EXECUTION COPY
ASSET PURCHASE AGREEMENT
dated as of
August 6, 1999
among
MSA IV,
MSA V
and
INTERNATIONAL LEASE FINANCE CORPORATION
TABLE OF CONTENTS
--------------------------
PAGE
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.....................................................1
ARTICLE 2
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale. .............................................7
SECTION 2.02. Assignment of Contracts and Rights. ...........................7
SECTION 2.03. Payment of Purchase Price. .....................................8
SECTION 2.04. Inspection. ...................................................8
SECTION 2.05. Delivery. .....................................................9
SECTION 2.06. Purchase Price Adjustment. ...................................9
SECTION 2.07. Payment of Adjustment of Purchase Price. .....................10
SECTION 2.08. Buyer Deposit..................................................12
SECTION 2.09. Manufacturer's Payments........................................13
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
SECTION 3.01. Corporate Existence and Power. ................................13
SECTION 3.02. Corporate Authorization. .....................................13
SECTION 3.03. Governmental Authorization. ..................................14
SECTION 3.04. Noncontravention. ............................................14
SECTION 3.05. Required Consents. ...........................................14
SECTION 3.06. Data. ....................................................14
SECTION 3.07. Absence of Certain Changes. ..................................14
SECTION 3.08. No Undisclosed Material Liabilities. .........................15
SECTION 3.09. Contracts. ...................................................15
SECTION 3.10. Litigation. ..................................................15
SECTION 3.11. Compliance with Laws and Court Orders. .......................15
SECTION 3.12. Aircraft and Leases. .........................................16
SECTION 3.13. Insurance Coverage. ...........................................17
SECTION 3.14. Licenses and Permits. ........................................18
SECTION 3.15. Selling Documents. ...........................................18
SECTION 3.16. Finders' Fees. ...............................................18
SECTION 3.17. True Sale. ...................................................18
PAGE
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF EACH BUYER
SECTION 4.01. Existence and Power. .........................................19
SECTION 4.02. Authorization. ..............................................19
SECTION 4.03. Governmental Authorization. ..................................19
SECTION 4.04. Noncontravention. ............................................19
SECTION 4.05. Litigation. ..................................................19
SECTION 4.06. Licenses and Permits...........................................19
SECTION 4.07. Finders' Fees. ...............................................20
SECTION 4.08. True Sale. ...................................................20
SECTION 4.09. Buyer Designees................................................20
ARTICLE 5
COVENANTS OF SELLER
SECTION 5.01. Conduct of the Business. .....................................20
SECTION 5.02. Access to and Provision of Information; Confidentiality. .....20
SECTION 5.03. Notices of Certain Events. ...................................22
SECTION 5.04. Taxes and Other Costs. .......................................22
SECTION 5.05. Maintenance Reserves. ........................................23
SECTION 5.06. Certain Additional Aircraft and Rental Agreements..............23
ARTICLE 6
COVENANTS OF EACH BUYER
SECTION 6.01. Confidentiality. ..............................................23
ARTICLE 7
COVENANTS OF EACH BUYER AND SELLER
SECTION 7.01. Best Efforts; Further Assurances. ............................24
SECTION 7.02. Certain Filings. .............................................25
SECTION 7.03. Public Announcements. ........................................25
SECTION 7.04. Substitute Aircraft............................................25
SECTION 7.05. Allocation of Purchase Price...................................25
ARTICLE 8
CONDITIONS
SECTION 8.01. Conditions to Obligations of Each Buyer and Seller. ..........26
SECTION 8.02. Conditions to Obligation of Buyer. ...........................26
PAGE
SECTION 8.03. Conditions to Obligation of Seller. ..........................30
ARTICLE 9
SURVIVAL; INDEMNIFICATION
SECTION 9.01. Survival. ....................................................32
SECTION 9.02. Indemnification.
