INTERVENTION

EX-10.26 2 dex1026.htm TERM COST PLAN AGREEMENT DATED APRIL 1, 2004 Term Cost Plan Agreement dated April 1, 2004

EXHIBIT 10.26

TERM COST PLAN^™ TCP^® Agreement # 03-1907


BETWEEN		-AND-

PRATT & WHITNEY CANADA CORP.		GREAT LAKES AVIATION, LTD.
1000 Marie Victorin,		1022 Airport Parkway
Longueuil, Quebec		Cheyenne, Wyoming 82001
Canada

(hereinafter called “P&WC”)		(hereinafter called “Customer”)

WHEREAS

Customer currently operates a fleet of 30 Beechcraft 1900D Airliner aircraft (“Aircraft”), which Aircraft utilize Pratt & Whitney Canada Corp. PT6A-67D engines.

P&WC has agreed to supply Customer with certain engine maintenance services under a Fleet Management Program^™ called a Term Cost Plan^™ (TCP^®), subject to the terms and conditions attached hereto;

Unless otherwise defined, all capitalized terms hereunder shall have the meaning ascribed to such terms at Article 1.0 hereof.

THE PARTIES HEREBY AGREE as follows:

For the duration of this Agreement, P&WC shall supply to Customer the Engine Maintenance Services listed below at the TCP^® Hourly Rate indicated below.


ENGINE MAINTENANCE SERVICES COVERED UNDER THIS AGREEMENT

• Engine Overhauls	Yes	• HSI Component Refurbishment	Yes

• Basic Unplanned Engine Removals (BUER)	Yes	• LCF Component Replacement	Yes

• ADAS+ Maintenance	No	• Spare Engine Support	Yes

• ECTM^® Analysis	Yes

Customer agrees to comply with all of the terms and conditions attached hereto, which form an integral part of this TCP^®.

Customer agrees to pay the TCP^® Hourly Rate indicated below and to comply with all of the terms and conditions attached hereto, which form an integral part hereof.

Agreement start date: April 1^st 2004

Agreement end date: March 31^st 2009

Customer’s Hourly Rate shall be XXXXX¹ per Engine Operating Hour.

Customer acknowledges having read and understood the scope and all of the terms and conditions of this Agreement, including but not limited to Annexes A through J.

Each of P&WC, Customer and RACC acknowledge and agree that this Agreement shall only become effective upon the execution of an agreement between P&WC and RACC whereby RACC shall guarantee the performance of all of the Customer’s financial obligations under this Agreement for an amount and upon terms to be agreed upon between P&WC and RACC (the “RACC Backstop Agreement”). The RACC Backstop Agreement shall be executed between P&WC and RACC within twenty (20) days from the date of execution of this Agreement, in default of which this Agreement shall be considered null. Each of Customer and RACC acknowledge that the execution of the RACC Backstop Agreement is a fundamental consideration of this Agreement.

Material omitted pursuant to a request for confidential treatment. Omitted material has been filed separately.


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		i

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® Agreement

SIGNED in duplicate by the duly authorized representative of each party.


PRATT & WHITNEY CANADA CORP.						GREAT LAKES AVIATION, LTD.

/s/ Gilbert Gaudette						/s/ Charles R. Howell IV
Name: Gilbert Gaudette						Name: Charles R. Howell
Title: V.P. Service Centres						Title: Chief Executive Officer
Date: April 16, 2004						Date: April 16, 2004

INTERVENTION

The undersigned, Raytheon Aircraft Credit Corporation, through its duly authorized representative, hereby acknowledges having read the present TERM COST PLAN^TM TCP^{^®} Agreement # 03-1907 and agrees with the terms and conditions contained therein, insofar as they may apply to Raytheon Aircraft Credit Corporation.

RAYTHEON AIRCRAFT CREDIT CORPORATION

/s/ Andrew A. Mathews

Name: Andrew A. Mathews

Title: President

Date: April 16, 2004


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		ii

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

TERM COST PLAN^™

AGREEMENT

Scope, Terms, Conditions


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		iii

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

TABLE OF CONTENTS


1.0	Definition	1
2.0	Scope of Services and Engine Eligibility	4
3.0	Exclusions	5
4.0	Conditions of Sale	7
5.0	Delivery	7
6.0	Component Replacement	7
7.0	Payment/ TCP^® Hourly Rate Adjustment	7
8.0	Taxes/Duties/Other Charges	8
9.0	TCP^® Hourly Rate Adjustment	9
10.0	Parties’ Responsibilities	10
11.0	Dac Services	12
12.0	Delay	13
13.0	Warranty & Limitation of Liability	14
14.0	Non-Disclosure	14
15.0	Termination	15
16.0	Export Controls	17
17.0	General Terms	17


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		iv

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

1.0

DEFINITION

In this Agreement

1.1

“Accessory” means the specific LRU installed on the Engine as specified in the Engine build specification;

1.2

“AD” means airworthiness directives;

1.3

“Agreement” means this agreement, including all applicable annexes;

1.4

“BUER” means basic unplanned engine removal; the premature removal of the Engine or Engine Module or Accessory due to an Engine, Component or Accessory induced malfunction. Removal for normal hot section deterioration, which is detectable through engine condition monitoring performed in accordance with the applicable aircraft and/or Engine maintenance manual, is not considered to be a BUER. Likewise, removal of an Engine, Component or Accessory due to a problem which could have been rectified using troubleshooting and/or corrective line maintenance actions as specified in the applicable aircraft and/or Engine maintenance manual, is not considered to be a BUER;

1.5

“CFR” means a P&WC Customer FMP^® Representative;

1.6

“Commercial Support Program” means the commercial assistance for the substitution, modification, or replacement of Component(s) for reasons of flight safety, critical engine performance and/or reliability, and AD’s concurred with by P&WC;

1.7

“Component” means a genuine P&WC part, necessary for the operation of the Engine, and normally supplied by P&WC as part of the Engine build specification unless otherwise specified within this Agreement;

1.8

“Consumable” means a Component which, by design, can only be used once and is replaced irrespective of apparent condition during the course of inspection, removal, maintenance, Repair or Overhaul;

1.9

“Customer Hold” means an Engine put on hold by Customer, irrespective of the stage of Engine Maintenance Services completed or to be completed. Reasons for Customer Holds may include but are not limited to events in which P&WC is awaiting; i) a purchase order from Customer; ii) confirmation of workscope by Customer; iii) a cost estimate approval from Customer; iv) information/data from Customer required to proceed with the Engine Maintenance Services; or v) the resolution of payment issues;

1.10

“Designated Facility” means the facility designated to Customer by the CFR, where Services covered by this Agreement shall be performed;

1.11

“Designated Analysis Center (DAC)” means the P&WC approved ECTM^® supplier, which will be, for the purposes of this Agreement, Altair Avionics Corporation;

1.12

“ECTM^®” means the P&WC engine condition trend monitoring program further described in paragraph 11.1 of this Agreement;


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		1

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

1.13

“Engine” means the P&WC turbine engines covered under this Agreement as specified in Annex A. The Engine is divided in 3 Modules - gas generator Module, power section Module and the HSI Module;

1.14

“Engine Cycle” means any Engine operational sequence involving an Engine start, aircraft take-off, flight and landing, culminating in an Engine shutdown. For the purpose of cycle calculation, refer to the definitions applicable to cycle calculation contained in the applicable service bulletin (SB14002) or in the airworthiness section of the applicable Engine maintenance manual;

1.15

“Engine Flying Hour (EFH)” means any 60-minute period of operation of an Engine on an aircraft in flight, irrespective of Engine Cycles during such period;

1.16

“Engine Maintenance Interval Escalation Program” means a monitoring program undertaken by P&WC and Customer to extend the maintenance interval of an Engine, Module or Component as specified in service bulletin SB14003, as may be amended from time to time;

1.17

“Engine Maintenance Services” means the Services that are covered on the face page of this Agreement;

1.18

“Engine Module or Module” means a power section, a gas generator section, or a HSI Module;

1.19

“Engine Operating Hours” means the number of Flight hours accumulated by an Engine as indicated in the Engine logbook in accordance with the applicable regulatory agency requirements;

1.20

“Field Level Maintenance” means routine check inspection and malfunction rectification performed at base stations during transit, turnaround or night stop;

1.21

“FAA” means the United States Federal Aviation Administration;

1.22

“Fleet” means the aircraft owned and/or lawfully leased or operated by Customer powered with Engines covered under this Agreement;

1.23

“Flight” means a completed takeoff and landing of an aircraft;

1.24

“FMP^®” means Fleet Management Plan^™, the budgeted maintenance agreement between Customer and P&WC pursuant to which P&WC supplies the Engine Maintenance Services specified in this Agreement and for which Services Customer pays P&WC an amount based on Customer’s Hourly Rate and Engine usage, as further described herein;

1.25

“FOD” means foreign object damage; damage to any portion of the aircraft Engine vcaused by impact or ingestion of birds, stones, hail or other debris that is not part of the Engine;

1.26

“Fuel Nozzle Kit” means the Components listed in Annex B, which can be removed from the gas generator;

1.27

“GLA Spares” means spare engines provided by GLA in accordance with the requirements in Annex D hereof;


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		2

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

1.28

“Goods” means a P&WC Engine or, in relation thereto, any piece part, Component, Accessory, Module, furnishing or other equipment of any kind which is installed in or attached to it;

1.29

“Hourly Rate” means the dollar value per Engine Operating Hour (including Engine Operating Hours accumulated using Spare Engines) paid for the Engine Maintenance Services covered under this Agreement;

1.30

“HSI” means hot section inspection, the removal and inspection of Engine combustion and turbine section Components, the repair or replacement of deteriorated Components, in compliance with the applicable Engine maintenance manual;

1.31

“HSI Components” means the Components described in Annex B, which can be removed from the gas generator section part of the Engine and sent to a Designated Facility for refurbishment prior to being returned for re-installment on the Engine;

