for the payment of such sums in accordance with this Service Agreement, and (b) has returned all lease engines provided under this Service Agreement.

ARTICLE 3 – TAXES

	
A.

	
Taxes, Duties, or Charges. In addition to the price for the Services, [***], upon demand, all taxes (including, without limitation, sales, use, excise, turnover or value added taxes), duties, fees, charges or assessments of any nature (but excluding any income taxes) (hereinafter “Taxes”) assessed or levied in connection with performance of this Service Agreement.

	
B.

	
Reimbursement/Refund. If payment of any such Taxes is made by CFM (or the applicable affiliated company), LAN will reimburse CFM (or the applicable affiliated company) upon demand, such reimbursement including, inter alia, penalties and interest levied on CFM (or the applicable affiliated company). CFM will use all reasonable efforts to obtain a refund thereof. [***].

	
C.

	
Withholdings. If LAN deducts any Taxes (“Charges”) with respect to any amounts payable to CFM under this Service Agreement, LAN shall pay such additional amounts to CFM so that the payment received by CFM net of all such Charges shall be equal to the payment amounts stated as due to CFM under this Service Agreement. [***]. To facilitate the utilization by CFM of tax credits generated by such withholding, and therefore facilitate remittance of said recovery to LAN, LAN shall provide documentation and assistance in a timely manner to CFM.

	
D.

	
[***].

ARTICLE 4 - EXCUSABLE DELAY

	
A.

	
Excusable Delay.   Either Party will be excused from, and will not be liable for, any delay in performance or failure to perform hereunder (except for the obligation to pay money or credit or debit an account which will not be excused hereunder), and will not be deemed to be in default for any delay in or failure of performance hereunder due to causes beyond its reasonable control.  Such causes will be conclusively deemed to include, but not be limited to [***] (including disruption of technology resources), or transportation shortages (each an “Excusable Delay”). [***].

	
B.

	
Continuing Obligations.  Article 4.A will not, however, relieve either Party from using its commercially reasonable efforts to avoid or remove such causes of delay and continue performance with reasonable dispatch when such causes are removed.  [***].

	
C.

	
Extended Delay Termination.  If delay resulting from any of the foregoing causes extends for more than [***] and the Parties have not agreed upon a revised basis for continuing the Services, including any adjustment of the price, then either Party, upon [***] written notice to the other, may terminate the purchase order that covers the delayed Services.

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ARTICLE 5 – PATENTS

	
A.

	
Claims.  CFM shall handle all claims and defend any suit or proceeding brought against LAN insofar as based on a claim that, without further combination, any material or process used in the repair of any items furnished under this Service Agreement constitutes [***]. This paragraph shall apply only to the extent that such material or process is so used to CFM's specification.

	
B.

	
Liability.  CFM's liability hereunder is expressly conditioned upon LAN promptly notifying CFM in writing and giving CFM exclusive authority, information and assistance (at CFM's expense) for the handling, defense or settlement of any claim, suit or proceeding. In case such material or process is held in such claim, suit or proceeding to constitute infringement and the use of said material or process is enjoined, CFM shall, at its own expense and at its option either (1) settle or defend such claim or suit or proceeding arising therefrom, or (2) procure for LAN the right to continue using said material or process in the item repaired under the Service Agreement, or (3) replace same with an item satisfactory and incorporating non-infringing material or process, or (4) modify same so it becomes satisfactory and non-infringing, or (5) refund the repair price applicable to such material or process. CFM shall not be responsible to LAN or to any third party, for incidental or consequential damages, including, but not limited to, costs, expenses, liabilities and/or loss of profits resulting from loss of use under this Article 5. [***].

	
C.

	
Indemnification.  The preceding paragraph B shall not apply: (1) to any material or process or part thereof of LAN design or specification, or used at LAN’s direction in any repair under the Service Agreement, or (2) to the use of any material or process furnished under the Service Agreement in conjunction with any other apparatus, article, material or process.  As to any material or process or use described in part (1) of the preceding sentence, CFM assumes no liability whatsoever for patent or copyright infringement, and LAN shall, in the same manner as CFM is obligated to LAN above, indemnify, defend and hold CFM harmless from and against any claim or liability, including costs and expense in defending any such claim or liability in respect thereto.

