Created: 4/23/1965

OCR scan of the original document, errors are possible

Till*oad,d day ofy and between China Airrganised under the laws of the Kepublic of China (hereinafter referred to aand ivir -nerica. . Delaware corporation with officesonnecticuthereinufter referred to as "Airan'1);


ranontract with the United Stateso provide riyine services and desires in the fulfilLeont of that contract to secure flying servicee froa an additional source; nnd

L is willing to provide such flying services under subcontract to Airan;

NUrt( THLds>Jtiu# in consideration of the suited nrmaises, the mutual covenanta,the conditions herein contained the parties hereto agree ss follows:

AATIOL- I, VICtSk, Pa^UiC-itl)

a. ChL shall, during the period sot forth In Article IU. hereof, furnish the following

Itea 1. Flying services with one basically6 aircraft and two basicallyircraft, and when requested by rtiraa the servicos of6ype aircraft subject to call orders as provided in paragraph c. of this Article I. including all necessary supplies, services, personnel, and ground support equipment for the operation thereof, unless Otherwise provided hereinafter, subject only to necessary absence of such aircraft for proper maintenance. CnL will base such aircraftlace or places agreed to betweenand Airaa, hereinafter referred to as the -base. ^Aich Base roint(s) oay be changed froa tics to tine by agreeoent between Caj- end Airaa expressed in writing, "nily maintenance inspections are to to performed at the Base Point or such aircraft, aircraft repairs, caintennncc, and services beyond CaJJa capability to perform at the case Point aay be performed it other locations. The aircraft will be operated between points agreed to between CAO and Airaa. *dr the foregoing services,shall be paid pursuant to th* rates set forth in Appendixttached hereto and herebyart hereof, and the provisions of Article IV. hereof,

Itoo 2. Modifications to its aircraft, requested by <tiram ond approved

byto suit then for use by Airaa; provided, thet if requested byhall bo reimbursed for such codification, and for

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restoring the aircraft to prior configuration upon release of tho aircraft. However, such Modified aircraft shall not beduring the period of assignment or call by UJ. without prior approvwl of Alrao. For the foregoing services, shall be reimbursed pursuant to paragraph "g" of Article IV. hereof.

Item ?. All necesaar/to its aircraft determined by Aires) to

have resulted from daofige sustained to CAL'o alrcreft as set forth in the provisions ofereof, entitledowever, shall not proceed with any work pursuant to this Itemntil such work is authorized by written notification from Airam, hall notifyin writing, of the work that is required to be performed, the estimated number of canhours required to perform repairs, the estimated cost of necessary materials, the estimated date work shall ccGSvnce aril the estimated date of completion. For services performed pursuant to thieshall be reimbursed in accordance with oarwgr*ph "g" of Article IV. hereof.

Farts and oaterials to the extent required in the performance

off this Article I. CaL shell be reimbursed for such parto and materials as provided in paragraph "g" of Arstcle IV. hereof.

Item 5. Upon request ofmay. If available, provide additional flight crow personnel for which UkL shall he paid pursuant to the normal rates set forth in Appendix "J" and tho provisions of Article IV. hereof. Requests byfor additional flight crew personnel sh.iH be in writing, requesting personnel byand category, desired location of services and period for which eervicee are being requested.

CAL shall have ccc-ple te authority and discretion to decideratters of maintenance, the adequacy of clearances, permissions obtained, endinsofar as the safety of the aircraft and its personnel arein accordance with established and industry standards.

