FLYAWAY COST

The SM-73 is presently under development and is not currently in production. Upon entering production, the Per Unit Flyaway Cost (Flyaway Cost) of SM-73 aircraft will be dependent upon the specific model, model block configuration, customer selected weapon system sensor-avionics-instrumentation-electronic warfare-armament systems package, and all related support equipment specific to an individual aircraft, not including fixed or expendable external stores (external or drop tanks, ordinance, pods and pylons), spares or ground support equipment.

Stavatti Military Aerospace is not publicly disclosing specific SM-73 Flyaway Costs at this time. Qualified Potential Customers interested in obtaining Flyway Cost Information regarding the SM-73 are encouraged to Contact Stavatti.

AVAILABILITY

The SM-73 Rigel™ is currently under development by STAVATTI MILITARY AEROSPACE-Tactical Air Warfare Systems Division. The SM-73 is not presently in production and is not available for procurement at this time. Stavatti is prepared to receive orders for the SM-73 at the present time, hence initial production aircraft will be produced in satisfaction of backlog orders. As of First Quarter 2008, the SM-70 series, including the SM-72, SM-73 and SM-74 are undergoing development as specified in the accompanying Development Schedule:

Stavatti reserves the right to adjust, modify, expedite, cancel or otherwise enhance the projected dates for SM-73 LRIP, IOC or FRP at our discretion. All program phase time-frame estimates are for the benefit of future force program budget planners and are non-contractually binding.

Stavatti projects the SM-73 will most likely be available for initial delivery to most qualified customers and enter Full-Rate Production (FRP) from 2015 through 2035 and beyond.
PURCHASE

SM-73 aircraft will be marketed and sold directly by STAVATTI MILITARY AEROSPACE to the end user as a Direct Commercial Sale (DCS) with exception of specific systems which require a Foreign Military Sales (FMS) component including, but not limited to: IFF and COMSEC/TEMPEST related systems and equipment. Furthermore, all Global Positioning Systems (GPS) receivers incorporating a PPS (Y) Interface must be approved for export through the Joint GPS Program Office.

Stavatti reserves the right to market and sell the SM-73 through the U.S. FMS program for purposes of assisting customers who desire the procurement of major weapon systems with military credits or direct program/operational support from the U.S. DoD.

To simplify the procurement process, Stavatti prefers to structure SM-73 procurement contracts as Fixed Cost Contracts (FCC). Customers may elect to procure SM-73 Standard Configuration aircraft or SM-73s configured for customized end user requirements. In the event customers wish to procure SM-73 Standard Configuration aircraft, there is a distinct possibility that aircraft may be procured from existing Stavatti inventory, thereby significantly reducing delivery lead-time.

If customers desire an SM-73 of custom configuration, the procurement lead-time may increase from 12 to 24 months due to the lead-times associated with the procurement of specific aircraft systems including powerplant, avionics, displays and armament. It is for this reason that the Standard Lead Time for the procurement of SM-73 aircraft is estimated at 12 months from date of contract signing.
Stavatti does not employ a standard SM-73 series FMS procurement process. All SM-73 procurement performed under FMS must be coordinated on a case-by-case basis. Stavatti’s standard SM-73 DCS procurement process for all SM-73 aircraft is as follows:

1) Customer provides Stavatti with a Letter of Intent (LOI). An LOI is a statement indicating that the customer (client nation) intends to enter into a binding contract for the procurement of a specified number of SM-73 aircraft. The LOI must include information relating to the number, model and configuration which the customer wishes to procure, the address of the procurement body, a signature of a qualified purchasing representative of the procurement body and the address of the delivery destination of the SM-72 aircraft.

2) Stavatti will submit forms DSP-5 or DSP-73 or DSP-85 as appropriate to the State Department-Directorate of Defense Trade Controls (DDTC) to obtain the necessary export licenses associated with the SM-73 procurement by the specific customer/client nation. Export licenses are not required for domestic sales to the US DoD/government user agencies. Once an approved export license is received by Stavatti, the customer and Stavatti may proceed with contract draft and signing.

3) Customer and Stavatti draft and enter into/sign a SM-73 Procurement Contract (PC). The PC will specify the precise configuration of the SM-73 aircraft to be procured including powerplant, avionics, instrumentation, escape systems, armament, APU, armor plating, sensors, EW suite, tires, paint scheme and livery, warranty, associated support equipment, etc. Delivery destination, anticipated delivery date and total contact value will be specified, as well as all other information necessary to produce and deliver the contracted SM-73 aircraft to the customer in their desired configuration. The Customer must ensure the PC is accompanied by a Contract Initiation Payment (CIP) valued at ONE THIRD (1/3 or 33.3%) of the Total Contract Value to be paid to Stavatti.