	
D.

	
Remedy.  THE FOREGOING SHALL CONSTITUTE THE SOLE AND EXCLUSIVE REMEDY OF  LAN AND THE SOLE LIABILITY OF CFM FOR PATENT OR COPYRIGHT INFRINGEMENT BY ANY MATERIAL OR PROCESS AND IS SUBJECT TO THE LIMITATION OF LIABILITY SET FORTH IN ARTICLE 1, “LIMITATION OF LIABILITY AND INDEMNIFICATION.”  THE PATENT WARRANTY OBLIGATIONS RECITED ABOVE ARE IN LIEU OF ALL OTHER PATENT WARRANTIES WHATSOEVER, WHETHER ORAL, WRITTEN, EXPRESSED, IMPLIED OR STATUTORY (INCLUDING ANY WARRANTY OF MERCHANTABILITY AND FITNESS FOR PARTICULAR PURPOSE OR ANY IMPLIED WARRANTY ARISING FROM COURSE OF DEALING, COURSE OF PERFORMANCE, OR USAGE OF TRADE).

ARTICLE 6 - NON DISCLOSURE

	
A.

	
Non-Disclosure.  Unless the Parties otherwise agree herein or further in writing, any of the terms of the Service Agreement or any knowledge, information or data which the Parties have or may disclose to each other shall be held in confidence and may not be either disclosed or used for any purpose, except:

	
  

	
1.

	
To the extent required by government agencies and courts for official purposes, disclosure may be made to such agencies and courts. In such event, a suitable restrictive legend limiting further disclosure shall be applied.

	
  

	
2.

	
The existence of the Service Agreement and its general purpose only may be stated to others by either of the Parties without approval from the other.

	
  

	
3.

	
CFM may disclose the same to its parents, affiliates, subsidiaries, joint venture participants, engineering service provider, or consultants as needed to perform the Services provided under this Service Agreement. LAN may disclose the same as required to be disclosed in the normal course of LAN's business to LAN's attorneys, accountants, advisors, auditors and rating agencies on a need-to-know basis [***].

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The preceding clause will not apply to information which (1) is or becomes part of the general public knowledge or literature otherwise than as a result of breach of any confidentiality obligation owed by either Party to the other hereunder, or (2) was, as shown by written records, known to the receiving party prior to receipt from the disclosing Party.

	
B.

	
Intellectual Property.  Nothing contained in this Service Agreement will convey to either Party the right to use the trademarks of the other, or convey or grant to LAN any license under any patent owned or controlled by CFM.

ARTICLE 7 - GOVERNMENTAL AUTHORIZATION & EXPORT SHIPMENT

LAN shall be the importer and/or exporter of record for Chile; CFM shall act as the importer and exporter of record in the country where the Designated Repair Station is located [***]. The applicable importer or exporter of record shall be responsible for the timely application for, obtaining and maintaining any required authorization, such as export license, import license, exchange permit or any other required governmental authorization relating to the related imported or exported Engine, and shall be responsible for complying with all U.S., French and other foreign government licensing and reporting requirements. At either Party’s request and expense, the other Party will assist the requesting Party in its application for any required export or import licenses. CFM will not be liable if any authorization is not renewed or is delayed, denied, revoked or restricted, and LAN will not thereby be relieved of its obligation to pay for Services performed by CFM. All transported Engines will be subject to (i) all applicable U.S. export laws, including but not limited to the U.S. Export Administration Regulations and International Traffic in Arms Regulations and (ii) the French export control regulations. LAN agrees not to dispose of U.S. or French origin items provided by CFM other than in and to the country of ultimate destination and/or as identified in an approved government license or authorization, except as said laws and regulations may permit.

ARTICLE 8 - WAIVER OF IMMUNITY

[***].

ARTICLE 9 - NOTICES

	
A.

	
Acknowledgement.  Any notices under this Service Agreement shall be in writing and be delivered or sent by mail, express/shipping service or electronic transmission to the respective Parties at the following addresses, which may be changed by written notice:

TO:

	
LAN AIRLINES S.A.