...................................................32
SECTION 9.03. Procedures. ..................................................33
ARTICLE 10
TERMINATION
SECTION 10.01. Grounds for Termination. ....................................33
SECTION 10.02. Effect of Termination.........................................35
SECTION 10.03. Breakage Costs Upon Termination or Failure to
Transfer Aircraft. (a) ............................35
SECTION 10.04. Repayment of Purchase Price and Hedging Breakage
Costs Upon Failure to Transfer the X000-000
Xxxxxxxx XXX 00000. ...............................36
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Warranties and Disclaimers....................................37
SECTION 11.02. Notices ....................................................37
SECTION 11.03. Amendments and Waivers........................................39
SECTION 11.04. Expenses. ...................................................40
SECTION 11.05. Successors and Assigns. .....................................40
SECTION 11.06. Governing Law. ..............................................40
SECTION 11.07. Jurisdiction. ...............................................40
SECTION 11.08. WAIVER OF JURY TRIAL..........................................41
SECTION 11.09. Counterparts; Third Party Beneficiaries.......................41
SECTION 11.10. Entire Agreement. ...........................................41
SECTION 11.11. Bulk Sales Laws. ............................................41
SECTION 11.12. Non Solicitation. ...........................................41
SECTION 11.13. Captions. ...................................................42
EXHIBIT A....................................................................A-1
EXHIBIT A-1................................................................A-1-1
EXHIBIT A-2................................................................A-2-1
PAGE
EXHIBIT B....................................................................B-1
EXHIBIT C....................................................................C-1
EXHIBIT D....................................................................D-1
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated as of August 6, 1999 among MSA IV, MSA
V, each a Delaware Business Trust (each a "Buyer" and together the "Buyers"),
and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation
("Seller").
W I T N E S S E T H :
WHEREAS, Seller conducts a business which owns and leases
commercial aircraft;
WHEREAS, the Buyers desire to purchase certain aircraft and related
assets from Seller and Seller desires to sell such assets to the Buyers, upon
the terms and subject to the conditions hereinafter set forth;
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions
(a) The following terms, as used herein, have the following
meanings:
"Aircraft" means, either collectively or individually, as applicable,
the aircraft listed on Exhibits A-1 and A-2, each with the manufacturer's serial
number as set forth on Exhibit A-1, including (i) the airframe, (ii) the Engines
and (iii) all appliances, parts, accessories, instruments, navigational and
communications equipment, furnishings, modules, components and other items of
equipment installed in or furnished with the Aircraft on the Delivery Date,
except that, with respect to Lessee Furnished Equipment, references herein to an
"Aircraft" shall be deemed to refer only to such interest in Lessee Furnished
Equipment as is held by the owner of the Aircraft therein under the applicable
Lease. References to the "Aircraft" shall, where the context requires, include
the Manuals and Technical Records.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such other Person.
"Assignment of Warranties" means, with respect to each Aircraft, the
assignment, reasonably satisfactory in form and substance to the applicable
Buyer and Seller, by Seller to the applicable Buyer or its designee of Seller's
right, title and interest in and to certain Manufacturer's warranties, with
respect to such Aircraft, together with the Manufacturer's consent to such
assignment.
"Contract" means any contract, agreement, lease, sublease, license,
commitment, sales or purchase order or other instrument binding upon Seller.
"control" (including, with its correlative meanings, "controlled by"
and "under common control with") means possession, directly or indirectly, of
the power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise).
"Custody and Loan Agreement" means the Amended and Restated Custody
and Loan Agreement dated as of the date hereof among Xxxxxx Xxxxxxx Aircraft
Finance, a Delaware business trust, MSA V, the "MSAF Lessors" (as defined
therein) and Seller.
"Data" means the information set out in Exhibit A, including, without
limitation, the assumptions set forth therein regarding aircraft condition and
lease terms and the liabilities being transferred, such as unearned revenue,
accrued and unpaid taxes and deferred taxes and all contracts, instruments and
other documentation delivered from Seller to each Buyer and returned by each
Buyer marked "seen by Buyer".
"Delivery Date" means, with respect to each Aircraft, the date on
which the applicable Buyer obtains title to such Aircraft and the related
Purchased Assets in accordance with this Agreement.
"Deposit Rebate" means, with respect to each Aircraft, the amount
specified opposite such Aircraft on Exhibits A-1 and A-2 as the "Buyer Deposit"
plus interest accrued from and including the date hereof to but excluding the
Delivery Date of such Aircraft at the rate of One Month LIBOR (compounded
daily).
"Engines" means, with respect to each Aircraft, the engines leased
with such Aircraft to the Lessee under the applicable Lease, together with all
equipment and accessories belonging to, installed in or appurtenant to such
engines or, with respect to all Aircraft, all such engines together with such
equipment and accessories.
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"Independent Referee" shall be Xxxx Xxxxxx, or if Xxxx Xxxxxx is
unavailable or unwilling to act as the Independent Referee hereunder, a person
appointed by Xxxx Xxxxxx.
"Intercompany Leases" means any aircraft lease agreement entered into
either between Seller and one of its Affiliates or between Affiliates of Seller.
