B747-100 AIRCRAFT PURCHASE AND SALE AGREEMENT
Dated as of March 24, 1998
Between
WILLIS LEASE FINANCE CORPORATION
as Buyer
and
UNITED AIR LINES, INC.,
as Seller
B747-100 AIRCRAFT PURCHASE AND SALE AGREEMENT
THIS B747-100 AIRCRAFT PURCHASE AND SALE AGREEMENT (this "AGREEMENT")
is made and entered into as of this 24th day of March, 1998, by and between
United Air Lines, Inc., a Delaware corporation ("SELLER"), and Willis Lease
Finance Corporation, a California corporation ("BUYER").
WHEREAS, Seller desires to sell the Aircraft (as hereinafter defined) to
Buyer and Buyer desires to purchase the Aircraft;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and other good and valuable consideration, the parties
hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF AIRCRAFT
1.1. AIRCRAFT SALE. Pursuant to the terms and subject to the conditions
contained in this Agreement, Seller hereby agrees to sell and deliver (or
cause the delivery) to Buyer, and Buyer hereby agrees to purchase and accept
(or cause the purchase and acceptance) from Seller, twelve (12) used Boeing
model B747-100 aircraft (each, individually, an "AIRCRAFT" and,
collectively, the "AIRCRAFT", and each airframe thereon an "AIRFRAME"
and, collectively, the "AIRFRAMES") bearing, respectively, U.S.
registration numbers N4732U, N4735U, N4720U, N4719U, N4729U, N4723U, N155UA,
N4728U, N157UA, N153UA, N154UA and N156UA, and manufacturer's serial numbers
19927, 19928, 19981, 19880, 19926, 19882, 20104, 19925, 20106, 20102, 20103
and 20105, all as set forth on Exhibit B hereto. Each such Aircraft shall
include therein (i) one (1) used model 660 auxiliary power unit ("APU"),
(ii) four (4) used Pratt & Whitney model JT9D-7A engines together with the
engine quick engine change components ("QEC") (each, individually, an
"Engine" and, collectively, the "Engines"), (iii) all of the components,
equipment, instruments, appliances, accessories, furnishings, seats, avionic
components, and parts (including the QEC's) normally installed on, attached
to or appurtenant to each airframe and engine in Seller's fleet of Boeing
B747-100 aircraft, excluding entirely any and all Excluded Items (as
hereinafter defined)) ("PARTS") and (iv) the aircraft documentation set
forth in Exhibit A hereto (the "AIRCRAFT DOCUMENTATION"); PROVIDED,
HOWEVER, Buyer expressly agrees and covenants that all of the restrictions on
the use and operation of each of the Aircraft and Airframes will be fully
complied with by Buyer (and by any subsequent owner or transferee).
1.2. ITEMS EXCLUDED FROM THE AIRCRAFT SALE. The following items shall
not be a part of the Aircraft nor be subject to this sale (collectively, the
"EXCLUDED ITEMS"):
__________________________________________________________________________
__________________________________________________________________________:*
A. ____________________________________________________
______________________________________________________________________;*
B. ____________________________________________________
______________________________________________________________________.*
1.3. ASSUMPTION OF LEASE.
____________________________________________________
____________________________________________________.*
1.4. JOINT OBLIGATIONS. Buyer and Seller each shall timely and
promptly make all filings which may be required by each of them in connection
with the consummation of the transactions contemplated hereby under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the
"Hart-Scott Act"). Each party shall furnish to each other such necessary
information and assistance as the other party may reasonably request in
connection with the preparation of any necessary filings or submissions by it
to any U.S. or foreign governmental agency, including, without limitation,
any filings necessary under the provisions of the Hart-Scott Act. Each party
shall provide the other party the opportunity to make copies of all
correspondence, filings or communications (or memoranda setting forth the
substance thereof) between such party or its representatives, on the one
hand, and the Federal Trade Commission (the "FTC"), the Antitrust Division
of the United States Department of Justice (the "Antitrust Division") or
any similar foreign governmental agency or members of their respective
staffs, on
- ---------------
* This redacted material has been omitted pursuant to a request for
confidential treatment and the material has been filed separately.
2
the other hand, with respect to this Agreement or the transactions
contemplated hereby. If the transactions contemplated by this Agreement have
not been approved under the Hart-Scott Act within ninety (90) days from the
filing under the Hart-Scott Act, and this Agreement is thereby terminated,
Seller shall refund any and all Downpayments received from Buyer within five
(5) business days after termination. Seller shall pay the filing fee for
Hart-Scott.
1.5. SELLER'S OPTIONS TO RETAIN AND SELL AIRCRAFT.
(a) SELLER'S OPTION TO RETAIN AIRCRAFT.
____________________________________________________
____________________________________________________.*
(b) SELLER'S OPTION TO SELL RETAINED AIRCRAFT.
(1) Seller shall have the option, upon written notice to
Buyer at any time until December 31, 2001 but in no event later than two (2)
months prior to Seller's designated sale date for such Put Aircraft, as
specified in such notice, to sell to Buyer any of the Retained Aircraft
("PUT AIRCRAFT") for the purchase price set forth below.
(2) In the event Seller exercises its option to sell the Put
Aircraft, if the Seller's designated sale date is:
(i) in 1998, then the Purchase Price for each such Put
Aircraft shall be $_________;*
(ii) in 1999, then the Purchase Price for each such Put
Aircraft shall be $_________;*
(iii) in 2000, then the Purchase Price for each such Put
Aircraft shall be $_________;*
(iv) after December 31, 2000, but before January 1, 2002,
then the Purchase Price of $_________ shall be adjusted by an amount of
$______, in each successive
- ---------------
* This redacted material has been omitted pursuant to a request for
confidential treatment and the material has been filed separately.
3
quarter of such year with such adjustment subtracted from the base $_________
Purchase Price for each such Put Aircraft until December 31, 2001; and*
(v) after December 31, 2001, the parties shall attempt
in good faith to mutually agree on the Purchase Price of the Put Aircraft,
but in the absence of mutual agreement on the Purchase Price for such Put
Aircraft by the end of ninety (90) days after Seller sends written notice to
Buyer of Seller's exercise of its option to sell such Put Aircraft to Buyer,
then Seller may sell any such Put Aircraft to any third party.
Notwithstanding the foregoing, until January 1, 2002, under no circumstances
shall any Put Aircraft be sold to any other entity whose acquisition is for
the purpose of cannibalization of the Put Aircraft.
1.6. SELLER'S OPTIONS TO SELL ADDITIONAL ENGINES.
(a)
____________________________________________________
____________________________________________________.*
(b) In the event Seller exercises its option to sell the Put
Additional Engines, if the condition of such Engine is:
(i) serviceable, then the price for such Put Additional
Engine shall be $_______;*
(ii) unserviceable, then the price for such Put
Additional Engine shall be $_______;* and
(iii) either serviceable or unserviceable, but
missing a QEC, the amount of $______ shall be deducted from the price as
stated in either (i) or (ii) above.*
1.7. FIRST RIGHT TO PURCHASE OTHER ADDITIONAL ENGINES.
____________________________________________________
____________________________________________________.*
- ---------------
* This redacted material has been omitted pursuant to a request for
confidential treatment and the material has been filed separately.
4
ARTICLE II
AIRCRAFT AND AIRFRAME PRICE
AND PAYMENT; DOWNPAYMENTS
2.1. AIRCRAFT PURCHASE PRICE. Subject to application of the allocated
share of the Downpayments (as hereinafter defined), Buyer shall pay and
deliver to Seller: (a) for each of the first seven (7) Aircraft to be sold
hereunder (as set forth on Exhibit B hereto) the purchase price of
_________________________________ United States Dollars (US$_________); and
(b) for each of the remaining Aircraft to be sold hereunder the purchase
price of _________________________________ United States Dollars
(US$_________) with the Downpayments payable as described below and the
balance of the purchase price payable on delivery of each of the Aircraft
(such purchase price sum, before application of the Downpayments provided
herein, the "AIRCRAFT PURCHASE PRICE"). The Aircraft Purchase Price shall
be paid by Buyer pursuant to the terms of Section 2.3 hereof concurrent with
the Delivery (as hereinafter defined) of the Aircraft in immediately
available funds. Notwithstanding the foregoing, with respect to Aircraft
bearing U.S. registration number N154UA, which Buyer is purchasing subject to
a lease to Boeing (as described below), the Aircraft Purchase Price shall be
_________________________________________ United States Dollars
(US$_________) (of which __________________________________ United States
Dollars (US$_________) is for the Purchase Price of the Aircraft and
______________________________________ United States Dollars (US$_________)
is for the Purchase Price of the Lease). In the event the Lease is not
consummated between Seller and Boeing, Buyer shall nevertheless purchase the
subject Aircraft for a Purchase Price of _________________________________
United States Dollars (US $_________) on the date described in Exhibit B.*
2.2. A. FIRST DOWNPAYMENT. A first downpayment of ___________ United
States Dollars (US$_________) (THE "FIRST DOWNPAYMENT") has been paid by
Buyer to Seller. Fifty percent (50%) of the First Downpayment shall be
non-refundable to Buyer and the other fifty percent (50%) of the First Down
Payment shall be refundable until execution of this Agreement, and then be
non-refundable, unless otherwise expressly stated herein. The First
Downpayment shall be applied against the Aircraft Purchase Price of the
twelve Aircraft as follows: $_______
- ---------------
* This redacted material has been omitted pursuant to a request for
confidential treatment and the material has been filed separately.
