1
EXHIBIT 10.1
PURCHASE AGREEMENT NUMBER
98 QMBW 366196 UK
between
▇▇▇▇▇▇▇-▇▇▇▇▇▇ LIMITED
and
CHINA AVIATION SUPPLIES IMPORT & EXPORT
CORPORATION
relating to the sale and purchase of
Qty 3 BN2A-MkIII TRISLANDER AIRCRAFT
for
CHINA NORTHERN AIRLINES
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INDEX
CLAUSE,
1 Definitions
2 Aircraft Specification
3 Price
4 Terms of Payment
5 Delivery
6 Regulatory Requirements and Certificates
7 Plant Representatives avid Inspection
8 Buyers Acceptance
9 Title and Risk
10 Ferry of the Aircraft
11 Field Service
12 Vendors Product Support
13 Warranties
14 Alterations to Purchase Agreement
15 Excusable Delay
16 Non-Excusable Delay
17 Training
18 Technical Publications and Documents
19 Industrial Property Rights
20 Taxes and Customs Duties
21 Spare Parts Provisioning
22 Assignment
23 Arbitration
24 Notices
APPENDIX
IA Basic Aircraft Specification
IB Optional Equipment
II Performance Guarantees
III Specimen Acceptance Certificate
IV Specimen Change Order
V List of Primary Structure
VI Initial Provisioning Package
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PURCHASE AGREEMENT NUMBER 98 QMBW 366196UK
MADE THIS DAY 21ST DAY OF NOVEMBER 1998
BETWEEN
(1) "the seller"
▇▇▇▇▇▇▇-▇▇▇▇▇▇ LIMITED (BN) ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇
and
(2) "the Buyer"
CHINA AVIATION SUPPLIES IMPORT AND EXPORT CORPORATION, (CASC) a subsidiary of
the General Administration of Civil Aviation of China, (CAA -China) a Chinese
Corporation with its principal office in Beijing, Peoples Republic of China.
WHEREBY the Seller agrees to sell and deliver and the Buyer agrees to purchase
and take delivery of three (3) ▇▇▇▇▇▇▇-▇▇▇▇▇▇ BN2A-Mk III Trislander Aircraft
to be operated by China Northern Airlines, the head office of which is located
At ▇-▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ District, Sheyang, People's Republic of
China, ("the operator") upon the terms and conditions contained in this
Purchase Agreement, together with the Appendices attached hereto which shall
be deemed to be a part of this Purchase Agreement.
NOW, THEREFORE, it is agreed as follows:-
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CLAUSE 1: DEFINITIONS
1.1 In this Purchase Agreement the following words and phrases
shall have the meanings as indicated:-
"THE AIRCRAFT" MEANS THE ▇▇▇▇▇▇▇-▇▇▇▇▇▇ BN2A-WIII TRISLANDER
AIRCRAFT, THE SUBJECT OF THIS PURCHASE AGREEMENT WHICH SHALL BE
MANUFACTURED IN ACCORDANCE WITH THE SPECIFICATIONS DEFINED IN
APPENDIX 1A TRISPEC ISSUE 2 DATED 09 NOVEMBER 1998 WHICH REPRESENTS
THE BASIC STANDARD OF THE AIRCRAFT AND APPENDIX IB TRIOPT ISSUE 1
DATED 09 NOVEMBER 1998 WHICH REPRESENTS THE AGREED CHANGES SHOWN IN
THE OPTIONAL EQUIPMENT SPECIFICATIONS.
"The Aircraft Price" means the fixed ex-works price per aircraft, as
defined in Appendix 1A.
"The Optional Equipment Price" means the fixed ex-works price of the
optional equipment per aircraft as defined in Appendix I B.
"The Final Price of the Aircraft" is the sum of the Aircraft Price
and the Optional Equipment Price defined herein and inclusive of any
variations made under the terms of the Purchase Agreement.
"Type Certificate" is the certification for the Aircraft as issued
by the United Kingdom Civil Aviation Authority (CAA) and as
validated by the General Administration of Civil Aviation of China
(CAA-China).
"Certificate of Airworthiness for Export" is that issued by the CAA.
"The Delivery Date" means the date on which the Aircraft is offered
by the Seller to the Buyer for acceptance pursuant to Clause 5
hereof.
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1.1.2 "The Effective Date" shall mean the date by
which the Seller shall have received:
a) A signed copy of the Purchase Agreement
b) Subject to the approval of the government of
the People's Republic of China. The Buyer will
inform the Seller by written notification when the
Buyer receives Chinese governmental approval.
If the Seller does not receive the payment referred to
in Clause 4.1a) within 10 working days after receiving
the notification of Chinese government approval, the
Seller shall have the right to terminate the Purchase
Agreement.
c) The payment referred to in Clause 4.1a) hereof
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CLAUSE 2: AIRCRAFT SPECIFICATION
2.1 The Seller has obtained a Type Certificate issued by both the U.K.
CAA and the Federal Aviation Authority (FAA) of the United States of
America for the BN2A-Mk 111 Trislander Aircraft. Aircraft purchased
herein which shall be manufactured to conform to the CAA Type
Certificate and with validation by CAA-China in accordance with the
Specifications defined in Appendix 1A TRISPEC Issue 2 dated 09
November 1998 and Appendix IB TRIOPT Issue 1 dated 09 November 1998
annexed hereto and each Aircraft shall be offered for
acceptance with a United Kingdom Certificate of Airworthiness for
Export to the People's Republic of China together with a copy of the
Aircraft's United Kingdom CAA Type Certificate together with
CAA-China Airworthiness Department Type Validation Certificate.
The Seller will be responsible for communication with the CAA-China
Airworthiness Department for validation of the import of the type of
Aircraft purchased under this Purchase Agreement into the People's
Republic of China.
2.2 The Buyer shall notify the Seller three months prior to the
delivery of the Aircraft of its exterior colour scheme and paint
specifications. The interior shall be finished in the
Seller's standard material and colour scheme.
2.3 The Aircraft shall meet the performance guarantee as specified in
Appendix II attached hereto.
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CLAUSE 3: PRICE
3.1 AIRCRAFT PRICE
The Aircraft price of each Aircraft as specified in the basic
specification Appendix IA shall be fixed ex works L. 799,800.
(Seven Hundred and Ninety Nine Thousand Eight Hundred pounds
sterling).
3.2 OPTIONAL EQUIPMENT PRICE
3.2.1 OPTIONAL EQUIPMENT PRICE AIRCRAFT ONE
The price of the Optional Equipment as specified in Appendix lB
shall be fixed ex works L..182,392. (One Hundred and Eighty Two
Thousand Three Hundred and Ninety Two pounds sterling).
3.2.2 OPTIONAL EQUIPMENT PRICE AIRCRAFT TWO AND THREE
The unit price of the Optional Equipment as specified in Appendix 1B
shall be fixed ex works L. 177,331 (One Hundred and Seventy Seven
Thousand Three Hundred and Thirty One pounds sterling).
The Seller will be responsible for the purchased and installation of
the Optional Equipment.
3.3 FINAL PRICE OF THE AIRCRAFT
The final price of each Aircraft shall be the sum of
o the price of each Aircraft as defined in 3.1
o the price of Optional Equipment as defined in 3.2.1 and 3.2.2
CLAUSE 4. TERMS OF PAYMENT
4.1 ADVANCE PAYMENT SCHEDULE - Advance payment for each Aircraft
will be made to the Seller by the Buyer as follows:-
DUE DATE OF PAYMENT AMOUNT DUE PER AIRCRAFT
------------------- -----------------------
Percentage times the Final Price of the
----------------------------------------
Aircraft
--------
a) Within 10 working days 15..%(Fifteen)
from approval by the
Buyers Government of
this Purchase
Agreement.
b) 14 months prior to the 10..%(Ten)..........
first day of the
scheduled delivery
month of the Aircraft.
c) 12 months prior to the 10..%(Ten).........
first day of the
scheduled delivery
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month of the Aircraft.
Total ....35...%
4.2 PAYMENT AT DELIVERY - the Buyer will pay any unpaid balance of
the Final Price of the Aircraft at the time of delivery of each
Aircraft.
4.2.1 Overall Payment Schedule
DATE % AIRCRAFT 1 AIRCRAFT 2 AIRCRAFT 3 TOTAL L. DUE
---- - ---------- ---------- ---------- ------------
May 1999 15 147,329 146,570 146,570 440,469
-------- -- ------- ------- ------- -------
June
----
July 10 98,219 98,219
---- -- ------ ------
August
------
September 10 98,219 98,219
--------- -- ------ ------
October
-------
November 10 97,713 97,713
-------- -- ------ ------
December
--------
January 2000 10 97,713 97,713 195,426
------------ -- ------ ------ -------
February
--------
March 10 97,713 97,713
----- -- ------ ------
April
-----
May
---
June
----
July
----
August
------
September 65 638,425 638,425
--------- -- ------- -------
October
-------
November
--------
December 65 635,135 635,135
-------- -- ------- -------
January 2001
------------
February 635,135 635,135
-------- ------- -------
TOTAL L. 982,192 977,131 977,131 2,936,454
-------- ------- ------- ------- ---------
4.3 Form of Payment - the Buyer will make all payment to the Seller by wire
transfer of immediately available funds in Pounds in Sterling to Barclays
Bank Plc, PO Box 1197, 320 New ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇, for the account of ▇▇▇▇▇▇▇-▇▇▇▇▇▇ LIMITED, account number ▇▇▇▇▇▇▇▇,
Sort Code number 20-44-22
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CLAUSE 4: TERMS OF PAYMENT CONT'D.
4.4 INVOICES -
4.4.1 the Seller shall submit to the Buyer within 45 days prior to the
date each advance payment is due (except with respect to the first
advance payment due within 10 working days after approval of the
Agreement, in which case an invoice will be provided at the time of
such signing) reflecting the amount of the advance payment due on
such payment date. The Purchase Agreement Number shall be
referenced on each invoice submitted to the Buyer.
4.4.2 at the same time as providing the Buyer the Notice of Target
Delivery Date for an Aircraft, the Seller will provide to Buyer a
preliminary invoice reflecting Seller's best estimate of the final
price of the Aircraft.
4.4.3 at the same time as providing the Buyer the Notice of Delivery Date
for an Aircraft, the Seller will provide to the Buyer a final
invoice reflecting the final price of the Aircraft. The Seller's
agreement to provide Buyer this final invoice is given in
consideration of Buyer's needs to obtain financing for the Aircraft.