	
CFM INTERNATIONAL SA

	
[***]

	
[***]

	
[***]

	
[***]

 

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B.

	
Effect of Notices.  Notices will be effective and will be deemed to have been given to (or “received by”) the recipient: (A) upon delivery, if sent by courier, express mail, or delivered personally; (B) on the next business day following receipt, if sent by facsimile; or (C) on the fifth (5th) day after posting (or on actual receipt, if earlier) in the case of a letter sent prepaid first class mail.

ARTICLE 10 – LIENS

	
A.

	
Other Liens. LAN: acknowledges that CFM has the legal right to assert mechanic’s liens or other statutory or common law liens under applicable law (foreign or domestic) against Engines following performance of Services under this Service Agreement, With respect to Engines leased to LAN, CFM understands that LAN has been authorized and required by the owners to cause Services to be performed.  CFM may, at its option, notify the owners of the existence of this Service Agreement and CFM’s lien rights arising from performance of Services.

	
B.

	
Enforcement.  If LAN fails to tender any payment owing under this Service Agreement and CFM initiates foreclosure with respect to any Engine pursuant to a mechanic’s lien, then LAN agrees to supply to CFM all records, log books and other documentation pertaining to the maintenance condition of the Engine, and a certificate either (i) certifying that the Engine has not been involved in any Aircraft Accident or Incident or (ii) specifying the date and facts surrounding any Accident or Incident in which the Engine has been involved and the nature and extent of the damage sustained (such records, log books, certificate and other documentation referred to hereinafter as the “Engine Documents”). The Parties recognize that the failure by LAN to deliver the Engine Documents may have a material, adverse effect on the value of any Engine with respect to which foreclosure has been initiated by CFM and the ability of CFM to sell or lease the Engine.

ARTICLE 11 – APPLICABLE LAW – DISPUTE RESOLUTION

	
A.

	
Applicable Law. This Service Agreement shall be construed, interpreted and applied, and the legal relations between the Parties determined, in accordance with the laws of the State of New York (U.S.A.). The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Service Agreement

Dispute Resolution. If any dispute arises relating to this Service Agreement, the Parties will endeavor to resolve the dispute amicably, including by designating senior managers who will meet and use commercially reasonable efforts to resolve any such dispute.  If the Parties’ senior managers do not resolve the dispute within sixty (60) days of first written request, either party may request that the dispute be settled and fully and finally determined by binding arbitration, in accordance with the International Chamber of Commerce pursuant to its rules of Conciliation and Arbitration, by one or more arbitrators appointed in accordance with said rules.  The place of arbitration and hearings shall be New York, USA. The arbitration shall be in English and the opinion shall be rendered in English. The arbitration award shall be final and binding by any Party in any court of competent jurisdiction, and shall waive any claim appeal whatsoever against it, [***]. The arbitrators will have no authority to award punitive damages or any other damages not measured by the prevailing Party's actual damages, and may not, in any event, make any ruling, finding or award that does not conform to the terms and conditions of the Service Agreement. All statements made or materials produced in connection with this dispute resolution process and arbitration are confidential and will not be disclosed to any third party except as required by law or subpoena. The Parties intend that the dispute resolution process set forth in this Article will be their exclusive remedy for any dispute arising under or relating to this Service Agreement or its subject matter.

	
  

	 

	
C.

	
Exception.  Either Party may at any time, without inconsistency with this Article, seek from a court of competent jurisdiction any equitable, interim or provisional relief to avoid irreparable damage.  This Article will not apply to and will not bar litigation regarding claims related to a Party’s proprietary or intellectual property rights, nor will this Article be construed to modify or displace the ability of the Parties to effectuate any termination contemplated in Article 2.

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ARTICLE 12 - MISCELLANEOUS

	
A.

	
Assignment of Service Agreement.. This Service Agreement, any related purchase order or any rights or obligations hereunder may not be assigned, in whole or in part, without the prior written consent of the other Party, except that LAN’s consent will not be required for an assignment by CFM to one of CFM’s affiliates [***]. However, notwithstanding CFM’s assignment to any such affiliate, CFM shall remain responsible for the performance of any and all obligations so assigned. Any assignment in contradiction of this clause will be considered null and void.