5
for each of the first six (6) delivered Aircraft, $______ for the seventh
(7th) delivered Aircraft and $______ for each of the five (5) remaining
delivered Aircraft.*
B. SECOND DOWNPAYMENT. A second downpayment of
________________________________________ United States Dollars (US$_________)
(THE "SECOND DOWNPAYMENT") shall be due on March 25, 1998. The Second
Downpayment shall be non-refundable (unless otherwise expressly stated
herein) to Buyer and shall be applied against the Aircraft Purchase Price of
the twelve Aircraft as follows: $_______ for each of the first six (6)
delivered Aircraft, $_______ for the seventh (7th) delivered Aircraft and
$_______ for each of the five (5) remaining delivered Aircraft. For purposes
of this Agreement, "BUSINESS DAY" shall mean any day upon which banks in
Chicago, Illinois and San Francisco, California are open for business.*
C. THIRD DOWNPAYMENT. A third downpayment of
________________________________ United States Dollars (US $_______) (the
"Third Downpayment") shall be due on September 30, 1998. The Third
Downpayment shall be non-refundable (unless otherwise expressly stated
herein) to Buyer and shall be applied against the Aircraft Purchase Price of
the Aircraft as follows: $_______ for the seventh (7th) delivered Aircraft
and $_______ for each of the five (5) remaining delivered Aircraft.*
2.3. PAYMENT INSTRUCTIONS. All payments due hereunder to Seller,
including the balance of each respective Aircraft Purchase Price, shall be
made (unless Seller shall otherwise direct Buyer in writing) by wire transfer
of immediately available funds in United States Dollars to Seller's account
at The First National Bank of Chicago, N.A., Chicago, Illinois, Attn:
Transportation Group, with instructions to credit United Air Lines, Special
Account No. 51-67795, and with the request that said bank advise Seller's
Vice President and Treasurer of Seller's receipt of such funds.
2.4. REFUND INSTRUCTIONS. All refunds due hereunder to Buyer shall be
made (unless Buyer shall otherwise direct Seller in writing) by wire transfer
of immediately available funds in United States Dollars to Buyer's account at
Wells Fargo Bank, San Francisco, California with instructions to credit
Willis Lease Finance Corporation Account No. 4518 101 423, and with the
request that said bank advise Buyer's Chief Financial Officer of Buyer's
receipt of such funds.
2.5. NO ADJUSTMENTS. Except as otherwise expressly stated herein, no
adjustments will be made to any amount owing hereunder based on the
maintenance status or condition of the Aircraft, the Airframe, the Engines,
the APU, the Parts, or the Aircraft Documentation, or based on any other
fact, circumstance or situation whatsoever, whether contemplated or
unforeseeable.
- ---------------
* This redacted material has been omitted pursuant to a request for
confidential treatment and the material has been filed separately.
6
2.6. REFUND FOR REJECTED ENGINES.
____________________________________________________
____________________________________________________.*
ARTICLE III
AIRCRAFT DELIVERY; TITLE AND RISK OF LOSS
3.1. AIRCRAFT DELIVERY DATE. The scheduled delivery date with respect
to each Aircraft is the date set forth opposite such Aircraft's FAA
Registration Number under the heading "Scheduled Delivery Date" in Exhibit
B hereto (each such date being referred to individually as a "SCHEDULED
DELIVERY DATE" and, collectively, the "SCHEDULED DELIVERY DATES") and,
subject to the terms hereof, Seller will deliver such Aircraft to Buyer, and
Buyer will accept delivery of the Aircraft from Seller, on such date. Seller
agrees to use its best efforts to deliver each Aircraft on its Scheduled
Delivery Date; PROVIDED, Buyer and Seller agree that each Scheduled Delivery
Date is subject to change by Seller for any operational, logistical or other
good faith reason without penalty to Seller (as long as Seller is exercising
reasonable good faith efforts to deliver the Aircraft as soon as
practicable), but in no such event will Delivery of any Aircraft be adjusted
pursuant to this first proviso of Section 3.1 to a date later than thirty
(30) calendar days beyond its Scheduled Delivery Date, as adjusted pursuant
to the provisions hereof, and in no event earlier than the Aircraft's
retirement date set forth on Exhibit B (the Scheduled Delivery Date, as
adjusted pursuant to the provisions hereof, being referred to individually as
a "DELIVERY DATE" and collectively, the "DELIVERY DATES").
Notwithstanding anything to the contrary contained herein, if Seller revises
the Delivery Date of any Aircraft as set forth in Exhibit B for the sole
purpose of utilizing said Aircraft in its own passenger operations
("ADJUSTED AIRCRAFT"), Buyer agrees to accept the extension of the
Scheduled Delivery Date resulting from such revised Delivery Date at no cost
to Seller.
- ---------------
* This redacted material has been omitted pursuant to a request for
confidential treatment and the material has been filed separately.
7
____________________________________________________.*
3.2. PLACE OF DELIVERY OF AIRCRAFT. Each Aircraft will be delivered to
Buyer in Marana or Phoenix, Arizona or such other location as mutually agreed
(the "DELIVERY LOCATION"). Seller shall be responsible for the crew costs
for the ferry flight of each Aircraft to the Delivery Location (the
"DELIVERY"). Buyer shall be responsible for all other costs associated with
the Delivery of each Aircraft, including, but not limited to, any landing
fees, fuel expenses, hotel costs, meal expenses and any other incidental
costs associated with the Deliveries. Buyer shall be responsible for any
sales or transfer taxes or other taxes, duties, charges or fees resulting
from the Delivery Location.
3.3. DELIVERY. For purposes of this Agreement, "DELIVERY" shall mean,
with respect to each Aircraft being delivered hereunder, the delivery of
possession of such Aircraft being delivered hereunder to Buyer and the
transfer by Seller to Buyer of its right, title and interest in and to such
Aircraft and the delivery by Seller to Buyer of a Bill of Sale, substantially
in the form of Exhibit C hereto (each, a "WARRANTY BILL OF SALE"), in each
case covering such Aircraft.
3.4. BUYER'S ACCEPTANCE. Prior to the Delivery of each Aircraft, Buyer
shall deliver to Seller a completed and executed technical acceptance
certificate in the form set out as Exhibit D hereto (a "TECHNICAL ACCEPTANCE
CERTIFICATE") in regard to such Aircraft in accordance with Section 4.1.D
hereof. Upon conclusion of the Delivery (but subject to the provisions of
Section 4.6 through 4.9 hereof), Buyer shall deliver to Seller a completed
and executed final acceptance certificate in the form set out as Exhibit D-1
hereto (a "FINAL ACCEPTANCE CERTIFICATE") in regard to such Aircraft in
accordance with Section 4.1.D hereof, and no other acknowledgment or receipt
of such Aircraft shall be required by Seller (such Final Acceptance
Certificate being conclusive evidence of Buyer's satisfaction or waiver of
each of the conditions precedent set forth in Section 4.2 hereof).
3.5. TITLE AND RISK OF LOSS. Except as otherwise provided herein, upon
Delivery of an Aircraft to Buyer at the applicable Delivery Location, title
to and risk of loss or damage to such Aircraft, from any cause whatsoever,
and exclusive care, custody and control thereof, will pass to Buyer.
- ---------------
* This redacted material has been omitted pursuant to a request for
confidential treatment and the material has been filed separately.