CLAUSES 5: -DELIVERY
5.1 TIME OF DELIVERY the Aircraft shall be delivered to the Buyer by
the Seller and the Buyer will accept delivery of the Aircraft in
accordance with the following Schedule:
MONTH & YEAR OF QUANTITY OF
--------------- -----------
DELIVERY AIRCRAFT
-------- --------
April 2000 1
July 2000 1
September 2000 1
5.2 NOTICE OF TARGET DELIVERY DATE - The Seller will give the
Buyer notice of the Target Delivery Date of the Aircraft approximately
90 (ninety) days prior to the scheduled month of delivery.
5.3 NOTICE OF DELIVERY DATE - the Seller will notify the Buyer thirty
(30) days prior to the delivery date at which each Aircraft will be
presented by the Seller for acceptance by the Buyer.
5.4 PLACE OF DELIVERY - each Aircraft shall be delivered at the Seller's
factory at Bembridge, Isle of Wight, England.
5.5 TITLE AND RISK OF LOSS - Title to and risk of loss of an Aircraft
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will pass from the Seller to the Buyer upon delivery of such Aircraft
but not prior thereto.
5.6 DELIVERY DOCUMENTS - concurrent with the final payment for each
Aircraft, the Seller shall present to the Buyer's representative the
following documents:
o Section Sellers Bifi of Sale conveying good title to such
Aircraft, free of encumbrance
o Section Final Invoice.
o Section CAA Flight Manual
o Section Airframe Log Books
o Section Engine Log Books
o Section Propeller Log Books
o Section United Kingdom Certificate of Airworthiness for
Export issued by the CAA
o Section Certificate of Approval of Aircraft Radio Station
issued by the United Kingdom Civil Aviation Authority
o Section Copy of the CAA Type Certificate
o Section Weight and Balance Supplement
CLAUSE 6: REGULATORY REQUIREMENTS AND CERTIRCATES
6.1 CERTIFICATES
6.2 The Seller will manufacture each Aircraft to conform to the appropriate
Type Certificate issued by the CAA for the specific model of Aircraft and
will obtain from CAA and furnish to the Buyer at the delivery of each
Aircraft a Certificate of Airworthiness for Export to the People's
Republic of China issued by the CAA.
6.3 The Seller may at its option incorporate development modifications in the
Aircraft designed to facilitate manufacture and which do not entail any
increase in price or postponement of the delivery date of the Aircraft.
Any such modifications shall not adversely affect the guaranteed
performance of the Aircraft set forth in Appendix II.
6.4 The Seller undertakes to incorporate all modifications declared mandatory
by the U.K. Civil Aviation Authority and CAA-China prior to the Delivery
Date for the Aircraft except as specified in Clause 6.4 hereof The Seller
shall notify the Buyer of all such modifications without delay by
presentation of Change Order, as provided for under Clause 14 hereof,
showing that there is no increase in the prices as set out in Clause 3
hereof and indicating the effect on the Delivery Programme. Any delay
beyond the Delivery Date pursuant to the Seller carrying out its
obligations under this paragraph shaft be deemed to be excusable delay
within the meaning of Clause 15 hereof.
6.5 The Seller shall notify the Buyer of all modifications declared mandatory
by the U.K. Civil Aviation Authority for the Aircraft. In the event of such
modifications the Seller shall make available to the Buyer, at the Seller's
expense. the parts, drawings and instructions required to incorporate such
modifications in the Aircraft.
6.6 The Seller will promptly notify the Buyer of any amendments to the
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specifications described in the Purchase Agreement and any effect on
design, performance, weight, balance, scheduled delivery month.
CLAUSE 7: PLANT REPRESENTATIVES AND INSPECTION
7.1 The Aircraft shall be inspected by the Seller during construction under the
Seller's own system of quality assurance approved by the CAA.
7.2 The Seller shall permit the authorised representative of the Buyer to
visit its works by prior agreement in order to observe the Aircraft during
completion.
7.3 The Buyer may have up to three (3) duly authorised resident inspectors at
the Seller's plant who can inspect the manufacturing process and the work
in progress and who will have access to such relevant technical data as is
reasonably necessary to carry out said inspection. The Seller shall make
available to the Buyer's representative suitable office accommodation with
telephone and facsimile facilities and shall provide local transportation.
The Seller shall also make available a recommended inspection fist for the
Aircraft.
7.4 The Seller shall arrange for said resident inspector(s) to visit Seller's
facilities and if possible those of its suppliers and subcontractors at all
reasonable times during business hours. Such inspection shall be performed
in such manner as not to delay or hinder the construction or manufacture
of the Aircraft or the performance of this Purchase Agreement by Seller or
any other work in progress in the respective facilities.
The actual detailed inspection of the Aircraft shall only take place in the
presence of the inspection personnel of Seller, according to a procedure to
be agreed upon with Buyer. If access to any part of said facilities where
construction is in progress is restricted for security reasons, Seller
shall be allowed a reasonable time to make the items available for
inspection, elsewhere if possible.
Buyer shall bear all expenses in connection with transport (other than
local transport), subsistence, insurance, and salary of such resident
inspector(s).
7.5 Buyer shall indemnity and hold harmless Seller and Seller's employees from
and against all liabilities, damages, losses and judgements, costs
attorneys' fees and other expenses relative thereto which may be asserted,
assesed or accrued against seller and its employees by reason of injury to
or death of Buyer's resident inspector arising out of or in connection with
the present Clause, except in the case of gross negligence or wilful
misconduct.
Seller shall indemnify and hold harmless Buyer and Buyer's resident
inspector from and against all liabilities , damages losses and judgements,
costs, attorneys' fees and other expenses relative thereto which may be
asserted, assessed or accrued against Buyer and its resident inspector by
reason of injury to or death of Seller's employees arising out of or in
connection with the present Clause, except in case of gross negligence or
wilful misconduct.
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In the event any claim is made or suit is brought against either party for
Daages for death or injury, the part against whom claim is made or suit is
brought shall promptly give notice to the other party and the latter shall
have the right to supervise and conduct the defence thereof, or to effect
any settlement which it, in its opinion, deems proper.
7.6 The buyer shall not later than thirty (30) days before the date of arrival
of the Resident inspectors notify the Seller in writing of the names of
such resident Inspectors.
CLAUSE 8: BUYERS ACCEPTANCE
8.1 Each Aircraft shall be delivered at the Seller's factory at Bembridge,
Isle of Wight, England.
8.2 The Buyer shall not later than thirty (30) days before the Delivery Date
notify the Seller in writing of the name(s) of the Buyer's
representative(s) who will be authorised to accept the Aircraft on the
Buyer's behalf
8.3 The Buyer's acceptance tests of each Aircraft shall take place at the
Seller's factory at Bembridge, Isle of Wight, England.
The tests shall be carried out by the Seller's personnel. If the Buyer so
wishes, one (1) representative of the Buyer's flight personnel may be
present as an observer and have a seat in the cockpit. A maximum of two (2)
representatives of the Buyer having only access to the passenger cabin, may
participate in such acceptance tests. During the flight these
representatives shall comply with the instructions of the Seller's
representatives.
Prior to the delivery of the Aircraft the parties shall agree on a
customers acceptance procedure and the successful compliance with said
procedure shall be deemed to demonstrate compliance with the specification
and the guaranteed performance.
The Seller shall give to the Buyer not less than thirty (30) days' notice
in writing of the proposed time for such tests. The Buyer agrees to
attend the Aircraft acceptance tests at the date notified by the Seller.
In the course of the acceptance tests, the Seller shall fly the Aircraft to
be delivered for an aggregate period of time not exceeding two (2) hours.
Such time may, if necessary, be modified for a successful performance of
the acceptance procedure at the Buyer's request and after agreement of both
parties. The acceptance tests shall demonstrate to the Buyer the
satisfactory functioning of the Aircraft and its equipment.
The Seller shall make available to the Buyers representative
suitable office accommodation with telephone and facsimile facilities and
shall provide local transportation.
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8.3 Upon completion of manufacture, the Seller shall offer the Aircraft, at its
factory in England, to the Buyer for inspection both on the ground and in
flight. The Aircraft shall be operated at the Seller's expense and risk and
only by the Seller's nominees during the Acceptance Flight Test.
Upon successful completion of the Aircraft acceptance tests, and the
Buyer is notified that the Aircraft conforms to the contract specifications
as defined in Appendix IA and IB and that it meets the guaranteed
performance as defined in Appendix II, the Buyer's representative shall
give the Seller a signed Acceptance Certificate in the form specified in
Appendix III hereto and pay the unpaid balance of the final price of the
Aircraft at the time of delivery of each Aircraft. Title and risk in the
Aircraft shall then transfer to the Buyer.
The Seller shall immediately make available to the Buyer the following
documents:-
o Section The Seller's ▇▇▇▇ of Sale conveying good title to such
Aircraft free of encumbrances.
o Section Final Invoice
o Section CAA Flight Manual
o Section Airframe Log Books
o Section Engine Log Books
o Section Propeller Log Books
o Section United Kingdom Certificate of Airworthiness for Export
issued by the CAA
o Section Certificate of Approval of Aircraft Radio Station issued by
the United Kingdom Civil Aviation Authority
o Section Copy of the CAA Type Certificate
o Section Weight and Balance Supplement
8.4 The Seller shall be entitled to use the Aircraft prior to its delivery for
such flight test as may be necessary to obtain a Certificate of
Airworthiness for the Aircraft, and such use shall not change the Buyer's
obligation to accept delivery of the Aircraft hereunder.
8.5 Any flight hours in excess of twenty-five (25) shall be credited to the
Buyer at the cost of L. 75 per flight hour.
8.6 The Buyer shall indemnify and hold harmless the Seller and the Seller's
employees against all liabilities, damages, losses and judgements, costs,
Attorneys' fees and other expenses relative thereto which may be asserted,
assessed or accrued against the Seller and its employees by reason of
injury to or death of Buyer's personnel arising out of or in connection
with the test on the ground or in flight provided for in this clause,
except in case of gross negligence or willful misconduct
The Seller shall indemnify and hold harmless the Buyer and the Buyer's
employees against all liabilities, damages, losses and judgements, costs,
Attorneys' fees and other expenses relative thereto which may be asserted,
assessed or accrued against the Buyer and its employees by reason of
injury to or death of Seller's personnel arising out of or in connection
with the test on the ground or in light provided for in this clause,
except in case of gross negligence or willful misconduct.