In calling for aircraft which may be furnished "on call" pursuant to Itemf article I. hereof,which tens shall include its authorized representative, shallall order in accordance with Appendix "BP, attached hereto andart hereof, which shell notifyof the place at which the aircraft is required and the period of liiae for which such aircraft is desired. Cal shall respond by agreeing to furnish the aircraft in accordance with the terms requested, or will advise ofof the aircraft, or advise the portiom of tho requested period during which the aircraft csn be cade available, cept In the event of non-ovuilability, Ci.L'a rosponoo shall state the plaeu at which the aircraft will be made available, and such response shelldeeuisd an offer which of for nay be accented by Airam at any tine before It Is

withdraw:!. Acceptance in writing of such offer by Airaa shall beall order for GaL to furnish the aircraft at the place of availability as stated byand for tho agreed period whereupon th? aircraft shall be dee&ed to be called hereunder; such ul>ce of availability shall be tfe "Point of Origin" for such aircraft

d. Airax and/or its duly authorized representative, say iseue Flight Service Operational Orders in accordance with Appendix "C" attached hereto and herebyort hereof, for all flights, except maintenance flights to and froa Taiwan, and oay issue changes thoreto at any tine end froa time tD time during the life of this contract. Such orders and changes thereto, shall be in writing anl signed by the authorized representative; provided that such orders cay be issued orally or by other means when the exigency of any situation precludes written opsratiorml orders or changes in which event such oral orders amy be confirmed in writingeasonable time after perforaance of the services ordered. Such orders shall authorise Oni. to perform flights specified therein and oay designato the routes to be flown and the points from which and to which the flight shall be made.

o. Upon reqi'ost oferber of the aircraft crew shall sign, when requested, for all specified cargo listed on the manifest andeceipt therefor at destination; provided, that Ca-'s personnel shall not be responsible fer cargo content or identification.

shall be responsible for the management, supervision and theof all parts, components, equipment and supplies for only the This will be done at no additional cost to Chu. all suchpon request fromo the extent taatavailable. It is understood the source of such iteos is UnitedStores.

shall have no obligation to replace any aircraft furnishedarer destroyed or undergoing repairs while engaged inof this contraot.

AhTICLs. Ii. pjitoOUaiL tiXHlS&S

shall provide, within the rates per flying hour provided for helaaintenance and operations personneloroml complementcrew members for the aircraft furnished hereunder.

am shall arrange for all personnel required to load, handle and CAli shall be responsible,within the rates per flying hourfor providing qualified personnel to supervise the placementof cargo as well as the seating of passengors. Except asprovided for herein, OAX shall determine its own requirementsto be assigned to the performance of this contractoperational and aalntenance requirements hereunder.

shell engage such of Its facilities and equipment as shall bethe performance of this contract except as otherwisefor ln this contract; prevised, howovor, that Airoi Liay loan or

furnish -AL such supplies or equipswit as, in the opinion of Airaa, ara required by GAL for ths perfcrrance of tho contract and -hlch arc not reasonably available tofrom other sources.


services called for unucr this contract shall co sconce on the daywritten and continue until midnight,

shell have the right to renew this contact for two additionalperiods and such renewal shall be automaticswriting) days prior to the effective date of suchAiraa shall have the right to terminate this contract atit shall de tern in* the services provided for therein arc noby giving notice in writing; days prior todate of such termination.

A&ICLc. IV. QOtSiJcAOlUh .aj rAPvU.7

shall pay CaL in accordance with the provisions of this articlethe appropriate rates set forth in Appendix "A" hereof for thoby CAi, hereundur.

As pertains to Iteaf Article I. hereof, Caa shall be paid, upon

submission of proper invoices or vouchers, the applicable rates stipulated in Appendix "A" for services rendered snd accepted less deductions. If any herein provided.