8
ARTICLE IV
CONDITIONS PRECEDENT; DELIVERY CONDITIONS
4.1. SELLER'S CONDITIONS PRECEDENT. Seller's obligation to tender each
Aircraft for Delivery to Buyer shall be subject to the satisfaction of each
of the following conditions precedent:
A. On or before the first Delivery Date, Buyer shall have duly
authorized, executed, and delivered this Agreement;
B. On or before each Delivery Date, Buyer will provide Seller a
written opinion of its counsel addressed to Seller stating that
Buyer is validly organized and existing and in good standing
under the laws of the State of its incorporation, that this
Agreement and any other documents and certificates delivered by
Buyer in connection with such Delivery (the "BUYER AGREEMENTS")
have been validly executed by Buyer and that Buyer's obligations
under the Buyer Agreements are binding, valid and enforceable in
accordance with their respective terms; that neither this
Agreement nor any other Buyer Agreement nor performance by Buyer
of any of its obligations hereunder or thereunder violate any
provisions of existing law, the Amended and Restated Articles of
Incorporation or the Certificate of Incorporation of Buyer or any
agreement, indenture, note or other instrument which is binding
upon Buyer of which such counsel has knowledge; and that no
action by any governmental bureau, agency or commission is
requisite to the validity or enforceability, in regard to Buyer,
of the Buyer Agreements. It is understood that any such opinions
of such counsel may (x) state that the enforceability of any
obligation referred to therein is subject to and may be limited
by (i) applicable bankruptcy, insolvency, fraudulent conveyance,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally, (ii) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and (iii) public policy
considerations and (y) express no opinion as to the
enforceability of Article XI hereof;
C. On or before each Delivery Date, Seller shall have received the
certificate of insurance and the report of Buyer's independent
insurance broker evidencing the coverage required under
Article IX hereof with respect to the Aircraft to be delivered on
such Delivery Date, in form and substance reasonably satisfactory
to Seller;
D. On or before each Delivery Date, Buyer shall have accepted the
Aircraft to be delivered on such Delivery Date, as evidenced by
delivery by Buyer to Seller of a completed and executed Technical
Acceptance Certificate and Final Acceptance Certificate;
9
E. On or before each Delivery Date, Seller shall have received
Buyer's payment of the Aircraft Purchase Price for the Aircraft
to be delivered on such Delivery Date, in accordance with the
terms hereof;
F. Buyer shall not be in default in any material respect in the
performance or observance of any term or obligation set forth
herein; and
G. All required consents shall have been obtained, and the
applicable waiting periods specified under the Hart-Scott Act
with respect to the transactions contemplated by this Agreement
shall have lapsed or been terminated.
4.2. BUYER'S CONDITIONS PRECEDENT. Buyer's obligation to accept Delivery
of the Aircraft shall be subject to the satisfaction of the following conditions
precedent:
A. On or before the first Delivery Date, Seller shall have duly
authorized, executed, and delivered this Agreement;
B. On or before each Delivery Date, Seller will provide to Buyer a
written opinion of its counsel (which may be Seller's in-house
counsel) addressed to Buyer stating that Seller is validly
organized and existing and in good standing under the laws of the
State of Delaware; that this Agreement, the Warranty Bill of Sale
with respect to the Aircraft and any other documents and
certificates delivered by Seller in connection with such Delivery
(the "SELLER AGREEMENTS") have been validly executed by Seller
and that Seller's obligations under the Seller Agreements are
binding, valid and enforceable in accordance with their terms;
that neither the Seller Agreements, nor performance by Seller of
any of its obligations hereunder or thereunder violate any
provisions of existing law, the Certificate of Incorporation of
Seller as amended, or its By-Laws or any agreement, indenture,
note or other instrument which is binding upon Seller of which
such counsel has knowledge; and that no action by any
governmental bureau, agency or commission is requisite to the
validity or enforceability, in regard to Seller, of the Seller
Agreements. It is understood that any such opinions of such
counsel may state that the enforceability of any obligation
referred to therein is subject to and may be limited by (i)
applicable bankruptcy, insolvency, fraudulent conveyance,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally, (ii) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and (iii) public policy
considerations;
C. On or before each Delivery Date, Seller will tender the Aircraft
to be delivered on such Delivery Date for Delivery to Buyer, in
the condition set forth in Section 4.4 hereof, together with the
Aircraft Documentation as described in Exhibit A and A-1 hereto
with respect to such Aircraft, and
10
pursuant to the inspection and Delivery terms and conditions set
forth in Sections 4.4 and 4.6, respectively;
D. On or before each Delivery Date, Seller will tender to Buyer
legal and beneficial title to the Aircraft and Engines to be
delivered on such Delivery Date, free and clear of any mortgages,
pledges, security interests, liens, claims, encumbrances or other
charges or rights of others of any kind (hereinafter,
collectively "LIENS"), other than Liens arising as a result of or
attributable to (a) Buyer, or (b) Seller's retention of the data
plates for each of the Airframes of the Aircraft, or (c) the
restrictions on use and transfer of the Aircraft pursuant to
Article XI hereof;
E. On or before each Delivery Date, Seller will deliver to Buyer a
Warranty Bill of Sale for the Aircraft (including, without
limitation, each Engine installed thereon), to be delivered on
such Delivery Date;
F. On or before each Delivery Date, Seller will provide to Buyer a
written opinion of its FAA counsel, the law firm of Lytle Soule &
Curlee of Oklahoma City, Oklahoma, or any other law firm as
Seller may designate, addressed to Buyer stating that Seller is
the FAA-registered owner of the Aircraft to be delivered on such
Delivery Date and that such Aircraft (and/or any Engine or
Engines) is free and clear of all Liens filed with the FAA, other
than Liens arising as a result of or attributable to (a) Buyer,
or (b) Seller's retention of the data plates for each of the
Airframes, or (c) the restrictions on use and transfer of the
Aircraft pursuant to Article XI hereof;
G. Seller shall not be in default in any material respect in the
performance or observance of any term or obligation set forth
herein; and
H. The applicable waiting period specified under the Hart-Scott Act
with respect to the transactions contemplated by this Agreement
shall have lapsed or been terminated.
4.3. [INTENTIONALLY NOT USED].
4.4. DELIVERY CONDITIONS.
A. Except as specifically set forth in this Section 4.4, each of
the Aircraft (including each Airframe, Engine, APU, Landing Gear, and Part
installed thereon, and any of the Aircraft Documentation applicable thereto)
will be delivered to Buyer in "AS-IS" condition; PROVIDED, HOWEVER, BUYER
EXPRESSLY AGREES TO THE SPECIAL COVENANTS AND RESTRICTIONS ON USE SET FORTH
IN SECTIONS 1.1 AND 11 HEREOF. Each Aircraft will have been in compliance
with all applicable Airworthiness Directives (AD) in accordance with Seller's
FAA approved maintenance program, and will have had a valid Certificate of
Airworthiness, at the time of retirement of each Aircraft from Seller's
revenue passenger operations.
11
B. RECORDS. On or prior to the Delivery Date or as otherwise
provided in Exhibits A and A-1 hereto for each Aircraft, Seller shall provide
to Buyer the Aircraft Documentation listed in Exhibit A hereto in respect of
such Aircraft.
C. ENGINES. Each Engine installed upon or accompanied with an
Aircraft at Delivery will be delivered in an "AS IS" condition. Engines
may be Delivered in unserviceable condition and shall have no minimum number
of hours and cycles remaining on their most limiting life limited internal
engine components. No borescope inspections shall be permitted.
D. APU'S. Each APU installed upon or accompanied with an Aircraft
at Delivery will be delivered in "AS-IS" condition. APU's may be Delivered
in unserviceable condition and shall have no minimum number of hours and
cycles remaining on their most limiting life limited internal APU components.
No borescope inspections will be permitted.
4.5. [INTENTIONALLY NOT USED]
4.6. INSPECTION.
A. Upon retirement and prior to Delivery, Buyer shall inspect the
Aircraft. Seller shall (i) provide Buyer with reasonably sufficient access
to the Aircraft Documentation listed in Exhibit A in respect of each of the
Aircraft and (ii) permit Buyer, at Buyer's expense, to conduct an inspection
("INSPECTION") of each of the Aircraft (including, without limitation, the
related Engines, Landing Gear, APU and Parts).
B. The Inspection of each of the Aircraft shall permit Buyer to
confirm the compliance of the Aircraft Documentation with respect to each
such Aircraft with the requirements of Exhibit A hereto and perform the
inspections with respect to each such Aircraft set forth in Exhibit E hereto.
Promptly following the Inspection, Buyer shall indicate in writing any
reasonable discrepancies which cause any Aircraft and/or its Aircraft
Documentation not to meet the delivery conditions specified in Section 4.4
and, as a condition precedent to Buyer's obligations to accept the Delivery
of that Aircraft, such discrepancies shall be corrected, or caused to be
corrected, by Seller pursuant to or in accordance with Seller's FAA-approved
maintenance program as soon as possible, at Seller's sole cost and expense.
C. There will be no acceptance or delivery flight for any of the
Aircraft.
D. Promptly following the Inspection, the representatives of Buyer
shall indicate in writing any reasonable discrepancies that cause the
Aircraft and/or the Aircraft Documents not to meet the delivery conditions
specified in Section 4.4, and, as a condition precedent to Buyer's
obligations to accept the Delivery of the Aircraft, such discrepancies shall
be corrected, or caused to be corrected, by Seller pursuant to or in
accordance with the Seller's FAA-approved maintenance program as soon as
possible, at Seller's sole cost and expense.
12
4.7. DELAYS DUE TO CORRECTIONS.
A. Any reasonable delay in Delivery of any Aircraft (an "AFFECTED
AIRCRAFT") caused by Seller's correction (or its causing the correction) of
discrepancies discovered and noted by Buyer during the Inspection will be
deemed to not be a breach of this Agreement by Seller, so long as Seller is
exercising reasonable good faith efforts to correct such discrepancies as
soon as reasonably practicable, and therefore will not excuse any failure by
Buyer to accept Seller's tender of such Aircraft for Delivery upon correction
of such discrepancies.
