CLAUSES

TITLES

0

DEFINITIONS AND INTERPRETATION

1

SALE AND PURCHASE

2

SPECIFICATION

3

PRICES

4

PRICE REVISION

5

PAYMENTS

6

MANUFACTURE PROCEDURE - INSPECTION

7

CERTIFICATION

8

BUYER’S TECHNICAL ACCEPTANCE

9

DELIVERY

10

EXCUSABLE DELAY

11

NON-EXCUSABLE DELAY

12

WARRANTIES AND SERVICE LIFE POLICY

13

PATENT AND COPYRIGHT INDEMNITY

14

TECHNICAL DATA AND SOFTWARE SERVICES

15

SELLER’S REPRESENTATIVES

16

TRAINING AND TRAINING AIDS

17

EQUIPMENT SUPPLIER PRODUCT SUPPORT

18

BUYER FURNISHED EQUIPMENT

19

INDEMNIFICATION AND INSURANCE

20

TERMINATION

21

ASSIGNMENTS AND TRANSFERS

22

MISCELLANEOUS PROVISIONS

EXHIBITS

TITLES

Exhibit A

SPECIFICATION

Exhibit B

FORM OF SPECIFICATION CHANGE NOTICE

Exhibit C

PART 1 AIRFRAME PRICE REVISION FORMULA

PART 2 PROPULSION SYSTEMS PRICE REVISION FORMULA

Exhibit D

FORM OF CERTIFICATE OF ACCEPTANCE

Exhibit E

FORM OF BILL OF SALE

Exhibit F

SERVICE LIFE POLICY - ITEMS OF PRIMARY STRUCTURE

Exhibit G

TECHNICAL DATA INDEX

Exhibit H

MATERIAL SUPPLY AND SERVICES

Exhibit I

FORM OF ASSIGNMENT OF AIRFRAME WARRANTY AND SUPPORT RIGHTS

Exhibit J

PARTICIPATION AGREEMENT

0.   DEFINITIONS AND INTERPRETATION

0.1

In addition to words and terms elsewhere defined in this Agreement, the initially capitalised words and terms used in this Agreement shall have the meaning set out below.

Affiliate

means with respect to any person or entity, any other person or entity directly or indirectly controlling, controlled by or under common control with such person or entity.

Affiliated Training Centers

has the meaning set out in Clause 16.3.1.

Agreement

this Aircraft Purchase Agreement, including all exhibits, appendixes and letter agreements attached hereto, as the same may be amended or modified in writing by the parties and in effect from time to time.

Aircraft

any or all of the twenty (20) Airbus A330-200 aircraft to be sold by the Seller to the Buyer pursuant to this Agreement, subject to any subsequently agreed conversion into A330-300 aircraft, together with all components, equipment, parts and accessories installed in or on such aircraft and the Propulsion Systems installed thereon upon Delivery.

Aircraft Training Services

means all training courses, flight training, line training, flight assistance, line assistance, maintenance support, maintenance training (including Practical Training) or training support performed on aircraft and provided to the Buyer pursuant to this Agreement, whether or not provided in the Seller’s or Seller’s Affiliate facilities.

Airframe

means the Aircraft excluding the Propulsion Systems.

Airframe Basic Price

has the meaning set out in Clause 3.2.

Airframe Price Revision

Formula

is set out in Part 1 of Exhibit C.

Assignment of Airframe

Warranty and Support

Rights

with respect to an Aircraft, means the assignment of airframe warranty and support rights entered into or to be entered into between the Buyer and its Operator in the form or substantially in the form of Exhibit I or in such other form as Buyer and its Operator may agree (and as consented to by the Seller).

Approved List

has the meaning set out in Clause 18.5.2.

Approved Suppliers

has the meaning set out in Clause 18.5.2.

Aviation Authority

means when used in respect of any jurisdiction the government entity, which under the laws of such jurisdiction has control over civil aviation or the registration, airworthiness or operation of aircraft in such jurisdiction.

Balance of Final Price

has the meaning set out in Clause 5.4.1

Basic Price

means the sum of the Airframe Basic Price and the Propulsion Systems Basic Price.

Bill of Sale

with respect to a Aircraft, means a bill of sale in the form of Exhibit E.

Buyer Furnished

Equipment

has the meaning set out in Clause 18.1.1.

Certificate of Acceptance

with respect to an Aircraft, means a certificate of acceptance in the form of Exhibit D.

Default Rate

means the default rate of interest as defined in Clause 5.7.

Delivery

with respect to an Aircraft, means the transfer of title to the Aircraft from the Seller to the Buyer in accordance with Clause 9.

Delivery Date

with respect to an Aircraft, means the date on which Delivery shall occur.

Delivery Location

with respect to an Aircraft, means the facilities of the Seller at the location of final assembly of the Aircraft which depending on the Aircraft model is either in France or in Germany.

Delivery Period

has the meaning ascribed thereto in Clause 9.2.1.

Deposit

has the meaning set out in Clause 5.2.

Designated Airworthiness

Authority

has the meaning set out in Clause 7.2.6.

Development Changes

as defined in Clause 2.1.3 of this Agreement

Excusable Delay

has the meaning set out in Clause 10.1.

Export Airworthiness

Certificate

with respect to an Aircraft, means an export certificate of airworthiness issued by the Aviation Authority of the Delivery Location.

Failure

has the meaning set out in Clause 12.2.1.

Final Price

has the meaning set out in Clause 3.4

Gross Negligence

means any act or omission done with either (i) intent to cause damage or (ii) recklessly, and with knowledge that damage would probably result, or (iii) where the risk of damage resulting from such act or omission would be obvious to a person acting reasonably and in knowledge of the same facts as the offending party but the offending party has not considered the possible existence of such risk.

Ground Training Services

means all training courses performed in classrooms (classical or Airbus CBT courses), full flight simulator sessions, fixed base simulator sessions, field trips and any other services provided to the Buyer on the ground pursuant to this Agreement and which are not Aircraft Training Services.

Initial Operator

with respect to an Aircraft, means the first operator of such Aircraft in commercial revenue service following its Delivery by the Seller to the Buyer.

Item

has the meaning set out in Clause 12.2.1.

Manufacture Facilities

means the various manufacture facilities of the Seller, its Affiliates or any sub-contractor, where the Airframe or its parts are manufactured or assembled.

Material

has the meaning set out in Clause 1.2 of Exhibit H.

Operator

with respect to an Aircraft, means any operator of such Aircraft following Delivery hereunder.

Non-Excusable Delay

has the meaning set out in Clause 11.1.

Participation Agreement

with respect to an Aircraft means the participation agreement relating to such Aircraft entered into or to be entered into between the Buyer and the relevant Operator in the form or substantially in the form of Exhibit J or in such other form as Buyer and its Operator may agree (and as consented to by the Seller).

Predelivery Payment

means the payment(s) determined in accordance with Clause 5.3.

Predelivery Payment

Reference Price

with respect to an Aircraft, means the predelivery reference price for such Aircraft determined in accordance with Clause 5.3.1.

Propulsion Systems

with respect to an Aircraft, means any of (i) the set of two (2) General Electric (GE) engines, including nacelles, thrust reversers and associated standard equipment, installed on such Aircraft on Delivery; or (ii) the set of two (2) Pratt & Whitney engines, including nacelles, thrust reversers and associated standard equipment, installed on such Aircraft on Delivery, or (iii) the set of two (2) Rolls Royce (RR) engines, including nacelles, thrust reversers and associated standard equipment, installed on such Aircraft on Delivery, in each case selected as per sub-Clause 3.3.5 hereof.