In the event that any claim is made or suit is brought against
either Party for
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damages for death or injury, the Party against whom the claim is made or
suit is brought shall promptly give notice to the other Party and the
latter shall have the right to supervise and conduct the defence thereof,
or to effect any settlement which it, in its opinion, deems proper.
CLAUSE 9: TITLE AND RISK
9.1 SELLER'S INDEMNIFICATION OF BUYER
Until transfer of title to an Aircraft to the Buyer, the Seller will
indemnify and hold harmless the Buyer and the Buyer's observers from and
against all claims and liabilities, including all expenses and attorneys!
fees incident thereto or incident to establishing the right to
indemnification, for injury to or death of any person(s), including
employees of the Seller but not employees of the Buyer, or
for loss of or damage to any property, including an Aircraft,
arising out of or in any way related to the operation of an Aircraft
during all demonstration and test flights conducted under the provisions
of the Purchase Agreement, whether or not arising in tort or occasioned by
the negligence of the Buyer or any of the Buyer's observers.
9.2 INSURANCE REQUIREMENTS
The Buyer will purchase and maintain insurance provided by The People's
Insurance (Property) Company of China. (PICC). The Buyer will provide such
certificate of insurance to the Seller at least ten (10) days prior to the
scheduled delivery of each Aircraft under the Purchase Agreement. The
insurance certificate will reference each Aircraft delivered to the Buyer
pursuant to the Purchase Agreement.
9.3 TRANSFER, OF TITLE AND RISK
Upon delivery of the Aircraft and final payment to the Seller for
the Aircraft as set out in Clause 4.2 hereto, title and risk in the
Aircraft shall pass to the Buyer.
CLAUSE 10: FERRY OF THE AIRCRAFT
10.1 The Seller will be responsible for arranging the ferry of the Aircraft,
free of charge, to the destination airport in the People's Republic of
China, designated by the Buyer.
10.2 Prior to the entry of the Aircraft in People's Republic of China the
Seller shall be responsible for all charges, (fuel, oil, navigation and
landing fees) expenses and flight arrangements i.e. ferry route
application. After entry into the People's Republic of China, the Buyer
shall be responsible for all charges relating to fuel, oil, navigation
and landing fees and for all flight arrangements.
10.3 The Buyer shall indemnify and hold harmless the Seller and the Seller's
employees against all liabilities, damages, losses and judgements, costs,
Attorneys' fees and other expenses relative thereto which may be asserted,
assessed or accrued against the Seller and its employees by reason of
injury to
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or death of Buyer's personnel arising out of or in connection with the
present clause, except in case of gross negligence or willful misconduct
10.4 The ferry pilots(s) shall be in possession of the following documents
which should be available for inspection fifteen (15) days prior to the
commencement of the ferry flight:-
o Section Health Certificate
o Section Pilot's Licence
o Section International Pilot's Licence
10.5 At the Buyer's request, operations engineering support in the duration of
ferry flight will be provided by the Seller free of charge.
CLAUSE 11: FIELD SERVICE
11.1 The Seller shall provide free of charge to the Buyer a field service
representative with ability and experience of airframe, engines and
instruments, for a period of seven (7) man-months for the first Operator
of the Aircraft in the Buyer's country. This period may be divided into
two portions with agreement of both parties.
This field service shall be provided at the Operator's main base or at
other location to be mutually agreed. In the event any such field service
representative is sent at the Operator's request to any other sites,
transportation and hotel expenses required for such representative to and
between sites shall be provided by or at the expense of the Operator.
When necessary, visits will also be arranged for representatives of Major
Vendors.
The Operator shall provide, free of charge, domestic tickets on the
Operator's flights for the representatives for the purpose of domestic
business travel.
The Operator shall furnish, free of charge, suitable space and
office equipment, including other necessary facilities such as telephone
and fax facility in order to enable the Seller's representatives to
fulfil their task properly.
CLAUSE 12: VENDORS PRODUCT SUPPORT
12.1 The Seller will transfer its Vendor Product Support Agreements to the
Buyer upon delivery of the Aircraft.
Such Product Support Agreements will include the following:
1. Technical data and manuals required to operate, maintain, service and
overhaul the Vendors Items. Technical data and manuals shall be
prepared
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in general accordance with Society of British Aircraft
Constructors (SBAC) Specification. and will be published in the
English language.
2. Warranties and Guarantees comprising Standard Warranties as set
forth in the Vendor Warranty Manual.
3. Training to ensure efficient operation, maintenance and overhaul of
the Vendors Items for the Buyer's shop and line service personnel.
4. Spares data in general accordance with SBAC Specification, Initial
Provisioning training, and spares service including routine
and emergency deliveries.
5. Technical assistance and liaison on maintenance, overhaul, service,
repair and operation and inspection of the Vendors Items.
6. Field service representation, when required, and based where the
Aircraft is operated, to assist the Buyer with maintenance, overhaul,
repair, operation, inspection, tooling, Spares provisioning and
training requirements, as the case may be.
CLAUSE 13: WARRANTIES
13.1 STANDARD WARRANTY
Neither the operation nor the performance of the Aircraft will be adversely
effected by the introduction of the requirement for Year 2000 compliance.
13.1.1 Subject to conditions as hereinafter provided the Seller warrants
to the Buyer that each Aircraft and part of the Aircraft delivered
under this Purchase Agreement which is designed by the Seller or
by an approved manufacturer to any of the approved part number or
order of the Seller shall at the time of delivery to the Buyer:
(i) be free from defects in material
(ii) be free from defects in workmanship (including without
limitation processes of manufacture)
(iii) be free from defects in design (including without
limitation selection of materials) having regard to the
state of the art at the date of such design.
(iv) shall be Year 2000 compliant
(v) full warranty shall commence from the date of delivery
of the Aircraft to the Buyer.
13.1.2 Subject to conditions hereinafter provided the Seller further
warrants that each accessory, equipment, appliance system and part
selected by the Seller for installation in the Aircraft and
delivered under this Purchase Agreement which is not subject to
the warranty contained in sub-Clause 13.1.1 above shall at the
time of delivery to the Buyer:
(i) be free from defects in its installation in the Aircraft
(ii) be suitable for its intended use
(iii) be installed in such manner as not to
invalidate any applicable warranties.
(iv) shall be Year 2000 compliant
(v) full warranty shall commence from the date of delivery
of the
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Aircraft to the Buyer.
13.1.3 Prior to the delivery of the first Aircraft, the Seller shall
obtain from the Engine Manufacturer and Propeller Manufacturer and
from all Vendors enforceable warranties in respect of each part of
the Aircraft. These will be transferred to the Buyer on delivery
of the Aircraft. However, for parts which the Buyer has requested
the Seller to install on the Aircraft under agreed change notice,
where such parts are to be supplied by Vendors with whom the.
Seller has no existing enforceable warranty agreements, the Seller
shall exert his best efforts to obtain such warranty agreements
with the concerned Vendors and will advise the Buyer if such
agreement cannot be obtained.
The Seller shall make available and, transfer to the Buyer from
the date of delivery of the Aircraft the benefit of any Vendor
Warranty obtained from said Vendor in accordance with the General
Terms and Conditions of the Seller established in the spirit of
these Clauses. In addition, the Seller undertakes to supply to the
Buyer such Vendor Warranties in the form of the 'Vendor Warranty
Manual". Furthermore, the Seller shall communicate to the Buyer
the Vendor Patent Indemnity conditions.
13.1.4 The warranties contained in sub-Clause 13. 1.1 above shall be
limited as follows:
(i) with respect to defects (except as provided in sub-Clause
13.1.1 (iii)) in material or workmanship to those defects
which become apparent within thirty six (36) months, or
three thousand (3,000) flight hours (whichever shall first
expire) after delivery of the Aircraft or part.
(ii) with respect to defects in design, to those defects which
become apparent within thirty six (36) months after
delivery of the Aircraft or part.
13.1.5 In the case of any defect in or failure of the Aircraft or any
part covered by the Seller's warranties which becomes apparent
within the applicable warranty period, the Buyer shall within
sixty (60) days after such discovery forward to the Seller
particulars of the claim and reasons thereof and shall promptly
send to the Seller the parts alleged to be defective.
Subject to the warranty claim being accepted, all transportation
cost, insurance, and if any expenses imposed by a third party in
connection with return of the defective part to the Seller's
facilities (or to any other manufacturer or repairer designated by
the Seller) shall be borne by the Seller.
All transportation costs. insurance and any other expenses in
connection with return of the repaired parts under warranty
conditions to the Buyer's main base shall be borne by the Seller.
The Seller shall at its own expense promptly make all repairs,
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corrections and replacements necessary to make such unit or Spare
Part comply in all respects with said warranty. The Seller shall
have the sole right to determine whether the item shall be
repaired, overhauled or replaced.
For items which cannot be repaired economically, the Seller shall
either provide. free of charge, replacement items or corresponding
credit on future purchase of Spares, and the defective items shall
become the property of the Seller.
The Seller shall have the right to inspect the Aircraft and
documents and other recognised records in the event of any claim
tinder this Clause.
The unexpired portion of the original warranty shall apply to
items replaced or repaired tinder the provision of this Clause
"Standard Warranty". If a defective part is replaced under
warranty by a repaired or used part, then such part shall have an
equal or better life time limit and be of equal or better
condition than the defective part it replaces.
13.1.6 WARRANTY ADMISSION
The warranty set forth in sub-Clause 13.1 shall be administered as
hereinafter provided.
All warranty repairs, overhauls, corrections and transportation
cost will be at the Seller's expense provided the Seller or its
representative is convinced of the acceptability of the claim
according to the provisions of sub-Clauses 13.1.1 and 13.1.2
hereof
Warranty claim determination will be reasonably based upon
reports, historical data logs, inspection, tests. findings during
repair and failure analysis.
If items which are sent to the Seller under warranty
consideration are found to be serviceable, the Buyer shall refund
to the Seller its transportation costs and reasonable test
charges if undertaken by a vendor or vendor's authorised service
centre. If a warranty claim is authorised by the Seller's
onsite representative no cost Will accrue to the Buyer.
