Frontier Airlines 2011 Annual Report Download - page 153

of the art at the date of such design, which impairs the use of such items, will constitute a defect in design for the purpose of
this Clause 12.1 and be covered by the warranty set forth in Clause 12.1.1.2(iii).
12.1.3 Warranty Period
The warranties set forth in Clauses 12.1.1 and 12.1.2 will be limited to those defects that [] of the affected Aircraft (the “ Warranty
Period”).
12.1.4 Limitations of Warranty
12.1.4.1 The Buyer’s remedy and the Seller’s obligation and liability under Clauses 12.1.1 and 12.1.2 are limited to, at the Seller’s expense
and option, the repair, replacement or correction of any Warranted Part which is defective (or to the supply of modification kits,
rectifying the defect), together with a credit to the Buyer’s account with the Seller of an amount equal to the mutually agreed direct
labor costs expended in performing the removal and reinstallation thereof on the Aircraft at the labor rate defined in Clause 12.1.7.5.
The Seller may alternatively furnish to the Buyer’s account with the Seller a credit equal to the price at which the Buyer is then entitled to
purchase a replacement for the defective Warranted Part.
12.1.4.2 In the event of a defect covered by Clauses 12.1.1.2(iii), 12.1.1.2(iv) and 12.1.2(ii) becoming apparent within the Warranty Period,
the Seller shall also, if so requested by the Buyer in writing, correct such defect in any Aircraft which has not yet been delivered to
the Buyer, [*]
12.1.4.3 Cost of Inspection
In addition to the remedies set forth in Clauses 12.1.4.1 and 12.1.4.2, the Seller will reimburse the direct labor costs incurred by the
Buyer in performing inspections of the Aircraft to determine whether or not a defect exists in any Warranted Part within the Warranty
Period subject to the following conditions:
(i) such inspections are recommended by a Seller Service Bulletin to be performed within the Warranty Period;
(ii) the reimbursement will not apply for any inspections performed as an alternative to accomplishing corrective action as
recommended by the Seller prior to the date of such inspection.
(iii) the labor rate for the reimbursement will be the Inhouse Warranty Labor Rate, and
(iv) the manhours used to determine such reimbursement will not exceed the Seller’s estimate of the manhours required for such
inspections.
* Confidential