1.32

“LCFComponent(s)” means low cycle fatigue Component(s), Components whose service lives are limited to a specific number of cycles, as specified in the P&WC service bulletin SB14002;

1.33

“LRU” means line replaceable unit, a Component which may normally be removed and replaced with the Engine installed in the aircraft and as part of normal line maintenance activities;

1.34

“NBUER” means non-basic unscheduled engine removal; an unscheduled engine removal caused by conditions or circumstances not directly related to the Engine, such as, without limitation, FOD, lightning strike, as further defined in Annex C herein;

1.35

“OEM” means original equipment manufacturer;

1.36

“Operator Profile” means Customer’s mission profile, fleet, operating and maintenance practices set forth herein;

1.37

“Overhaul” means the Engine or Engine Module disassembly, inspection of all Components, the Repair or replacement of defective parts or LCF Component(s), re-assembly and testing of the Engine Module, all in accordance with the applicable P&WC Overhaul manuals. Once this process is completed, the Engine or Engine Module is considered to be “zero time”;

1.38

“Parties” means P&WC and Customer;

1.39

“P&WC Spares” has the meaning provided in Annex D hereof;

1.40

“P&WCL” means Pratt & Whitney Canada Leasing, Limited Partnership;

1.41

“PMA” means Parts Manufacturing Authorization;

1.42

“Power Charges” means the total charges payable by the Customer obtained by multiplying the Hourly Rate by the aggregate number of Engine Flying Hours;


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		3

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

1.43

“RACC” means Raytheon Aircraft Credit Corporation;

1.44

“RACC Loaners” means a minimum of eight (8) engines owned by RACC to be made available, in accordance with the requirements of this Agreement, on a bailment basis to the Customer by RACC to support the TCP^®;

1.45

“Repair” means the Services necessary to return an Engine or Component to a serviceable condition;

1.46

“Services” means work performed or authorized by P&WC (including supply and fitting of Goods), comprising, without limitation, reconditioning, Overhaul, Repair, servicing, testing, and inspection work;

1.47

“Spare Engines” means one or more P&WC Spares, RACC Loaners and GLA Spares;

1.48

“Term Cost Plan” (TCP^®) means the FMP^® maintenance plan under which Customer pays, monthly for the duration of this Agreement, a predetermined Hourly Rate per Engine Operating Hour for the Services covered under this Agreement.

1.49

“Transition Plan” means a scheduled Engine removal plan mutually established by the CFR, P&WC and Customer. Such Transition Plan shall provide, as a minimum, the requirement for Customer to Overhaul at least two (2) Engines per month for the next twenty-four (24) month period.

2.0

SCOPE OF SERVICES AND ENGINE ELIGIBILITY

2.1

P&WC shall supply to Customer, for Engines enrolled under this Agreement, the Engine Maintenance Services indicated on the face page hereof and further described in Annex C “Scope of Services” attached hereto.

2.2

Subject to the Transition Plan contemplated in section 10.4 hereof, Engines shall be eligible under this Agreement provided the following requirements are met:

2.2.1

All prior Overhauls and Repairs shall have been performed by a facility recognized by P&WC, in accordance with the OEM’s applicable manuals, instructions and recommendations; P&WC hereby acknowledges that Atlantic Turbines Inc.’s facilities (located in Prince Edward Island) and Standard Aero Limited’s facilities (collectively the “Former Repair Facilities”) are acceptable for the purposes of this paragraph;

2.2.2

Verification by P&WC that the Engines comply with the requirements established by the GLA Maintenance Program, it being understood, however, that any Engines covered by such program shall be subject to the Transition Plan; the Transition Plan will also provide that the Engines subject thereto will only be eligible under this Agreement if they are covered by a maintenance program which will incorporate, as a minimum, the maintenance tasks and intervals stipulated in Annex E;

2.2.3

Receipt by P&WC of two (2) original TCP^® agreements duly executed by Customer.


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		4

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

2.3

The following Engines are not eligible under this Agreement:

2.3.1

Engines operated by military, paramilitary or other government agency without the prior knowledge and written approval of P&WC;

2.3.2

Except for the pool consisting of all GLA Engines (reference Annex A), and RACC Loaners, Engines that have become part of any pool of engines, an arrangement by which a participant is entitled to exchange, withdraw and/or use engines held by another participant;

2.3.3

Engines used in dedicated trainer aircraft. Engines installed on aircraft used in typical pilot recurrent training programs are eligible under this TCP^{^®};

2.3.4

Agricultural engines or engines operated for agricultural purposes; and

2.3.5

Aircraft used in external load applications including, but not limited to, fire prevention, logging, construction, canyon or sea rescue, external load training and banner towing.

3.0

EXCLUSIONS

3.1

In particular, and without limitation, all incremental costs incurred by P&WC that are directly attributable to any of the following exclusions below shall not be covered under this Agreement:

3.1.1

Field level maintenance activities and inspections, including but not limited to consumables and labour, as specified in the Engine and/or aircraft maintenance manuals or in service bulletins;

3.1.2

Repairs attributable to damage caused by an Engine mounted LRU or Accessory other than those supplied by P&WC as part of the Engine build specification;

3.1.3

Cost of Repairs attributable to damages caused by workmanship performed by facilities other than P&WC or the Designated Facility. P&WC acknowledges that engine maintenance services may have been performed on the Engines by the Former Repair Facilities prior to the inception of this Agreement. P&WC agrees that it will not claim from the Customer the costs of Repairs attributable to damages caused by workmanship performed by the Former Repair Facilities. However, the Customer shall provide P&WC with all reasonable assistance required to allow P&WC to recover any such costs from the Former Repair Facilities. In addition, and for greater certainty, the Customer acknowledges that under no circumstances shall the foregoing be interpreted or construed as an acceptance by P&WC to assume any liability, of any nature whatsoever, for damages that may be caused, directly or indirectly, to the Customer or any third party as a result of engine maintenance services performed by the Former Repair Facilities on the Engines prior to this Agreement.

3.1.4

At Customer’s request, use of new Components when exchange Components are available or Repair of Components is feasible;

3.1.5

Costs resulting from improper storage, usage, maintenance or operation of an Engine, Engine Module or Engine Component or Accessory, including improper usage of ECTM^® (Proper usage and maintenance are described in the P&WC Engine maintenance manual, P&WC service bulletins, applicable aircraft flight manual and airworthiness regulations);


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		5

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

3.1.6

Repairs attributable to damage caused by non-maintained or poorly maintained runways and landing areas;

3.1.7

Repair or Component replacement attributable to damage caused by corrosion, erosion or sulphidation, if P&WC’s recommendations in relation thereto are not complied with;

3.1.8

Cost of Repair or cost of Component replacement directly attributable to the use of Components not originating from P&WC or from a P&WC authorized vendor, or the use of Repairs or repair schemes not approved by P&WC, including but not limited to the use of FAA-PMA parts;

3.1.9

Any incremental costs related to Customer’s failure to comply with P&WC’s Commercial Support Programs within the deadlines specified in the relevant P&WC service bulletin or service information letter unless such delays are caused by part shortages;

3.1.10

Any and all costs related to or arising from Engine or Engine Module removals and installations, unless an Engine or Engine Module must be removed due to a P&WC commercially supported campaign, directive or program (including first run warranty) that provides support for removal and installation, transportation and/or shipping;

3.1.11

Unless otherwise specified herein, freight costs for Engine or Engine Module, unless an Engine or Engine Module must be transported to a shop due to a P&WC Commercial Support Program (including first run warranty) that provides freight support;

3.1.12

Costs of rental engine support, unless otherwise provided in this Agreement

3.1.13

Tooling fees, hangar fees or any such related airport fees, taxes or duties or any other similar fees, levies or charges;

3.1.14

FOD, external damage to the Engine, Engine Module or Engine Component, collisions or rotor strikes, immersion in water, dropped Engine, Engine Module or Engine Component, rotor electrical leads shorting, accident, fire, flood, lightning strike, theft, explosion, riot, war, rebellion, seizure or any other belligerent acts;

3.1.15

Alteration, modification or tampering of any Engine, Engine Module or Engine Component after delivery by P&WC, which is either illegal or not specifically authorized by P&WC;

3.1.16

Use of Engine Components, Engine Modules or Engines from which P&WC’s name, part number, identification mark or serial number has been removed or defaced;

3.1.17

Use of stolen Engine Components, Engine Modules or Engines including without limitation, any Repair or Overhaul of such stolen Engine Components, Engine Modules or Engines and/or any resultant damage caused thereby;

3.1.18

Use of Engine Components, Engine Modules or Engines which have been involved in an accident where the subject Engine Components, Engine Modules or Engines failure is attributable to that accident;


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		6

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

3.1.19

Use of military Engine Components or Engine Components used in military or para-military operations;

3.1.20

Engine or module shop visits when said engine or module is removed solely for Customer’s convenience outside of the agreed Transition Plan;

3.1.21

Any and all costs related to or arising from Customer’s failure to comply with the terms and conditions of this Agreement; and

3.1.22

Any other factor which:

•

is beyond P&WC’s reasonable control;

•

occurred without fault or negligence of P&WC;

•

could not have been reasonably foreseen by P&WC; and

•

could not have been prevented by means reasonably available to P&WC.

4.0

CONDITIONS OF SALE

4.1

All sales of Engine Maintenance Services by P&WC to Customer covered hereunder shall be subject to the terms and conditions of this Agreement, including all of its Annexes. Services outside of or excluded from this Agreement shall be subject to the terms and conditions of a separate Repair and Overhaul Agreement. Purchase orders or any other document issued by Customer as part of the maintenance activity covered by this Agreement shall be deemed to incorporate the terms and conditions of this Agreement by reference, to the exclusion of any other terms or conditions which may be contained in such purchase orders or other documents.

5.0

DELIVERY

5.1

Incoterms. P&WC will deliver the Goods covered under the Engine Maintenance Services to Customer’s carrier FCA (Free Carrier Aboard, Incoterms 2000) P&WC’s Designated Facility. Title and risk of loss or damage shall pass to Customer on delivery.