If a failure occurs within the warranty period specified in
sub-Clause 13.1.4, the Buyer shall within sixty (60) days after
such failure was found file a Warranty Claim in the Seller's form
or, if the Buyer so prefers, in its own form, provided such form
contains at least the following data:
a) Description of defect and action taken, if any
b) Date of incident and/or of removal date
c) Description of the defective part
d) Part Number (PIN)
e) Serial Number (S/N)
f) Position on Aircraft, according to the Illustrated Parts
Catalogue (IPC)
g) Total flying hours or calendar time as applicable
h) Time since last overhaul (T.S.0.)
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i) Aircraft registration number
j) Aircraft total flight hours and/or number of landings
k) Location to which Warranty item should be returned
l) Claim number
m) Date of claim
n) Delivery date of part to the Buyer
A detailed report of the warranty claim findings will be made
available by the Seller.
13.1.7 IN-HOUSE WARRANTY
After previous agreement in writing from the Seller or his
representative at the Buyer's base, the Buyer may be authorised to
perform, subject to the terms of the Standard Warranty and the
terms hereof, the repair In-house of Warranty units and parts
covered by the Warranty. The Seller's representative has the right
to request return shipment of warranty units and removed parts, if
the nature of the failure requires technical investigation.
The Seller's representative shall further have the right to be
present during the disassembly and inspection of the failed units
and parts. The Buyer shall repair or correct such items in
accordance with the Seller's instructions.
The Buyer shall file a warranty claim within sixty (60) days after
failure was found, requesting a credit to the Buyer's account
equal to the labour cost expended plus the cost of the material
required for repair at current catalogue prices.
The man-hours authorised for In-house repair of any item by the
Buyer shall be based on the Seller's estimates of man-hours
required.
For the purpose of this sub-Clause 13.1.7, the warranty labour
rate shall be one hundred fifty (150) percent of the Buyer's
average direct hourly labour rate. For this purpose, "Average
direct hourly labour rate" means the average hourly rate
(excluding all fringe benefits, premium time allowances, social
charges, business taxes and the like) paid to the Buyer's
employees whose jobs are directly related to the performance of
the repair or modification. Prior to or concurrent with submittal
of the Buyer's first claim for labour reimbursement hereunder, the
Buyer shall notify the Seller of any significant change in such
rate. If requested, the Buyer shall furnish to the Seller such
data as may be reasonably required to substantiate such rate.
In no case will reimbursement be made to the Buyer for repair
costs including labour and material in excess of those which would
have resulted if repairs had been carded out at the Seller's
facilities.
The labour cost to be credited by the Seller as aforesaid shall
account for:
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- disassembly
- repair
- reassembly
- final inspection and test.
Claims for In-house Warranty credit shall be in accordance
with the format of sub-Clause 13.1.6 and will include the
additional following data:
- part numbers
- part serial numbers
- part descriptions
- quantity of parts
- unit price of parts
- total price of parts
- total labour hours
- total claim value.
The Buyer shall retain failed parts for a period of ninety
(90) days after the date of completion of repair. At the
Seller's request, such parts are to be returned to the
Seller's designated facilities, within fifteen (15) days from
receipt of such request. Seller to be responsible for
transportation cost.
13.1.8 Whenever a part of an Aircraft which contains a defect for
which the Seller is liable under the Seller's warranty has been
corrected, repaired or replaced pursuant to the terms of this
Clause (to the extent that the defect is not attributable to a
defective correction, repair or replacement by the Buyer), the
period of the Seller's warranty with respect to such
correction, repair, replacement or redesign, whichever may be
the case, shall be the remaining portion of the original
warranty. If a defective part is replaced under warranty by a
repaired or used part, then such part shall have an equal or
better life time limit and be of equal or better condition than
the defective part it replaces.
13.1.9 The Buyer's rights under the Standard Warranty are subject to
the Aircraft being maintained, overhauled, repaired and
operated in accordance with instructions issued by the Seller
and manufacturers of Vendor Parts, or with the instructions
issued or approved by the Buyer's authorities. The Seller shall
have the right to inspect the Aircraft and documents and other
recognised records in the event of any claim being made under
this Clause.
13.1.10 The Seller's liability under this Clause shall not extend to
fair wear and tear nor to:
(i) any of the Aircraft which has been
repaired, altered or modified after delivery except by
the Seller or in a manner approved by the Seller
(ii) any Aircraft which has been operated in
its damaged state subsequent to its involvement in an
accident, or for any other reason
(iii) parts from which the manufacturers'
trade ▇▇▇▇, name. serial number or other identification
marks have been removed, unless in any such case (except
in the case of (iii) above) the Buyer submits reasonable
evidence to the Seller that the defect did not arise
from or was not contributed to by any of the said
causes.
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13.2 SERVICE LIFE POLICY
In addition to the warranties set forth in sub-Clause 13.1 above,
the Seller further agrees that should a failure occur in any of the
items listed in Appendix V. and subject to the general conditions
and limitations set forth in sub-Clause 13.2.3 below, then the
provisions of this sub-Clause 13.2 shall apply.
13.2.1 For the purpose of this sub-Clause 13.2 the following
definitions shall apply:
(i) "Item" means any of the items of primary structure
specified in Appendix V
(ii) "Failure" means any breakage or defect which impair the
utility and safety or reliability of the Item.
13.2.2 Subject to general conditions and limitations set forth in
sub-Clause 13.2.3 below, the Seller undertakes that if a
Failure occurs in an Item before the Aircraft in which that
Item was initially installed has completed ten thousand
(10,000) flying hours or within ten (10) years after the
delivery of said Aircraft to the Buyer (whichever shall first
occur), the Seller shall, at his own discretion and cost, and
as promptly as practicable.:
(a) design and furnish to the Buyer a correction for the Item
affected by the Failure and provide any parts required for
such correction, or
(b) replace such Item
13.2.3 GENERAL CONDITIONS AND LIMITATIONS
13.2.3.1 The undertakings given in sub-Clauses 13.2.2 shall
not apply during the period of the warranty applicable to
that Item under sub-Clause 13. 1, nor if the Failure of
the Items is due to any of the causes referred to in
sub-Clauses 13.1.10 (i), (ii) and (iii).
13.2.3.2 This policy is applicable to Failures as defined in
sub-Clause 13.2.1, subject to maintenance and overhaul
processes as indicated in Seller's technical
documentation and/or any other Seller's technical written
instructions being strictly complied with by the Buyer.
13.2.3.3 The provisions of sub-Clause 13.1.9 above are incorporated
herein by this reference and shall condition the Seller's
obligation under this policy with respect to any listed
item.
13.2.3.4 The Buyer shall maintain historical records with
respect to the Item adequate to enable determination as
to whether the alleged Failure is covered by the present
undertaking.
13.2.3.5 The Buyer shall keep the Seller or its representative
informed of any significant incident whatsoever occurring
or recorded, resulting in any damage to the Aircraft.
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13.2.3.6 Service Life Policy application is, in all cases,
conditional to the Buyer's conformity with all structural
inspections identified within the Maintenance Manual.
13.2.3.7 The Buyer shall inform the Seller of defect or
Failure in sufficient detail to enable the Seller to deem
whether said Failure or defect is subject to a claim
under this warranty clause.
13.2.3.8 The return to the Seller, if such return is deemed
practicable by the Seller of any listed Item subject to
a Failure, shall be at the Buyer's transportation
expense. The Seller shall bear all return transportation
costs to the Buyer's main base.
13.2.3.9 Should the Seller issue a modification in order to
avoid a structural Failure and should the Seller elect
to deliver the necessary modification kit free of charge
to the Buyer, then the validity of this commitment under
sub-Clause 13.2 hereof shall be subject to the Buyer
incorporating in the Aircraft, within a reasonable time
to be mutually agreed between the Buyer and the Seller,
such modification as promulgated by the Seller and in
accordance with the Seller's instruction.
13.2.3.10 This Service Life policy is neither a warranty,
performance guarantee nor an agreement to modify the
Aircraft or airframe components to conform to new
developments hereafter occurring in the state of the
airframe design and manufacturing art. The Seller's
obligation herein is to make only those corrections to
the airframe or furnish replacement therefore all provided
in this sub-Clause 13.2.
13.2.3.11 The Buyer's rights under this sub-Clause 1.3.2 shall
not be assigned, sold, leased, transferred or otherwise
alienated by operation of law or otherwise, to other
operators except as provided for in Clause 22
"Assignment".
13.3 INTERFACE COMMITMENT
13.3.1 INTERFACE PROBLEMS
If the Buyer experiences any technical problem in the
operation of the Aircraft or its systems due to malfunction or
failure of an accessory, equipment or part, the cause of
which, after due and reasonable investigation, is not readily
identifiable to the design characteristics of one or more
components of the Aircraft (an Interface Problem) the Seller
shall, if requested by the Buyer and without charge to the
Buyer, promptly conduct an investigation and analysis of such
Problem to determine, if possible, the cause or causes of the
Problem and to recommend such corrective action as may be
feasible. The Buyer shall furnish to the Seller all data and
information in the Buyer's possession relevant to the
Interface Problem and shall co-operate with the Seller in the
conduct of its investigations and such tests as may be
required. At the conclusion of its investigations the Seller
shall promptly advise the Buyer in writing of the seller's
opinion as to the cause or causes of the Interface Problem and
the Seller's recommendations as to corrective action.
13.3.2 SELLER'S RESPONSIBILITY
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If the Seller determines that the Interface Problem is
primarily attributable to a defect in the design of any
component manufactured to the Sellers detailed design, the
Seller shall, if requested by the Buyer, correct the design of
such component to the extent of any then existing obligations
of the Seller (Seller Warranty).
13.3.3 VENDOR'S RESPONSIBILITY
If the Seller determines that the Interface Problem is
primarily attributable to a defect in the design of a
component not manufactured to the Seller's detailed design,
the Seller shall if requested by the Buyer, assist the Buyer
in processing any warranty claim the Buyer may have against
the manufacturer of such component. The Seller shall also take
whatever action is permitted by its contract with such
manufacturer in an effort to obtain a correction of the
interface Problem acceptable to the Buyer.
13.3.4 JOINT RESPONSIBILITY
If the Seller determines that the Interface Problem is
partially attributable to a defect in the design of a component
manufactured to the Seller's detailed design, the Seller shall,
if requested by the Buyer, seek a solution to the Interface
Problem through the co-operative efforts of the Seller and the
manufacturers of the other components involved. The Seller
shall promptly advise the Buyer of such corrective action as
may be proposed by the Seller and such other manufacturers,
such proposal to be consistent with any then existing
obligations of the Seller and such other manufacturers.