B. However, in the event that such delays cause the Delivery of
such Affected Aircraft to be more than sixty (60) calendar days beyond its
Scheduled Delivery Date (as such date may be adjusted pursuant to Section
3.1, Section 4.9 and Article VII hereof, but subject to the limitations of
the final proviso of Section 3.1 hereof), then:
(i) Buyer may elect to terminate this Agreement at any time
after such sixtieth (60th) day, with respect to such Affected Aircraft (and
only with respect to such Affected Aircraft), by giving written notice to the
Seller, and
(ii) Seller may elect to terminate this Agreement at any time at
least ninety (90) calendar days after such sixtieth (60th) day, with respect
to such Affected Aircraft (and only with respect to such Affected Aircraft),
by giving written notice to the Buyer.
C. If such election to terminate is made, then termination under
this Section with respect to such Affected Aircraft shall terminate and
discharge all obligations and liabilities of Buyer and Seller hereunder with
respect to such Aircraft and all undelivered items and services to be
furnished hereunder which are related thereto. Seller shall then return to
Buyer the prorata portion of the unapplied First and Second (and third, if
applicable) Downpayments with respect to such Affected Aircraft within five
(5) business days. If, following such sixty-day period or ninety-day period,
as the case may be, with respect to a delay under this Section 4.7, this
Agreement is not terminated with respect to the Affected Aircraft in
accordance with the provisions of this Section 4.7, then the time of delivery
otherwise required hereunder shall be extended unless and until terminated in
accordance with this Section 4.7.
D. The termination provisions set forth in this Section 4.7 are in
substitution for any other rights of termination or contract lapse arising by
operation of law by virtue of such delay.
4.8. BUYER'S ACCEPTANCE. Promptly upon tender of the Aircraft and
Delivery (but subject to Seller's correction of discrepancies described in
Section 4.7 hereof, if applicable) of each Aircraft, Buyer shall give written
notice to Seller of either its acceptance or rejection of such Aircraft. If
such Aircraft is accepted by Buyer, then Buyer shall deliver to Seller a
completed and executed Final Acceptance Certificate, and no other
acknowledgment or receipt of such Aircraft or its condition shall be required
by Seller or Buyer (such Final Acceptance Certificate being conclusive
evidence of Seller's satisfaction, or Buyer's waiver, of each of the
conditions precedent to Buyer's obligations set forth in this Section).
13
4.9. BUYER'S REJECTION.
A. If an Aircraft is rejected by Buyer (a "REJECTED AIRCRAFT"),
Buyer shall in such written notice state the reasons for its rejection,
specifying in what respects such Aircraft fails to comply with the terms of
this Agreement.
B. In the event of rejection of such Aircraft by Buyer, Seller
shall promptly notify Buyer as to Seller's concurrence or non-concurrence
(and the extent of such non-concurrence) with Buyer's reasons for rejection.
If Seller concurs with Buyer's reasons for rejection, then, as a condition
precedent to Buyer's obligations to accept the Delivery of such Aircraft,
Seller will promptly proceed to correct the conditions which were specified
as the basis for rejection by Buyer and with which Seller concurred. If,
after such correction and tender for inspection by Buyer, such Aircraft is
not rejected as hereinabove provided, Seller shall proceed with and Buyer
will accept Delivery thereof by completing and executing a Final Acceptance
Certificate with respect to such Aircraft.
C. In the event that Seller shall not, within sixty (60) days after
the Scheduled Delivery Date (as such date may be adjusted pursuant to Section
3.1, Section 4.7 or Article VII hereof, but subject to the limitations of the
final proviso of Section 3.1 hereof) with respect to a Rejected Aircraft,
have corrected or caused the correction of all conditions which were
specified as a basis for rejection of such Aircraft by Buyer and with which
Seller concurred, then Buyer shall have the option, by providing written
notice to Seller, of terminating this Agreement in full as to such Rejected
Aircraft, whereupon all obligations of the parties hereunder as to such
Rejected Aircraft shall be terminated.
D. If such election to terminate is made by Buyer, then termination
under this Section 4.9 with respect to such Rejected Aircraft shall terminate
and discharge all obligations and liabilities of Buyer and Seller hereunder
with respect to the Rejected Aircraft and all undelivered items and services
to be furnished hereunder which are related thereto and Seller shall then
return to Buyer the prorata portion of the unapplied First and Second (and
third, if applicable) Downpayments with respect to such Rejected Aircraft
within five (5) business days.
ARTICLE V
SELLER'S WARRANTIES AND DISCLOSURES
5.1. SELLER'S DISCLAIMERS OF WARRANTIES. EXCEPT AS PROVIDED IN SECTION
5.3 BELOW, EACH OF THE AIRCRAFT (INCLUDING BUT NOT LIMITED TO EACH AIRFRAME,
ENGINE, APU, LANDING GEAR AND PART INSTALLED THEREON, AND ANY OF THE AIRCRAFT
DOCUMENTATION APPLICABLE TO THE AIRCRAFT) ARE SOLD ON AN "AS IS" BASIS,
WITH ALL FAULTS AND WITHOUT RECOURSE TO SELLER, AND WITHOUT THE DATAPLATES
FOR ANY OF THE AIRFRAMES. THE WARRANTY SET FORTH IN SECTION 5.3 BELOW AND
THE OBLIGATIONS AND LIABILITIES OF SELLER THEREUNDER ARE EXPRESSLY IN LIEU
OF, AND SELLER WILL NOT BE DEEMED TO HAVE MADE, AND BUYER HEREBY WAIVES, ANY
AND ALL OTHER REPRESENTATIONS, WARRANTIES,
14
DUTIES, AND GUARANTEES OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, STATUTORY
OR OTHERWISE, CONCERNING ANY OF THE AIRCRAFT OR THE AIRWORTHINESS THEREOF
(INCLUDING BUT NOT LIMITED TO ANY AIRFRAME, ENGINE, APU, LANDING GEAR AND
PART INSTALLED THEREON, AND ANY OF THE AIRCRAFT DOCUMENTATION APPLICABLE TO
ANY SUCH AIRCRAFT), OR THE VALUE, CONDITION, DESIGN, OPERATION, DURABILITY OR
COMPLIANCE WITH SPECIFICATION OF ANY AIRCRAFT (INCLUDING BUT NOT LIMITED TO
ANY AIRFRAME, ENGINE, APU, LANDING GEAR AND PART INSTALLED THEREON, AND ANY
OF THE AIRCRAFT DOCUMENTATION APPLICABLE TO ANY SUCH AIRCRAFT), INCLUDING,
BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE, AND BUYER HEREBY WAIVES ANY AND ALL RIGHTS AND REMEDIES
IT MAY HAVE AGAINST SELLER RELATING TO ANY OF THE FOREGOING AND ARISING BY
LAW OR OTHERWISE INCLUDING BUT NOT LIMITED TO ANY OBLIGATION ARISING FROM THE
NEGLIGENCE (WHETHER ACTIVE, PASSIVE OR ANY OTHER TYPE) OF SELLER, ANY
AFFILIATE OF SELLER, OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, AGENTS
OR EMPLOYEES OR WITH RESPECT TO LOSS OF USE, REVENUE OR PROFIT, THE EXISTENCE
OF ANY LATENT, INHERENT OR ANY OTHER DEFECT (WHETHER OR NOT DISCOVERABLE), OR
AS TO THE INFRINGEMENT OF ANY PATENT, COPYRIGHT, DESIGN OR OTHER PROPRIETARY
RIGHT, OR OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES.
5.2. SELLER'S DISCLAIMERS OF PRIOR REPRESENTATIONS AND STATEMENTS. ANY
PRIOR REPRESENTATIONS OR STATEMENTS, WHETHER ORAL OR WRITTEN, MADE BY SELLER
(OR ANY AFFILIATE THEREOF) AS TO THE CONDITION OR FITNESS OF ANY OF THE
AIRCRAFT (INCLUDING BUT NOT LIMITED TO ANY AIRFRAME, ENGINE, APU, LANDING
GEAR AND PART INSTALLED THEREON, AND ANY OF THE AIRCRAFT DOCUMENTATION
APPLICABLE TO SUCH AIRCRAFT), OR THEIR CAPABILITY OR CAPACITY, ARE SUPERSEDED
HEREBY AND ANY SUCH REPRESENTATIONS OR STATEMENTS NOT SPECIFICALLY SET FORTH
IN THIS AGREEMENT ARE HEREBY WITHDRAWN BY SELLER (ON ITS OWN BEHALF AND ON
BEHALF OF ANY OF ITS AFFILIATES WHICH MAY HAVE MADE ANY SUCH REPRESENTATION
OR STATEMENT), SHALL NOT BE APPLICABLE TO THE TRANSACTIONS CONTEMPLATED
HEREBY AND ARE OF NO FURTHER FORCE AND EFFECT, AND BUYER ACKNOWLEDGES THAT
BUYER HAS NOT RELIED AND IS NOT RELYING ON ANY SUCH REPRESENTATION OR
STATEMENT.