5.2

Freight Costs. P&WC will assume repair and overhaul related freight charges from P&WC’s Designated Facility to Customer’s facility within the continental United States.

6.0

COMPONENT REPLACEMENT

6.1

Upon embodiment of new or exchange Components covered by this Agreement into an Engine, the Parties agree that the newly embodied Component shall become the property of Customer, and the removed Component shall become the property of P&WC. Components which are removed at Overhaul and which have value will be returned by P&WC to the Customer upon mutually agreeable delivery terms.

7.0

PAYMENT/ TCP^® HOURLY RATE ADJUSTMENT

7.1

During the term of this Agreement, Customer shall pay monthly an amount calculated by multiplying the total Engine Operating Hours of the Fleet for the month by the


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		7

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

Hourly Rate. These monthly payments shall be received by P&WC no later than the 15th day of the following month, in accordance with P&WC’s payment instructions listed in Annex H. Each such payment shall be considered final. However, should P&WC discover, at any time during a period of twelve (12) months following the issuance of an invoice, the existence of a material discrepancy relative to such invoice between the Engine Operating Hours reported by the Customer or estimated by P&WC, as the case may be, and the actual Engine Operating Hours relative to the Engines (as recorded in the flight logsheets, Engine logbooks or other recognized registers), P&WC will provide the Customer with a written notice thereof within thirty (30) days of the discovery of such material discrepancy. The notice shall contain a reasonably detailed account of P&WC’s claim. In such event, the amounts owed by the Customer to P&WC shall be paid by the Customer no later than thirty (30) days after the receipt by the Customer of P&WC’s notice.

7.2

Customer shall also pay, when due, all charges invoiced by P&WC for work outside of or excluded from the Engine Maintenance Services covered under this Agreement at the then current P&WC labor and material rates. P&WC may review or revise the terms of payment and credit limit from time to time. For work invoiced for Services rendered outside or excluded from the Engine Maintenance Services, payments by Customer shall be received by P&WC within thirty (30) days from date of receipt of invoice by Customer. Notwithstanding the foregoing, charges which are in good faith dispute in accordance with Section 7.6 hereof will only be paid upon resolution of such dispute.

7.3

For all late payments, Customer shall be liable for interest at a rate of 8% per annum or the U.S. prime rate plus five percent (5%), whichever is greater, without exceeding the maximum rate allowed per applicable law. In addition, Customer shall reimburse P&WC for all attorneys’ fees and other expenses incurred by P&WC in recovering any sums due from Customer.

7.4

In the event shipment of Goods is delayed due to actions or omissions of Customer, P&WC may at its discretion charge reasonable storage fees.

7.5

The Hourly Rate shall be subject to annual escalation at the following rates, to be applied on the date of anniversary of the Agreement:


1^st Anniversary	2^nd Anniversary	3^rd Anniversary	4^th Anniversary
XXXXX¹	XXXXX¹	XXXXX¹	XXXXX¹

7.6

In the event Customer disputes invoice charges, Customer shall notify P&WC in writing of the reasons for disputing the invoice within thirty (30) days of the date of receipt of the invoice by Customer.

8.0

TAXES/DUTIES/OTHER CHARGES

8.1

Except as otherwise specified herein, Customer is responsible for all taxes (excluding taxes based on P&WC’s net income), duties and other charges of any nature whatsoever, including interest and penalties thereon, arising from the sale, delivery or use of the Goods or from the provision of Services under this Agreement, and will reimburse P&WC for any such charges P&WC may be required to pay directly to a governmental authority or to a facility designated by P&WC which performs any of the Services covered under this Agreement.


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		8

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

9.0

HOURLY RATE ADJUSTMENT

9.1

The Hourly Rate is based on the Fleet described in Annex A and on the Operator’s Profile represented and warranted by the Customer as described in Annex F herein. Any material modifications to Customer’s Profile or changes in its geographical or operating environment must be immediately reported to P&WC and may result in an Hourly Rate adjustment. Any Fleet Changes (as defined below) must also be immediately reported to P&WC and may result in an Hourly Rate adjustment, in the manner contemplated hereinbelow. Subject to the following sentence, P&WC also reserves the right to adjust the Hourly Rate in circumstances where Customer does not adhere to the Transition Plan, the Engine maintenance conditions set forth in Annex E or is otherwise in default under this Agreement. Any Hourly Rate adjustment proposal made by P&WC as a result of default of Customer pursuant to the terms of this Agreement (which proposal shall include the calculations of such adjustment in sufficient details to enable Customer to make an informed decision with respect thereto) shall have to be agreed upon by Customer before it can take effect. If Customer refuses any such proposal for an Hourly Rate adjustment or is deemed to have refused by not replying to any such proposal within 10 days of its receipt, the Parties shall diligently deploy commercially reasonable efforts to establish a mutually agreeable alternative to the proposed Hourly Rate adjustment within 30 days of Customer’s refusal or deemed refusal thereof, failing which P&WC shall have the right to terminate this Agreement as per the provisions of Section 15.1.

9.2

Fleet Changes. The Hourly Rate shall, from time to time, be adjusted in the event that Engines are added to or removed from the Fleet (“Fleet Change(s)”), independent of any changes to the Operator’s Mission Profile as described in Annex F.

Addition of Engines. The calculation of the adjustment for adding engines shall be based on the following formula:

A + B

(C – D)+E

where,

A = Forecasted increase of expenses related to Engine Maintenance Services attributable to Fleet Changes;

B = Remaining total Power Charges as of the date of the Fleet Change;

C = Total forecasted EFH under this Agreement;

D = Total EFH forecasted to have been flown by the Customer as of the date of the Fleet Change; and

E = Forecasted increase of EFH due to the Fleet Change.

Reduction of Engines. The calculation of the adjustment for reducing engines shall be based on the following formula:

B - A

(C – D)-E


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		9

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

where,

A = Forecasted reduction of expenses related to Engine Maintenance Services attributable to Fleet Changes;

B = Remaining total Power Charges as of the date of the Fleet Change;

C = Total forecasted EFH under this Agreement;

D = Total EFH forecasted to have been flown by the Customer as of the date of the Fleet Change; and

E = Forecasted reduction of EFH due to the Fleet Change.

10.0

PARTIES’ RESPONSIBILITIES

10.1

Designated Facility. For the performance of any Services under this Agreement, Customer shall contact its CFR to obtain confirmation of the Designated Facility. Any work effected or completed without obtaining such confirmation from the CFR shall be at Customer’s entire expense.

10.2

CFR. The CFR shall:

Identify the Designated Facility; and

define the extent of work to be performed on Engine(s) or Components.

10.3

Unscheduled Repairs. When Customer believes an Engine needs unscheduled Repair and removal, Customer shall perform the standard on-wing maintenance manual level troubleshooting. If such troubleshooting is unsuccessful in returning the Engine to serviceability, Customer shall immediately advise the CFR prior to Engine removal.

10.4

Engine Removals. Upon the execution of this Agreement or as soon as practically possible thereafter, the CFR, P&WC and Customer, as applicable, shall agree to the Transition Plan. Customer shall inform P&WC of all Engines or Engine Modules removals and installations, at time of removal or installation, or upon P&WC’s request. Subject to paragraph 3.1.10 herein, Customer shall be responsible for all Engine, Module and Component removals and installations, including any costs related to these activities.

In addition, Customer shall inform P&WC, within 24 hours, of all unscheduled Engine, Engine Module or Engine Component removals, and, as soon as reasonably possible, of any known or suspected damage to an Engine, Engine Module or Engine Component.

10.5

Access for P&WC Personnel. Customer shall allow P&WC’s personnel reasonable access to the Engines and any removed Components, its quality system, as well as all other relevant operating and maintenance records maintained by Customer, including the Engine log books.

10.6

Engine data. At the time of each shop visit, Customer shall supply P&WC with the following information (as applicable) for the Engine, the Engine Modules or Components:

•

Time Since New (TSN)

•

Time Since Repair (TSR)


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EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

•

Time Since Overhaul (TSO)

•

Time Since Hot Section Inspection (TSHSI)

•

Reasons for Removal

10.7

Hardware: At the time of engine shop visits, Customer shall supply to PWC the last installed oil and fuel filters.

10.8

Engine Logbook. Customer shall ensure that all sections of the Engine logbook are properly completed when providing the Engine Logbook together with the Engine at time of shop-visit.

10.9

Engine Operation and Maintenance. Subject to the Transition Plan, Customer shall operate the Engines in accordance with the applicable OEM aircraft operating manual under the aircraft type certificate, and Customer’s Profile set forth in Annex F and shall, as a minimum, maintain the Engines in accordance with the provisions of Annex E. In addition, Customer shall ensure that recommendations made by P&WC are followed in accordance with P&WC’s instructions.

10.10

Engine Operating Hours. Customer shall declare to P&WC, no later than ten (10) days following signature of this Agreement, the Engine Operating Hours and cycles of each Engine at time of Agreement start date.

Customer shall, at the end of each month during the term of this Agreement, calculate the total Engine Operating Hours and cycles for each Engine and submit to P&WC, no later than the fifth (5th) working day of the following month, a report similar to the form set out in Annex G containing all information required therein. If Customer fails to submit the Engine Operating Hours within the prescribed delays, P&WC will estimate the hours flown for that month and invoice Customer accordingly.

10.11

Invoice. P&WC will issue an invoice calculated by multiplying the total Engine Operating Hours of the Fleet for the month by the Hourly Rate upon receipt of Customer’s report of Engine Operating Hours.

10.12

Corrosion, erosion, sulphidation. Customer shall notify P&WC within 48 hours if evidence of corrosion, erosion or sulphidation is detected during maintenance inspection.

10.13

Operating Environment. Customer warrants to P&WC that the Engine has not and shall not be operated in military, para-military or any other unusual service for which the aircraft has not been designed and certified by the original airframe manufacturer.