If such proposal is acceptable to the Buyer, the proposed
action shall be taken. Acceptance by the Buyer of such action
shall constitute full satisfaction of any claim the Buyer may
have against either the Seller or such other manufacturers with
respect to such Interface Problem.
13.3.5 GENERAL
a) All requests under this Clause shall be directed to the
Seller's and the Vendor's Warranty Administrators.
b) Except as specifically set forth in the present Clause,
this shall not be deemed to impose on the Seller any
obligation not expressly set forth elsewhere in this
Purchase Agreement.
c) All reports, recommendations, data and other documents
furnished by the Seller to the Buyer pursuant to this
Clause shall be deemed to be delivered under this purchase
Agreement and shall be subject to the limitations set
forth in the Seller's Warranty.
13.4 FAILURE BY VENDORS TO HONOUR THE WARRANTY
13.4.1 In the event that:
(i) any Vendor, under any Standard Warranty obtained by the
Seller pursuant to Vendor Product Support Agreements,
defaults in the performance of any material obligation
with respect to a defect in material or workmanship or a
defect in design in any accessory, equipment or
part (other than engines and engine accessories)
installed in an Aircraft at the time of delivery and
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(ii) the Buyer submits to the Seller reasonable proof that such has
occurred then the Sellers Standard Warranty, set forth in sub-Clause
13.1.1 of this Purchase Agreement shall apply to such defect to the
same extent as if such accessory, equipment or part had been
manufactured to the Seller's detail design, except that the shorter of
the two following warranty periods shall apply:
o either the Vendor's warranty period as indicated in the
Vendor Warranty Manual"
o or the Seller's warranty period as indicated in
sub-Clause 13.1.4 of this Purchase Agreement.
13.4.2 At the Seller's request, the Buyer shall assign to the Seller and
the Seller shall be subrogated to all of the Buyers rights against
such manufacturer with respect to such defect and arising by reason
of such default.
13.5 DEFINITIONS
For the purpose of this Clause 13:
Flight hours shall mean the accumulated time intervals from wheels off to
wheels on.
Approved manufacturer shall mean authorised sub-contractor by the Seller to
manufacture parts designed by the Seller to a Seller's part number.
Approved Part Number shall mean a part number generated and released by the
Seller for part identification.
14.1 Any alterations to this Purchase Agreement, except as provided for under
Clause 6.2 hereof shall be made only by written agreement which may take
the form of a Change Order as set out in Appendix IV hereto, issued by the
Seller or the Buyer and signed by the authorised representatives of both
parties.
15.1 GENERAL :- Seller will not be liable for any delay in the scheduled
delivery month of an aircraft or other performance under the Purchase
Agreement caused by (i) acts of God. (ii) way or armed hostilities; (iii)
government acts or priorities ; (iv) fires, floods or earthquakes; (v)
strikes or labour troubles causing cessation, slowdown, or interruption of
work ; or (vi) any other cause to the extent such cause is beyond Seller's
control and not occasioned by Seller's fault or negligence. A delay
resulting from such cause is defined as a n Excusable Delay.
15.2 The Seller will give a written notice to the Buyer (i) of a delay as soon
as the Seller concludes that an Aircraft will be delayed beyond the
scheduled delivery month due to an Excusable Delay; and, when known (ii) a
revised Delivery Date based on the Seller's appraisal of the facts
15.3 DELAY IN DELIVERY OF SIX (6) MONTHS OR LESS -
if the revised delivery month is six (6) months or less after the scheduled
delivery month, the Buyer will accept such Aircraft when tendered for
delivery, subject to the following:
15.3.1 The advance payment schedule will be adjusted to reflect the revised
delivery month.
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15.3.2 All other provisions of the Purchase Agreement are unaffected
by an Excusable Delay.
15.4 DELAY IN DELIVERY OF MORE THAN SIX (6) MOUTHS -
if the revised delivery month is more than six (6) months after the
schedule delivery month, either party may terminate the Purchase
Agreement with respect to such Aircraft within thirty (30) days of
the notice. If either party does not terminate the Purchase
Agreement with respect to such Aircraft, all terms. and conditions
of the Purchase Agreement will remain in effect.
15.5 AIRCRAFT DAMAGED BEYOND REPAIR -
If an aircraft is destroyed or damaged beyond repair for any reason
before delivery, the Seller will give written notice to the Buyer
specifying the earliest month possible, consistent with the
Seller's other contractual commitments and production capabilities,
in which the Seller can deliver a replacement. The Buyer will have
thirty (30) days from receipt of such notice to elect to have the
Seller manufacture a replacement aircraft under the same terms and
conditions of purchase, or failing such election, the Purchase
Agreement will terminate with respect to such Aircraft. The Seller
will not be obligated to manufacture a replacement Aircraft if
reactivating of the production line for the specific model of
Aircraft would be required.
15.6 TERMINATION
Termination under this clause will discharge all obligations and
liabilities of the Seller to the Buyer with respect to such
aircraft and all related undelivered materials, training, services
and other things terminated under this Purchase Agreement, except
that the Seller will return to the Buyer, without interest, an
amount equal to all advance payments paid by the Buyer for the
aircraft.
16.1 NON - EXCUSABLE DELAY : Delay in delivery of any Aircraft
established in accordance with the Notice of Delivery Date in
Clause 5.3 hereto in the Purchase Agreement by any cause that is
not an Excusable Delay pursuant to Clause 15 of the Purchase
Agreement.
16.2 LIQUIDATED DAMAGES
The Seller agrees to pay the Buyer liquidated Damages for each day
of non excusable delay in excess of twenty (20) days (collectively
the Non - Excusable Delay Payment Period) at the rate in pound
sterling per day of 1,000 (Liquidated Damages). The total amount
of such liquidated Damages for any Aircraft will not exceed the per
- Aircraft aggregate sum of pound sterling 35,000.
16.3 INTEREST
In addition to the liquidated damages in Clause 16.2, the Seller
will pay the Buyer Interest commencing twenty (20) days after the
scheduled Delivery Date as follows:
The product of the daily interest rate (computed by dividing the
Interest Rate in effect for each day by 365 days, or 366 days as
the case may be) times the entire amount of advance payments
received by the Seller for such Aircraft, and then time the actual
delayed days. The Interest Rate will be the three - month LIBOR
plus 0.40% pa. (London Interbank Offered Rate). The LIBOR rate
used for this calculation Will be the rate published by the London
edition of the financial Times on the scheduled delivery date and
reset every ninety (90) days thereafter. Such interest will be
calculated on a simple interest basis and paid in full at actual
delivery.
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16.4 RIGHT OF TERMINATION
The Buyer will not have the right to refuse to accept delivery of
any aircraft because of a non - excusable Delay for such aircraft
exceeds 150 days (Non - Excusable Delay Period) After such Non -
Excusable Delay Period, either Party may terminate the Purchase
Agreement as to such Aircraft by written or telegraphic notice
given to the other party.
16.5 TERMINATION
If the purchase Agreement is terminated with respect to any
aircraft for a non - Excusable Delay, the Seller will, in addition
to paying Liquidated Damages as described above, promptly repay to
the Buyer the entire amount of the Advance Payments received by the
Seller for such aircraft, with interest. (The interest rate is to
be as per clause 16.3)
17.1 The Seller shall provide training free of charge in England for the
Buyer's suitably qualified personnel. The Buyer shall be responsible for
providing travel to the Isle of Wight, England, and for all lodging
expenses. The Seller shall provide all local transportation.
17.1.1 PILOTS -
(a) The Seller will provide, free of charge, a course of flying
training on the Buyer's Aircraft for eighteen (18) pilots,
six(6) pilots per Aircraft, who are already qualified on
multi-engine and propeller-driven aircraft. Nine (9) of such
pilots shall be trained as Captains and nine (9) shall be
trained as Co-pilots.
(b) The course shall consist of a ten (10) day engineering
ground course at Bembridge Airport followed by a minimum of
seven (7) hours familiarisation flying in the Aircraft. One
pilot per Aircraft shall be trained to type conversion
instructor level.
(c) The pilot training courses shall be made in accordance with
the training plan approved by the Civil Aviation Authority.
Upon successful completion of the training course, the pilots
will receive a certificate signed by the Seller's training
pilot.
17.1.2 ENGINEERS -
The Seller will provide, free of charge, a course of training
for four (4) engineers per Aircraft.. The training course shall
consist of ten (10) working days ground course at Bembridge
Airport and shall cover airframe. power plant, electrics and
avionics and all systems.
Upon successful completion of the training course, the engineers
will receive a certificate signed by the Seller's Service
Engineer.
17.2 The Buyer shall make available at its expense suitable translators and
interpreters for both pilot and engineering training.
17.3 The dates of the flying training and ground training courses shall be
agreed between the Buyer and the Seller and shall be covered in a training
conference which will be held in China by a representative of the Seller
at a date to be mutually agreed.
17.4 Familiarisation flying shall be undertaken at Bembridge Airport
immediately after acceptance of the Aircraft and payment in full in
accordance with Clause 4. At all times when training of the Buyer's
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pilot is undertaken in the Aircraft, the Aircraft shall be insured by
the Buyer. The Buyer shall furnish the Seller with PICC certificate
satisfactory to the Seller that all such insurance has been effected, not
later than ten (10) days before the Delivery Date.
17.5 The Buyer shall indemnify and hold harmless the Seller and the Seller's
employees against all liabilities, damages, losses and judgements, costs,
Attorneys' fees and other expenses relative thereto which may be asserted,
assessed or accrued against the Seller and its employees by reason of
injury to or death of Buyer's personnel arising out of or in connection
with the present clause, except in case of gross negligence or wilful
misconduct
The Seller shall indemnify and hold harmless the Buyer and the Buyer's
employees against all liabilities, damages, losses and judgements, costs,
Attorneys' fees and other expenses relative thereto which may be
asserted, assessed or accrued against the Buyer and its employees by
reason of injury to or death of Seller's personnel arising out of or in
connection with the present clause, except in case of gross negligence or
wilful misconduct
o The Seller shall supply one copy of each of the following technical
publications, free of charge, at the issue current at the time of delivery
of the Aircraft, with each Aircraft together with one Microfiche reader
per Aircraft: The Seller acknowledges that the Buyer requires the document
180 days prior to delivery.