2. As pertains to Iteaf Article I. horoof, CAL shall be paid, upon submission of proper Invoices or vouchers, the normal rotes stipulated inor services rendered and accepted, loss deductions, if any, herein provided. OaL shall be paid the appropriate hourly rates for each of such personnel and pro rata amounts thereof for fractional ports of an hour flown provided that CAL shall be paid at tha rate for each such personneldnicumours per day. The ainioualying hours per day will apply tos that each such personnel are called for horeundor including days required in positioning the personnel to the point of use and return of such personnel to their rogulor assigned CAL station upon release fron services hereunder by Airaa. In addition, CaX will bo reimbursed for all expenses of positioning and depositioning such personnel Including, but not Halted to, transportation costs, incidentaland dead head pay.

tine, actual flying time, and flying hour is the logged timeflight to the nearest minute froo take-off to landing, plusfor each flight for warm-up and taxi tins.

addition to the flying hour rates provided in Appendixhall be paid for those personnel covered bytrotes for extra hazardous area flying set forth in ippendix "f

for each hour or prorataortion of an hour of extra hazardous aroo flying. Airaa shall designate in writing those personnal authorized on its behalf to execute certificates for extra hazardous area flight tine. The extr? haterdous flight hour rates prescribed in appendix "D* hereto shall apply to ell flight tine hereunder which is ofxtra hazardous nature, herein defined as flight tine over areas in which active combat operations are in progress or over areas controlled or occupied by unfriendly forces; provided, that the determination of whether flights or portions of flights are performed over such extra hazardous areas shall be by agreement between the local senior representatives of the parties hereto based upon known conditions priorlight or pilot experienced end reported conditions subsequent to orlight; provided, further, that such determination shill be made in advance of each flightknown or subsequent thereto when urJcnown. extra hazardous area flight tine will be certified by the aircraft commander and Airao, or its authorized representative therefor. The Flight Service Operational Order shall be used as the basis for billing for the hourly rate(s) payable for such extra hazardous flying.

o. CA1 shall be paidours flown hereunder by all aircraft furnished pursuant to Itemfxcept for maintenance flight hours, but including return of tho aircraft to point of origin during the poriod(s) of their assignment or call hereunder, and shall be paid for the minimum flight hours per ninety day period for basically assigned aircraft and ir. the case of call aircraft, pro rataortion of such ninety day period, whether or not actually flown. Such nlnlaue flight hours shall include all hours flown hereunder except isalntenance flight hours. The minimum hours net forth herein shall (apply from the moment the aircraft is ready to fly and is cocoitted to uso under this contract pursuantell Order. Such minimum hours shall cease to apply upon release of an aircraft fron the contract or upon destruction or loss of the aircraft.

shall be paid in accordance with tho provisions of this contractpresenting to Airac an original plus four copiesby an appropriate officer of as follows;

ertify that the above bill is Just and correct and payment therefor has not been

pursuant to the provisions of Iteosnd L. of articlebe subject to the following:

1. As pertains to Itemsf Article I. hereof, and subject to paragraphf this Article IV.,shall, upon submission of proper invoices and irouchers, be reimbursed at cost excepting for direct skilled labor utilized to accomplish modification and repairs to Cal aircraft for. shall beor each hour of direct skilled labor required and expended by CAi personnel. This rate includes reimbursement for unskilled labor, overhead ond profit.

2. pertains to Item a. of Article I. hereof, Oi^ shall be reimbursed for direct materials used in accordance withfollowing:

1. The amounts to be reimbursedarea under this" snail include any tax levy or customs djty by any taxing authority on the, receipt, use, storage, ownership, aale, delivery, transfer of the direct materials or tny tax which imy otherwise affect Cai-'s direct materials costs.

ii. for those parts and materials furnishedor which, in

-ccordancs tilthestablished practices, the costs cannot be determined either by reference to paid yendor's invoices or other means, the method of pricing will be by utilisation of the current usrfcst price or the price sat forth in the sost recent availablearts Catalog, whichever price ia taost advantageous to Airain. CbL will segregate 3il items falling in the above category and so identify in the invoiceeparate line item.

iii. All of Cai-'s claims for reinburse^ent of the costs of items purchased directly for this contract oust te supported by invoices which shall be subject to approval by -iraa. This applies to all authorised cost reimbursable iters Including direct parts and aatorialspursuant to Itemsnd 3. eias for reimbursement of costs of items withdrawn fromstock must be supported by CWs invoices which shall be subject to approval by slrea.

iv. Procurement, delivery, and xaterial handling expense (current

landed costs) incurred by Chi* to point of use will bo considered aa allowable elements of cost for purpose of reimbursement under this contract. As pertatn3 to landed oOStS, materials, and supplies which are used hereunder, which arc transported to cr en route to the point of use on copaercialhall be reimbursed at the comae reates for such transportation in effect at the tine the transportation is utilized.