10.14

Documentation. When requested, Customer shall provide P&WC with all the necessary documents to enable P&WC to fulfill its obligations under this Agreement or, to verify Customer’s compliance with this Agreement.

10.15

Collaboration. Both Parties shall continuously work together to minimize operating costs, maximize on-wing time of the Engines, actively participate in P&WC’s Engine Maintenance Interval Escalation Program and help identify cost reduction opportunities. The application of any benefits generated as a result of the foregoing shall be shared as mutually agreed upon by the Parties.


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		11

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

11.0

DAC SERVICES

11.1

ECTM^®. Customer shall utilize ECTM^® in accordance with the P&WC ECTM^® analytical guide. Customer shall be obligated to:

11.1.1

immediately register with a DAC;

11.1.2

execute all agreements required by the DAC to give effect to the aforesaid registration and the provision of services contemplated in Annex I hereof (the “DAC Services”); and

11.1.3

provide the DAC, on a weekly basis, the necessary ECTM^® data as well as all other information, in any form whatsoever, as may be reasonably required by the DAC.

11.2

Contact Person. Customer will provide P&WC with the contact information relative to the person who will have the responsibility of managing Customer’s obligations in relation to the DAC Services.

11.3

Data. Customer will provide manual data to the DAC at an interval not to exceed one week. Subject to sections 11.4 to 11.7 hereof, the DAC will update and interpret the data, as well as identify any maintenance requirements within 1 working day. Customer shall comply with and respond to these maintenance requirements in a timely fashion. If applicable or necessary, P&WC will supply Customer with ETCM^® Software at no cost to Customer.

11.4

Disclaimer. ANY DAC SERVICES CONTEMPLATED IN ANNEX I HEREOF (INCLUDING WITHOUT LIMITATION TURBINETRACKER^™ AND ANY SOFTWARE) WHICH MAY BE PROVIDED BY P&WC OR THE DAC ARE PROVIDED “AS IS,” AND P&WC DISCLAIMS ALL REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, ORAL OR WRITTEN, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE OR NONINFRINGEMENT, NON-INTERFERENCE WITH ENJOYMENT, OR ACCURACY, AND ALL WARRANTIES IMPLIED FROM ANY COURSE OF DEALING OR USAGE OF TRADE. ALL REPORTS FURNISHED TO CUSTOMER AS A RESULT OF THE DAC SERVICES MAY BE BASED ON INFORMATION FURNISHED BY CUSTOMER OR OTHER OWNERS OR OTHER OPERATORS OF MONITORED ENGINES; NEITHER P&WC NOR THE DAC SHALL HAVE LIABILITY FOR ANY ERRORS IN OR OMISSIONS FROM THE DATA AND REPORTS PROVIDED TO CUSTOMER, OTHER OWNERS OR OTHER OPERATOR. IT IS CUSTOMER’S RESPONSIBILITY TO DETERMINE THE SUITABILITY OF THE SERVICES FOR CUSTOMER’S PURPOSES. CUSTOMER ACKNOWLEDGES THAT 100% AVAILABILITY IS NOT REALIZABLE AND THAT INACCURACIES OR MALFUNCTIONS MAY OCCUR.

11.5

Airworthiness. WITHOUT LIMITING ANY OTHER EXCLUSION OF WARRANTY, P&WC MAKES NO WARRANTIES THAT THE DAC SERVICES ALLOW CUSTOMER OR THE OWNERS OR THE OPERATORS OF AN AIRCRAFT TO DETERMINE THE AIRWORTHINESS OF SUCH AIRCRAFT. CUSTOMER IS SOLELY RESPONSIBLE FOR DETERMINING THE AIRWORTHINESS OF THE AIRCRAFT, AT ALL TIMES, IN ACCORDANCE WITH ALL APPLICABLE REQUIREMENTS, INCLUDING WITHOUT LIMITATION, FROM THE MANUFACTURER(S) AND ALL RELEVANT REGULATORY AUTHORITIES.

11.6

Indemnification. Customer will defend, indemnify and hold harmless P&WC and its affiliates, directors, officers, employees, shareholders, representatives, agents,


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		12

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

servants, predecessors, successors, and permitted assigns (each an “Indemnitee”) from and against any claim, suit, demand, loss, damage, expense (including reasonable attorneys’ fees and costs) or liability that may result from, arise out of or relate to (a) Customer’s breach of any agreement between Customer and the DAC; (b) Customer’s use of or access to any DAC Services provided by the DAC; c) Customer’s negligence or willful misconduct in relation to the DAC Services; or (d) any personal injury or property damage arising with respect to any aircraft owned or operated by Customer with respect to which any DAC Services are provided, but only to the extent not caused (i) by the negligence or willful misconduct of P&WC, or (ii) the DAC Services.

11.7

LIMITATION OF LIABILITY. THE LIMIT OF P&WC AND THE DAC’S LIABILITY (WHETHER IN CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY IN TORT OR BY STATUTE OR OTHERWISE) CONCERNING PERFORMANCE OR NON-PERFORMANCE BY P&WC OR THE DAC, OR IN ANY MANNER RELATED TO THE DAC SERVICES, FOR ANY AND ALL CLAIMS, WILL NOT IN THE AGGREGATE EXCEED THE PAYMENTS MADE BY CUSTOMER TO P&WC HEREUNDER WITHIN THE 6 MONTHS PRIOR TO THE DATE THE CLAIM AROSE. CUSTOMER RELEASES P&WC AND THE DAC FROM AND AGAINST ALL LIABILITY BEYOND SUCH MAXIMUM LIABILITY. NEITHER P&WC NOR THE DAC WILL BE LIABLE FOR ANY LOSS OF DATA, PROFITS, SAVINGS, USE OR BUSINESS; FOR DELAYS, INCONVENIENCE OR BUSINESS INTERRUPTION; OR FRUSTRATION OF ECONOMIC OR BUSINESS EXPECTATIONS, NOR FOR ANY SPECIAL, INCIDENTAL, INDIRECT, EXEMPLARY, CONTINGENT, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE DAC SERVICES WITHOUT REGARD TO WHETHER P&WC HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. NEITHER P&WC NOR THE DAC WILL BE LIABLE OR RESPONSIBLE FOR ANY ANALYSIS, INTERPRETATION OR APPLICATION OF ANY INFORMATION OR DATA PROVIDED VIA THE DAC SERVICES. THESE LIMITATIONS ARE INDEPENDENT FROM ALL OTHER PROVISIONS OF THIS AGREEMENT AND WILL APPLY NOTWITHSTANDING THE FAILURE OF ANY REMEDY PROVIDED HEREIN.

11.8

Third Party Beneficiaries. The DAC is an intended beneficiary of this Section 11.0.

11.9

Future Considerations. The Parties hereto acknowledge and agree that should it be reasonably determined by P&WC and the Customer, at any time during this Agreement, that the use by the Customer of ADAS+ (Automatic Data Acquisition System) made available by the DAC would have allowed either Party to (i) materially reduce engine maintenance costs or (ii) maximize on-wing time of the Engines, the Customer shall be required to install ADAS+ (the ADAS + unit to be provided by P&WC at no charge) on all Engines or, alternatively, diligently establish other commercial or technical considerations with P&WC.

12.0

DELAY

12.1

P&WC is not responsible for any failure or delay in performance resulting from Customer Holds as well as causes which are (i) beyond P&WC’s reasonable control; (ii) occurred without fault or negligence of P&WC; (iii) could not have been reasonably foreseen and; (iv) could not have been prevented by means reasonably available to P&WC. These may include but are not limited to events such as acts of government, court order, civil unrest, sabotage, adverse weather conditions, labour trouble and shortage of materials or services. P&WC will give timely notice to Customer of any such event and will endeavor to avoid or remove the cause and resume performance with minimum delay. The time for delivery will be extended accordingly.


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		13

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

13.0

WARRANTY & LIMITATION OF LIABILITY

13.1

This Agreement is in lieu of the warranty and service policy applicable to Customer’s Engine(s) and Customer hereby assigns to P&WC the rights and remedies thereunder in respect of Repairs arising during the term of this Agreement. Any P&WC workmanship warranty costs will be absorbed by P&WC (or its contractors) outside the TCP^®. Upon termination of this Agreement, any remaining warranty & service policy coverage will return to Customer and P&WC will extend to Customer any available warranty received by the service provider on work performed hereunder. For greater certainty, P&WC will provide to Customer, upon termination of this Agreement, the available warranty relative to Repair and Overhaul services performed by P&WC as indicated in Annex J hereof.

13.2

P&WC is responsible for the defense of any claim, alleging infringement of a Canadian or United States patent by sale or use, without further combination, of new parts incorporated in the Goods provided the Customer gives P&WC prompt written notice of the claim, and full information and authority to defend it. P&WC’s responsibility includes all expenses of defense and payment of costs and damages for patent infringement awarded by the court or agreed to by P&WC. If use or sale of the Goods is finally prohibited, P&WC will, at its option (i) procure the right for sale or use, (ii) modify or replace the Goods to avoid infringement or (iii) take back the Goods and refund the price (less a reasonable allowance for use or damage). The Customer will hold P&WC harmless against any claim of patent infringement arising out of compliance with a design or specification furnished by Customer.

13.3

The Services and remedies provided by P&WC under this Agreement are accepted by the Customer in lieu of all other warranties expressed, implied or any obligation or liability of P&WC in contract or in tort whether or not arising out of negligence. The Customer’s remedies with respect to the warranties set forth in this Section 13.0 in relation to the Services provided hereunder are expressly limited to those set out in this Agreement, to the exclusion of any and all other remedies including, without limitation, indirect, incidental or consequential damages. Indirect, incidental or consequential damages include, without limitation, economic loss, loss or damage to any property or person or any other exemplary, punitive or similar damages, as well as expenses incurred external to the Engines as a result of any of the Services provided hereunder.