5.3. EXCEPTIONS TO SELLER'S DISCLAIMERS; SELLER'S WARRANTIES. Seller
hereby represents and warrants to Buyer that on the Delivery Date of each
respective Aircraft: (a) Seller will have all legal and beneficial title to
such Aircraft, (b) title thereto will be transferred to Buyer in full, free
and clear of any and all Liens, other than Liens arising as a result of or
attributable to (1) Buyer, or (2) Seller's retention of the data plates for
the Airframe of such Aircraft, or (3) the restrictions on use and transfer of
the Aircraft pursuant to Article XI hereof, and (d) with respect to Aircraft
N4723(8823), such Aircraft was involved in an incident on or about December
27, 1997 in which the Aircraft experienced damage to the Aircraft cabin and
was retired from service.
15
5.4. BUYER'S ACKNOWLEDGMENT. BUYER EXPRESSLY AGREES AND ACKNOWLEDGES
THAT NONE OF THE SELLER, NOR ANY AFFILIATE THEREOF IS THE MANUFACTURER OF ANY
OF THE AIRCRAFT (INCLUDING BUT NOT LIMITED TO ANY AIRFRAME AND ANY ENGINE,
APU, LANDING GEAR, COMPONENT, EQUIPMENT AND PART INSTALLED THEREON, AND ANY
OF THE AIRCRAFT DOCUMENTATION APPLICABLE TO THE AIRCRAFT, AND ANY OTHER PART,
EQUIPMENT, DATA OR INFORMATION SOLD HEREUNDER), AND THAT THE AIRCRAFT
(INCLUDING BUT NOT LIMITED TO THE AIRFRAME AND EACH ENGINE, APU, LANDING GEAR
AND PART INSTALLED THEREON, AND THE AIRCRAFT DOCUMENTATION APPLICABLE TO SUCH
AIRCRAFT) IS OF A MAKE, SIZE, DESIGN AND CAPACITY DESIRED BY BUYER FOR THE
PURPOSES INTENDED BY BUYER AND EACH IS A USED AIRCRAFT (INCLUDING BUT NOT
LIMITED TO EACH USED AIRFRAME, USED ENGINE, USED APU, USED LANDING GEAR AND
USED PART INSTALLED THEREON), AND, SUBJECT TO SECTION 5.3, BUYER CONFIRMS
THAT IT HAS NOT, IN ENTERING INTO THIS AGREEMENT, RELIED ON ANY CONDITION,
WARRANTY OR REPRESENTATION BY SELLER, OR ANY AFFILIATE THEREOF, EXPRESS OR
IMPLIED, WHETHER ARISING BY APPLICABLE LAW OR OTHERWISE IN RELATION TO ANY OF
THE AIRCRAFT (INCLUDING BUT NOT LIMITED TO ANY AIRFRAME OR ANY ENGINE, APU,
LANDING GEAR AND PART INSTALLED THEREON, AND THE AIRCRAFT DOCUMENTATION
APPLICABLE TO THE AIRCRAFT), INCLUDING, WITHOUT LIMITATION, WARRANTIES OR
REPRESENTATIONS AS TO THE DESCRIPTION, QUALITY, DURABILITY, AIRWORTHINESS,
MERCHANTABILITY, FITNESS FOR ANY USE OR PURPOSE, VALUE, CONDITION, DESIGN OR
OPERATION OF ANY KIND OR NATURE OF ANY OF THE AIRCRAFT (INCLUDING BUT NOT
LIMITED TO ANY AIRFRAME AND ANY ENGINE, APU, LANDING GEAR AND PART INSTALLED
THEREON APPLICABLE TO SUCH AIRCRAFT), AS TO THE ABSENCE OF ANY LATENT,
INHERENT OR ANY OTHER DEFECTS (WHETHER OR NOT DISCOVERABLE), OR AS TO THE
INFRINGEMENT OF ANY PATENT, COPYRIGHT, DESIGN OR OTHER PROPRIETARY RIGHT; AND
THE BENEFIT OF ANY SUCH CONDITION, WARRANTY OR REPRESENTATION BY BUYER, OR
ANY AFFILIATE OF ANY THEREOF, IS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVED BY BUYER.
5.5. ASSIGNMENT OF MANUFACTURERS' WARRANTIES. Seller hereby assigns,
effective as of the Delivery Date of each respective Aircraft, to Buyer any
and all existing assignable warranties, service life policies, indemnities
and patent indemnities of or other rights, remedies or claims against
manufacturers and maintenance and overhaul agencies to or for Seller, of or
for such Aircraft (in the case of rights, remedies or claims, only with
respect to rights, remedies or claims arising, or based on events,
occurrences and circumstances occurring, on or after the Delivery of such
Aircraft); PROVIDED, THIS DOES NOT APPLY TO THE PYLONS INSTALLED ON ANY OF
THE AIRCRAFT. To the extent that such rights are not assignable, Buyer is
hereby subrogated to all such rights of Seller. Seller makes no
representation or warranty as to the existence or assignability of any such
rights or as to the validity or scope of any such subrogation.
16
ARTICLE VI
TAXES AND DUTIES
6.1. TAX INDEMNITY. Buyer will pay upon demand, and agrees to
indemnify, on an after-tax basis as described in Section 6.3, Seller and any
affiliate thereof (each, a "TAX INDEMNITEE") against and hold each Tax
Indemnitee harmless from any and all taxes (including without limitation,
sales, use, and value added taxes), assessments, charges, fees or duties of
any nature whatsoever (hereinafter, collectively, "TAXES") imposed by any
United States federal, state or local government jurisdiction or taxing
authority or any foreign government or taxing authority (each, a "TAXING
AUTHORITY"), together with any penalties, fines or interest thereon required
to be paid by a Tax Indemnitee or Buyer (reduced by any tax credits or tax
savings as a result of tax deductions available to the Tax Indemnitees as a
result of such Taxes, penalties, fines or interest) as a result of the sale,
use, delivery or transfer of any Aircraft, the Airframe, any Engine, or any
Part under this Agreement, other than Taxes imposed on or measured by the
income (other than gross income) or gains of any Tax Indemnitee.
6.2. CLAIM PROCEDURE. If a claim is made against a Tax Indemnitee for
any Taxes for which Buyer has agreed to indemnify Seller under this Article
VI, or for any penalty, fine or interest thereon, such Tax Indemnitee, upon
receiving notice of such claim, will promptly notify Buyer. Failure by the
Tax Indemnitee to so notify the Buyer shall not relieve Buyer of its
obligations to indemnify hereunder except to the extent Buyer is materially
prejudiced by such failure. Buyer shall have the right to control, at its
expense, any administrative or judicial proceedings (including the resolution
thereof) with respect to such Taxes. If requested by Buyer in writing, such
Tax Indemnitee will, at Buyer's expense, take such action as Buyer may
reasonably direct with respect to such claim. Any payment by a Tax
Indemnitee of such Taxes or any penalty, fine or interest thereon, will be
made under protest if so directed by Buyer. If payment is made, such Tax
Indemnitee will, at Buyer's expense, take such action as Buyer may reasonably
direct to recover such payment. If all or any part of any such Taxes
together with any penalty, fine or interest thereon, is refunded, such Tax
Indemnitee will repay Buyer such part thereof as Buyer will have paid
including any interest received thereon. Buyer will pay such Tax Indemnitee
upon demand for all reasonable expenses (including without limitation, all
costs, expenses, losses, reasonable legal and accountants' fees and
disbursements, penalties and interest) incurred by such Tax Indemnitee in
making payment, protesting payment, endeavoring to obtain a refund of any
such Taxes, or enforcing such Tax Indemnitee's rights against Buyer under
this Article VI.
6.3. NO SET-OFF, ETC.
(a) All payments by one party to the other party under or in
connection with this Agreement will be made without set-off or counterclaim,
free and clear of and without deduction for or on account of any Taxes.
(b) If a party is compelled by law to make payment subject to any
Tax for which such party is required to indemnify the receiving party and as
a consequence the receiving party does not actually receive for its own
benefit on the due date a net amount equal to the full
17
amount provided for under this Agreement, the party making that payment will
pay all necessary additional amounts to ensure receipt by the other party of
the full amount so provided for.
(c) The amount which Buyer will be required to pay with respect to
this Article will be an amount sufficient to restore such Tax Indemnitee to
the same position such Tax Indemnitee would have been had the liability for
Taxes subject to indemnity pursuant to Section 6.1 not been incurred.
6.4. EXEMPTIONS. Seller understands that Buyer is providing the
Aircraft and other assets hereunder for resale, and agrees to cooperate in
obtaining any exemption from Taxes reasonably determined by Buyer to be
applicable to the purchase of the Aircraft and other assets hereunder.