Propulsion Systems Basic

Price

with respect to a set of Propulsion Systems, means the price of such set of Propulsion Systems as set out in Clause 3.3.

Propulsion Systems

Reference Price

with respect to a set of Propulsion Systems, means the reference price for such set of Propulsion Systems as set out in Part 2 of Exhibit C.

Propulsion Systems

Manufacturer

with respect to an Aircraft, means the manufacturer of the Propulsion Systems selected by the Buyer pursuant to sub-Clause 3.3.5 for that Aircraft.

Propulsion Systems Price

.

Revision Formula

is set out in Part 2 of Exhibit C

Ready for Delivery

with respect to an Aircraft, means the time when (i) the Technical Acceptance Process has been successfully completed and (ii) the Export Airworthiness Certificate has been issued for that Aircraft.

Scheduled Delivery Month

has the meaning set out in Clause 9.1.

Seller’s Representatives

means the representatives of the Seller referred to in Clause 15.2.

Seller Representatives

Services

means the services provided by the Seller to the Buyer pursuant to Clause 15.

Seller Service Life Policy

has the meaning set out in Clause 12.2.

Seller’s Training Course

Catalog

has the meaning set out in Clause 16.4.1.

Seller’s Training Center

has the meaning set out in Clause 16.3.1.

Spare Parts

means the items of equipment and material which may be provided pursuant to Exhibit H.

Specification Change

Notice or SCN

means an agreement in writing between the parties to amend the Specification pursuant to Clause 2.1.2

Specification

with respect to an Aircraft, means either (a) the Standard Specification if no SCNs are applicable or (b) if SCNs are issued in this Agreement, the Standard Specification as amended by all applicable SCNs for that Aircraft.

Standard Specification

with respect to an Aircraft, means the Seller’s relevant standard specification document number, issue and issue date, as well as the relevant design weights relating to the aircraft purchased and sold in this Agreement a copy of which has been annexed as an Exhibit A to this Agreement.

Supplier

has the meaning set out in Clause 12.3.1.1.

Supplier Part

has the meaning set out in Clause 12.3.1.2.

Supplier Product

Support Agreement

has the meaning set out in Clause 12.3.1.3.

Technical Acceptance

Process

with respect to an Aircraft, means the technical acceptance process for such Aircraft to be performed pursuant to Clause 8 including without limitation the acceptance tests performed on the Aircraft in order to demonstrate the satisfactory functioning of the Aircraft and compliance with the Specification.

Technical Data

has the meaning set out in Clause 14

Total Loss Aircraft

has the meaning set out in Clause 10.4.

Training Conference

has the meaning set out in Clause 16.4.1

Type Certificate

has the meaning set out in Clause 7.1.

Warranty Part

has the meaning set out in Clause 12.1.1.

Warranty Period

has the meaning set out in Clause 12.1.3

Working Day

with respect to (i) any action to be taken hereunder, a day other than a Saturday, Sunday or other day designated as a holiday in the jurisdiction in which such action is required to be taken or (ii) any payment to be made hereunder, any day other than a Saturday, Sunday or a day that is a legal holiday or a day on which banking institutions are authorised to close in the City of New York - USA, Amsterdam - The Netherlands, Hamburg — Ireland, Germany, Shannon - Ireland or Paris - France.

0.2

Clause headings and the Index are inserted for convenience of reference only and shall be ignored in the interpretation of this Agreement.

0.3

In this Agreement unless the context otherwise requires:

(a)

references to Clauses, paragraphs, Appendices, Schedules and Exhibits are to be construed as references to the Clauses of, paragraphs of and Appendices, Schedules and Exhibits to this Agreement and references to this Agreement include its Schedules, Exhibits and Appendices;

(b)

words importing the plural shall include the singular and vice versa; and

(c)

references to a person shall be construed as including, without limitation, references to an individual, firm, company, corporation, unincorporated body of persons and any state or agency of a state.

1

SALE AND PURCHASE

The Seller will cause to be manufactured and will sell and deliver, and the Buyer will buy and take delivery of each of the Aircraft subject to the terms and conditions contained in this Agreement.

2

SPECIFICATION

2.1

Airframe Specification

2.1.1

Specification

The A330-200 aircraft (the “A330-200 Aircraft”) will be manufactured in accordance with the Standard Specification, Document G.000.02000, Issue 4.3 dated July 13, 2006, as amended to reflect 233t MTOW, 182t MLW, 170t MZFW (as so amended, the “Standard Specification”, a copy of which is annexed hereto as Exhibit A1).

The A330-300 aircraft (the “A330-300 Aircraft”) will be manufactured in accordance with the Standard Specification, Document G.000.03000, Issue 7.3 dated July 13, 2006, as amended to reflect 233t MTOW, 187t MLW, 175t MZFW (as so amended, the “Standard Specification”, a copy of which is annexed hereto as Exhibit A2).

2.1.2

Specification Change Notice (SCN)

The Specification may be amended by written agreement between the parties in a Specification Change Notice. Each Specification Change Notice shall be substantially in the form set out in Exhibit B and shall set out in detail the particular change to be made to the Specification and the effect, if any, of such change on design, performance, weight, time of Delivery of the relevant Aircraft, and on the text of the Specification. Such SCN may result in an adjustment of the Basic Price.

2.1.3

Development Changes

The Specification may also be revised by the Seller without the Buyer’s consent in order to incorporate development changes if such changes do not adversely affect price, time of delivery, weight or performance of the Aircraft, interchangeability or replaceability requirements under the Specification. In any other case the Seller shall issue to the Buyer a Manufacturer Specification Change Notice. Development changes are changes deemed necessary by the Seller to improve the Aircraft, prevent delay or ensure compliance with this Agreement (the “Development Changes”).

2.1.4

Specification Change Notices for Certification

The provisions relating to Specification Change Notices for certification are set out in Clauses 7.1

2.1.5

Buyer Import Requirements

The provisions relating to Specification Change Notices for Buyer import requirements are set out in Clause 7.2.

2.1.6

Inconsistency

In the event of any inconsistency between the Specification and any other part of this Agreement, this Agreement shall prevail to the extent of such inconsistency.

2.2

Propulsion Systems

Each of the Aircraft shall be equipped with either a set of (a) General Electric CF6-80E1A4, or (b) Rolls Royce Trent 772B, or (c) Pratt & Whitney 4168A series Propulsion Systems, as shall be selected by the Buyer pursuant to sub-Clause 3.3.5 below.

2.3

Customisation Milestones Chart

As part of the Agreement, the Seller is providing the Buyer with an agreed Customisation Milestones Chart setting out the minimum lead times prior to the Scheduled Delivery Month of the Aircraft, when a mutual agreement shall be reached (execution of a SCN) in order to integrate into the Specification, any items requested by the Buyer from the Specification Changes Catalogues made available by the Seller.

3

PRICES

3.1

Basic Price of the Aircraft

3.1.1

The “Basic Price” of each Aircraft is the sum of:

(i)

the Basic Price of the Airframe, and

(ii)

the Basic Price of the Propulsion Systems.