13.4

Notwithstanding the foregoing, P&WC will indemnify and hold Customer harmless in the event that a third party holds Customer liable for damages (including reasonable attorneys’ fees) caused directly by the provision of any Service P&WC has provided to Customer; provided, however, that P&WC shall not be responsible for any indirect, incidental or consequential damages incurred by the Customer or any such third parties including, without limitation, economic loss, loss or damage to any property or person and any other exemplary, punitive or similar damages.

14.0

NON-DISCLOSURE

14.1

Save and except for disclosures (i) required to be made pursuant to applicable statute or government regulation or (ii) to be made pursuant to any bona fide request from a Party’s lenders or insurance carriers or potential lenders or insurance carriers,


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		14

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

provided such lenders or insurance carriers execute prior to disclosure, a non-disclosure agreement in form and substance satisfactory to the other Party, acting reasonably, neither Party shall disclose without the prior written approval of the other Party, any information regarding terms and conditions of this Agreement to any third party, nor advertise or release any publicity concerning this Agreement. The provisions of this paragraph shall survive termination of this Agreement. The Parties acknowledge that should any lender or insurance carrier refuse to execute the required non-disclosure agreement, the Parties shall diligently make other mutually agreeable arrangements relative to the disclosure of this Agreement and its content.

14.2

P&WC reserves the right to disclose the terms and conditions of this Agreement to any of its affiliates on a “need to know” basis.

15.0

TERMINATION

15.1

In the event that either Party is in default of any provision of this Agreement and remains in default for a period of fifteen (15) days after receipt of written notice thereof from the other, such other Party may, without prejudice to any rights and remedies otherwise provided under this Agreement or by law, suspend the Services under this Agreement from the date of the written notice for default and terminate this Agreement by notice at any time after the fifteen (15) day period, subject to any accrued obligations existing at the date of termination.

15.2

P&WC shall have the right, but not the obligation, to terminate this Agreement, without further notice or delay to the Customer, in the event that the Customer’s accrued financial obligations to P&WC under this Agreement exceed the guarantee provided by RACC under the RACC Backstop Agreement.

15.3

Either Party (the “Terminating Party”) may terminate this Agreement for any reason, provided the Terminating Party:

15.3.1

is not in default under this Agreement;

15.3.2

provides the other Party (and RACC) with a three (3) month prior written notice of termination; and

15.3.3

complies with the provisions of this Article 15.0, including, without limitation, sections 15.4 to 15.6, as applicable to the Terminating Party.

Without limiting the generality of the foregoing, should the Terminating Party be the Customer, it shall not have the right to exercise the termination option provided under this paragraph (i) if it is in default under the terms of any agreement it may have executed with RACC relative to the Aircraft, including, without limitation, the payment of all sums due to RACC thereunder or (ii) if it still has outstanding indebtedness to RACC, unless RACC consents to such termination in writing.

15.4

Upon termination of the Agreement by P&WC under Section 15.1 or 15.2 above or upon termination of the Agreement by any Party pursuant to Section 15.3 or 15.9, P&WC shall, within 30 days of the date of termination, provide the balance of Customer’s FMP^® account, with relevant documentation as deemed appropriate by P&WC, which shall be calculated as follows:

The aggregate amount of monthly payments received from Customer under the Agreement covering the period from the date of inception of this Agreement forward


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EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

Less

The aggregate amount of all services provided by P&WC under the Agreement, valued at the event cost established below, and as adjusted from time to time as contemplated in this Agreement.


Item		Event Cost
Gas Generator Overhaul		XXXXX
Power Section Overhaul		XXXXX
HSI Component Refurbishment		XXXXX
BUER		XXXXX
LCF Components		P&WC Price List 501 less XXXXX¹

15.5

In the event that the balance of Customer’s FMP^® account determined pursuant to Section 15.4 is positive (monthly payments received exceed aggregate amount of services provided under the Agreement from the date of the Agreement forward), P&WC shall, within 60 days from the date of the termination notice, reimburse 100% of the positive balance to the Customer, less any amounts due to P&WC by Customer under any other agreement with P&WC, including, without limitation, any negative reserve under any other agreement between P&WC and Customer.

15.6

In the event that the balance of Customer’s FMP^® account determined pursuant to Section 15.4 is negative (monthly payments received are less than the aggregate amount of services provided under the Agreement from the date of the Agreement forward), the Customer shall, within 60 days from the date of termination notice, pay to P&WC 100% of the negative FMP^{^®}balance.

15.7

Except in the case of a termination for convenience under Section 15.3, any payment made to a Party pursuant to Sections 15.5 or 15.6, as the case may be, shall be without prejudice to any of such Party’s rights to claim actual damages pursuant to this Agreement or at law, provided such Party is not the party in default hereunder.

15.8

Should the Customer be indebted to P&WC upon the occurrence or by reason of a default under this Agreement (the “Customer’s Debt”) and that the Customer does not, for any reason whatsoever, pay the Customer’s Debt at the earliest of (i) the prescribed delay(s) to effect such payment or (ii) thirty (30) days from the date of such default, P&WC shall have the right to apply any sums that P&WC may have received from the Customer, whether under the terms of this Agreement or any other agreement(s) executed with the Customer, as a reduction to the Customer’s Debt, without further notice or delay to the Customer.

15.9

Either Party may terminate this Agreement at any time by written notice to the other if the other Party becomes insolvent or performs or permits any act of bankruptcy, liquidation, or if a receiver, trustee or custodian is appointed of the other Party or a substantial part of the other Party’s property.

15.10

In the event that an Engine is damaged by accident and deemed by P&WC to be

Material omitted pursuant to a request for confidential treatment. Omitted material has been filed separately.


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EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

beyond economical Repair, or deemed by P&WC not to be recoverable due to theft or loss, or is transferred to a third party by sale or otherwise, performance of all obligations of the Parties under this Agreement, except for the Customer’s obligation to make any payment due to P&WC hereunder, for such Engine shall be completed up to the date of such event and shall cease thereafter.

16.0

EXPORT CONTROLS

16.1

This Agreement is subject to Canadian, U.S. or other country’s export control regulations.

16.2

P&WC:

•

will apply and pay for any necessary export permit/license required for shipment from a Designated Facility to the Customer’s location as required;

•

cannot be held responsible for the issuance, or renewal of export license/permits;

16.3

Customer:

•

will apply and pay for any necessary export license/permit required for shipment from Customer’s facility to a P&WC location as required;

•

cannot be held responsible for the issuance or renewal of export license/permits.

Note:

Neither Party will be held responsible for cost(s)/expenses incurred by either Party should export license/permit not be issued and/or renewed by a government authority.

17.0

GENERAL TERMS

17.1

All notices required to be given pursuant to this Agreement shall be in writing and shall be considered as duly delivered when sent by registered mail to the other Party at the address stated on the face page of this Agreement (in the case of the Customer, to the attention of the President) or such other address as either Party shall advise the other in writing.

17.2

Neither Party may assign this Agreement in whole or in part without the written consent of the other.

17.3

This Agreement with its Annexes constitutes the sole and entire Agreement between the Parties with regard to the subject matter hereof and supersedes all other contracts, agreements or understandings including, without limitation, Customer’s purchase orders or P&WC’s acknowledgment thereof.

17.4

This Agreement shall be governed and interpreted in accordance with the laws in force in the State of New York.

17.5

No modification of this Agreement shall be binding unless agreed to by a written instrument executed by duly authorized representatives of both Parties.

17.6

Recourses are cumulative and not alternative. Singular includes the plural.

17.7

Any concession, latitude or waiver allowed by either Party to the other at any time shall not prevent such party from subsequently enforcing its rights and shall not be deemed a waiver of any subsequent breach.


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EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

17.8

The Parties have requested this Agreement, including all of its Annexes, to be drawn in the English language.

17.9

Each of the parties has been given the opportunity to review this Agreement with legal counsel.

17.10

This Agreement is the result of negotiation between all parties hereto. Accordingly, no provision of this Agreement shall be interpreted for or against any party hereto on the basis that such party was the draftsman of such provision, and no presumption or burden of proof shall arise disfavoring or favoring any party by virtue of the authorship of any of the provisions of this Agreement.

17.11

Each of the parties hereto represents to the other that (a) it has full power, authority and legal right to enter into and perform this Agreement, (b) the execution, delivery and performance of this Agreement has been duly authorized by all necessary action on each party’s part, does not require any approvals or consents except such approvals and consents as have heretofore been duly obtained or which are specifically enumerated herein to which this Agreement is subject, and (c) this Agreement does not contravene any law binding on either of the parties or contravene any agreement to which either of the parties hereto is a party or by which it is bound, or any law, governmental rule, regulation or order. Upon request, each of the parties will provide the other party with documentary evidence of its authority to enter into this Agreement.

17.12

The provisions of this Agreement shall be severable, and if any provision shall be invalid, illegal or incapable of being enforced by reason of any rule of law, administrative order, judicial decision or public policy, all other provisions contained herein shall, nevertheless, remain in full force and effect.

17.13

The captions or headings in this Agreement are made for convenience and general reference only and shall not be construed to describe, define or limit the scope or intent of the provisions of this Agreement.

17.14

This Agreement may be executed in several counterparts, each of which, when so executed, shall be deemed to be an original, and such counterparts shall, together, constitute and be one and the same instrument.

17.15

All annexes and exhibits referred to in this Agreement and attached hereto are by this reference incorporated as an integral part of this Agreement, subject to the terms and conditions set forth herein.