6.5. SURVIVAL. Notwithstanding any other provision of this Agreement,
the obligations of Buyer and each Tax Indemnitee under this Article VI will
survive the consummation, completion or termination (or any combination of
any thereof) of this Agreement.
ARTICLE VII
DELAY IN PERFORMANCE; LOSS OR DESTRUCTION OF AIRCRAFT
7.1. EXCUSABLE DELAY. Seller will not be responsible nor deemed to be
in default of its obligation hereunder on account of any delay in the
Delivery of any of the Aircraft hereunder due to causes reasonably beyond
Seller's control and not occasioned by its intentional acts or gross
negligence including, by way of illustration and not of limitation, acts of
God, acts of terrorism, acts of public enemies or hostilities, war, warlike
operations, insurrection, riots, fires, floods, explosions, earthquakes,
epidemics or quarantine restrictions, civil disturbance, any act of
government, governmental priorities, allocation regulations or orders
affecting materials, facilities or aircraft, strikes or labor troubles
causing cessation, slow-down or interruption of work, delay in
transportation, or due to any other cause to the extent it is reasonably
beyond Seller's control or not occasioned by Seller's intentional acts or
gross negligence. Delays resulting from any of the foregoing causes are
referred to as "EXCUSABLE DELAYS."
7.2. TERMINATION FOR EXCUSABLE DELAY. If, due to an Excusable Delay,
delivery of any Aircraft is delayed for a period of more than sixty (60) days
after the Scheduled Delivery Date for such Aircraft (as such date may be
adjusted pursuant to Section 3.1, Section 4.7 and 4.9 hereof, but subject to
Section 3.1 hereof), then Buyer may or, at any time at least ninety (90) days
after such sixtieth (60th) day, Seller may terminate this Agreement with
respect to such Aircraft so delayed by giving written notice to the other at
any time after the expiration of such applicable period, and if such election
to terminate is made then termination under this Section shall terminate and
discharge all obligations and liabilities of Buyer and Seller hereunder. If,
following such sixty-day period or one hundred fifty day period, as the case
may be, with respect to an Excusable Delay, this Agreement is not terminated
with respect to such delayed Aircraft in accordance with the provisions of
this Section 7.2, then the time of delivery otherwise required hereunder
shall be extended unless and until terminated in accordance with this Section
7.2. The termination provisions set forth in this Section 7.2 are in
substitution for any other rights of
18
termination or contract lapse arising by operation of law by virtue of an
Excusable Delay. Should Buyer terminate this Agreement with respect to such
Aircraft, Seller shall then return to Buyer the prorata portion of the
unapplied First and Second (and third, if applicable) Downpayments with
respect to such Aircraft so delayed within five (5) business days.
7.3. LOSS OR DESTRUCTION OF AIRCRAFT. If prior to the Delivery thereof,
any Aircraft shall suffer a Casualty Occurrence (as defined in Section 7.4
below), then neither party hereto will have any obligation to the other party
with respect to the lost or damaged Aircraft pursuant to this Agreement. In
the event that any Aircraft suffers a Casualty Occurrence prior to the
Delivery of such Aircraft, then, following Seller's notice of such Casualty
Occurrence pursuant to Section 7.4 hereof, Seller (unless Buyer elects to
purchase such Aircraft pursuant to this Section 7.3) will return to Buyer the
PRORATA portion of the unapplied First and Second (and third, if applicable)
Downpayments for such undelivered Aircraft within five (5) business days, and
neither party hereto shall have any further obligation to the other party
with respect to such undelivered Aircraft pursuant to this Agreement. In the
event that any Engine suffers a Casualty Occurrence prior to the Delivery of
such Engine, then Seller will substitute an alternate engine within ninety
(90) days for the Engine that suffered a Casualty Occurrence as provided in
Section 7.4. Upon such substitution, each alternate engine so substituted
shall become an "Engine" for all purposes of this Agreement.
7.4. CASUALTY OCCURRENCE DEFINED. For purposes of this Agreement,
"CASUALTY OCCURRENCE" shall mean any total or partial destruction of any
Aircraft or any Engine, the severity of which (i) materially affects the
operation and utility of the Aircraft or such Engine or (ii)makes the repair
of such Aircraft or such Engine uneconomical, as determined by Seller.
Seller agrees to provide written notice of any total or partial destruction
of any Aircraft or any Engine promptly after Seller becomes aware of such
destruction and determines that such destruction constitutes a Casualty
Occurrence pursuant to the provisions hereof.
7.5. EVENTS OF DEFAULT.
(a) BUYER EVENTS OF DEFAULT. Each of the following events shall
constitute a "BUYER EVENT OF DEFAULT" (whether any such event shall be
voluntary or involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order of any court
or any order, rule or regulation of any administrative or governmental body):
(i) Buyer shall not have made (x) any payment of Aircraft
Purchase Price within one (1) Business Day after the same shall have become
due and payable or (y) any other amount payable hereunder within three (3)
Business Days after receipt of written notice that the same shall have become
due and payable; or
(ii) In the event that the Aircraft which has been tendered for
Delivery by Seller is in compliance with the provisions specified for
Delivery pursuant to Section 4.4 hereof, but Buyer shall have rejected such
Aircraft and such rejection shall have continued for a period of five (5)
Business Days after Seller's written demand to Buyer for Buyer to accept such
Aircraft; or
19
(iii) Buyer shall have failed to observe and perform any of its
covenants in Article XI hereof; or
(iv) Buyer shall have failed to perform or observe (or caused
to be performed and observed) any other covenant or agreement to be performed
or observed by it hereunder or under the other Buyer Agreements, and such
failure shall continue unremedied for a period of 30 days after written
notice thereof from Seller; or
(v) any representation or warranty made by Buyer herein or in
any other Buyer Agreement shall prove to have been incorrect in any material
respect at the time made and shall continue to be material and unremedied for
a period of 30 days after written notice thereof from Seller; or
(vi) the filing of a petition against Buyer under any
applicable bankruptcy, insolvency or other similar laws in the United States,
as now or hereafter amended, and the lack of the withdrawal or dismissal of
such proceeding within 60 days thereafter; or the entry of a decree or order
for relief by a court having jurisdiction in the premises in respect of Buyer
in an involuntary case under any such laws, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other similar
official) of Buyer or for all or a substantial part of its property, or
ordering the winding-up or liquidation of its affairs and, in the case of any
such decree or order, the continuance of such decree or order unstayed and in
effect for a period of 60 consecutive days; or
(vii) the commencement by Buyer of a voluntary case under the
bankruptcy, insolvency or other similar law in the United States, as now
constituted or hereafter amended, or the filing by Buyer of any answer in any
proceeding under any such laws seeking relief or reorganization whereby Buyer
admits the material allegations of any petition filed against Buyer in any
such proceeding, or the consent by Buyer to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of Buyer or for all or a substantial
part of its property, or the making by Buyer of any general assignment for
the benefit of creditors.
(b) SELLER EVENTS OF DEFAULT. Each of the following events shall
constitute a "SELLER EVENT OF DEFAULT" (whether any such event shall be
voluntary or involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order of any court
or any order, rule or regulation of any administrative or governmental body):
(i) Seller shall have failed to perform (or observe or caused
to be performed and observed) any covenant or agreement to be performed or
observed by it hereunder and such failure shall continue unremedied for a
period of thirty (30) days after written notice thereof from Buyer; or
(ii) any representation or warranty made by Seller herein or
in any other Seller Agreement shall prove to have been incorrect in any
material respect at the time made
20
and shall continue unremedied for a period of thirty (30) days after written
notice thereof from Buyer; or
(iii) the filing of a petition against Seller under the Federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal or state bankruptcy, insolvency or other similar law in the United
States, and the lack of the withdrawal or dismissal of such proceeding within
60 days thereafter; or the entry of a decree or order for relief by a court
having jurisdiction in the premises in respect of Seller in an involuntary
case under the Federal bankruptcy laws, as now or hereafter constituted, or
any other applicable Federal or state bankruptcy, insolvency or other similar
law in the United States, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of Seller or for
all or a substantial part of its property, or ordering the winding-up or
liquidation of its affairs and, in the case of any such decree or order, the
continuance of such decree or order unstayed and in effect for a period of 60
consecutive days;
(iv) the commencement by Seller of a voluntary case under the
Federal bankruptcy laws, as now constituted or hereafter amended, or any
other applicable Federal or state bankruptcy, insolvency or other similar law
in the United States or the filing by Seller of any answer in any proceeding
under any such laws seeking relief or reorganization whereby Seller admits
the material allegations of any petition filed against Seller in any such
proceeding, or the consent by Seller to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of Seller or for all or a
substantial part of its property, or the making by Seller of any general
assignment for the benefit of creditors; or
(v) Seller shall not have made any required refund payment
within three (3) Business Days after receipt of written notice that the same
shall have become due and payable.