3.2

Airframe Basic Price

3.2.1

The A330-200 Airframe Basic Price is the sum of:

(i)

the basic price of the A330-200 Airframe as defined in the Standard Specification (excluding Buyer Furnished Equipment), which is:

US$[***]

(US Dollars — [***])

(ii)

the sum of the basic prices of all SCNs as set forth in Exhibit A-1 to the Agreement, which is:

US$[***]

(US Dollars —[***])

3.2.2

The A330-300 Airframe Basic Price is the sum of:

(i)

the basic price of the A330-300 Airframe as defined in the Standard Specification (excluding Buyer Furnished Equipment) , which is:

US$[***]

(US Dollars - [***])

(ii)

the sum of the basic prices of all SCNs as set forth in Exhibit A-2 to the Agreement, which is:

US$[***]

(US Dollars — [***])

3.2.3

The Airframe Basic Price has been established in accordance with the average economic conditions prevailing in December 2004, January 2005 and February 2005 and corresponding to a theoretical delivery in January 2006 - (the “Base Period”).

3.3

Propulsion Systems Basic Price

3.3.1

The A330-200 and A330-300 General Electric Propulsion Systems

The Basic Price of the GE CF6-80E1A4 Propulsion System (including nacelles, thrust reversers and additional standard equipment) for the A330-200 and A330-300 Aircraft, at delivery conditions prevailing in January 2006, is:

US $[***]

(US dollars — [***]).

3.3.2

The A330-200 and A330-300 Pratt & Whitney Propulsion Systems

The Basic Price of the PW 4168A Propulsion System (including nacelles, thrust reversers and additional standard equipment) for the A330-200 and A330-300 Aircraft, at delivery conditions prevailing in January 2006, is:

US $[***]

(US dollars — [***]).

3.3.3

The A330-200 and A330-300 Rolls Royce Propulsion Systems

The Basic Price of the RR Trent 772B Propulsion System (including nacelles, thrust reversers and additional standard equipment) for the A330-200 and A330-300 Aircraft, at delivery conditions prevailing in January 2006, is:

US $[***]

(US dollars — [***]).

 3.3.4

Propulsion Systems Reference Period

The Propulsion Systems Basic Price has been established in January 2006 delivery conditions and has been calculated from the Propulsion Systems Reference Price. The Propulsion Systems Reference Price is set forth in the [***] in Exhibit C for [***] respectively.

3.3.5

Selection of Propulsion Systems

The Buyer shall notify the Seller in writing within [***] months from the date hereof of its initial selection of the Propulsion Systems to be installed on the Aircraft at Delivery. The Buyer shall then have the flexibility up to the first day of the [***] month prior to the Scheduled Delivery Month of each Aircraft to change its initial Propulsion Systems selection, by giving written notice of any such change to the Seller.

3.3.6

Predelivery Payments Assumed Propulsion Systems

The parties hereto agree that for the purposes of calculating the Predelivery Payment Reference Price as defined under Clause 5.3.1 herein, it will be assumed that the Buyer has selected the Rolls Royce Propulsion Systems. For the avoidance of doubt there shall be no revision to the Predelivery Payment Reference Price in the event that the Buyer selects another Propulsion System.

3.4

Final Price

With respect to each Aircraft, the Final Price of such Aircraft shall be the sum of:

(i)

the Airframe Basic Price as revised as of the Delivery Date in accordance with Clause 4.1; plus

(ii)

the aggregate of all increases or decreases to the Airframe Basic Price as agreed in any Specification Change Notice or part thereof applicable to the Airframe subsequent to the date of this Agreement as revised as of the Delivery Date in accordance with Clause 4.1; plus

(iii)

the Propulsion Systems Reference Price as revised as of the Delivery Date in accordance with Clause 4.2; plus

(iv)

the aggregate of all increases or decreases to the Propulsion Systems Reference Price as agreed in any Specification Change Notice or part thereof applicable to the Propulsion Systems subsequent to the date of this Agreement as revised as of the Delivery Date in accordance with Clause 4.2; plus

(v)

any further amount resulting from any other provisions of this Agreement and/or any other written agreement between the Buyer and the Seller, in each case, relating to the Aircraft and specifically making reference to the Final Price of an Aircraft.

4.

PRICE REVISION

4.1

Revision of Airframe Basic Price

The Airframe Basic Price is subject to revision in accordance with the relevant Airframe Price Revision Formula up to and including the Delivery Date as set forth in Part 1 of Exhibit C to this Agreement.

4.2

Revision of Propulsion Systems Reference Price

4.2.1.

The Propulsion Systems Reference Price is subject to revision in accordance with the relevant Propulsion Systems Price Revision Formula up to and including the Delivery Date, as set forth in Part 2 of Exhibit C.

4.2.2

Modification of Propulsion Systems Reference Price and Propulsion Systems Price Revision Formula

The Propulsion Systems Reference Price, the prices of the related equipment and the Propulsion Systems Price Revision Formula are based on information received from the Propulsions Systems Manufacturer and are subject to amendment by the Propulsion Systems Manufacturer at any time prior to the Delivery Date. If the Propulsion Systems Manufacturer makes any such amendment, the amendment shall be automatically incorporated into this Agreement, and the Propulsion Systems Reference Price, the prices of the related equipment and the Propulsion Systems Price Revision Formula shall be adjusted accordingly. The Seller agrees to notify the Buyer as soon as it receives notice of any such amendment from the Propulsion Systems Manufacturer.

5

PAYMENTS

5.1

Seller’s Account

The Buyer shall pay the Predelivery Payments, the Balance of Final Price and/or any other amount due by the Buyer to the Seller, to the Seller’s account:

Beneficiary Name: AIRBUS

account identification: [***]

with:

[***]

SWIFT: [***]

ABA: [***]

[***]

or to such other account as may be designated by the Seller in writing no later than three (3) Working Days prior to the date on which such payment is due.

5.2

Deposit

An amount equal to [***] US dollars (US$[***]) (the “Deposit”) per Aircraft specified in this Agreement already paid by the Buyer to the Seller prior to the date of execution of this Agreement shall be deducted from the first Predelivery Payment due under this Agreement, with respect to such Aircraft.

5.3

Predelivery Payments

5.3.1

With respect to each Aircraft, the Buyer shall pay Predelivery Payments to the Seller calculated on the Predelivery Payment Reference Price of the relevant Aircraft. The Predelivery Payment Reference Price is determined by the following formula:

A = Pb (1 + [***])

Where

A

:

The Predelivery Payment Reference Price for Aircraft to be delivered in year T;

T

:

the year of Delivery of the relevant Aircraft

Pb

:

the Basic Price;

N

:

(T- 2006)

5.3.2

Such Predelivery Payments shall be made in accordance with the following schedule:

DUE DATE OF PAYMENTS

PERCENTAGE OF
PREDELIVERY PAYMENT
REFERENCE PRICE

Upon signature of this Agreement

[***] (less the Deposit)

On the first day of each of the following
months prior to the Scheduled Delivery
Month:

[***]

[***]

Total Payment prior to Delivery

[***]

5.3.3

Any Predelivery Payment received by the Seller shall constitute an instalment in respect of the Final Price of the relevant Aircraft. The Seller shall be entitled to hold and use any Predelivery Payment as absolute owner thereof, subject only to (i) the obligation to deduct any such Predelivery Payment from the Final Price when calculating the Balance of Final Price or (ii) the obligation to repay to the Buyer an amount equal to the Predelivery Payments pursuant to any other provision of this Agreement.

5.3.4

If any Predelivery Payment is not received on the relevant due date specified in Clause 5.3.2 then, and in addition to any other rights and remedies available to Seller, the Seller shall have the right to set back the Scheduled Delivery Month for the relevant Aircraft, by a period of one (1) month for each thirty (30) days such payment is delayed.