4) Stavatti completes the production of SM-73 aircraft to the "Green" or Un-Painted/Pre-Final Integration stage. Prior to "Painting" and completing final integration of aircraft armament, sensor, avionic and EW systems, the Customer is required to provide a Green Aircraft Payment (GAP) valued at ONE THIRD (1/3 or 33.3%) of the Total Contract Value to be paid to Stavatti. Once the GAP is received by Stavatti, "Green" aircraft enter the painting/ final integration phase.

5) Stavatti completes and delivers the SM-73 aircraft as specified in the PC. Upon delivery (or upon completion in the event the Customer receives/takes possession of the completed aircraft directed at the factory) of the procured SM-73 aircraft to the customer, the balance of the total contract value, equal to the remaining ONE THIRD (1/3 or 33.3%) of the Total Contract Value, must be paid to Stavatti.

Stavatti will receive payment for domestic SM-73 sales by wire transfer of funds, certified check, United States Dollars/Federal Reserve Notes (USD/FeRNs), gold or alternate precious Platinum Group Metal (PGM). Stavatti will receive payment for foreign export SM-73 sales by wire transfer of funds, United States Dollars/Federal Reserve Notes (USD/FeRNs), gold or alternate precious Platinum Group Metal (PGM).
EXPORT

In compliance with the Arms Export Controls Act (AECA) and the International Traffic in Arms Regulations (ITAR: CFR 120-130), Stavatti restricts the marketing and sale of the SM-73 air weapon system to qualified U.S. and NATO allied air defense arms. In support of current U.S. Arms Embargoes as issued by the U.S. State Department, Stavatti will not export SM-73 aircraft to any of the following nations:

Armenia, Azerbaijan, Belarus, Cuba, Iran, Libya, Mongolia, North Korea, Syria, Tarjirkistan, The People’s Republic of China, Federal Republic of Yugoslavia, Haiti, Liberia, Rwanda, Somalia, Sudan and Zaire

Stavatti recognizes that the status of State Department Arms Embargoes is in constant flux with nations being added or removed from the Arms Embargo List from time to time. Stavatti therefore encourages parties and potential customers interested in procuring SM-73 series aircraft to visit the State Department-Directorate of Defense Trade Controls (DDTC) Website at: http://www.pmdtc.org/ for a current State Department Embargo Reference List.
Prior to marketing the SM-73 series to any potential customer nation, Stavatti contacts DDTC to receive "Prior Approval To Market." Once prior approval is received, Stavatti initiates a comprehensive marketing program which consists of information and support material which is unavailable to the Public Domain. Prior to issuance of a production contract or purchase order, Stavatti submits an export license application (DSP-5, DSP-61, DSP-73, etc.) for the purpose of obtaining an export license in support of the anticipated contract or purchase order. The export license application must be accompanied by attachments, some of which must be completed in-whole or in-part by the potential customer/procurement body. Furthermore, a Letter of Intent (LOI) or similar official document including a Procurement Contract must be issued by the intended procurement body to serve as an attachment to accompany the export license application for review by the State Department-DDTC in support of the SM-73 export licensing process.

Stavatti is a State Department-DDTC registered manufacturer and exporter or U.S. Munitions List (USML) Category I, II, III, IV, VIII (Aircraft), X as well as additional items. Copies of expired, prior year State Department-DDTC Registration Letters are available for review on the Stavati Licenses webpage. Current Registration Letters received from DDTC are not posted online for security purposes.
WARRANTY

Stavatti will assign each SM-73 aircraft with a 5,000 hour, Nose-to-Nozzle, Manufacturer’s Limited Warranty. Stavatti expressly warrants each new SM-73 aircraft (exclusive of powerplant and powerplant accessories as supplied by the powerplant supplier), including factory installed avionics, armament, electronic countermeasures and additional factory installed equipment, both standard to the type and optional, to be free from defects in material and workmanship under normal use and service for a period of 5,000 flight hours beginning upon delivery of the SM-73 aircraft to the initial end user.

Stavatti‘s obligation under this warranty will be limited to repairing or replacing, at its sole option, any component or components which within the applicable warranty period are identified by the owner/operator. The repair or replacement of defective components under this warranty will be made by or through any Stavatti or Stavatti approved SM-73 service facility without assessment of fee or cost to the warranty holder for components or labor for removal, installation and/or repair. All import duties, sales taxes and use taxes, if any, on such warranty repairs or replacement components are the sole responsibility of the warranty recipient.
The warranty will apply to any SM-73 aircraft, avionics and fixed aircraft equipment as integrated by Stavatti under production contract by the end user which has been flown, maintained and operated in accordance with Stavatti and other applicable manuals, bulletins, airworthiness directives and other written instructions. The warranty, however, will not apply to SM-73 aircraft, avionics and fixed aircraft equipment as integrated by Stavatti under production contract by the end user which have been subject to misuse, abuse, negligence, accident or battle damage; or which have been altered other than by Stavatti, or contrary to applicable manuals, bulletins, and other written instructions provided by Stavatti, in any way that, in the sole judgement of Stavatti, adversely affects their performance, stability or reliability; or to normal maintenance services (such as powerplant adjustments, cleaning, control rigging, brake and other mechanical adjustments and maintenance inspections); or to the replacement of service items (such as brake linings, filters); or to normal deterioration of appurtenances (such as paint and livery) due to wear.