7.6. REMEDIES.
(a) GENERALLY. Subject to the final sentence of this Section
7.6(a), upon the occurrence of any Buyer Event of Default or Seller Event of
Default and at any time thereafter so long as the same shall be continuing,
the non-defaulting party may, at its option, declare by written notice to the
defaulting party this Agreement to be in default (without the necessity of
such written declaration upon the occurrence of any Buyer Event of Default
described in paragraph (iv) or (v) of Section 7.5(a) hereof or any Seller
Event of Default described in paragraph (iii) or (iv) of Section 7.5(b)
hereof) and at any time thereafter, so long as such outstanding Buyer Event
of Default or Seller Event of Default, as the case may be, shall not have
been remedied, the non-defaulting party may (i) rescind or terminate this
Agreement with respect to the affected Aircraft or Engines, and/or (ii)
exercise any other right or remedy that may be available to it under
applicable law or proceed by appropriate court action to enforce the terms
hereof or to recover damages for the breach hereof; provided, however, that,
in the event of a Seller Event of Default under Section 7.5(b)(i) hereof
relating to Seller's failure to deliver an Aircraft and Aircraft
Documentation that complies with the provisions specified for Delivery
pursuant to Section 4.4 hereof, so long as Seller shall have used reasonable
good faith efforts to cause delivery of such an Aircraft and/or Aircraft
Documentation, Buyer's exclusive remedy shall be as provided in Section 4.9D
hereof.
21
(b) NO WAIVER. No delay on the part of either party in exercising
any of its rights, powers or privileges under this Agreement shall operate as
a waiver thereof nor shall any single or partial exercise of any right, power
or privilege preclude any other or further exercise thereof, or the exercise
of any other right, power or privilege.
(c) REMEDIES CUMULATIVE. The rights and remedies herein and
therein provided are cumulative and not exclusive of any rights or remedies
provided by law.
ARTICLE VIII
INDEMNIFICATION
8.1. GENERAL INDEMNITY.
(a) With respect to each Aircraft, Buyer will be responsible for
and shall indemnify, defend and hold harmless Seller and any affiliate
thereof, and each of their respective officers, directors, agents and
employees (each, a "SELLER INDEMNITEE"), on an after-tax basis, from and
against any and all claims, damages, losses, liabilities, obligations,
penalties and judgments of every kind and nature, including all costs and
expenses, including reasonable attorneys' fees and expenses, incident
thereto, but excluding Taxes (hereinafter, collectively, "CLAIMS"), which
occur on or after the respective Delivery Date of such Aircraft (including,
but not limited to, the Airframe and any Engine, APU, Landing Gear,
component, equipment and part installed thereon, any of the Aircraft
Documentation applicable to such Aircraft, and any other part, equipment,
data or information sold hereunder) and which directly or indirectly arises
in any manner out of or in connection with (a)the ownership by Buyer or by
any third person on or after the Delivery Date of such Aircraft (including
but not limited to the Airframe and any Engine, APU, Landing Gear, component,
equipment and part installed thereon, any of the Aircraft Documentation
applicable to such Aircraft, and any other equipment, part, data or
information sold hereunder), or (b)the use, possession, dispossession,
re-possession, control, operation, location, landing, departure, condition,
acceptance, rejection, delivery, non-delivery, re-delivery, registration,
de-registration, re-registration, sale, leasing, wet leasing, chartering,
subleasing, importation, exportation, transfer of title or other disposition
of title, abandonment, storage, maintenance, service, repair, overhaul,
testing, design, modification, dismantling, disassembly or re-assembly by
Buyer or by any third person on or after the Delivery Date of such Aircraft
(including but not limited to the Airframe and any Engine, APU, Landing Gear,
component, equipment and part installed thereon, any of the Aircraft
Documentation applicable to such Aircraft, and any other part, equipment,
data or information sold hereunder), or (c)any condition of, or defect in,
such Aircraft (including but not limited to the Airframe and any Engine,
Landing Gear, component, equipment and part installed thereon, any of the
Aircraft Documentation applicable to such Aircraft, and any other part,
equipment, data or information sold hereunder), or any Claim for patent,
trademark or copyright infringement, regardless of whether such condition
came into existence, or was discovered or reported, on, before or after the
respective Delivery Date of such Aircraft, or was caused by any Seller
Indemnitee's acts or omissions on or prior to the relevant Delivery Date.
The foregoing indemnity shall apply to all Claims, regardless of whether any
such Claim arises in tort (including, without limitation, strict liability).
Buyer will pay a Seller Indemnitee upon demand for all reasonable expenses
(including without limitation, all
22
reasonable legal and accountants' fees and disbursements, and interest)
incurred by such Seller Indemnitee in enforcing such Seller Indemnitee's
rights against Buyer under this Section 8.1. Neither the consummation of the
sale pursuant to this Agreement nor any subsequent lease, sale or other
transfer of the any of the Aircraft shall release Buyer from its obligations
pursuant to this Section 8.1(a).
(b) If any Claim is made by a Seller Indemnitee, such Seller
Indemnitee, upon receiving notice of such Claim, will promptly notify Buyer;
provided however that failure by the Seller Indemnitee to so notify the Buyer
shall not relieve Buyer of its obligations to indemnify hereunder except to
the extent Buyer is materially prejudiced by such failure.
8.2. SURVIVAL. Notwithstanding any other provision of this Agreement,
the obligations of the parties under this Article VIII will survive the
consummation, completion, or termination (or any combination of any thereof)
of this Agreement.
ARTICLE IX
INSURANCE
9.1. INSURANCE REQUIREMENTS. Effective upon the Delivery of each
Aircraft to Buyer, and for a period of three (3) years thereafter, Buyer will
at its expense maintain, or shall cause each subsequent operator of each such
Aircraft (whether as owner, lessee or such other capacity in which such
operator has possession of the Aircraft) to maintain, with respect to such
Aircraft and Parts (including, without limitation, Parts that have been sold)
with insurance carriers of recognized responsibility, aviation products
liability and contractual liability insurance in an amount not less than
___________________________ United States Dollars (US$_____________) per
occurrence, and in the annual aggregate, combined single limit bodily injury
and property damage. Such liability insurance shall be endorsed: (a)to name
all Seller Indemnities, as the case may be, as additional insureds
("ADDITIONAL INSUREDS") thereunder; (b)to expressly provide cross-liability
clauses; (c)to expressly provide that all of the provisions thereof, except
the limits of liability, shall operate in the same manner as if there were a
separate policy covering each insured and shall waive, any right of
subrogation of the insurers against each Additional Insured; (d)to expressly
provide that, in respect of the respective interests of each Additional
Insured in such policies, the insurance shall not be invalidated by any
action or inaction of Buyer or such other operator or any affiliate thereof
(or any director, officer, agent or employee thereof) or any other third
party (other than the Additional Insureds) and shall insure the respective
interests of the Additional Insureds, as they appear, regardless of any
breach or violation of any warranty, declaration or condition contained in
such policies by Buyer or such other operator or any affiliate thereof (or
any director, officer, agent or employee thereof) or any other third party
(other than the Additional Insureds); (e)to expressly provide that such
insurance shall be primary without any right of contribution from any other
insurance which is carried by any Additional Insured; (f)to expressly waive
any right of the insurers to set-off or counterclaim or any other deduction,
whether by attachment or otherwise, in respect of any liability of any
Additional Insured; (g)to expressly cover the contractual liability to each
of the Additional Insureds assumed by in Section 8.1 hereof but only to the
extent of the contractual liability assumed by in Section 8.1 hereof.
- ---------------
* This redacted material has been omitted pursuant to a request for
confidential treatment and the material has been filed separately.
23
9.2. BROKER'S CERTIFICATES. Buyer will furnish to Seller, not less than
five (5) business days prior to the scheduled Delivery Date of each Aircraft
(and upon any renewal of such insurance contracts), broker's certificates
certifying that such policies of insurance, endorsed as required herein, are
in full force and effect (together with the waivers of subrogation as
described in Section 9.1), and stating the opinion of such firm that
insurance complies with the terms hereof, that all premiums in connection
with such insurance then due have been paid, and that the respective
Additional Insureds will be given (30) days prior written notice by the
insurers in the event of either cancellation or material change in such
coverage or in said waivers, except that with respect to war risk coverage,
seven (7) days prior written notice will be given or, if seven (7) days
notice is not available, such lesser period of time as is generally being
made available by insurers. Buyer acknowledges that the failure to provide
such report to Seller shall have the same effect hereunder as the failure to
maintain the insurance otherwise required by this Article IX.
9.3. SURVIVAL. Notwithstanding any other provision of this Agreement,
the obligations of the parties under this Article IX will survive the
consummation, completion, or termination (or combination of any thereof) of
this Agreement.
ARTICLE X
REPRESENTATIONS
10.1. SELLER'S REPRESENTATIONS.
(a) STATUS. Seller is a corporation duly incorporated and validly
existing under the laws of the State of Delaware and has the power to own its
property and assets and carry on its business as it is now being conducted.