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		18

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

ANNEX A - ENGINE LIST

60 Engines and 2 Spares

Fleet Engine serial numbers covered by this Agreement:


Gas Generator		Power Section

Serial Number	TTSN\TCSN\TSO\TSHSI	Serial Number	TTSN/TCSN\TSO
114333	16,934\21,417\16,906\4,843	PS0076	15,511\19,288\15,511
PS0068	13,143\15,365\13,116\7,374	114224	22,033\24,793\12,545
114034	20,139\26,630\12,050\2,465	PS066	15,112\17,857\15,112
114220	21,925\21,484\14,922\7,282	114225	16,649\17,725\8,200
PS0090*	12,514\15,088\0\0	PS0095*	13,226\14,652\0
114224*	20,503\23,906\11,016\0	114457*	15,655\18,511\4,917
PS0077	15,630\16,495\15,630\4,764	PS0031	15,194\19,194\15,194
114305	12,646\20,551\675\4,865	PS0093	14,368\17,626\14,368
PS0079	15,698\19,328\15,698\3,181	114333*	13,913\18,021\289
114179*	17,879\24,479\10,178\104	114177	22,006\29,276\14,880
PS0059	13,137\15,438\13,137\1,545	114463	17,462\21,857\6,083
114381	17,003\18,207\17,003\2,353	114268	19,972\26,652\13,693
114266	19,262\26,538\12,238\2,372	114443	16,188\17,428\16,188
PS0060	13,976\15,822\13,976\2,372	PS0079	15,244\18,698\15,244
114393	15,626\18,522\15,626\4,878	114340	19,165\25,799\12,489
PS0049	13,681\15,738\2,721\698	114223	21,586\23,754\5,349
PS0012	14,171\16,071\14,171\109	PS0017	16,163\19,576\16,163
PS0076	15,780\19,024\15,780\7,095	114305	16,704\24,793\4,747
114380	16,330\21,496\16,309\1,244	114380	16,314\21,437\16,293
PS0001*	12,859\16,224\104\104	114406*	15,447\18,332\104
114462	17,650\18,801\5,866\2,656	114202	22,251\26,025\14,224
114376	13,199\14,171\13,178\6,482	114376	13,199\14,177\13,177
114265	18,477\22,143\7,413\5,385	114265	18,477\22,139\7,413
114357	17,623\17,710\5,789\1,056	114426	17,159\20,002\5,912
		114462	16,290\17,365\16,290
PS0056*	11,908\14,114\120\120	114124	21,409\28,044\13,725
114426	TBD	PS0014	TBD
114460	17,410\20,421\5,686\5,717	114218	21,327\24,123\15,373
PS0082	12,213\14,824\812\812	PS0082	13,035\15,835\812
114443	16,980\17,848\16,980\2,082	PS0077	15,258\16,997\15,258
114444	16,742\19,823\16,742\1,088	114234	22,078\24,794\5,674
PS0072	14,629\19,069\14,629\1,609	114460	17,573\20,571\5,875
114464	16,563\17,876\4,637\1,748	PS0060	15,081\17,734\4,709
114463	16,564\20,018\4,637\2,195	PS0084*	13,962\17,492\104
114218*	19,404\22,660\466\466	114260	20,411\27,76313,038
114112	23,990\29,971\6,332\1,047	114220	22,117\21,635\15,126
PS0031	14,854\19,076\14,854\2,714	114267	20,105\20\703\9,640
114441	15,155\18,606\15,155\2,714	114357	17,102\17,622\5,116
114409	17,327\21,584\5,9495,519	114304	18,016\23,316\6,040
PS0078	12,271\13,466\12,271\6,097


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EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907


PS0094	15,490\19,477\15,490\3,811	114266	19,588\27,141\12,564
PS0095	15,490\16,589\15,489\675	PS0078	15,605\16,531\15,605
PS0084	12,406\16,384\12,406\481	PS0011	11,991\15,483\11,991
PS0120	13,558\14,501\13,532\6,777	114421	17,177\21,181\6,384
114395	18,266\21,726\6,6,4062,311
PS0014	16,683\18,687\16,683\2,805	PS0075	14,364\17,482\14,364
114271*	18,095\23,166\6,149\7,241	114061*	22,700\29,820\2,716
PS0092	15,604\18,079\15,604\2,186
PS0048	16,465\20,253\16,442\6,263	PS0048	19,457\20,245\16,435
114429	17,586\22,226\5,474\6,641	PS0056	16,280\18,363\16,280
PS0055	16,404\20,463\16,384\6,268	114448	16,507\17,952\16,507
114445	17,072\17,359\17,051\1,512	114235	21,308\23,394\11,354
114232	21,241\22,333\10,936\6,384	114464	17,564\18,606\5,914
114193	21,483\26,462\13,400\2,653	114409	17,744\21,573\6,843
114448*	16,996\17,258\16,996\1,350	114238*	21,511\26,179\13,242
PS0011	15,809\18,238\15,781\3,945	114113	22,728\28,502\14,801
114267	19,031\19,354\8,566\3,365	114338	18,901\25,132\12,424
PS0075*	15,783\19,355\15,783\3,302	114274	17,437\23,807\5,605
PS0017	14,640\17,845\558\1,771	PS0068	14,857\17,219\14,857
114458	15,916\17,583\15,916\1,727	114445	16,864\17,423\16,864
PS0093*	16,009\17,718\15,978\1,810	114232*	20,772\21,173\10,493
		114441*	16,427\19,702\16,396
		114271*	UNK\UNK\6,492
PS0018*	16,400\17,838\0\0
114377*	UNK\UNK\3,333\3,333	PS0018*	13,362\14,910\0
		114046*	12,499\14,943\0

where:


TSN	=	Time Since New
TSO	=	Time Since Overhaul
TSHSI	=	Time Since Hot Section Inspection
CSN	=	Cycle Since New
CSO	=	Cycle Since Overhaul
CSHSI	=	Cycle Since Hot Section Inspection

Note: The information contained in this Annex was presented to P&WC by the Customer and is valid as of November 10, 2003 or December 10, 2003 where indicated with an asterisk (*) beside the engine serial number. Customer acknowledges that P&WC relied upon such information in entering into this Agreement and in determining the Hourly Rate.

Any discrepancies found by P&WC will be the sole responsibility of Customer and may result in an adjustment of the Hourly Rate by P&WC or the exercise of such other recourse as P&WC has under the Agreement.


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		20

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

ANNEX B - LCF, HSI and FUEL NOZZLE KIT COMPONENTS

LCF COMPONENTS

The following LCF Components are covered under this Agreement. The scope of services shall be subject to Annex C.

Rotor, Compressor, 1^st Stage

Rotor, Compressor, 2^nd Stage

Rotor, Compressor, 3^rd Stage

Rotor, Compressor, 4^th Stage

Compressor Rotor Shaft

Compressor Impeller

Compressor Turbine Disk

Disk, Power Turbine, 1^st Stage

Disk, Power Turbine, 2^nd Stage

HSI COMPONENTS

The following HSI Components are covered under this Agreement. The scope of services shall be subject to Annex C.

Small Exit Duct Assembly

CT Vane Ring

CT Disk and Blades

Shroud Housing Retaining Bolts

CT Shroud Segments

Combustion Chamber, outer liner

Combustion Chamber, inner liner

1^st Stage PT Vane

#2 Bearing Cover Flange

#2 Bearing Cover Locating Plate

CT Shroud Housing

Sealing Ring(s),

PT Stator Housing

The Designated Facility for HSI Components refurbishment shall, at the inception of this Agreement, be Customer. However, the Parties acknowledge and agree that should P&WC, for any commercially reasonable motive during the term of this Agreement, to designate a new Designated Facility for the provision of such services, the Hourly Rate may be increased to consider any labor-related incremental costs that P&WC may have to incur as a result thereof.


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		21

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

ANNEX C - SCOPE OF SERVICES

1.0

GENERAL

1.1

Annex C further defines the extent of Engine Maintenance Services to be provided by P&WC under this Agreement. The requirements for Engine induction and restoration are defined in the applicable Service Centre Specification. P&WC shall provide the Customer with a copy of such specification upon request by Customer.

1.2

An HSI or HSI Repair shall be performed when indicated by ECTM^® by borescope inspection, hard time intervals or as determined by P&WC in conjunction with Customer to optimize shop visit scheduling. P&WC reserves the right to determine if an HSI or HSI Repair is required.

1.3

Unscheduled replacement of any Accessory by a serviceable unit as a consequence of confirmed failure due to another Component or Engine induced malfunction is covered under this Agreement

1.4

Costs related to the incorporation of service bulletins applicable to components under this Agreement covered through commercial support programs, at time of Engine Module scheduled shop visits or as described in the commercial support program notification and minimum service bulletin(s) will be covered under the terms of this Agreement.

1.5

P&WC may from time to time, offer the option to exchange Engines for convenient purpose. Finalization of such exchange would require mutual agreement from both Parties and would be subject to Customer, or if the Customer does not own the Engine, the owner of the Engine to enter into a P&WC Engine Exchange Agreement which shall effect the transfer of title of the Engines.

2.0

FUEL NOZZLE KIT REFURBISHMENT

2.1

Fuel nozzle refurbishment costs are included in the TCP^® coverage at Overhaul of the gas generator module only. It excludes all costs associated with fuel nozzle restoration outside the gas generator scheduled Overhaul visit.

2.2

The Customer agrees to the fuel nozzle restoration interval stipulated in Annex E.

3.0

HSI

3.1

An HSI or HSI repair will be performed in accordance with the PT6A Engine Maintenance Manual inspection criteria. Repairs may use in-service inspection criteria as deemed applicable.

3.2

HSI Components coverage includes the cost to Repair or replace (if unserviceable or non-repairable per the Engine Maintenance Manual), as the case may be, the HSI Components listed in Annex B, part B, at a Designated Facility.

3.3

Customer shall keep, for the duration of this Agreement, a minimum of three (3) P&WC HSI kits in relation to the HSI Components in inventory.


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		22

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

3.4

Customer shall provide the Designated Facility and the CFR with the following information at time of HSI:

3.4.1

Reason for Removal;

3.4.2

CT Disk serial number, LCF card, and Trim Weight Locations;

3.4.3

Engine serial numbers, TSN, CSN, TSO, CSO, TSHSI and CSHSI.

4.0

ACCESSORY WORKSCOPE

4.1

This Agreement covers those costs associated with the Accessories listed below, as follows:

4.2

Accessories removed for BUR (Field Level Maintenance) are not covered under the terms of this Agreement.