Furthermore, if such delay is greater than [***] days, the Seller shall have no obligation to deliver the relevant Aircraft within the Scheduled Delivery Month for such Aircraft, as modified pursuant to the preceding paragraph. Upon receipt of the full amount of all delayed Predelivery Payments, together with Default Interest pursuant to Clause 5.7, the Seller shall inform the Buyer of a new Scheduled Delivery Month for such Aircraft consistent with the Seller’s other commitments and production capabilities.

5.4

Balance of Final Price

5.4.1

With respect to each Aircraft, the Balance of Final Price payable by the Buyer to the Seller on the Delivery Date shall be the Final Price of such Aircraft less the amount of Predelivery Payments received by the Seller on or before the Delivery Date with respect to such Aircraft.

5.4.2

Upon receipt of the Seller’s invoice, and immediately prior to Delivery, the Buyer shall pay to the Seller the Balance of Final Price with respect to such Aircraft.

5.5

Other Charges

Unless expressly stipulated otherwise, any other charges due under this Agreement other than those set out in Clauses 5.2, 5.3 and 5.4 shall be paid by the Buyer at the same time as payment of the Balance of Final Price or, if invoiced after the Delivery Date, within [***] days after receipt of the invoice by the Buyer.

5.6

Method of Payment

5.6.1

All payments provided for in this Agreement shall be made in United States Dollars (USD) in immediately available funds.

5.6.2

All payments due to the Seller hereunder shall be made in full, without deduction or withholding of any kind. Consequently, the Buyer shall procure that the sums received by the Seller under this Agreement shall be equal to the full amounts expressed to be due to the Seller hereunder, without deduction or withholding on account of and free from any and all taxes, levies, imposts, dues or charges of whatever nature. If the Buyer is compelled by law to make any such deduction or withholding the Buyer shall pay such additional amounts as may be necessary in order that the net amount received by the Seller after such deduction or withholding shall be equal to the amounts which would have been received in the absence of such deduction or withholding and pay to the relevant taxation or other authorities within the period for payment permitted by applicable law, the full amount of the deduction or withholding. If the Seller receives a refund of any amount with respect to which the Buyer has paid an additional amount as described above the Seller shall pay to the Buyer, as soon as practicable after the refund has been made (but not before the Buyer has made all payments to the Seller required under this Clause), an amount equal to such refund, provided that after such payment the Seller shall be in no worse position in respect of its overall tax position than it would have been if no such payment had been made.

5.7

Default Interest

If any payment due to the Seller under this Agreement including but not limited to any predelivery payment, or deposit for the Aircraft as well as any payment for any spare parts, data, documents, training and services due to the Seller is not received within three (3) Working Days of the due date, without prejudice to the Seller’s other rights under this Agreement or at law, the Seller shall be entitled to interest for late payment calculated on the amount due from but excluding such date up to and including the date when the payment is received by the Seller at a rate equal to LIBOR for six (6) months deposits in US Dollars (as published in the Reuters screen or its successor screen on the due date) plus [***] per annum.

5.8

Taxes

5.8.1

The amounts stated in this Agreement to be payable by the Buyer are exclusive of value added tax chargeable under the laws of the Delivery Location (“VAT”) and accordingly the Buyer shall pay any VAT chargeable in respect of supplies to the Buyer as contemplated by this Agreement provided that the Seller shall reasonably cooperate with the Buyer to mitigate the imposition of any tax liability on the Buyer with respect to such circumstances.

5.8.2

The Seller shall, in respect of the Aircraft, services, parts, instructions or data delivered or furnished hereunder (i) pay all taxes, duties or similar charges of any nature whatsoever, whenever and wheresoever levied, assessed, charged or, collected for, or in connection with the execution of this Agreement and the fabrication, manufacture and assembly of the Aircraft, or the sale or delivery to the Seller of any component of the Aircraft by a sub-contractor, a Supplier or an Affiliate of the Seller in connection with [***].

5.8.3

The Buyer shall bear the costs of and pay any and all taxes, duties or similar charges of any nature whatsoever not assumed by the Seller under Clause 5.8.2 including but not limited to any duties or taxes due upon or in relation to the importation or registration of the Aircraft in the Buyer’s country and/or any withholdings or deductions levied or required in the Buyer’s country in respect of the payment to the Seller of any amount due by the Buyer hereunder.

5.9

Proprietary Interest

The Buyer shall not, by virtue of anything contained in this Agreement (including, without limitation, any Predelivery Payments hereunder, or any designation or identification by the Seller of a particular aircraft as an Aircraft to which any of the provisions of this Agreement refer) acquire any proprietary, insurable or other interest whatsoever in any Aircraft before Delivery of such Aircraft, as provided in this Agreement.

5.10

Set-Off

The Seller may set-off any matured obligation owed by the Buyer to the Seller and/or its Affiliates against any obligation (whether or not matured) owed by the Seller to the Buyer, regardless of the place of payment or currency. The Seller will promptly notify the Buyer in writing following the exercise by it of such right of set-off.

6

MANUFACTURE PROCEDURE — INSPECTION

6.1.

Manufacture Procedure

Each Airframe shall be manufactured in accordance with the relevant requirements of the laws of the jurisdiction of incorporation of the Seller or of its relevant Affiliate as enforced by the Aviation Authority of such jurisdiction.

6.2

Inspection

6.2.1

Subject to providing the Seller with certificates evidencing compliance with the insurance requirements set forth in Clause 19, the Buyer or its duly authorised representatives (which may include, without limitation, a reasonable number of representatives from the Initial Operator with respect to any Aircraft) (the “Buyer’s Inspector(s)”) shall be entitled to inspect the manufacture of each Airframe and all materials and parts obtained by the Seller for the manufacture of such Airframe on the following terms and conditions;

(i)

any inspection shall be made according to a procedure to be agreed upon with the Buyer but shall be conducted pursuant to the Seller’s own system of inspection as developed under the supervision of the relevant Aviation Authority;

(ii)

the Buyer’s Inspector(s) shall have access to such relevant technical data as is reasonably necessary for the purpose of the inspection;

(iii)

any inspection and any related discussions with the Seller and other relevant personnel by the Buyer’s Inspector(s) shall be at reasonable times during business hours and shall take place in the presence of relevant inspection department personnel of the Seller;

(iv)

the inspections shall be performed in a manner not to unduly delay or hinder the manufacture or assembly of the Aircraft or the performance of this Agreement by the Seller or any other work in progress at the Manufacture Facilities.

6.2.2

Location of Inspections

The Buyer’s Inspector(s) shall be entitled to conduct any such inspection at the relevant Manufacture Facility of the Seller or its relevant Affiliate and where possible at the Manufacture Facilities of the sub-contractors provided that if access to any part of the Manufacture Facilities where the Airframe manufacture is in progress or materials or parts are stored are restricted for security or confidentiality reasons, the Seller shall be allowed reasonable time to make the relevant items available elsewhere.

6.3

Seller’s Service for Buyer’s Inspector(s)

For the purpose of the inspections, and commencing with the date of this Agreement until the Delivery Date of the final Aircraft hereunder, the Seller shall furnish without additional charge suitable space and office equipment (including reasonable telephone communications) in or conveniently located with respect to the Delivery Location for the use of a reasonable number of Buyer’s Inspector(s) .