"Lease" means, with respect to each Aircraft, (A) the aircraft lease
agreement relating to such Aircraft between Seller or its Affiliate and the
applicable Lessee, identified on Exhibit A, together with all supplements and
amendments thereto, pursuant to which such Aircraft is leased to such Lessee or
(B) the aircraft lease agreement relating to such Aircraft between Seller and
the applicable Lessee entered into subsequent to the date hereof, together with
all supplements and amendments thereto or (C) the aircraft lease agreements
relating to the X000-000 Xxxxxxxx XXX 00000 and the B767-300ER Aircraft MSN
24875 between Buyer or its designee and the applicable Lessee, together with all
supplements and amendments thereto.
"Lease Documents" means, with respect to each Aircraft, the Lease and
all other agreements (including any side letters, assignment of warranties or
option agreements) delivered in connection with, or relating to, the Lease of
such Aircraft other than Intercompany Leases that will be terminated on the
Delivery Date of such Aircraft.
"Lease Novation" means, with respect to each Aircraft, a lease
novation agreement, assignment agreement and lessee acknowledgment, assignment
and amendment agreement, or any other agreement or instrument reasonably
satisfactory in form and substance to the applicable Buyer and Seller to be
entered into between Seller (or the applicable lessor), the applicable Buyer (or
its nominee) and the applicable Lessee on or prior to the Delivery Date of such
Aircraft and to be effective upon such Delivery Date pursuant to which such
Aircraft will be leased by the applicable Buyer (or its nominee) directly or
indirectly to the applicable Lessee and the applicable Lease Documents will be
novated with the applicable Buyer or its nominee as the new lessor thereunder,
subject to the rights of the Lessee with respect to Seller (or the applicable
lessor) for the period prior to the Delivery Date.
"Lessee" means, with respect to each Aircraft, the lessee of such
Aircraft as identified on Exhibit A-1.
"Lessee Furnished Equipment" means, with respect to each Aircraft,
any appliances, parts, accessories, instruments, navigational and communications
equipment, furnishings, modules, components and other items of equipment,
3
installed in or furnished with such Aircraft on the Delivery Date which in
accordance with the terms of the Lease for such Aircraft can be removed by the
Lessee for such Aircraft and not be replaced with the same item of equal or
greater value or utility.
"Lien" means, with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance or other adverse claim of
any kind in respect of such property or asset. For the purposes of this
Agreement, a Person shall be deemed to own subject to a Lien any property or
asset which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such property or asset.
"MSA IV Trust Agreement" means the trust agreement dated July 28,
1999 constituting MSA IV.
"MSA V Trust Agreement" means the trust agreement dated August 4,
1999 constituting MSA V.
"Maintenance Reserves" means, at the time of calculation, with
respect to each Aircraft, any cash maintenance accruals, maintenance funds or
maintenance reserves or the like or cash amounts defined as "Supplemental Rent"
or "Reserves" held by the lessor under the applicable Lease in relation to
airframes, Engines, auxiliary power units, or landing gear.
"Manuals and Technical Records" means, with respect to each Aircraft,
all records, logs, technical data and manuals relating to the maintenance and
operation of such Aircraft (including all documents defined as "Aircraft
Documentation" under the Lease), which the Lessee with respect to such Aircraft
is required by the terms of the Lease therefor to return to the lessor
thereunder upon the expiration or termination of the term of such Lease.
"Manufacturer" means, with respect to each Aircraft, the manufacturer
of such Aircraft as specified in the relevant Lease Documents.
"One Month LIBOR" means the per annum London interbank offered rate
for one month U.S. dollar deposits as displayed on page "3750" on the Telerate
Monitor (or replacement service) at approximately 11:00 a.m. London time.
"Person" means an individual, corporation, partnership, limited
liability company, association, statutory business trust, common law trust or
other entity or
4
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Portfolio Delivery Deadline" means September 30, 1999.
"Property Tax" means, any personal property taxes, excise, use, value
added, recording, documentary, conveyancing and similar levies, charges and
fees, withholdings, imposts, levies, customs or other duties, together with any
interest, penalty, addition to tax or additional amount imposed by a Taxing
Authority responsible for the imposition of such tax (domestic or foreign).