"Direct ^killed Labor" as used herein includesabor which can be performed only by individuals possessing the professional, specialized and/or technical skills, knowledge, and capability to accomplish inspection, adjustments, repairs, tests, and similar operations; cachine ehop work, welding, electroplating, and similar operations on or incident tooverhaul, and repair of aircraft or related components, accessories, or parts. "Direct Skilled Labor" includes only those skilled laborers, artisans, craftsmen, and operators together with their leadnen and foremen, actually and directly employed in the perfomance of work and aervices as required under this contract. It does not include that labor which is performed in cleaning and polishing of aircraft, aircraft components and equipment, paint removal, assisting ir. heavy work, such as novlng equipment or heavy coopensnts; generally, performing oonial

f 12 pagss

Woks and/or oiscoilaneous workature which requires none of the technical skilli, knowledge or professions roferrei to in first portion of this paragraph It also does not include work and labor performed by aoainlGtratire personnel, corporate officers, supply personnel, allersonnel above the foreaan level, office personnel,icatchBSQ, guards and janitors.

i. "Dtract Kateriale" as ueed herein are defined as all items purchased, supplied, annufscturod or fabricsted with the intention of ontaring then into, or nakingart of the aircraft, for tho purposes of this contract, cleaning, brightening polishing components, packing. {potroloua, oil and lubricants) and other aaterlals, used or consumed directly or. the aircraft or conpor.ente, parts thereof, shall be considered direct materials. other aaterlals such as office and stationer/ supplies, sweeping compoundsuipment, personnel washroom supplies, lighting suppliss,hich are not (aixl would not be) actually used directly on the aircraft or Its components, shall bo considered indirect materials.

j. Alrsm shall sake pajnuat hereof in United States dollars by check, draft or other instrument and payable as directed by &u. in writing.

a-iTIGLaV. apaClAi,u;S

and/or its duly authorised representative, shall providesupervision, snd operational control necessary to assureperforas the services in accordance *ith the provisions of thethat such services will be concensurate with the ratedthe aircraft, reasonable professional standards, end theCkL's personnel. CL will have, final authority to decide all cotterswith the services Involving safety of operation.

shall not be responsible for non-cospletion or diversion of anyoriginal point or destination due to causes beyond the control The flying tics for flights which are not completed or areto causes beyond the controlhall be considered astine for payisont under the terns cf the contract. The Captain

of the aircraft shall be the deciding authority on flight completion or diversion, or any other action deeaod necessary in the interest cf flight safety.

eraployees and ofTlcsrs of CL, or other persons orbyin the performance of work or rendition of servicescontract, shall at all *Lms be identified aa the employees,agents ofandt bs considered as the emnlcyess, officersof *irao.

may, if it finds it to be in the best interest of theo remove, and CL shall remove, any employeeto perform services under this contract.

is the understanding of Airao that GAL shall be relieved of thepay landing fees,t-ways conaunleations snd parking charges for

operations perforose under this contract. In the event Airaa is unable to obtain such relief, it is agreed that Airam shall pay such charges incurred under this contract.

as expressly provided in this contract, Airam shall have noto or for GAL personnel engaged in the performance of

shall furnish in writing tothe race, personal historyany other pertinent information availabls tof requestedofL peraonnel asslgred to this contract.

is the Intention of the parties that Airsr. shall be responsibleall petroleun products, engine oil and lubricants (POL)the perfomance of "this contract as detarxin-'d reasonable byeach delivery of POL hereunder, OaL shalleliveryby the Captain of the aircraft.