Each SM-73 procurement contract will incorporate a complete description of all aspects associated with the 5,000 hour `Nose-to-Nozzle’ manufacturers limited warranty. Customers will be able to extend their warranties in 500 hour blocks beyond 5,000 hours for a nominal fee.

LEASING

SM-73 aircraft will be made available for lease with customer approved credit directly from Stavatti. Stavatti lease programs are subject to U.S. State Department-Office of Defense Trade Controls Approval and may be conducted as DCS or FMS lease programs. FMS lease programs are coordinated through an appropriate U.S. DoD user agency and will generally consist of SM-73 aircraft owned by the U.S. DoD which are then leased, through a DoD negotiated lease agreement, to the end user. FMS lease programs are outside Stavatti’s sphere of influence and parties interested in leasing SM-73 aircraft through FMS are urged to contact the U.S. DoD.

Stavatti DCS leases will involve the lease of Stavatti owned aircraft to the end user. DCS lease terms and arrangements must be negotiated on a case-by-case basis and are dependent upon the type and number of SM-73 aircraft leased and the qualifications of the nation/air arm leasing the SM-73 aircraft. Typically SM-73 aircraft will be available for 36, 60 and 120 month leases.

All Stavatti lease customers are subject to pre approval requirements. Additional requirements will also apply to qualify for the SM-73 lease program. All lease customers will be required to maintain current Hull and Liability insurance from a qualified aerospace insurance provider throughout the duration of the lease. All leased SM-73 aircraft must be operated by a qualified, SM-73 Type Certified pilot with a current U.S. First Class Medical or equivalent medical certification and no less than 1,500 hours high performance aircraft experience. In the event lease customers are unable to provide a qualified pilot, Stavatti will provide contract pilot services at a negotiated contract cost. A Stavatti lease maintenance agreement will be implemented in conjunction with the standard 5,000 hour ‘Nose-to-Nozzle’ Limited Manufacturer’s Warranty. The lease customer will be responsible for the costs associated with maintenance and repairs on the SM-73 aircraft hull and systems resulting from the combat environment during the time of lease. In the event an SM-73 aircraft is destroyed and/or damaged to such an extent that the aircraft is considered a total loss, during either peace or war, the lease customer will responsible for the remainder of the lease owed due, plus the purchase price of the aircraft at lease end.

Additional requirements, limitations and restrictions will apply. Contact Stavatti for more information regarding the leasing of SM-73 aircraft.

LICENSING & LICENSED PRODUCTION

SM-73 will be available for licensed production in qualified facilities worldwide. Licensing of SM-73 production is subject to U.S. State Department-Directorate of Defense Trade Controls Approval. Stavatti is responsible for coordinating and negotiating all SM-73 licensing worldwide.

Stavatti will permit the production licensing of all SM-73 models in its entirety, in kit form or, alternatively, industry teaming for the production of SM-73 aircraft in-part or in component form. Licensing arrangements must be considered on a case-by-case basis. Generally, Stavatti assumes license production involves the production of entire SM-73 aircraft from an indigenous producer within a customer nation. To produce the SM-73 under license a customer must first exhibit possession of a qualified, appropriate aircraft production facility capable of producing the SM-73 aircraft to the degree desired (i.e. in whole or in part) as well as qualified engineers and assembly personnel to support the production process. Customers must then pay an initial licensing fee, as well as annual licensing maintenance fees and a royalty on aircraft produced/sold.

Qualified Customers who produce the SM-73 under license will receive significant technical and production support from Stavatti, including access to both Stavatti’s U.S. domestic SM-73 production facility as well as complete familiarization with SM-73 prototypes, production vehicles and demonstrators.

In the event a nation desires to produce the SM-73 under license, but lacks the facilities and equipment to do so, Stavatti can provide total support and assistance with regard to the organization and creation of a suitable production facility.

OFFSET

To address the issue of global fiscal responsibility with regard to necessary defense spending, Stavatti offers numerous Offset opportunities associated with SM-73 procurement.
The standard cost offset associated with SM-73 procurement is the licensed production of SM-73 subsystems and components in the customer nation. Stavatti maintains industry partners worldwide and desires to expand major airframe component/assembly production into your region of the world.

Barter is an offset opportunity which Stavatti will willingly consider. Oil, minerals, and additional goods may serve as suitable barter toward the procurement of SM-73 aircraft. Additionally, Stavatti will take trade-ins from existing nation fighter/trainer/ transport aircraft fleets, serving to reduce overall aircraft procurement costs.

Contact Stavatti to discover offsets which may be right for you.