"Purchase Price" means, with respect to each Aircraft, the amount
specified opposite such Aircraft as the "Base Purchase Price" on Exhibit A-1 or
Exhibit A-2, as the case may be.
less:
(i) the Deposit Rebate; and
(ii) an amount equal to the value of any amounts (including any
rent, additional rent, insurance premiums or other amounts (including
in respect of B767-300ER Aircraft MSN 25132 only, Maintenance Reserves
and excluding in respect of A330-300 Aircraft MSN 54 only, all prepaid
rentals received by Seller with respect to the period up to December
1999) received by Seller in respect of such Aircraft with respect to
the period from and including the earlier of (1) the Delivery Date and
(2) August 10, 1999 (or August 17, 1999 if Seller confirms in writing
to Buyer that it is prepared to deliver such Aircraft on or prior to
August 10, 1999 but such Aircraft is located at the time of such
confirmation in a jurisdiction that local counsel has advised in
writing possesses a possible Transfer Tax risk if the Aircraft were to
be delivered);
plus:
an amount equal to interest on the Base Price for such
Aircraft less the deduction specified in clause (ii) above, if any,
from and including August 10, 1999 to but excluding the Delivery Date
at One Month LIBOR compounded for each day in such period.
For the avoidance of doubt, any cash Maintenance Reserves held by Seller with
respect to any Aircraft on the Delivery Date of such Aircraft shall be for
Seller's account.
5
"Security Deposits" means, at the time of calculation, with respect
to each Aircraft, all cash amounts, security deposits in the form of prepayments
of rent, letters of credit and guarantees paid by or issued on behalf of the
Lessee for the benefit of the lessor under the relevant Lease as security for
obligations of such Lessee under such Lease and related Lease Documents.
"Servicing Agreement" means the Amended and Restated Servicing
Agreement dated as of the date hereof among Seller, MSA V, MSA IV, Xxxxxx
Xxxxxxx Aircraft Finance, a Delaware business trust and the other entities party
thereto.
"Tax" means any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, license, registration, recording, documentary, conveyancing,
gains, withholding on amounts paid to or by Seller, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental or windfall
profit tax, custom, duty or other tax, governmental fee or other like assessment
or charge of any kind whatsoever, together with any interest, penalty, addition
to tax or additional amount imposed by any governmental authority responsible
for the imposition of any such tax (domestic or foreign) (a "Taxing Authority").
"Transfer Tax" means all excise, sales, use, value added, stamp,
recording, documentary, conveyancing, franchise, property, transfer, gains or
similar taxes and fees, withholdings, imposts, levies, customs or other duties,
together with any penalties, fines, interest thereon or addition to tax or
additional amount imposed by a Taxing Authority responsible for the imposition
of such tax (domestic or foreign).
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
Adjustment Cut-off Date 2.06(a)
Adjustment Report 2.06(a)
Buyer Permits 4.06
Damage Related Adjustment 2.06(a)
Damages 9.02
Hedging Transaction 10.03
Indemnified Party 9.03
Indemnifying Party 9.03
Minimum Transfer Condition 10.01(b)
Permits 3.14
6
Term Section
Permitted Liens 3.12(a)
Purchased Assets 2.01
Required Consents 3.05
ARTICLE 2
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale. Upon the terms and subject to the
conditions of this Agreement, each of the Buyers agrees to purchase, assume and
accept from Seller and Seller agrees to sell, convey, transfer, assign and
deliver, or cause to be sold, conveyed, transferred, assigned and delivered, to
each of the Buyers or an entity designated and wholly-owned by each such Buyer,
free and clear of all Liens, other than Permitted Liens, all of Seller's right,
title and interest in, to and under the Aircraft (MSA V to purchase each of the
Aircraft listed on Exhibit A-1 and MSA IV to purchase the Aircraft listed on
Exhibit A-2) on an "AS IS, WHERE IS" basis, the Lease Documents, and, subject to
the terms of the Custody and Loan Agreement, the Security Deposits (together,
the "Purchased Assets"), and including, without limitation, all right, title and
interest of Seller in, to and under:
(a) all of Seller's rights against third parties relating to the
Purchased Assets, including, without limitation, rights under
manufacturers' and vendors' warranties and service life policies;
(b) all transferable licenses, permits or other governmental
authorization affecting, or relating solely to, each Purchased Asset,
including without limitation the items listed on Schedule 3.14; and
(c) all Manuals and Technical Records.