CAL is authorised to transport CaL personnel,quipment and 3upplies during performance of services hereunder,pecs available basis on ths aircraft furnished hereunder. Airac shall have the right to utilise one half of the available cabinACL) and if available,CL on maintenance flights to ana froa laiwan.

j. Examination of Records.; L agrees that the Comptroller General of the United States or any of his duly authorized representatives shall, until the expiration of three years after final payment under this contract, have access to and the right to examine any directly pertinent books, documents, papers and recordsnvolving transactions pslated to this contract.

k- Sqvist-Controllednot acquire for use in the performance

of this contract any supplies or services originating froa sources within Soviet-controlled areas, as Listed in ArtieVIII. cf this contract, or transported from or throughng or Macao, without the written approval of Airaa.

1- Price Reduction for defective Cost or Pricing Jata:

1. If Airam determines that any price, including profit or fee, negotiated in connection with this contract was increased by any significant subs becausefurnished incomplete or inaccurato cost or pricing data or data not current, then such price shall be reduced accordingly and the contract shall be modified in writing to reflect such adjustment.


1. For purposes of verifying that cost or pricing data submitted inwith the negotiation of this contract or any contract change or other codification involving an amount in excessCCO are accurato, complete and current, Airan, or its authorized rapre3enta-tives, shall,until the expiration of three years froa the date of final payment under this contract, have the right to examine these books.

f 12 pages

records, documents and other sup-portingich will pemitevaluation of the cost or pricing data submitted, along with the computations snd projections used therein, which were available toas of the date of execution of the contract.

n, CAL shall not enter into any suDcontract.oral or written, for tho of any of the work or services provided for under tho terns of this contract without the written approval of

mXtkll* Vi.

The Indemnification provisions contained herein are applicable to 'aconducted under and pursuant to this contract only.

a. To the extent Airam is indemnified by tho United Stales Governnent andto availability of United States Government appropriations for this purpoee,foes hereby agree to indemnify CnL for losses, deuages, or LiabUity as set forth inndbelow, resulting froa risks as defined int being understood that CkL does not maintain insurance to cover such risks and that the cost therefor has not been included in the contract price.

1. Loss or damages to CAL's oircraft, to aircraft chartered by for

performance under this contract, to aircraft components, parts, accessories carriedL's aircraft or othor aircraft performing under this contract, and toproperty located at locations utilized in the performance of this contract as directed or approved by Airao, due to or resulting from:

i. Capture, seizure, arrest, restraint, or detention, or thethereof, or of any attempt thereat, or any taking or the property or damage to or destruction thereof, by anyor GovemcenUl authority or agent (whether secret or otherwise) or by any military, naval, or usurped power, whether any of the foregoing be don* by way of requisition or otherwise and whether In time of peace or war ond whether lawful or unlawful.

ii. All consequences of hostilities oruch as operations,

invasions, civil war, revolution, rebellion, insurrection, whether thereeclaration of war or not.

lil. Strikes, riots, or civil commotion.

iv. Malicious mischief, sabotage, or any Intentional injury or(or attempt thereat and by any perron whatsoever).

v. Authorized or directed performance of services under this contract to or over any area ln which combat operations are in progress or which is controlled or occupied by urJrisndly forces.

vi. The performance by CLr supply missions in or over any

territory agreed between CaL and Aires ta be hazardous, or in which aircraft employee! by CaL personnel for such missions transport explosives or flammable, or volatile cargo as required or authorized by Airam,

vii. Air-drop missions.