HARD COPY (H)
TECHNICAL PUBLICATIONS OR
MICROFICHE (M)
o Set of Load & Trim Sheets (Metric H
o System)
o Owner's Handbook (part of Flight H
o Manual)
o Specimen CAA Flight Manual H
o Maintenance Manual and Supplements H and M
o for Operators options
o Illustrated Parts Catalogue M
o Set of Field Service Publications M
o Maintenance Schedule M
o Set of Progressive Maintenance Check
o Lists H
o Lyconling engine Operator's Manual ▇
▇ ▇▇▇▇▇▇▇▇ Owner's Manual M
o Vendor Warranty Manuals H
o Master Minimum Equipment List H
o List of Life Limited Parts H
o Pilots Check List H
18.2 The Seller shall supply to the Buyer free of charge all
amendments issued for the aforementioned technical publications, for
a period of three (3) years following the date of acceptance of the
third Aircraft. Thereafter such amendments shall be supplied at the
Seller's prevailing prices.
18.3 The Seller shall supply Service Bulletins in hard copy, free of
charge to the registered owner of the Aircraft so long as the
Aircraft is in operation.
18.4 The Seller shall supply one copy of each of the following documents
with each
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Aircraft:
o Seller's ▇▇▇▇ of Sale - conveying good title to such, Aircraft
free of encumbrances.
o CAA Flight Manual
o Airframe Log Book
o Weights and balance supplement
o Engine Log Books (one per engine)
o Propeller Log Books (one per propeller)
o United Kingdom Certificate of Airworthiness for Export issued
by the CAA
o Certificate of Approval of Aircraft Radio Stations issued by
United Kingdom CAA
o Copy of the Aircraft Type Certificate issued by the CAA, with
CAA-China validation
18.5 All publications and documents supplied hereunder shall be in
the English language using aeronautical terminology in common use and
any interpretation thereof shall be Buyer's responsibility.
18.6 A set of documents will be supplied free of charge to CAA-China
Airworthiness Department.
18.7 Three (3) sets of training notes shall be supplied free of
charge to the Buyer prior to April 1999.
18.8 Preliminary copies of the relevant manuals will be forwarded to
the Buyer in advance of the delivery of the first Aircraft for the
purposes of translation by the Buyer.
9.1 The Seller indemnifies the Buyer against any claims (other
than claims resulting from loss of use of the Aircraft) resulting
from infringement of any United Kingdom Letters patent/copyright or
registered design by the Aircraft or Aircraft Spare Parts provided
that:
19.1.1 all claims shall be reported in writing to the Seller which shall
have absolute control at its expense of aft negotiations on the
Buyers behalf and
19.1.2 the Buyer shall take all reasonable steps in co-operation with the
Seller to resist such claims.
20.1 The Seller shall be solely responsible for and shall pay the
amount of all taxes, duties, or imports imposed upon the Seller by
the relevant Tax Authorities in the United Kingdom.
The Buyer shall be solely responsible for and shall pay the amount
of all taxes, duties, or imports imposed upon the Buyer by the
relevant Tax Authorities in the People's Republic of China.
21.1 Spare parts support shall be guaranteed by the Seller whilst
the aircraft is in operation.
21.2 Due to the procurement lead time of components the Seller
advises that the Initial Provisioning Package (I.P.P.) should be
ordered prior to the end of April 1999. The recommended level of
provisioning is listed in Appendix VI.
21.3 The Seller will buy back slow moving items from the I.P.P.
listing, excluding consumables beyond September 2002 at 85% of the
original ex works purchase price. Transportation costs shall be
shared equally between the Seller and the Buyer.
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CLAUSE 22: ASSIGNMENT
22.1 The terms and conditions contained in this Purchase Agreement
shall be deemed a personal contract and shall not be assigned to a
third party without the consent of both Parties.
CLAUSE 23: ARBITRATION
23.1 Any dispute in connection with this Purchase Agreement shall
be settled through friendly negotiation. Failing such settlement all
disputes shall be submitted for arbitration. Each Party shall
appoint an arbitrator within a period of thirty (30) days after the
receipt of written notification from the opposite party, and the two
arbitrators shaft jointly nominate a third person of Swedish
nationality as umpire to form an Arbitration Committee. The two
appointed arbitrators shall be confined to persons of Chinese and
British nationality. The arbitration shall take place in Stockholm,
Sweden, in accordance with the Swedish Arbitration Procedures then
set forth by the Arbitration Institute of Stockholm Chamber of
Commerce. Any such dispute shall be resolved in accordance with the
terms and conditions of this Purchase Agreement and the law of
Sweden. The decision of the Arbitration Committee shall be
considered as final and neither party shall appeal such decision to
any court. The arbitration fee shall be borne by the losing party
unless otherwise awarded by arbitration.
CLAUSE 24: NOTICES
24.1. All notices required by this Purchase Agreement will be in
the English language and will become effective on the date of
receipt and will be transmitted by any customary means of written
communication addressed as follows:
In the case of the Operator
China Northem Airlines
Dongta Airport Shenyang
Zip Code: 110043
People's Republic of China
Fax No. ▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ - for the attention of the Chief
Economist
In the case of the Buyer:
China Aviation Supplies Import & Export Corporation
First Business Department
P 0 Box 2379
25 Yong An Li ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇ Men Wai
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇▇ of China
Fax No. ▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇▇ for the attention of Director of
the First Division
In the case of the Seller:
▇▇▇▇▇▇▇-▇▇▇▇▇▇ Ltd
The Airport
Bembridge
Isle of Wight
Great Britain P035 5PR
40
30
Fax No. ▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ for the attention of the Commercial
Manager
41
31
IN WITNESS whereof the parties hereto have caused this Purchase Agreement to be
signed in duplicate by their respective duly authorised representatives.
SIGNED WITNESS TO SIGNATURE
For and on behalf of
CHINA AVIATION SUPPLIES
IMPORT & EXPORT CORPORATION
.......................................... .........................................
(Signature) (Signature)
.......................................... .........................................
(Name) (Name)
.......................................... .........................................
(Title) (Title)
Signed
For and on behalf of
CHINA NORTHERN AIRLINES
.......................................... .........................................
(Signature) (Signature)
.......................................... .........................................
(Name) (Name)
.......................................... .........................................
(Title) (Title)
Signed
For and on behalf of
▇▇▇▇▇▇▇-▇▇▇▇▇▇ LIMITED
.......................................... .........................................
(Signature) (Signature)
.......................................... .........................................
(Name) (Name)
.......................................... .........................................
(Title) (Title)
42
32
APPENDIX 1A
TO
PURCHASE AGREEMENT 98 QM13W 366196 UK
BASIC AIRCRAFT SPECIFICATION
TRISPEC ISSUE 2
43
33
Trislander
Basic Aircraft Specification BN2A-MkIII
POWER PLANT
3 Lycoming ▇-▇▇▇ ▇▇▇ hp. engines
3 ▇▇▇▇▇▇▇▇ constant two-bladed feathering proper.
3 ▇▇▇▇▇▇▇▇ propeller spinners
3 ▇▇▇▇▇▇▇▇ propeller governors
3 Electric engine starters
3 Oil coolers
3 Engine driven fuel pumps
3 Induction air filters
12 Dynafocal engine mounts
3 Fully variable carburettor heating systems
6 Shielded ignition harnesses
FUEL SYSTEM
2 Integral fuel tanks - 250 US gallons (usable) total
10 Electrical auxiliary fuel pumps
3 Remotely controlled fuel cocks
4 Quick-release fuel tank caps
2 Quick-dram fuel sumps
4 Electric fuel contents transmitters
INSTRUMENTS
1 Sensitive airspeed indicator
1 Sensitive altimeter
1 Rate of climb indicator
1 Turn co-ordinator
1 Slaved directional gyro system with pictorial navigation indicator
1 Horizon gyro (vacuum)
1 Direct reading standby magnetic compass
1 Audio / visual stall warning system
3 Flap position indicator fights
2 Trim position indicators (mechanical)
4 Fuel contents indicators
i Ammeter/ Voltmeter
3 Engine tachometers
3 manifold pressure indicators
3 Oil pressure and temperature indicators
3 Cylinder head/exhaust gas temperature indicators
3 Fuel pressure indicators
1 Alternate static source
TRISPEC issue 2 09/11/98 PAGE 1 OF 4
▇▇▇▇▇▇▇-▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ SPR, U.K.
44
34
TRISLANDER
BASIC AIRCRAFT SPECIFICATION BN2A - MKIII
INSTRUMENTS (CONTINUED)
1 instrument panel with space provision for optional equipment
1 Outside temperature gauge
2 Carburettor charge temperature indicators
1 Time - piece indicating hrs, min, sec.
ELECTRICAL PROVISIONS
2 Generators (28 volt 70 amp)
1 Battery (24 volt 25 amp hour)
2 Transistorised voltage regulators
2 Filter Units
2 Overvoltage relays
1 Busbar low volts relay
1 Central annunciator panel
1 Ground power supply receptacle
1 Flap actuator
1 Electrically heated pitot head
3 Navigation Lamps
2 Landing Lamps
2 Map and instrument panel secondary lighting lamps
Cabin Door warning lamps and microswitch system
Busbar distribution system with thermal type circuit breakers
Fully adjustable white instrument panel lighting and individual
passenger cabin lighting
1 Port forward passengers door interlock system.
CONTROLS AND PANEL ACCESSORIES
2 Adjustable rudder bar and toe brakes
1 Parking brake selector
2 Control handwheel
1 Wing flap selector switch
1 Elevator trim handwheel
1 Elevator trim handwheel
3 Sets low friction engine and propeller controls
1 first aid kit
1 Fire extinguisher
1 Pilot's sun visor and 1 co-pilot's sun visor
1 Pilot's direct vision window
1 Pilots map and stowage pocket
1 Co-Pilot's map and stowage pocket
TRISPEC ISSUE 2 09/11/98 PAGE 2 OF 4
▇▇▇▇▇▇▇ - ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇,▇▇.