7

CERTIFICATION

7.1

Type Certification

Each Aircraft is type certificated under European Aviation Safety Agency (EASA) procedures for joint certification in the transport category. The Seller has obtained the relevant type certificate (the “Type Certificate”) to allow the issuance of the Export Airworthiness Certificate.

The Seller confirms that it has obtained an FAA Type Certificate (transport category) for the Aircraft pursuant to Part 21 and in compliance with the applicable provisions of Part 25 of the US Federal Aviation Regulations.

7.2

Export Airworthiness Certificate

7.2.1

Each Aircraft will be delivered to the Buyer with the Export Airworthiness Certificate and shall have incorporated all means of compliance with all applicable EASA and FAA Airworthiness Directives, on a terminating basis if available, and in a condition enabling the Buyer (or an eligible person under then applicable law) to obtain at time of Delivery a standard airworthiness certificate issued pursuant to Part 21 of the US Federal Aviation Regulations.

7.2.2

If any law or regulation is promulgated or becomes effective or an interpretation of any law is issued before an Aircraft purchased under this Agreement is “Ready for Delivery” to the Buyer and which law, regulation or interpretation requires any change to the Specification as it may be modified pursuant to Clause 2 in order to obtain the Type Certificates and Export Airworthiness Certificate as hereinabove provided for such Aircraft, the Seller shall make the requisite variation or modification.

The effect on price of such a change shall be borne:

(i) by the Seller insofar as it results from laws, regulations or interpretations that are to be complied with by the Seller before the Delivery of the relevant Aircraft. In addition, the Seller will provide the Buyer with the kits and labor necessary to terminate any Airworthiness Directive or other “mandatory continuing airworthiness information” issued by the state of manufacture under Ch. 4.2 of Annex 8 to the International Convention on Civil Aviation that has been issued prior to the Delivery of the relevant Aircraft but which is not required to be terminated by the Seller, provided that such kits have been defined pursuant to the then applicable airworthiness requirement described above.

(ii) by the Buyer for any operational requirements to be complied with by any Operator or changes other than those set forth in sub-paragraph (i) above.

If the Seller anticipates that the Scheduled Delivery Month of any Aircraft will be postponed by reason of such change it shall promptly notify the Buyer and the provisions of Clause 10 (Excusable Delay) will apply.

In the event of such a variation or modification being made pursuant to this sub-Clause, the parties hereto shall sign a SCN, in which the effects, if any, upon performances, weights, interchangeability and Delivery shall be specified and agreed between the Buyer and the Seller.

7.2.3

Notwithstanding the provisions of sub-Clause 7.2.2, if any such change is applicable to Propulsion Systems, engine accessories, quick engine change units or thrust reversers, or to Buyer Furnished Equipment, the costs of such change shall be borne in accordance with such arrangements as may be made separately between the Buyer and the Propulsion System and/or Buyer Furnished Equipment manufacturers.

7.2.4

The Seller shall as far as practicable take into account the information available to it concerning any proposed new regulations of the Seller’s Aviation Authorities in order to minimize the costs of changes which may appear necessary to obtain the Export Airworthiness Certificate after such proposed new regulations have become mandatory.

7.2.5

In the event that type certification has not been previously undertaken by the Seller in a country where the Buyer intends to lease an Aircraft to an Initial Operator, then subject to due notice from the Buyer to the Seller at least nine months prior to the month of delivery of the relevant Aircraft (or such lesser period that the Seller acting reasonably agrees is practicable), the Seller shall use all reasonable efforts to obtain such type certification, and shall not charge the Buyer with its costs for the necessary documentation and justification work to demonstrate the aircraft specification compliance for such type certification purposes.

7.2.6

Upon the Buyer’s request, to be provided to the Seller with adequate notice, the Seller shall identify the changes that may be required in order for an Aircraft to be eligible for a standard airworthiness certificate to be issued by the airworthiness authority designated by the Buyer for the registration of such Aircraft (the “Designated Airworthiness Authority”).

Where the Buyer’s Designated Airworthiness Authority requires a modification to comply with additional import aviation requirements and/or supply of additional data, prior to the issuance of the Export Airworthiness Certificate, the Seller shall incorporate such modification and/or provide such data at costs to be borne by the Buyer, provided that the Buyer’s request is made at a time reasonably in advance of the Scheduled Delivery Month for such Aircraft and in accordance with the Seller’s lead times for specification changes.

Such changes shall be made the subject of an SCN to be agreed between the parties, which shall specify the corresponding effect, if any, on the price and time of Delivery of the relevant Aircraft.

If the Seller anticipates that the Scheduled Delivery Month of the relevant Aircraft will be postponed by reason of such change it shall promptly notify the Buyer and the Scheduled Delivery Month of such Aircraft as provided in sub-Clause 9.1 will be extended to the extent of such postponement.

8

BUYER’S TECHNICAL ACCEPTANCE

8.1

Technical Acceptance Process

Prior to Delivery each Aircraft shall undergo the Technical Acceptance Process. The Seller will give to the Buyer not less than [***] days written notice of the proposed time when the Technical Acceptance Process will commence. Completion of the Technical Acceptance Process shall demonstrate the satisfactory functioning of the relevant Aircraft and shall be deemed to demonstrate compliance with the Specification. Should it be established that the relevant Aircraft does not comply with the Technical Acceptance Process requirements, the Seller shall without hindrance from the Buyer be entitled to carry out any necessary changes and, as soon as practicable thereafter, resubmit the relevant Aircraft to such further Technical Acceptance Process as is necessary to demonstrate the elimination of the non-compliance. The Seller will keep the Buyer informed as to progress with such changes and, as soon as practicable thereafter, will be entitled to resubmit the relevant Aircraft for new acceptance tests to demonstrate the elimination of such non-compliance or defect, such tests to be held and carried out in accordance with this Clause 8.

The Technical Acceptance Process shall, without limitation, include a technical acceptance flight which shall not exceed [***] duration (save as may be extended by agreement between the Buyer and the Seller).

8.2

Buyer’s Attendance

8.2.1

The Buyer shall be entitled to elect to attend the Technical Acceptance Process.

8.2.2

If the Buyer elects to attend the Technical Acceptance Process, the Buyer;

(i)

shall co-operate in complying with the reasonable requirements of the Seller with the intention of completing the Technical Acceptance Process within [***] Working Days after its commencement;

(ii)

may have a maximum of four (4) of the Buyer’s representatives (with no more than three (3) such representatives having access to the cockpit at any one time) accompany the Seller’s representatives on a technical acceptance flight and during such flight the Buyer’s representatives shall comply with the instructions of the Seller’s representatives.

8.2.3

If the Buyer does not attend and/or fails to co-operate in the Technical Acceptance Process, the Seller shall be entitled to complete the Technical Acceptance Process and the Buyer shall be deemed to have accepted the Technical Acceptance Process as satisfactory in all respects and the Seller will furnish such data with respect to such tests as the Buyer may reasonably request, [***].

8.3

Certificate of Acceptance

Once the relevant Aircraft is Ready for Delivery, the Buyer shall, on or before the Delivery Date, sign and deliver to the Seller a Certificate of Acceptance in respect of such Aircraft.

8.4

Finality of Acceptance

Delivery by the Buyer of a signed and dated Certificate of Acceptance with respect to the relevant Aircraft will be irrevocable and the Buyer shall have no right to revoke such acceptance for any reason, whether known or unknown to the Buyer at the time of acceptance.

8.5

Seller’s Use of Aircraft

The Seller will be entitled to use, without compensation to the Buyer or other liability, each Aircraft prior to its Delivery as may be necessary to obtain the certificates required under Clause 6 hereof, and such use will not affect the Buyer’s obligation to accept Delivery of any Aircraft hereunder. [***].