	
B.

	
Beneficiaries. Except as otherwise expressly provided to the contrary, the rights herein granted and this Service Agreement are for the benefit of the Parties hereto and are not for the benefit of any third person, firm or corporation, except as expressly provided herein.

	
C.

	
Survival Of Certain Clauses. The rights and obligations of the Parties under the following Articles of this Service Agreement as amended, and related Exhibits shall survive the expiration, termination or completion of this Service Agreement:

	
  

	
- Limitation of Liability and Indemnification

	
  

	
- Taxes

	
  

	
- Patents

	
  

	
- Non Disclosure

	
  

	
- Governmental Authorization & Export Shipment

	
  

	
- Waiver of Immunity

	
  

	
- Applicable Law – Dispute Resolution

	
  

	
- Miscellaneous

	
D.

	
General Rules of Contract Interpretation.  Article and paragraph headings contained in this Service Agreement are inserted for convenience of reference only and do not limit, affect or restrict in any way the meaning and the interpretation of this Service Agreement.  Words used in the singular shall have a comparable meaning when used in the plural and vice versa, unless the contrary intention appears. Words such as “hereunder”, “hereof” and “herein” and other words beginning with “here” refer to the whole of this Service Agreement, including amendments. References to Articles, Sections, Paragraphs or Exhibits will refer to the specified Article, Section, Paragraph or Exhibit of this Service Agreement unless otherwise specified.

	
E.

	
Language.  The English language will be used in the interpretation and performance of this Service Agreement.  All correspondence and documentation arising out of or connected with this Service Agreement and any related purchase order(s), including Engine records and Engine logs, will be in the English language.

	
F.

	
Severability.  The invalidity or unenforceability of any part or provision of this Service Agreement, or the invalidity of its application to a specific situation or circumstance, shall not affect the validity legality and enforceability of the remainder of this Service Agreement, or its application to other situations or circumstances. In addition, if a part of this Service Agreement becomes invalid, the Parties will endeavour in good faith to reach agreement on a replacement provision that will reflect, as nearly as possible, the intent of the original provision.

	
G.

	
Non-Waiver. Any failure or delay in the exercise of rights or remedies hereunder will not operate to waive or impair such rights or remedies.  Any waiver given will not be construed to require future or further waivers.

	
H.

	
Currency Judgment.  This is an international transaction in which the specification of United States Dollars is of the essence.  No payments required to be made under this Service Agreement will be discharged by payments in any currency other than United States Dollars, whether pursuant to a judgment, arbitration award or otherwise.

	
I.

	
No Agency Fees.  LAN represents and warrants that no officer, employee, representative or agent of LAN has been or will be paid a fee or otherwise has received or will receive any personal compensation or consideration by or from CFM in connection with the obtaining, arranging or negotiation of this Service Agreement or other documents entered into or executed in connection herewith.

	
J.

	
No Agency.  Nothing in this Service Agreement will be interpreted or construed to create a partnership, agency or joint venture between CFM and LAN.

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K.

	
Titles/Subtitles.  The titles and subtitles given to the sections of the Service Agreement are for convenience. They do not limit or restrict the context of the article or section to which they relate.

	
  

	 

	
L.

	
Entire Agreement ; Modification. This Service Agreement, together with its Exhibits and any amendment (or Letter Agreement relating hereto, if any), contains and constitutes the entire understanding and agreement between the Parties respecting the subject matter hereof, and supersedes and cancels all previous negotiations, pre-existing agreements, commitments and writing in connection herewith.  This Service Agreement may not be released, discharged, abandoned, supplemented, modified or waived, in whole or in part, in any manner, orally or otherwise, except by a writing of concurrent or subsequent date signed and delivered by a duly authorized officer or representative of each of the Parties hereto making specific reference to this Service Agreement and the provisions hereof being released, discharged, abandoned, supplemented, modified or waived.

	
M.