45
35
TRISLANDER
BASIC AIRCRAFT SPECIFICATION BN2A-MKIII
AIRCRAFT FEATURES
1 Side-loading baggage compartment (key-locked door)
1 Nose baggage compartment
5 Wide cabin entry doors (key-locked)
2 Independently adjustable pilot's seats, mounted on a single frame
2 Inertia reel sash harness
1 Tricycle landing gear with double main wheels, steerable nosewheel
and hydraulic disc brakes on mains Forced draught cabin ventilation
system to each seat station Cabin sidewall furnishings
1 Ground equipment bag complete with two aileron locks, two elevator
locks, one pitot head cover, two jacking pads and two picket rings
1 Steering bar
4 Emergency exit windows
Sound and thermal insulation
Baggage screen
Cabin heating system
Windscreen de-misting system
Multi-coat anti-corrosion protection
Seat belt/no smoking sign
Dual vacuum system
Pitot/static system
RADIO FOUNDATION
2 VHF COM antenna
1 VHF NAV antenna (with Diplexer)
1 VHF Mkr antenna
1 UHF G/S antenna
1 Audio selector panel with intercom and PA
DC feeders and circuit breakers for two
NAV/COM and single ADF
Antenna feeders
2 Headsets with boom mikes
2 Cockpit speakers
6 Cabin PA speakers
1 Pilot press-to-transmit button
1 Co-pilot press-to-transmit button
Static discharge system
TRISPEC Issue 2 09/11/98 PAGE ▇ ▇▇ ▇
▇▇▇▇▇▇▇-▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇, ▇.▇.
46
36
Trislander
Basic Aircraft Specification BN2A-MKIII
AVIONICS
2 KX165-25's presenting VOR and ILS on Dual KI525A PNI'S for Pilot and
Co Pilot
1 KCS 55A Compass System
1 KR87 ADF presented on K1228 RMI (slaved)
1 KN 63 DME coupled to ▇▇▇ ▇ & ▇▇▇ ▇
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇.
▇ ▇▇▇ 129 Encoding Altimeter
1 KR 21 Marker Beacon Receiver
1 KMA 24W-71 Audio System
47
37
APPENDIX IB
TO
PURCHASE AGREEMENT 98 QMBW 366196 UK
OPTIONAL EQUIPMENT
TRIOPT ISSUE 1
48
38
APPENDIX IB
OPTIONAL EQUIPMENT
Installed price each,
Pounds Sterling
o Co-Pilots Instruments 13,683 *
o A change order may be introduced to allow for the
purchase and installation of a Co-pilots Attitude Indicator
independent in all respects from the Pilots system. The Seller
to provide price for said equipment and installation after
determination of offset cost associated with the non supply of
the item contained within the Co-Pilots Instrument price
quoted above. The Buyer to give consideration to this
quotation.
o RDR 2000 Weather Radar 23,693
o Horizon Gyro with Stabilisation 7,011
o Pick-Off for Weather Radar
o KHF 950 H.F. Radio 24,763
o Garmin 155 G.P.S. 8,899
o Airframe de-icing including Propellers 79,544
o and L.H. Windshield de-icing
o Right Windshield de-icing 2,369
o Cargo Protection Boards (One Aircraft only) 437
o Cargo Tie-Downs (One Aircraft only) 955
o Co-Pilots A.D.F. 4,667
o 2 man portable Oxygen System 3,750
o 5 Place Intercom System (One Aircraft only) 4,049
o Cockpit Voice Recorder (30 minutes) 22,300
The above list prices are subject to an introductory discount of 7%.
TRIOPT ISSUE 1 Date: 09/11/98
49
39
APPENDIX 1B
TO
PURCHASE AGREEMENT 98 QMBW 366196 UK
PERFORMANCE GUARANTEE
40
APPENDIX H
PERFORMANCE GUARANTEE
NOTES:
o Performance will be in accordance with the relevant Flight Manual.
o All figures are quoted at maximum all-up weight and ISA conditions.
Maximum take-off weight 4536 kg
Maximum landing weight 4536 kg
Maximum zero fuel weight 4400 kg
Empty equipped weight 2989 kg
Maximum fuel load 680 kg
Payload with maximum fuel 867 kg
'Take-off run (sea level) 347 m
Take-off distance (to clear 15m obstacle) 579 m
Landing Distance (from 15m) 442 m
Landing Run - 257 m
Cruise Speed 245 km/hr (133 knots)
Maximum Cruise Speed 260 km/hr (142 knots)
Rate of Climb (All engines operating) 235 m/min
Rate of Climb (One engine inoperative) 87 m/min
Maximum Ceiling (All engines operating) 3481 m
Maximum Ceiling (One engine inoperative) 2131 m
Stall Speed (Flaps Up) 112 km/hr (61 knots)
41
Stall Speed (Flaps Full Down) 92 km/hr (50 knots)
Range (with 45 mins:holding fuel) 1315 km.
APPENDIX III
TO
PURCHASE AGREEMENT 98 QMBW 366196 UK
SPECIMEN ACCEPTANCE CERTIFICATE
42
APPENDIX III
ACCEPTANCE CERTIFICATE (SPECIMEN)
The authorised representative of the Buyer shall sign an Acceptance Certificate
as set out below on completion of a satisfactory inspection of each of the
Aircraft.
THIS IS TO CONFIRM THAT I hereby certify that ▇▇▇▇▇▇▇-▇▇▇▇▇▇ BN 2A
Mk III. Aircraft Constructor's serial number under Purchase Agreement
No. 98 QMBW 366196 UK. conforms with the specification ordered and has received
a UK Certificate of Airworthiness for Export to Number and I
therefore accept the Aircraft fund on behalf of .
Aircraft Registration
Registration No. B-
Engine Type
Serial No. Port Starboard Centre
PROPELLER TYPE
SERIAL NO. PORT STARBOARD CENTRE
AIRCRAFT INSPECTED AT DATE TIME
SIGNED
For and on behalf of
CHINA AVIATION SUPPLY IMPORT AND EXPORT CORPORATION
Signed
For and on behalf of
CHINA NORTHERN AIRLINES
Signed
For and on behalf of
▇▇▇▇▇▇▇-▇▇▇▇▇▇ LIMITED
43
APPENDIX IV
TO
AGREEMENT PURCHASE 98 QMBW 366196 UK
SPECIMEN CHANGE ORDER
44
APPENDIX IV
CHANGE ORDER (SPECIMEN)
CHANGE ORDER No.
Dated
To Purchase Agreement 98 QMBW 366196 UK. dated for the supply of
Aircraft.
1. Proposed Change and Origin
2. Effect on Price:
3. Effect on Due Date of Offer:
4. Date by which this Change Order is to be returned:
We hereby agree to the above alteration to the Purchase Agreement number
GP/CH/01 under the provisions of Clause 13 thereof with the effects as shown.
Signed
For and on behalf of
CHINA NORTHERN AIRLINES
Signed
For and on behalf of
▇▇▇▇▇▇▇-▇▇▇▇▇▇ LIMITED
45
APPENDIX V
TO AGREEMENT PURCHASE QMBW 366196 UK
LIST OF PRIMARY STRUCTURE
46
APPENDIX V
LIST OF PRIMARY STRUCTURES
1. WING
Front Spar
Rear Spar
Inter-Spar skins
Nacelle Boxes
Engine Mounting Frames
Aileron Hinges
Flap Hinges
Main Landing Gear Pick Ups
Wing to Fuselage Pick Ups
2. FUSELAGE
Fuselage to Wing Pick Ups
Fuselage Spar Frames
Fuselage Frames
Fuselage Longerons
Fuselage Floor
Nose Wheel mounting Structure
Fin Mounting Structure
3. EMPERNNAGE
Tail Plane Mounting Structure
Tail Plane Spars
Tail Plane Inter-Spar Skins
Elevator Hinges
Fin Spares
Rudder Hinges
Fin Pick Ups
Centre Engine Mounting Frame
4. LANDING GEAR
Main Landing Gear Structure
Nose Landing Gear Structure
47
APPENDIX VI
TO
AGREEMENT PURCHASE 98 QMBW 366196 UK
INITIAL PROVISIONING PACKAGE
48
APPENDIX VI
INITIAL PROVISIONING PACKAGE
THE SELLER WILL PROVIDE WITHIN 30 DAYS OF THE EFFECTIVE DATE OF
THIS PURCHASE AGREEMENT, LISTINGS INDICATING IPP'S OF VALUES
APPROXIMATING TO
a) L 300,000
b) L 750,000
together with a budgetary quotation for two relevant Lyncoming piston engines.
49
The People's Insurance (Property) Company of China, Ltd.
Certificate of Insurance
CERTIFICATE NUMBER:
TO WHOM IT MAY CONCERN
THIS IS TO CERTIFY that we, the PEOPLE'S INSURANCE (PROPERTY) COMPANY OF CHINA
LTD., ("PICC Property") have issued insurance in the name of the GENERAL
ADMINISTRATION OF CIVIL AVIAITON OF CHINA ("CAAC") and/or the GOVERNMENT OF THE
PEOPLE'S REPUBLIC OF CHINA and/or Regional Airlines and/or Associated and/or
Subsidiary Companies including inter ▇▇▇▇ ▇▇▇▇▇ NORTHERN AIRLINES and CHINA
AVIATION SUPPLIES IMPORT AND EXPORT CORPORATION (hereinafter called "the
Assured") covering their fleet of aircraft, against the following risks and up
to the limits stated, whilst operating anywhere in the world, but to each
flight to and from the following countries/territories should be declared in
full details prior to the flight and insurance coverage is granted subject to
written confirmation having been issued by the Insurer, Countries which are
subject of UN sanctions, and Algeria, Angola, Liberia, Somalia, Sudan, DR Congo
(formerly Zaire), Iran, Afghanistan, Bosnia-Herzegovina, and the following
former USSR States/Republics: Azerbaijan, Checheno/Ingushskaya, Tadzhikistan,
Georgia and ▇▇▇▇▇▇▇.
▇. ▇▇▇▇ ALL RISKS (including spare parts, engine and the like not forming
part of an aircraft, hereinafter called "the Spares") of loss or Damage
whilst flying and on the ground for an Agreed Value each aircraft. The
coverage provided under this insurance is subject to the following
Deductibles:
In respect of aircraft
In respect of Spares US $ 10,000.00 but engine running activities to
be subject to the applicable deductible for the aircraft type.
2. HULL (including Spares) WAR AND ALLIED RISKS as excluded by the War,
Hijacking and other Perils Exclusion Clause (AVN.48B) other than paragraph
(b) thereof for an Agreed Value as at (1) above. This insurance excludes
confiscation by the Government of Registration and is subject to an
aggregate limit of US $ 1,750,000,000.00.
Coverage for Spares is restricted in respect of War Risks (as
defined in paragraph (a) of AVN.48B) to whilst in Transit only. NOTE:
THIS AGGREGATE LIMIT MAY BE REDUCED OR EXHAUSTED BY VIRTUE OF CLAIMS MADE
IN RESPECT OF ANY AIRCRAFT/SPARES INSURED UNDER THE HULL WAR AND ALLIED
RISKS INSURANCE POLICY.