9

DELIVERY

9.1

Delivery Schedule

9.1.1

Subject to the provisions of this Agreement, the Seller shall have each Aircraft Ready for Delivery at the Delivery Location within the months specified below.

Each such month shall be, with respect to the corresponding Aircraft, the “Scheduled Delivery Month” for such Aircraft.

Number

Scheduled Delivery Month

Year

[***]

[***]

2008

[***]

[***]

2009

[***]

[***]

2010

TOTAL

20

9.1.2

The Seller shall give the Buyer at least [***]. Thereafter the Seller shall notify the Buyer of any change in such date necessitated by the conditions of manufacture or flight. In addition, the Seller shall give the Buyer at least [***] days prior written notice of the anticipated week during which the relevant Aircraft shall be Ready for Delivery.

9.2

Delivery

9.2.1

The Buyer shall send its representatives to the Delivery Location to take Delivery

of, and collect, the relevant Aircraft within seven (7) days after the date on which such Aircraft is Ready for Delivery (the “Delivery Period”) and shall pay the Balance of the Final Price on or before the Delivery Date.

9.2.2

Title to and risk of loss of or damage to the relevant Aircraft will pass to the Buyer upon Delivery following the execution and delivery of the Certificate of Acceptance by the Buyer and upon payment of the Final Price for such Aircraft. The Seller shall deliver and transfer title to the relevant Aircraft free and clear of all encumbrances and will provide the Buyer with such appropriate documents of title (such as a full warranty Bill of Sale (except for warranties in respect of any Buyer Furnished Equipment converted to Seller Furnished Equipment and other Buyer Furnished Equipment, which shall be as received by the Seller from the suppliers of such Buyer Furnished Equipment), certificate of transfer, or other documents) as the Buyer may reasonably request.

9.2.3

Should the Buyer fail to:

(i)

deliver the signed Certificate of Acceptance to the Seller, when required to do so pursuant to Clause 8.3, within the Delivery Period; or

(ii)

pay the Balance of the Final Price for the relevant Aircraft to the Seller on or before the Delivery Date;

(iii)

within two (2) Working Days after Delivery of the relevant Aircraft, remove such Aircraft from the Delivery Location for whatever reason (except for reasons directly attributable to the Seller),

then the Buyer will on demand reimburse the Seller for all reasonable costs and expenses (including, without limitation, costs and expenses attributable to storage, preservation and protection, insurance and taxes) sustained by the Seller and resulting from any such delay or failure. Such reimbursement will be in addition to any other rights that the Seller may have as a result of any such delay or failure.

9.3

Fly Away

9.3.1

The Buyer and the Seller shall co-operate to obtain any licenses which may be required by the Aviation Authority of the Delivery Location for the purpose of exporting the Aircraft. The Seller shall not charge the Buyer for such assistance.

9.3.2

Except for expenses to be borne by the Seller as provided in Clause 5.8.2 of this Agreement, all expenses of, or connected with, flying the Aircraft from the Delivery Location after Delivery shall be borne by the Buyer. The Buyer shall make direct arrangements with the supplying companies for the fuel required for all post-Delivery flights [***]. In addition, it is understood between the parties that at Delivery the Aircraft should be serviced with all lubricating and hydraulic fluid levels full to the normal operating levels.

10

EXCUSABLE DELAY

10.1

The Buyer acknowledges that the Aircraft are to be manufactured by Seller in performance of this Agreement and that the Scheduled Delivery Months are based on the assumption that there shall be no delay due to causes beyond the control of the Seller. Accordingly, Seller shall not be responsible for any delay in the Delivery of the Aircraft or delay or interruption in the performance of the other obligations of the Seller hereunder due to causes beyond its control, and not occasioned by its fault or negligence including (but without limitation) acts of God or the public enemy, war, civil war, warlike operations, terrorism, insurrections or riots, fires, explosions, natural disasters, compliance with any applicable foreign or domestic governmental regulation or order, labour disputes causing cessation, slowdown or interruption of work, inability after due and timely diligence to procure materials, equipment or parts, general hindrance in transportation or failure of a sub-contractor or Supplier to furnish materials, components, accessories, equipment or parts, for any of the reasons referred to above. Any delay or interruption resulting from any of the foregoing causes (including any delay pursuant to Clause 7.2.2) is referred to as an “Excusable Delay”.

10.2

If an Excusable Delay occurs:

(i)

the Seller shall notify the Buyer of such Excusable Delay as soon as practicable after becoming aware of the same, [***];

(ii)

the Seller shall not be responsible for any damages arising from or in connection with such Excusable Delay suffered or incurred by the Buyer;

(iii)

the Seller shall not be deemed to be in default in the performance of its obligations hereunder as a result of such Excusable Delay; and

(iv)

the Seller shall as soon as practicable after the removal of the cause of the delay resume performance of its obligations under this Agreement and in particular shall promptly notify to the Buyer the revised Scheduled Delivery Month for the relevant Aircraft, which shall be determined in a non discriminatory manner compared with other customers of the Seller similarly affected.

10.3

Termination on Excusable Delay

10.3.1

If the Delivery of any Aircraft is delayed as a result of an Excusable Delay for a period of more than [***] months after the last day of the Scheduled Delivery Month of such Aircraft as at the commencement of such Excusable Delay, the Buyer will be entitled to terminate this Agreement with respect only to the Aircraft so affected by giving written notice to the Seller within thirty (30) days after the expiry of such [***] month period.

In the event that such delay continues for an additional [***] month period after the expiration of such [***] months period, either party will have the option to terminate this Agreement with respect only to the Aircraft so affected by giving written notice to the other party within [***] days after the expiry of such additional [***] month period.

The Buyer shall not be entitled to terminate this Agreement pursuant to this Clause if the Excusable Delay results from a cause within its control.

Such termination will discharge all obligations and liabilities of the parties hereunder with respect to such affected Aircraft, except that the Seller will repay to the Buyer an amount equal to the entire amount of any Predelivery Payments received from the Buyer hereunder with respect to such affected Aircraft, [***].

10.3.2

If, in respect of any Aircraft, the Seller concludes that the Delivery of such Aircraft shall be delayed for more than [***] months after the last day of the Scheduled Delivery Month of such Aircraft as at the commencement of such Excusable Delay, due to an Excusable Delay and as a result thereof reschedules Delivery of such Aircraft to a date or month reflecting such delay then the Seller shall promptly notify the Buyer in writing to this effect and shall include in such notification the new Scheduled Delivery Month. Either party may thereupon terminate this Agreement with respect to such Aircraft by giving written notice to the other party within [***] days after receipt by the Buyer of the notice of anticipated delay.

Such termination will discharge all obligations and liabilities of the parties hereunder with respect to such affected Aircraft, except that the Seller will repay to the Buyer an amount equal to the entire amount of any Predelivery Payments received from the Buyer hereunder with respect to such affected Aircraft, [***].

10.3.3

If this Agreement shall not have been terminated with respect to the delayed Aircraft during the [***] day period referred to in either Clause 10.3.1 or 10.3.2 above, then the Seller shall be entitled to reschedule Delivery and the new Scheduled Delivery Month shall be notified to the Buyer and shall be binding on the parties.