	
Counterparts.  This Service Agreement may be executed in one or more counterparts, all of which counterparts will be treated as the same binding agreement, which will be effective as of the date set forth on the first page hereof, upon execution by both Parties and delivery by each Party hereto to the other Party of one or more such counterparts.

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EXHIBIT J: ON-SITE SUPPORT

SERVICES

CFM On-Site Support will provide on wing support technicians, along with special tooling, to perform flight-line services, on wing and off wing inspection, maintenance, and repair of Engines as specified in a mutually executed work order by LAN. Such Engine support services may be provided, as designated by LAN and agreed by service provider (such agreement not to be unreasonably withheld) at LAN’s facilities or at repair facilities owned by CFM On-Site Support or its affiliates.  All Services provided shall be in accordance with its standard commercial quality control policies, procedures, and practices, that are in accordance with an approved repair station and that are auditable upon contract signature. A turn-time estimate for each workscope for acceptance by LAN prior to beginning of work will be provided.

FIXED WORKSCOPE PRICING

Fixed Prices for workscopes provided by CFM On-Site Support include the labor charges involved in preparation and execution of the workscope requiring normal manpower and tooling in normal work conditions. It does not include consumables or other charges that may be applicable. Prices are stated in Year 2010 U.S. Dollars.

	
CFM56  Fixed Workscope Pricing

	  
	
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EXHIBIT K:  FLIGHTLINE LRU SUPPORT

[***]

 

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EXHIBIT L:      DESIGNATION LETTER

[Customer Letterhead]

[Name and address of Original Engine Manufacturer]

	
Attn: 

	
Manager Warranty Programs

Re:           Designation of CFM as Claims Administrator and Engine Benefits Recipient.

1. [________________] (“Customer”) and [_________________] (“OEM”) entered into General Terms Agreement Number [____________________] dated [_________] (the “GTA”), for the purchase by Customer of [_________] (“Engine”) equipped [______________] (“Aircraft”) and spare engines. Pursuant to the GTA, OEM provides Customer various warranties, guarantees and other Engine related benefits introduced via Service Bulletins and other special offerings (specifically described in paragraph 3 hereof, the “Engine Benefits”)

 

2. Customer and CFM International, Inc (“CFM”) have entered into a separate agreement, Number [____________________] dated [_________]  ("Maintenance Agreement") for the maintenance, repair and overhaul of Engines.  The Maintenance Agreement specifies that Customer shall, during the term of the Agreement, designate CFM to act as claims administrator and Engine Benefits recipient.  Accordingly, Customer hereby authorizes CFM from and after the date of the Maintenance Agreement to: (a) negotiate and enter into final settlements with OEM for Engine Benefits and (b) receive from OEM in the name of CFM all proceeds of such Engine Benefits.  Customer warrants to OEM that all actions undertaken by CFM pursuant to this authorization shall be binding on Customer and that OEM may rely thereon.

3. Engine Benefits are specifically limited to the following, all as more fully defined in the GTA:

 

a. Standard warranties:  New Engine and Module, New Parts, Campaign Change, Ultimate Life, Vendor Back-Up and Vendor Interface Warranties;

b. Special guarantees:  Extended New Engine and Module, Extended New Parts, Extended Campaign Change, AOG;

c. Industry participation offers on CFM56-5B engines as set forth in fleet-wide service bulletins;

 

d. Extended warranties, and non-warranty programs offered by OEM pursuant to Service Bulletins or other communications between Customer or CFM.

4. OEM consents to the disclosure by Customer to CFM of Engine Benefits in the GTA, Service Bulletins or other notices.  CFM agrees to hold in confidence all such Engine Benefits information, or other OEM proprietary information, provided to CFM in order to give effect to the Engine Benefits information. This Letter may only be amended or modified by the written agreement of the parties hereto, and shall remain in effect throughout the term (including extensions) of the Maintenance Agreement. This Letter will be interpreted and applied in accordance with the substantive laws of the State of New York.

	
Customer

	
CFM

	
OEM

	  	  	  
	
By: _______________

	
By: _______________

	
By: _______________

	  	  	  
	
Title: ______________

	
Title: ______________

	
Title: ______________

	
Date: ______________

	
Date: ______________

	
Date: ______________

 

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