50
The coverage in respect of spares, as detailed in 1 and 2 above is for
such sums as may be declared by the Assured, subject to a limit of US $
250,000,000.00 any one occurrence (or currency equivalent), not exceeding US $
25,000,000.00 in any one sending.
3. AIRCRAFT THIRD PARTY, PASSENGER, BAGGAGE, CARGO, MAIL and AIRLINE GENERAL
THIRD PARTY (including products) LEGAL LIABILITY, for a Combined Single
Limit (Bodily Injury/Property Damage) of at least US $ 1,250,000,000.00
any one occurrence, each aircraft, unlimited in all during the currency of
the policy, but in the aggregate in respect of Products. War and Allied
Risks are also covered, in accordance with the Extended Coverage
Endorsement (AVN52C) as contained in this policy.
It is further certified that PICC PROPERTY have been advised of the attachment
of the following Equipment hereunder:
Equipment/Aircraft type:
Registered Marks:
Manufacturers Serial no.:
Agreed Value:
Effective date: (or as advised to Insurers)
Deductible US $ (not applicable in the
event of Total Loss of
War and Allied Risks).
The said Equipment is the subject of the following Contract(s):
Contract Party(ies):
AND, in addition, in respect of Legal Liability Insurances, their respective
directors, officers, employees, servants, agents, successors, assigns and
sub-contractors and in accordance therewith PICC PROPERTY have agreed to the
following:
IT is noted that the Contract Party(ies) have an interest in respect of the
Equipment under the Contract(s). Accordingly, with respect to losses occurring
during the period from the Effective Date until the expiry of the Insurance or
until the expiry or agreed termination of the Contract(s) or until the
obligations under the Contract(s) are terminated by any action of the Assured
or the Contract Party(ies), whichever shall first occur, in respect of the said
interest of the Contract afforded by the Policy is in full force and effect and
it is further agreed that the following provisions are specifically endorsed to
the Policy:
1. Under the Hull, Hull War and Aircraft Spares Insurances
1.1 In respect of any claim on Equipment that becomes payable on the basis of
a Total Loss settlement (net of any relevant Policy Deductible) shall be
made to, or to the order of the
51
Contract Party(ies). In respect of any other claim, settlement (net of
any relevant Policy Deductible) shall be made with such party(ies) as may
be necessary to repair the Equipment unless otherwise agreed after
consultations between the PICC PROPERTY and the Assured and, where
necessary under the terms of the Contract(s), the Contract Party(ies).
Such payment shall only be made provided they are in compliance with all
applicable laws and regulations.
1.2 PICC PROPERTY shall be entitled to the benefit of salvage in respect of
any property for which a claims settlement has been made.
2. Under the Legal Liability Insurance
2.1 Subject to the provisions of this endorsement, the Insurance shall
operate in all respects as if a separate policy has been issued covering
each party insured hereunder, but this provision shall not operate to
include any claim howsoever arising in respect of loss of damage to the
equipment insured under the Hull or Spares Insurance of the Assured.
Notwithstanding the foregoing the total liability of PICC PROPERTY in
respect of any and all Assureds shall not exceed the limits of liability
stated in the Policy.
2.2 The Insurance provided hereunder shall be primary and without right of
contribution from any other insurance which may be available to the
Contract Party(ies)
2.3 This Endorsement does not provide coverage for the Contract Party(ies)
with respect to claims arising out of their legal liability as
manufacturer, repairer, or servicing agent of the Equipment.
3. Under ALL Insurance
3.1 The Contract Party(ies) are included as Additional Assured(s)
3.2 The cover afforded to each Contract Party by the Policy in accordance
with this Endorsement shall not be invalid by any act or omission
(including misrepresentation and non-disclosure) of any other person or
party which results in a breach of any term, condition or warranty of the
Policy PROVIDED THAT the Contract Party so protected has not caused,
contributed to or knowingly condoned the said or omission.
3.3 The provisions of this Endorsement apply to the Contract Party(ies)
solely in their capacity as financier(s)/lessor(s) in the identified
Contract(s) and not in any other capacity. Knowledge that any Contract
Party may have or acquire or actions that it may take or fail to take in
that other capacity (pursuant to any other contract or otherwise) shall
not be considered as invalidating the cover afforded by this Endorsement.
3.4 The Contract Party(ies) shall have no responsibility for premium and PICC
PROPERTY shall waive any right of set-off or counterclaim against the
Contract Party(ies), except in respect of outstanding premium in respect
of the Equipment.
3.5 Upon payment of any loss or claim to or on behalf of any Contract
Party(ies), PICC PROPERTY shall to the extent and in respect of such
payment be thereupon subrogated to all legal and equitable rights of the
Contract Party(ies) indemnified hereby (but not against and Contract
Party). PICC PROPERTY shall not exercise such rights without the consent
of those indemnified, such consent not to be unreasonably withheld. At
the expense of PICC PROPERTY, such Contract Party(ies) shall do all things
reasonably necessary to assist the PICC PROPERTY to exercise said rights.
3.6 Except in respect of any provision for Cancellation or Automatic
Termination specified in the Policy or any endorsement thereof, cover
provided by this Endorsement may only be cancelled or materially altered
in a manner adverse to the Contract Party(ies) by the
52
giving of not less than Thirty (30) days (but Seven (7) days or such
lesser period as may be customarily available in respect of War and
Allied Perils) notice in writing to China Northern Airlines. Notice
shall be deemed to commence from the date such notice is given by the
PICC PROPERTY. Such notice will NOT, however, be given at normal expiry
date of the policy or any endorsement.
EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS OF THIS ENDORSEMENT:
1. THE CONTRACT PARTY(IES) ARE COVERED BY THE PLOICY SUBJECT TO ALL TERMS,
CONDITIONS, LIMITATIONS, WARRANTIES, EXCLUSIONS AND CANCELLATION PROVISION
THEREOF.
2. THE POLICY SHALL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN THE
CONTRACT(S) WHICH PURPORT TO SERVE AS AN ENDORSEMENT OR AMENDMENT TO THE
POLICY.
PICC PROPERTY further acknowledges receipt of:
1. the Loss Payable Clause from the notice of Assignment of Insurance as
referred to in paragraph (2) below;
2. a Notice of Assignment of Insurances executed by the Lesser, China
Northern Airlines, the Owner and
and have noted the same, subject always to the provisions of AVN67B and the
terms, conditions, limitations, exclusions and cancellation provisions of the
relative Policy(ies)
Policy Numbers PAVH98/1001 and PAVH/98/1002 which expire at 00.01 on October
1st 1999, Beijing Standard Time.
The People's Insurance (Property) Company of China Ltd.
Shenyang Branch
Authorised Signature
THE PEOPLE'S INSURANCE (PROPERTY) COMPANY OF CHINA LTD.
Head Office: Beijing (Established in 1949)
CERTIFICATE OF INSURANCE
CERTIFICATE NUMBER:SS71/CR9728
Date:June 2nd 1998
TO: British Aerospace (Aviation Services) Limited
53
THIS IS TO CERTIFY that we, the PEOPLE'S INSURANCE (PROPERTY) COMPANY OF CHINA
LTD., ("PICC Property") have issued Insurance Policy No. PAVH 97/901 in the name
of the GENERAL ADMINISTRATION OF CIVIL AVIATION OF CHINA ("CAAC") and/or the
GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA and/or Regional Airlines and/or
Associated and/or Subsidiary Companies including inter alia CHINA NORTHERN
AIRLINES and (hereinafter called "the Assured") covering their fleet of
aircraft, including inter alia A300-600R Manufacturers serial No. Chinese
Registered marks Aircraft against the following risks and up to the limits
states, whilst operating anywhere in the world, but each flight to and from the
following countries/territories should be declared in full details prior to the
flight and insurance coverage is granted subject to written confirmation having
been issued by the Insurer, Countries which are subject of UN sanctions, and
Algeria, Angola, Liberia, Somalia, Sudan, DR Congo (formerly Zaire), Iran,
Afghanistan, Bosnia-Herzegovina, and the following former USSR States/Republics:
Azerbaijan, Checheno/Ingushskaya, Tadzhikistan, Georgia and ▇▇▇▇▇▇▇.
▇. ▇▇▇▇ ALL RISKS of Loss or Damage whilst flying and on the ground for an
Agreed Value each aircraft. The coverage is subject to a deductible, in
respect of A300-600R Aircraft of US $ 750,000.00 each and every claim
other than Total Loss/constructive Total Loss Arranged Total Loss.
2. HULL WAR AND ALLIED RISKS including Hijacking and Confiscation,
in accordance with the policy wording but excluding confiscation by
the Government of Registration, for an Agreed Value as at (1)
above.
2. AIRCRAFT THIRD PARTY, PASSENGER, BAGGAGE, CARGO, MAIL and AIRLINE GENERAL
THIRD PARTY LEGAL LIABILITY, for a Combined Single Limit (Bodily
Injury/Property Damage) of at least US $ 1,250,000,000.00 any one
occurrence, each aircraft, but unlimited in all during the currency of the
Policy. War and Allied Risks are also covered, in accordance with the
Extended Coverage Endorsement (AVN52C) as contained in this policy.
It is further certified that in connection with Repair Services provided by
under Aircraft Maintenance Agreement which the Assured had entered into with
and in accordance with the requirements thereof the following are noted and
agreed:
1. Under the HULL ALL RISKS, HULL WAR AND ALLIED RISKS INSURANCE
1.1 To waive any right of subrogation of the Insurers against
2. Under the LIABILITY INSURANCE
2.1 To include and employees, officers, agents, directors and sub-contractors
as additional assureds for their respective rights and interests.
2.2 To provide that such insurance shall be primary and without right of
contribution from any other insurance which may be available to
54
2.3 To include a Severability of Interest Clause (which provides that the
Insurance shall operate in all respects of the limit liability, as if each
Insured were the subject of a separate policy).
This agreement shall not operate to prejudice the Company's right of recourse
against as Servicers where such right of recourse, as expressed in the Aircraft
Maintenance Agreement would have existed had this certificate not been effected
under this Policy.
Subject to the terms, conditions, limitations, exclusions, and cancellation
provisions of the relative Policy which expires at Midnight 30th September 1998
Local Standard Time Beijing.
The People's Insurance (Property) Company of China Ltd.
Shenyang Branch
Authorised Signature