4.3

Accessories that are unserviceable when received with the Engine at shop visit are not covered under the terms of this Agreement.

4.4

The following defines the Accessory workscope to be performed by P&WC, at time of Engine/Module shop visit for Repair, HSI or Overhaul.


	Repair	HSI	Overhaul
Bleed Valve	FC	FC	O/H
Chip Detector	FC	FC	O/H
Flow Divider/Dump Valve	V	V	O/H
Fuel Nozzle set	C/FC&R	C/FC&R	O/H
Oil Filter	C&I	C&I	O/H
T-5 Harness	FC	FC	O/H
T-5 Thermocouples	FC	FC	O/H
T1 Trim Stick	FC	FC	O/H
Propellor Governor Unit	V	V	O/H
Fuel Control Unit	V	V	O/H
Fuel Pump	V	V	O/H
Thermostatic By-Pass & Check Valve	V	V	O/H
Oil-to-Fuel Heater	V	V	O/H
Ignition Exciter	V	V	O/H

Codes:


V:		Visually inspect
C&I:		Clean and Inspect, reinstall if serviceable
FC:		Functional/Bench check
C/FC&R:		Clean, Functionally Check and Repair deviating Nozzles as necessary
O/H:		Per Overhaul Manual Instructions

5.0

LCF HARDWARE

5.1

P&WC will replace an LCF Component listed in Annex B which is accessible at time of shop visit, if the cycles remaining on the subject Component is insufficient to reach the next scheduled engine shop visit or HSI interval that will permit access to that LCF Component. At its option, P&WC may elect to install serviceable LCF Components.


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		23

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

5.2

LCF Components removed by P&WC will be returned to Customer.

6.0

ENGINE MODULE – SCHEDULE VISIT (BASIC WORKSCOPE)

6.1

Gas Generator Module

Overhaul Manual – (Basic module (AGB/Compressor Assembly)

•

Liners/PT Vane Ring

•

Bleed Valve/Trim Stick/Ignition plugs & cables

Maintenance Manual

•

Hot Section Kit

•

Fuel Nozzles/ Flow Divider

Customized “minimum SB” list mandatory parts replacement

•

#1 bearing

•

#2 bearing (every second overhaul)

Test per Overhaul Manual

•

GLA first stage PT Vane Ring

•

Slave accessories

6.2

Power Section Module

Overhaul Manual – (Basic module (PT Assembly/ Exhaust / RGB)

•

T-5 probes & harness

•

Chip detector

Customized “minimum SB” list mandatory parts replacement

•

#4 bearing

•

#3 bearing (every second overhaul)

•

First stage planet & sun gear

•

Oil Pressure jet, # 3 & 4 bearing

•

PT Blades, second stage

Test per Overhaul Manual

•

Slave first stage PT Vane Ring

•

Slave Accessories

6.3

Hot Section Inspection

Maintenance Manual – (Basic module)

•

CT disk balancing assembly

•

CT vane assembly

Customized “minimum SB” list mandatory parts replacement

•

CT disk (if cycles > 6000)

Matching

•

SCTI-B-002 or +/-.03 from last test cell run class


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		24

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

ANNEX D - SUPPORT SPARE ENGINES

1.0

GLA SPARES

1.1

Customer shall have the obligation, for purposes of spare engine support, to provide, at any given moment during the term of this Agreement, not less than two (2) GLA Spares. Customer acknowledges and agrees that the GLA Spares constitute fundamental components of the TCP^®.

1.2

The GLA Spares shall be made available by Customer to support the TCP^® without any restrictions or limitations whatsoever regarding the projected operation and time of use under this Agreement.

2.0

RACC LOANERS

2.1

RACC shall have the obligation to provide, at any given moment during the term of this Agreement, the RACC Loaners. RACC acknowledges and agrees that the RACC Loaners constitute fundamental components of the TCP^®.

2.2

The RACC Loaners shall be made available by RACC, at no additional cost (but subject to section 4.2 of this Annex), to support the TCP^® without any restrictions or limitations whatsoever regarding the projected operation and time of use under this Agreement.

2.3

For each RACC Loaner, Customer shall execute a bailment agreement in a form acceptable to RACC and which will incorporate, as a minimum, the requirements provided in this Annex D.

3.0

P&WC SPARES

3.1

P&WC reserves the right to provide P&WC support spare engines (through P&WCL) at any time during the term of this Agreement, at no additional cost and at its entire discretion (the “P&WC Spare(s)”). The Customer will be required to execute P&WCL’s standard rental engine agreement prior to the release of such P&WC Spares by P&WCL attached as Schedule 1 to this Annex D.

4.0

GENERAL

4.1

Use of Spare Engines. The Spare Engines usage shall be monitored by the CFR, with prior notice to Customer, in such a way as to provide for optimal spare engine support during the term of this Agreement.

4.2

Payment Obligation. The Customer shall be obligated to pay to P&WC the Hourly Rate for usage of the Spare Engines. Such amounts collected by P&WC shall be held for the benefit of the TCP^®. Spare Engine support for events not covered by this Agreement shall be supplied to the Customer at the published P&WCL Rental Rate applicable at such an event.

4.3

Shipment of Engine. The Customer shall ship the Engine or Engine Module requiring Engine Maintenance Services covered hereunder to the Designated Facility within five (5) working days from the actual removal date.


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		25

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

4.4

Application of P&WCL Rental Rate. In the event that the five (5) working day period is exceeded and Customer has a Spare Engine installed, then the published P&WCL Rental Rate shall apply until such time Engine is shipped.

4.5

Customer Hold. In the event that the Customer (i) has a Spare Engine installed and; (ii) has its Engine put on a 7-day window Customer Hold status by P&WC; (iii) and such Customer Hold status affects the execution of Engine Maintenance Services covered herein, then the published P&WCL Rental Rate shall automatically apply in relation to Customer’s use of the Spare Engine (notwithstanding the rate quoted in the rental or bailment agreement, as applicable) until such time as Customer has remedied the Customer Hold situation under this Agreement.

4.6

Removal of Spare Engines. Spare Engines may remain on wing unless decided otherwise by the CFR.

4.7

Maintenance of Spare Engines. Spare Engines shall be maintained by Customer using the same maintenance practices and inspection intervals as the Engines covered under this Agreement and Annex E. However, Spare Engines will be subject to a basic Time Before Overhaul (TBO) threshold inspection interval and shall be removed from service prior to the threshold inspection interval published in the applicable service bulletins or maintenance manual.

4.8

Prohibition. Customer shall use the Spare Engines as whole units and shall not separate same into modules unless it has obtained the prior approval of P&WC.


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		26

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

ANNEX E - MAINTENANCE TASKS, INTERVALS AND OPERATIONAL GUIDELINES

1.0

ENGINE MAINTENANCE CONDITIONS

The Customer shall operate and maintain the Engines and components in accordance with the Aircraft Flight Manual, Pilot’s Operating Handbook, the applicable Engine Maintenance Manual, recommended Service Bulletins, and any other instructions and recommendations issued by P&WC. In addition, the following maintenance tasks are or will be performed at the indicated intervals for each such Engine (it being understood, however, that the Overhaul intervals set forth below shall not be applicable for an Engine subject to the Transition Plan until the initial Overhaul under the Transition Plan is completed:

Note 1:

The tasks and intervals below may be supplemented, adjusted, or removed at any time at the CFR or P&WC’s discretion to improve engine reliability or cost control.

Note 2:

Unless otherwise specified below, all Engine maintenance tasks and intervals listed in the applicable aircraft and Engine Maintenance Manual are to be performed.

Engine Model: PT6A-67D


	TASKS	INTERVAL

	GENERAL
1	Gas Generator – Overhaul Power Section – Overhaul	12,000 cy 12,000 cy
2	Hot Section Inspection interval	6000 cy or based on ECTM^® and borescope inspection

	ECTM (Ref. SIL Gen –055 )	ECTM V Version - latest revision
	Manual Data	Daily data collection
1	Trend alert	D ITT = 15ºC, D Ng = 1%
2	Forward data to DAC	Customer / weekly basis
3	Maintenance actions recorded in ECTM data	Customer / Done by qualified personnel as required

*D :

Delta


	PROPELLER
1	Dynamic balance	1000 hrs max.
2	Check primary blade angle	1000 hrs max.
3	Inspect slip rings & brush block assembly, clean as necessary, inspect de-icing leads & de-icing mats	50 hrs max.


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		27

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907


	TASKS	INTERVAL

	CLEANING
1	Compressor wash (water)	N/A
2	Turbine wash (water )	N/A
3	Engine external wash	N/A
4	Performance recovery wash (cleaning agent)	N/A

	FUEL SYSTEM
1	Fuel nozzle inspection*	650 hrs
2	Fuel pump filters replacement	600 hrs
3	Inspect gas generator. Case drain valves	At fuel nozzle inspection

P&WC reserves the right to adjust this interval should hot section condition trends show evidence that the fuel nozzles and flow divider have been run beyond the optimum removal interval.


	BORESCOPE INSPECTION	By qualified personnel
1	Hot section inspection	At fuel nozzle replacement
2	Compressor inlet	At fuel nozzle replacement
3	Oil, scavenge pump, Inlet screen	1000 hrs

	IGNITION
1	Inspect ignitors and excitor box	200 hrs.
2	Replace ignitors	GLA Maintenance Program
3	Visual inspection of ignition cables	When ignitors are replaced

	AIR
1	Bleed valve operational check	1000 hrs max and if trend dictates
2	P3 filter check	400 hrs max.
3	P3 filter replacement	1000 hrs max.

	INDICATION
1	ITT and Torque verification	1000 hrs max. or if ECTM^® dictates


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		28

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907


	TASKS	INTERVAL

	OIL
1	Main oil filter inspection	200 hrs max.
2	Main oil filter replacement	1000 hrs max.
3	Oil filter patch check	At main oil filter replacement
4	Chip detector - open circuit check	50 hrs max.
5	Chip detector - continuity check (including wiring harness / terminals if fitted)	600 hrs

	ACCESSORIES
1	Propeller Governor – inspect per SB 14236	1000 hrs.
2	Fuel Heater - inspect per Maint. Man	1000 hrs.