SECTION 2.02. Assignment of Contracts and Rights. Anything in this
Agreement to the contrary notwithstanding, this Agreement shall not constitute
an agreement to assign any Purchased Asset or any claim or right or any benefit
arising thereunder or resulting therefrom if such assignment, without the
consent of a third party thereto, would constitute a breach or other
contravention of such Purchased Asset or in any way adversely affect the rights
of the applicable Buyer or Seller thereunder. Seller and each Buyer agree that
they shall enter into a Lease Novation with respect to each Aircraft (other than
the B737-400 Aircraft MSN 26291 and X000-000 XX Xxxxxxxx XXX 00000 - in respect
of which MSA V or its designee shall have entered into a Lease directly with the
applicable Lessee on or prior to the applicable Delivery Date) with the
applicable Lessee.
7
SECTION 2.03. Payment of Purchase Price. (a) On each Delivery Date
with respect to each Aircraft (other than the B737-300 Aircraft MSN 24449, as
described in subsection (b) below) , the Purchase Price for such Aircraft and
any other sums payable by either party hereunder shall be paid in cash by wire
transfer to such bank account as the party receiving such sum may designate in
writing at least three business days prior to the date of payment without
deduction for withholding or value added taxes.
(b) On August 10, 1999, MSA IV shall pay the Purchase Price for the
B737-300 Aircraft MSN 24449 to Seller and Seller shall transfer all of its
beneficial ownership interest in such Aircraft including, without limitation,
the right to receive rents, additional rents, insurance premiums and other
amounts (but excluding the right to receive cash Maintenance Reserves) with
effect from August 10, 1999. On the Delivery Date for such Aircraft, which shall
occur on or prior to April 30, 2000, Seller shall deliver title to such Aircraft
and the related Purchased Assets to MSA IV.
(c) All payments under this Section 2.03 shall be made in U.S.
dollars by 2:00 p.m. (Eastern Standard Time) and in immediately available funds
so that the recipient receives credit in New York for the full amount of such
payment on the due date. The Purchase Price shall be subject to adjustment as
provided in Section 2.06.
SECTION 2.04. Inspection. Prior to the applicable Delivery Date
therefor, the applicable Buyer or its designee shall be given an opportunity to
inspect the Aircraft to be delivered (including the Manuals and Technical
Records therefor), such inspection to be at such Buyer's expense. Seller shall
provide all reasonable assistance necessary to enable such Buyer or its designee
to complete such inspection promptly. Such Buyer acknowledges that such
inspection shall take place at a time and location and in such a manner as shall
not disrupt the operation of such Aircraft by the applicable Lessee.
Each Buyer shall indemnify and hold harmless Seller from and against
any and all Damages arising by reason of death or injury to any person employed,
engaged by or acting on behalf of Buyer, arising out of the inspection of any
Aircraft to be purchased by such Buyer conducted pursuant to the provisions of
this Section except to the extent such Damages relate to the willful misconduct
of Seller.
SECTION 2.05. Delivery. Seller shall deliver its executed xxxx of
sale to MSA V or its designee with respect to each of the Aircraft listed on
Exhibit A-1 as close as practicable to the time of delivery by MSA V of the
Purchase Price for such Aircraft. Seller shall deliver its executed xxxx of sale
to MSA IV or its
8
designee with respect to the B737-300 Aircraft MSN 24449 on the Delivery Date
for such Aircraft, which shall occur on or prior to April 30, 2000. In addition,
on or prior to the applicable Delivery Date of each Aircraft, Seller shall
execute a Lease Novation with respect to each Aircraft (and, if relevant, a
purchase option novation agreement) (other than the B737-400 Aircraft MSN 26291
and B767- 000 XX Xxxxxxxx XXX 00000 - in respect of which MSA V or its designee
shall have entered into a Lease directly with the applicable Lessee) and shall
transfer and deliver to the applicable Buyer the Lease Documents, the
Maintenance Reserves, and, subject to the terms of the Custody and Loan
Agreement, the Security Deposits related to such Aircraft. At each Delivery Date
each Aircraft shall be in the possession of the applicable Lessee pursuant to
the relevant Lease Novation or Lease (or shall be in the possession of a
sublessee or located at an aircraft maintenance facility, in each case as
permitted under the Lease, Lease Documents or Lease Novation) and, in any case,
Seller shall have no obligation to physically deliver such Aircraft to the
applicable Buyer or its designee.