10.4

Total Loss, Destruction or Damage

If prior to Delivery, any Aircraft is lost, destroyed or in the reasonable opinion of the Seller is damaged beyond repair (“Total Loss Aircraft”), the Seller shall notify the Buyer to this effect, as soon as practicable, but in any event, within one (1) month of such occurrence. The Seller shall include in said notification (or as soon after the issue of the notice as such information becomes available to the Seller) the earliest date consistent with the Seller’s other commitments and production capabilities that an aircraft to replace the Aircraft may be delivered to the Buyer and the Scheduled Delivery Month shall be extended as specified in the Seller’s notice to accommodate the delivery of the replacement aircraft; provided, however, that in the event the specified extension of the Scheduled Delivery Month is to a month exceeding [***] months after the last day of the original Scheduled Delivery Month then this Agreement shall terminate with respect to said Aircraft unless:

(i)

the Buyer notifies the Seller within one (1) month of the date of receipt of the Seller’s notice that it desires the Seller to provide a replacement aircraft during the month quoted in the Seller’s notice; and

(ii)

the parties execute an amendment to this Agreement recording the variation in the Scheduled Delivery Month;

provided, however, that nothing herein shall require the Seller to manufacture and deliver a replacement aircraft if such manufacture would require the reactivation of its production line for the model or series of aircraft which includes the Aircraft purchased hereunder.

In the event that the Agreement with respect to such Total Loss Aircraft is terminated pursuant to this sub-Clause 10.4, the obligations and liabilities of the parties hereunder with respect to such Aircraft will be discharged. The Seller will repay to the Buyer an amount equal to the entire amount of any Predelivery Payments received from the Buyer hereunder with respect to any such Total Loss Aircraft, [***].

10.5

Termination Rights Exclusive

In the event that this Agreement shall be terminated as provided for under the terms of Clauses 10.3 or 10.4, such termination shall discharge all obligations and liabilities of the parties hereunder with respect to such affected Aircraft and undelivered material, services, data or other items applicable thereto and to be furnished hereunder and neither party shall have any claim against the other for any loss resulting from such non-delivery. The Seller shall in no circumstances have any liability whatsoever for Excusable Delay other than as set forth in this Clause 10.

11

NON-EXCUSABLE DELAY

11.1

Liquidated Damages

Should any of the Aircraft not be Ready for Delivery to the Buyer [***] and such delay is not as a result of an Excusable Delay or Total Loss (a “Non-Excusable Delay”), then the Buyer shall have the right to claim, and the Seller shall pay upon demand by way of liquidated damages to the Buyer, the following amounts:

(a)

In the event that the Seller has notified the Buyer of the anticipated delay at the latest three (3) months prior to the first day of the Scheduled Delivery Month (as it may have been amended by mutual agreement): US Dollars — [***] (US$[***]) for each day of delay commencing on the [***] Working Day following the last day of the Scheduled Delivery Month and ending on the day of Delivery of the relevant Aircraft;

(b)

In the event that the Seller has notified the Buyer of the anticipated delay less than three (3) months prior to the first day of the Scheduled Delivery Month (as it may have been amended by mutual agreement) but prior to the date on which the Seller informs the Buyer of the Notified Delivery Date: US Dollars — [***] (US$[***]) for each day of delay commencing on the [***] Working Day following the last day of the Scheduled Delivery Month and ending on the day of Delivery of the relevant Aircraft;

(c)

In the event that the Seller has notified the Buyer of the anticipated delay on or after the date on which the Seller informs the Buyer of the Notified Delivery Date: US Dollars — [***] (US$[***]) for each day of delay which falls within the Scheduled Delivery Month, commencing on the [***] Working Day following the Notified Delivery Date and increasing to US Dollars — [***] (US$[***]) for each such day of delay which continues beyond the last day of the Scheduled Delivery Month;

The amount of such liquidated damages shall in no event exceed the total of US Dollars [***] (US$[***]) in respect of any one Aircraft.

11.2

[***]

In the event that such delay in Delivery exceeds [***] months, the Buyer will have the further right, exercisable by written notice to the Seller given no more than one (1) month after such [***] month period, to terminate this Agreement in respect only of the Aircraft that is the subject of such delay, whereupon the Seller will pay the Buyer, within ten (10) Working Days after receipt of such notice, an amount equal to [***], together with interest in an amount equal to LIBOR for six month deposits of a similar amount plus [***] per annum over the period from date of receipt of the relevant Predelivery Payment to date of reimbursement hereunder. Such payment will be in addition to any amount due pursuant to sub-Clause 11.1 above.

11.3

Termination

In the event that (i) the Buyer has not exercised its right to terminate under Clause 11.2 hereof and (ii) such subsequent delay in Delivery exceeds twelve (12) months, either party will have the right, exercisable by written notice to the other party given no more than one (1) month after such twelve (12) month period, to terminate this Agreement in respect only of the Aircraft that is subject to such delay, whereupon the Seller will pay the Buyer, within ten (10) Working Days after such notice, an amount equal to all Predelivery Payments made by the Buyer to the Seller in relation to such Aircraft, together with interest in an amount equal to LIBOR for six month deposits of a similar amount plus [***] per annum over the period from date of receipt of the relevant Predelivery Payment to date of reimbursement hereunder. Such payment will be in addition to any amount due pursuant to sub-Clause 11.1 above.

11.4

[***]

11.5

Limitation of Damages

The Buyer and the Seller agree that payment by the Seller of the amounts due pursuant to Clause 11.1 shall be considered to be liquidated damages and have been calculated to compensate the Buyer for its entire damages for all losses of any kind due to Non-Excusable Delay. The Seller shall not in any circumstances have any liability whatsoever for Non-Excusable Delay other than as set forth in this Clause 11.

11.6

Remedies

THIS CLAUSE 11 SETS FORTH THE SOLE AND EXCLUSIVE REMEDY OF THE BUYER FOR DELAYS IN DELIVERY OR FAILURE TO DELIVER, OTHER THAN SUCH DELAYS AS ARE COVERED BY CLAUSE 10, AND THE BUYER HEREBY WAIVES ALL RIGHTS, INCLUDING WITHOUT LIMITATION ANY RIGHTS TO INCIDENTAL AND CONSEQUENTIAL DAMAGES OR SPECIFIC PERFORMANCE, TO WHICH IT WOULD OTHERWISE BE ENTITLED IN RESPECT THEREOF. THE BUYER WILL NOT BE ENTITLED TO CLAIM THE REMEDIES AND RECEIVE THE BENEFITS PROVIDED IN THIS CLAUSE 11 WHERE THE DELAY REFERRED TO IN THIS CLAUSE 11 IS CAUSED BY THE NEGLIGENCE OR WILFULL MISCONDUCT OF THE BUYER OR ITS REPRESENTATIVES.

12

WARRANTIES AND SERVICE LIFE POLICY

This Clause covers the terms and conditions of the warranty and service life policy.

12.1

Standard Warranty

12.1.1

Nature of Warranty

Subject to the conditions and limitations as hereinafter provided for and except as provided for in Clause 12.1.2, the Seller warrants to the Buyer that each Aircraft and all Warranted Parts as defined hereinafter shall at 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 the selection of materials) having regard to the state of the art at the date of such design; and

(iv)

be free from defects arising from failure to conform to the Specification, except to those portions of the Specification relating to performance or where it is expressly stated that they are estimates, approximations or design aims.

For the purpose of this Agreement the term “Warranted Part” shall mean any Seller proprietary component, equipment, accessory or part as installed on an Aircraft at Delivery of such Aircraft and

(a)

which is manufactured to the detailed design of the Seller or a subcontractor of the Seller and

(b)

which bears a part number of the Seller at the time of such delivery.