In the erent of loss or damage beyond the limits of economical repair toype aircraft, Airam shall have the option of paying toum ofO -or eazh such aircraft, or replacing the aircraft with another aircraft of the sere make, cod elimilar structural and mechanical condition as was the aircraft prior to such loss or damage,

liability of CAL in the event ofsntion, injury or disability toersonnel resulting from risks, as hereinabove defined inii" above, for any benefits which GAL say be obligated to pay to such personnel or their duly appointed personal representatives in accordance with Cl's currantual or other statutory or contract benefits as approved by Airam, or froc. legal action,esult of such death, detention, injury or disability.

u,- In no evjnt shall CAL be indemnified under this Article VI. ibr such loaa, damage, or liability compensated by Cl's insurance, including any self insurance program the cost of which io included in the prices charged hereunder.

The indemnification of losses, damages, or liability as defined in paragraphsndbove, shall only extend to and include payments made by CL in accordancu with CL's approved Personnel Manual, and settlements including settlements and/or payment of judgments made with the written approval of Airaa. Losses, damages, or liability shall also be construed to include reasonable costspenses incident thereto approved by Airam.

shall give Airaa Lar.wiLjte notice in writing of any claim within the scopa of this indemnif ication.

riCLi, VII. il^iyiCaTIOlia;

To the extent that CAL is not cov3rcd by insurance, including ony self insurance program, thef which is included in the prices charged hereunder, Airam doesea to indemnify CL and hold CL harmless from any and. all claims and damages with respect to cargo, to passengers snd other persona including thair baggage, except dd-'s personnel, carried by or with the consent or solicitation of Airam, and to third partyinjury and nroporty damage clr-ims resulting from services furnished


pursuant to the provisions of this contract, it being understood that no costs for any insurance for the risks covered by this irdeanification have been includsi in the contract price.

b. Paragraphs "h" andf Article Vi. hereof are applicable to this Article VII.


a. For the pumose of this contract, boviet-controlled areas are the following:

Albania Bulgaria

China, excluding Taiwanut including Manchuria, Inner

Ifcmgolia, tne provinces of Tsinghai and Sikang, Sinking, Tibet, the former tCwangtung leased Territory, the present Port Arthur teval Uaseand Liaoning Province.

Communist-controlled area of Vietnam and Communist-controlled area of Laos.



wist German (Soviet ione of Germany and the Soviet Sector of derlin)





:.'orth Korea

Outer Mongolia

Poland and Oareig


Union of Soviet Socialist Republics

AjfflCLi rx. i^rsH-ji t

Airam shall furnish to CALum to be deductible from amounts to be paid to CiJ, as provided in Part IV.b. such equipment and facilities or their approximate equivalent at such prices as shall be agreed to in writing between tne parties hereto from tine to time.

AJfflSLto X. COar^C'.UjiL

T.iis contract consists ofnn


Appendix of one page; anf one rage; an Appendix "C" of pages; and anf one pagO.

riuiOF, the partiese, by their respective officials or representatives thereunto duly authorised, executed this agreement.


dob Teh

/mJ Asm T. C. Chew

Typed fuane: Title:

alii Ana-tlGA, liC

Uy J. e. walksr. Jr.

Typed Name: J. N* Walker, Jr. Title: Vice President, Flying Contract Affairs


APP^iuXX "a* Contractage

a.Bic 1


Per Flying Hour Poray Period





Per Flying Hour Peray Period



r Lines

Pursuant to Article I, iwriigraphof subject, von arc fcsrcby to provide, if available, additional aircraft ao specified Iwiowi

Type ofr craft. ce

?icase return tha original and four eonies bo ths undersign sdin rpsce providedour agreement to vis request knd siraraft identif Icatioo miEosr assigned.

Air America, Inc. Autfrorift'id itanreoantitbive

To: nir -Eerica, inc.

Chine Air Lines herebyto furnisn aircraft as indicated:

Aircraft Identification ill be




To: China Air

This constitutese of the Contractor's Offer ae statesand shall, pursuant to article I. Paragraph o. of the contract,t_onalor CAi to furnish thet theof origin as Indicated* Ths aircraft chall proceed fron



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Original document.

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