	POWER TURBINE BLADES
1	PRE SB 14172 with more than 1500 hrs	200 hrs.
2	POST SB 14172 with more than 4000 hrs	200 hrs.

	OPERATIONAL GUIDELINES
1	Use of MTOP (Maximum Take-Off Power)	Not to be used unless required.
2	Reduced Take-off, climb and cruise power	Recommended unless conditions dictate otherwise
3	Reverse propeller operation	Not recommended unless situation dictates otherwise. Disking (flat pitch) is recommended to minimize FOD.
4	Inertial separator	Recommended for ground operations to minimize FOD except for high power ground performance check.
5	Deep cycling battery program	Per OEM recommendations.
6	Single Engine run (if use)	Record abbreviated cycles
7	Starting	GPU is recommended. During start cycle, obtain max. stabilized Ng speed prior fuel induction.
8	Engine Cooldown	Two minutes at minimum obtainable ITT at Ground Idle prior to shutdown.


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		29

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

ANNEX F - MISSION PROFILE AND OPERATING ENVIRONMENT

1.0

OPERATOR PROFILE

1.1

The Hourly Rate is based on the Operator Profile declared by Customer. Any modifications to the Operator Profile or changes in geographical or operating environment must be reported promptly to P&WC and may result in an adjustment to the Hourly Rate referenced in this Agreement.

1.2

The Operator Profile under this Agreement is for Engines used in the regional airline flight profile submitted by Customer as indicated below and which are operated within the limitations specified in the applicable section of the aircraft flight manual.

1.3

The Fleet under this Agreement shall consist of 60 installed Engines and two (2) spares as referenced in Annex “A”.

1.3.1

annual utilization of each engine module of 2047 Engine Operating Hours + /-5%;

1.3.2

annual average cycle ratio of 1.05 cycle/hour +/- 5%;

1.3.3

Overhaul interval achieved at 12,000 cycles for gas generator and power section modules;

1.3.4

HSI initial interval set at 6,000 cycles for the hot section, interval subject to adjustment based on ETCM^{^®} and borescope inspection results.

2.0

OPERATING ENVIRONMENT

Hub:

Cheyenne, WY

Route Structure:

Mid-West, USA

South-West, USA


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		30

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

ANNEX G - MONTHLY REPORT FORM

TCP^® Agreement Number: 03-1907 Report for the month of: Date

INSTALLED ENGINES AT MONTHS END

Aircraft Information

Engine Status at month end

Engine Monthly
Utilisation

A/C
Tail #

A/C
S/N

A/C
Hours
this
month

A/C
Cycles
this
month

Engine
Position

Engine
S/N

TSN
Month
end

CSN
Month
End

TSO

TCSO

TSHSI

CSHSI

EFH
Flown
This
Month

Cycles
this
Month

Total for
Fleet

Note: When reporting for the first time please complete all fields

Total for
Active

Hours

Cycles

TSN & CSN mandatory for following months

Hours

Cycles

REMOVAL & INSTALLATION - ENGINE ACTIVITY THIS MONTH

A/C
Tail
#

A/C
S/N

Engine
S/N

Engine
Position

Remove

Installed

Date

TSN
remove or
Install

CSN
remove or
Install

Cause
for
Removal

EFH this
month
removed
engine

Cycles this
month
removed
engine

Note: Please check appropriate column “Removed” or “Installed” and complete required information

Total for
Removed

Hours

Cycles

SPARE ENGINE STATUS

Engine S/N

TSN

CSN

TSO

TCSO

TSHSI

CSHSI

Location

Signature:

Date:


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		31

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

ANNEX H - WIRE TRANSFER INSTRUCTIONS

In the event that a wire transfer requires to be made, please instruct your bank to pay as follows for payments crediting our account at the Bank of Montreal in Canada.

US DOLLAR PAYMENT ROUTING - INTERNATIONAL AND CANADIAN CUSTOMER


Pay through:	Bank of Montreal
	International Banking, Head Office
	Montreal, Quebec
	Swift Address:	XXXXX¹

Account with Institution:	BANK OF MONTREAL
	Rue St-Charles Ouest,
	Longueuil, Quebec
	Branch Transit Number:	XXXXX¹

Beneficiary:	Pratt & Whitney Canada Corp.
	Longueuil, Quebec, Canada

US DOLLAR PAYMENT ROUTING - US CUSTOMER (ONLY)


Pay through:	Harris Bank International Corporation, New York, N.Y
(Destination Bank)	Swift Code:	XXXXX¹
	FEDWIRE ABA #:	XXXXX¹
	Or, CHIPS Participant ABA #:	XXXXX¹

Beneficiary’s Bank	Bank of Montreal
	International Banking H.O. Montreal
	Swift Code:	XXXXX¹
	Account Number:	XXXXX¹
	Or, CHIPS UID:	XXXXX¹
	(if CHIPS Network used)

Beneficiary:	XXXXX¹
	Pratt & Whitney Canada Corp.
	Longueuil, Quebec, Canada

NOTE:

PLEASE INCLUDE ALL INVOICE NUMBERS ON WIRE TRANSFERS AND FAX ALL PAYMENT DETAILS TO ###-###-####.

Material omitted pursuant to a request for confidential treatment. Omitted material has been filed separately.


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		32

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

ANNEX I – DAC SERVICES

P&WC agrees to:

provide access to the TurbineTracker^™ system for review of fleet data;

provide User and Maintainer On-The-Job-Training (OJT). Training will also be available via CD-ROM and DAC’s facility;

have the data received from TurbineTracker^™ analyzed at P&WC’s approved DAC;

have the DAC provide to the Customer recommendations based on data received; and

provide to Customer through the DAC, a regular report outlining fleet condition status.

CUSTOMER agrees to:

on a weekly basis, provide manual data to the DAC. Should Customer fail to provide the data, Customer’s Hourly Rate will be subject to a 5% upward rate adjustment; and

be registered with the P&WC approved DAC and act upon recommendation(s) received from the DAC and / or P&WC based on trend shift(s) and/or other usage information.

The Parties acknowledge that the foregoing Annex I is subject to the provisions of Section 11.0 hereof.


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		33

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

ANNEX J- WARRANTY

P&WC warrants that Engine Overhaul and Repair services will comply with applicable P&WC specifications and conform generally with standards of good workmanship in the industry. P&WC further warrants that, at time of delivery, new and used serviceable replacement parts will be free from defects in material and manufacture. Details concerning this warranty are found below.

1.1

Exclusive Remedy

P&WC will provide the following remedy in the event of an unplanned engine removal that results from defects in the parts or services provided, and, that occurs within the applicable period of warranty coverage:

•

Correct the defective condition and any damage to the engine resulting from that condition;

•

Reimburse reasonable removal and installation charges;

•

Reimburse reasonable shipping charges;

•

Waive the daily rate applicable to any P&WC rental engine leased to replace the Customer’s damaged engine (normal hourly operating charges will still apply).

1.2

Coverage Periods

All warranty claims must be made within the maximum operating hours after delivery and the maximum time after delivery as indicated in the table below. During this time, warranty coverage is fully transferable to another lawful commercial operators of the aircraft.


Category of Engine Work	Operating Hours	Time after Delivery
Engine Overhaul (Comprehensive Coverage)	1,000 hours	1 year
Engine Overhaul (Workmanship Coverage)	Full TBO (prorated after 1,000 hrs)	No Limit
Tested Engine Repairs	500 hours	1 year
Untested Engine Repairs (including HSI)	500 hours	90 Days

1.3

Two separate levels of warranty coverage are provided with respect to engine overhaul work: i) the Comprehensive coverage, and ii) the Full TBO Workmanship coverage.

Comprehensive Warranty Coverage. The comprehensive warranty coverage remains in effect from the time of delivery for 1,000 operating hours or 1 year, whichever sooner occurs. During this time, the Customer enjoys full coverage against the malfunction or failure of the engine for causes other than those provided in the Exclusions and Limitations section below. This coverage extends not only to defects in material and workmanship, but also to the failure of component engine parts that are inspected and replaced at Overhaul. This coverage also extends to Customer-supplied parts, but only if those parts are either in new condition, or are accompanied by a Pratt & Whitney Canada Service Centre Network overhaul tag.


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		34

EXHIBIT 10.26 - CONFIDENTIAL TREATMENT

Great Lakes Aviation

PTA-67D TCP^® # 03-1907

Full TBO Workmanship. After the expiration of the comprehensive coverage, the workmanship coverage remains in effect on a prorated basis until the conclusion of the TBO interval, as published from time to time by P&WC. During this time, the Customer is protected against defects in workmanship in the Overhaul Services performed by a Pratt & Whitney Canada Service Centre. The Customer will be assessed a prorated portion of the cost of Repair and incidental charges. The applicable assessment is based on the percentage of the remaining TBO consumed at the time of the warranty claim. The operation of the workmanship warranty is illustrated in the chart below:

1.4

COMMERCIAL OVERHAUL WARRANTY COVERAGE

[GRAPHIC APPEARS HERE]

1.5

Exclusions and Limitations

Pratt & Whitney Canada Service Centres’ warranties described above will be void in the following circumstances:

14.6.1

If the engine is subjected to improper preservation, storage, installation, operation, or maintenance;

14.6.2

If the engine has been operated or maintained in a manner not in compliance with the instructions of P&WC or the aircraft manufacturer;

14.6.3

If the engine has been subjected to abuse, misuse, or neglect, or has been damaged by foreign object, electrical arcing, corrosion, erosion, accident, or any other factor not within the control of P&WC; or,

14.6.4

If the engine has been repaired or altered at any facility other than those of the Pratt & Whitney Canada Service Centre Network.


The disclosure of this document is subject to the restrictions of Article 14.0 contained herein		35