12.1.2

Exclusions

The warranties set forth in Clause 12.1.1 shall not apply to Buyer Furnished Equipment, nor to the Propulsion Systems (in the case of CFM Propulsion System, excluding nacelles and thrust reversers), nor to any component, equipment, accessory or part purchased by the Seller that is not a Warranted Part except that:

(i)

any defect in the Seller’s workmanship incorporated in the installation of such items in the Aircraft, including any failure by the Seller to conform to the installation instructions of the manufacturer of such item that invalidates any applicable warranty from such manufacturer, shall constitute a defect in workmanship for the purpose of this Clause and be covered by the warranty set forth in sub-Clause 12.1.1 (ii); and

(ii)

any defect inherent in the Seller’s design of the installation, in view of the state of the art at the date of such design, which impair the use of such item shall constitute a defect in design for the purpose of this Clause and be covered by the warranty set forth in sub-Clause 12.1.1 (iii).

12.1.3

Warranty Period

The warranties contained in Clauses 12.1.1 and 12.1.2 shall be limited to those defects which become apparent within thirty six (36) months after Delivery of the affected Aircraft (“Warranty Period”).

12.1.4

Buyer’s Remedy and Seller’s Obligation

12.1.4.1

The Buyer’s remedy and the Seller’s obligation and liability under Clauses 12.1.1 and 12.1.2 are limited to the [***], repair, replacement or correction of any Warranted Part which is defective and the [***] or to the supply of modification kits rectifying the defect, at the Seller’s expense and option.

The Seller may equally at its option furnish a credit to the Buyer equal to the price at which the Buyer is entitled to purchase a replacement for the defective Warranted Part.

12.1.4.2

In the event of a defect covered by sub-Clauses 12.1.1 (iii), 12.1.1 (iv) and 12.1.2 (ii) becoming apparent within the Warranty Period and the Seller being obliged to correct such defect, the Seller shall also, if so requested by the Buyer, make such correction in any Aircraft which has not yet been delivered to the Buyer; provided, however,

(i)

that the Seller shall not be responsible nor deemed to be in default on account of any delay in Delivery of any Aircraft or otherwise, in respect of the performance of this Agreement due to the Seller’s undertaking to make such correction and provided further

(ii)

that, rather than accept a delay in the Delivery of any such Aircraft, the Buyer and the Seller may agree to deliver such Aircraft with subsequent correction of the defect by the Buyer at the Seller’s expense, or the Buyer may elect to accept Delivery and thereafter file a warranty claim as though the defect had become apparent immediately after Delivery of such Aircraft.

12.1.4.3

In addition to the remedies set forth in Clauses 12.1.4.1 and 12.1.4.2, the Seller shall reimburse the direct labor costs spent by the Buyer in performing inspections of the Aircraft to determine whether or not a defect exists in any Warranted Part within the Warranty Period or until the corrective technical solution removing the need for the inspection is provided by the Seller.

The above commitment is subject to the following conditions:

(i)

such inspections are recommended by a Seller Service Bulletin to be performed within the Warranty Period;

(ii)

the inspection is performed outside of a scheduled maintenance check as recommended by the Seller’s Maintenance Planning Document;

(iii)

the reimbursement shall not apply for any inspections performed as an alternative to accomplishing corrective action when such corrective action has been made available at no charge to the Buyer and such corrective action could have reasonably been accomplished by the Buyer at the time such inspections are performed or earlier,

(iv)

the labor rate to be used for the reimbursement shall be labor rate defined in Clause 12.1.7, and

(v)

the manhours used to determine such reimbursement shall not exceed the Seller’s reasonable estimate of the manhours required by the Buyer for such inspections unless reasonably proven that more man-hours than the Seller’s reasonable estimate were required.

12.1.5

Warranty Claim Requirements

Each Buyer’s warranty claim (“Warranty Claim”) shall be considered by the Seller only if the following conditions are first fulfilled:

(i)

the defect having become apparent within the Warranty Period;

(ii)

the Buyer having submitted to the Seller evidence reasonably satisfactory to the Seller that the claimed defect is due to a matter set out within this Clause 12.1, and that such defect has not resulted from any act or omission of the Buyer, including but not limited to, any failure to operate and maintain the affected Aircraft or part thereof in accordance with the standards set forth or any matter covered in Clause 12.1.10;

(iii)

the Buyer having returned as soon as practicable the Warranted Part claimed to be defective to the repair facilities as may be designated by the Seller, except when the Buyer elects to repair a defective Warranted Part in accordance with the provisions of Clause 12.1.7;

(iv)

the Seller having received a Warranty Claim as set forth in Clause 12.1.6.

12.1.6

Warranty Administration

The warranties set forth in Clause 12.1 shall be administered as hereinafter provided for:

(i)

Claim Determination

Warranty Claim determination by the Seller shall be reasonably based upon the claim details, reports from the Seller’s local representative, historical data logs, inspection, tests, findings during repair, defect analysis and other suitable documents.

(ii)

Transportation Costs

Transportation costs for sending a defective Warranted Part to the facilities designated by the Seller and for the return therefrom of a repaired or replaced Warranted Part shall be borne by the Buyer .

(iii)

Return of an Aircraft

In the event of the Buyer desiring to return an Aircraft to the Seller for consideration of a Warranty Claim, the Buyer shall notify the Seller of its intention to do so and the Seller shall, prior to such return, have the right to inspect such Aircraft and thereafter, without prejudice to its rights hereunder, to repair such Aircraft, at its sole option, either at the Buyer’s facilities or at another place acceptable to the Seller. Return of any Aircraft by the Buyer to the Seller and return of such Aircraft to the Buyer’s facilities shall be at the Buyer’s expense.

(iv)

On-Aircraft Work by the Seller

In the event that a defect subject to this Clause 12.1 may justify the dispatch by the Seller of a working team to repair or correct such defect through the embodiment of one or several Seller’s Service Bulletins at the Buyer’s facilities, or in the event of the Seller accepting the return of an Aircraft to perform or have performed such repair or correction, then the labor costs for such on-Aircraft work are to be borne [***].

All related expenses, including but not limited to reasonable travel and living expenses, in excess of the labour costs as defined above, incurred in performing such repair or correction shall be borne by the Buyer, unless otherwise mutually agreed.

The condition which has to be fulfilled for on-Aircraft work by the Seller is that in the opinion of the Seller, the work necessitates the technical expertise of the Seller as manufacturer of the Aircraft.

If said condition is fulfilled and if the Seller is requested to perform the work, the Seller and the Buyer shall agree on a schedule and place for the work to be performed.

(v)

Warranty Claim Substantiation

In connection with each claim by the Buyer made under this Clause 12.1, the Buyer shall file a Warranty Claim on the Buyer’s form within sixty (60) days after a defect became apparent. Such form must contain at least the following data:

a)

description of defect and action taken, if any,

b)

date of incident and/or removal date,

c)

description of the defective part,

d)

part number,

e)

serial number (if applicable),

f)

position on Aircraft,

g)

total flying hours or calendar time, as applicable at the date of defect appearance,

h)

time since last shop visit at the date of defect appearance,

i)

manufacturer serial number (“Manufacturer’s Serial Number”) of the Aircraft and/or its registration,

j)

Aircraft total flying hours and/or number of landings at the date of defect appearance,

k)

Warranty Claim number,

l)

date of Warranty Claim,

m)