(b) POWER AND AUTHORITY. Seller has, or will on or prior to the
first Delivery Date, the power to enter into and perform, and has, or will on
or prior to the first Delivery Date, taken all necessary action to authorize
its entry into and performance of, this Agreement and the transactions
contemplated hereby.
(c) LEGAL VALIDITY. This Agreement constitutes the legal, valid
and binding obligation of Seller enforceable in accordance with its terms.
(d) NON-CONFLICT WITH LAWS. So far as concerns Seller, the entry
into and performance of this Agreement and the transactions contemplated
hereby do not and will not conflict with:
(i) any law or regulation or any official or judicial order
applicable to Seller;
(ii) the constitutional documents of Seller; or
(iii) any agreement or document to which the Seller is a party
or which is binding upon Seller or its assets.
24
(e) CONSENTS. All authorizations, approvals, consents, licenses,
exemptions, filings, registrations, notarizations and other matters official
or otherwise applicable to Seller which are required or advisable in
connection with the entry into, performance, validity and enforceability of
this Agreement, delivery of the Aircraft hereunder or any of the transactions
contemplated hereby shall be obtained by Seller prior to the date upon which
they are required or it is advisable that they be obtained.
10.2. BUYER'S REPRESENTATIONS.
(a) STATUS. Buyer is a company duly incorporated and validly
existing under the laws of the State of California and has the power to own
its property and assets and carry on its business as it is now being
conducted.
(b) POWER AND AUTHORITY. Buyer has the power to enter into and
perform and has taken all necessary action to authorize the entry into,
performance and delivery of this Agreement and each of the other Buyer
Agreements and the transactions contemplated hereby and thereby.
(c) LEGAL VALIDITY. This Agreement and each other Buyer Agreement
constitute the legal, valid and binding obligations of Buyer enforceable in
accordance with their respective terms.
(d) NON-CONFLICT WITH LAWS. The entry into and performance of
this Agreement and the other Buyer Agreements and the transactions
contemplated hereby and thereby do not and will not conflict with:
(i) any law or regulation or any official or judicial order
applicable to Buyer; or
(ii) the constitutional documents of Buyer; or
(iii) any agreement or document to which Buyer is a party or
which is binding upon Buyer or any of its assets.
(e) CONSENTS. All authorizations, approvals, consents, licenses,
exemptions, filings, registrations, notarizations and other matters, official
or otherwise applicable to Buyer which are required or advisable in
connection with the entry into, performance, validity and enforceability of
this Agreement and the other Buyer Agreements, purchase and acceptance of the
Aircraft hereunder or any of the transactions contemplated hereby shall be
obtained by Buyer prior to the date upon which they are required or it is
advisable that they be obtained.
ARTICLE XI
RESTRICTIONS ON USE AND TRANSFER OF THE AIRCRAFT
Buyer expressly agrees and covenants that:
25
A. ____________________________________________________
______________________________________________________________________;*
B. ____________________________________________________
______________________________________________________________________;*
C. ____________________________________________________
______________________________________________________________________;*
D. ____________________________________________________
______________________________________________________________________;*
_________________________________________________________________
_________________________________________________________.*
_________________________________________________________________
_________________________________________________________.*
_________________________________________________________________
_________________________________________________________.*
E. ____________________________________________________
______________________________________________________________________.*
ARTICLE XII
MISCELLANEOUS
12.1. TRANSFERABILITY. No assignment or transfer may be made by either
party of all or any of its rights in respect of this Agreement without the
prior written consent of the other party, such consent not to be unreasonably
withheld. For the avoidance of doubt, Seller and Buyer agree that Buyer
shall not be entitled to assign any of its rights (other than the right to
purchase as expressly provided in the immediately preceding sentence) or any
of its obligations under this Agreement without the prior written consent of
Seller, such consent not to be unreasonably withheld. Notwithstanding the
above, Buyer may transfer its interest in the Aircraft to its subsidiaries,
provided that such transfer takes place after Delivery of any Aircraft.
12.2. FURTHER ASSURANCES. Each party agrees from time to time to do and
perform such other and further acts and execute and deliver any and all such
other instruments as may be required by law or reasonably requested by the
other party at the other party's expense to
- ---------------
* This redacted material has been omitted pursuant to a request for
confidential treatment and the material has been filed separately.
26
establish, maintain and protect the rights and remedies of the other party
and carry out and effect the intent and purpose of this Agreement.
12.3. NOTICES.
(a) All notices under this Agreement shall be given to the
intended recipient at the address or facsimile number set out on the
execution pages of this Agreement (or such other address or facsimile number
as either party may specify to the other in writing from time to time).
(b) Any communication from one party to the other under this
Agreement shall be effective when actually received and in the case of a
communication by facsimile only if a transmission report is produced by the
machine from which the facsimile was sent indicating that the facsimile was
sent in its entirety to the facsimile number of the recipient notified for
the purposes of this clause, provided that if any communications are
received after 5:00 p.m. (local time for recipient) on any day, the same
shall only be effective at the commencement of business on the next working
day.
12.4. VARIATION. The provisions of this Agreement shall not be varied
otherwise than by an instrument in writing executed by or on behalf of both
parties.
12.5. CONFIDENTIALITY. Except to the extent that any of the following
is available in the public domain (other than by reason of an act of either
party in violation of this Agreement), each party shall keep the terms of
this Agreement and the transactions contemplated hereby and the Maintenance
Program Documents strictly confidential, provided that it may disclose this
Agreement and the transactions hereby contemplated if required to do so:
(i) for the purpose of legal proceedings, administrative or
regulatory requirements or as otherwise required by law;
(ii) to effect any registrations, filings or recordations
required by or pursuant to this Agreement;
(iii) for the purpose of disclosure to its auditors or to its
legal or other professional advisers; or
(iv) for the purpose of advising any potential financier or Other
Owner of any of the Aircraft.
12.6. SEVERABILITY OF PROVISIONS. If any provision of this Agreement is
prohibited or unenforceable in any jurisdiction, such prohibition or
unenforceability shall not invalidate the remaining provisions hereof or
affect the validity or enforceability of such provisions in any other
jurisdiction.
12.7. TIME OF ESSENCE. The time stipulated in this Agreement for all
payments payable by the Buyer to the Seller or from the Seller to the Buyer
and for the performance of the parties' other obligations under this
Agreement will be of the essence of this Agreement.
27
12.8. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
12.9. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO THE
CONFLICTS OF LAWS PRINCIPLES THEREUNDER.
12.10. SUBMISSION TO JURISDICTION. Each party to this Agreement
irrevocably agrees that any legal suit, action or proceeding brought by the
other party, which arises out of or relates to this Agreement or any document
or agreement referred to herein, or any of the transactions contemplated
hereby or thereby, may be instituted in the Circuit Court of the State of
Illinois, Cook County, or the United District Court for the Northern District
of Illinois. The agreement set forth in this Section 12.10 is given solely
for the benefit of the parties to this Agreement and such agreement is not
intended and shall not inure to the benefit of any other person.
12.11. BROKER FEES. Each party agrees to indemnify and hold the other
party harmless from and against any and all claims, suits, damages, costs and
expenses (including, but not limited to, reasonable attorney's fees) asserted
by agents, brokers or other third parties, representing or allegedly
representing such party, for any commission or compensation of any nature
whatsoever based upon the sale or transfer between Seller and Buyer of any of
the Aircraft. Seller represents to Buyer that Seller has not retained or
hired any agents, brokers or other third party, for any commission or
compensation of any nature whatsoever based upon the sale or transfer between
Seller and Buyer of any of the Aircraft. Buyer represents to Seller that
Buyer has not retained or hired any other agents, brokers or other third
party, for any commission or compensation of any nature whatsoever based upon
the sale or transfer between Seller and Buyer of any of the Aircraft.
12.12. COSTS AND EXPENSES. Except as otherwise expressly provided
herein, each party will pay its own expenses incurred in connection with this
Agreement and the transactions contemplated hereby, including, without
limitation, attorney's fees, filing fees, inspection and other consulting
fees.
* * *
28
IN WITNESS WHEREOF, the parties hereto have caused this Aircraft
Purchase and Sale Agreement to be executed and delivered as of the date first
above written.
UNITED AIR LINES, INC.,
SELLER
By: /s/ Andrew P. Studdert
Its: Senior Vice President,
Fleet Opns.
Address for Notices:
UAL Services, a Division of
United Air Lines, Inc.
1611 Adrian Road
Burlingame, CA 94010
Attention: Director, Asset Management
Telephone: (650) 876-4347
Facsimile: (650) 876-3544
WILLIS LEASE FINANCE CORPORATION
BUYER
By: /s/ Charles F. Willis
Its: President
Address for Notices:
Willis Lease Finance Corporation
180 Harbor Drive, Suite 200
Sausalito, CA 94965
Attn: General Counsel
Telephone: (415) 331-5281
Facsimile: (415) 331-5167
29