SECTION 2.06. Purchase Price Adjustment. (a) If any of the Data with
respect to any Aircraft are materially incorrect or incomplete in any respect on
the relevant Delivery Date (except for any normal wear and tear to the Aircraft
from the date hereof to such Delivery Date), the applicable Buyer and Seller
agree to adjust the Purchase Price for the relevant Aircraft upwards or
downwards, as the case may be. Such Buyer's rights to a downward adjustment in
the Purchase Price for any Aircraft shall be without prejudice to its right to
reject any Aircraft pursuant to Section 7.04. As promptly as practicable after
each Delivery Date, and in any case no later than 30 days after the last
Delivery Date (the "Adjustment Cut-off Date"), the applicable Buyer may cause to
be prepared and delivered to Seller an adjustment report substantially in the
form attached hereto as Exhibit B (the "Adjustment Report") setting forth such
Buyer's calculation of any Purchase Price adjustment for the relevant Aircraft.
If the material inaccuracy or omission in the Data for any Aircraft relates to
any damage, destruction or other casualty of such Aircraft or part thereof which
has been repaired to such Buyer's reasonable satisfaction prior to final
determination of the aggregate Purchase Price adjustment pursuant to Section
2.06(a) or (c), then the portion of the downward adjustment in the Purchase
Price for such Aircraft that is related to such damage (the "Damage Related
Adjustment") shall be reduced by an amount equal to the amount, if positive, of
the Damage Related Adjustment less any expense or loss incurred by such Buyer in
connection with such repair or damage.
(b) If Seller disagrees with the applicable Buyer's calculation of
any Purchase Price adjustment delivered pursuant to Section 2.06(a), Seller may,
within 30 days after delivery of the relevant Adjustment Report, deliver a
notice to such Buyer disagreeing with such calculation and setting forth
Seller's calculation of such amount (including any adjustments in Seller's favor
which are not set
9
forth in such Buyer's Adjustment Report). Any such notice of disagreement shall
specify those items or amounts as to which Seller disagrees, and Seller shall be
deemed to have agreed with all other items and amounts contained in the
Adjustment Report.
(c) If any notices of disagreement shall be duly delivered pursuant
to Section 2.06(b), the applicable Buyer and Seller shall, during the 15 days
following the date of delivery of such notice of disagreement, use their best
efforts to reach agreement on all disputed items or amounts in order to
determine a mutually acceptable adjustment to the Purchase Price. If Buyer only
disagrees with certain amounts set forth in Seller's notice of disagreement,
then Buyer will be deemed to have agreed with all other items and amounts
contained in the Seller's notice of disagreement. If during such period the
applicable Buyer and Seller are unable to reach such agreement, they shall
promptly thereafter cause the Independent Referee promptly to review this
Agreement, the Data and the disputed items or amounts for the purpose of
calculating the adjustment to the Purchase Price. The Independent Referee is
authorized to engage third party experts as necessary to aid in such review, the
identity and necessity of which shall be agreed by Seller and the applicable
Buyer. In making such calculation, the Independent Referee shall consider only
those items or amounts as to which Seller has disagreed or which Seller has
presented as an adjustment in Seller's favor and as to which the applicable
Buyer has disagreed. The Independent Referee shall deliver to such Buyer and
Seller, as promptly as practicable, a report setting forth its calculation of
the adjustment to the Purchase Price of the relevant Aircraft. Such report shall
be final and binding upon such Buyer and Seller. The cost of such review and
report (and any experts) shall be borne equally by such Buyer and Seller.
(d) The applicable Buyer and Seller agree that they will, and agree
to cause their respective independent accountants and technical staff or
consultants to, cooperate and assist in the preparation of any adjustment to the
Purchase Price, including without limitation, the making available to the extent
necessary of books related to the Purchased Assets, records related to the
Purchased Assets, work papers related to the Purchased Assets and personnel.
SECTION 2.07. Payment of Adjustment of Purchase Price. (a) Seller
shall pay to MSA V or MSA V shall pay to Seller, as an adjustment to the
Purchase Price for all of the Aircraft listed on Exhibit A-1, in the manner and
with interest as provided in Section 2.07(d), either (i) the aggregate net
amount resulting from MSA V's Adjustment Reports delivered pursuant to Section
2.06(a) if no notices of disagreement with respect thereto are delivered
pursuant to Section 2.06(b); or (ii) if any such notices of disagreement are
delivered, the aggregate net amount resulting from non-disputed Adjustment
Reports and, with respect to any disputed
10
Adjustment Reports, (A) the adjustment amounts therefor ultimately agreed by MSA
V and Seller pursuant to Section 2.06(c) or (B) in the absence of such
agreement, the adjustment amounts for such disputed Adjustment Reports
ultimately reported in the Independent Referee's calculation delivered pursuant
to Section 2.06(c); provided no party shall be obligated to pay any adjustment
amount unless (i) the aggregate amount for which such party is liable exceeds
$500,000 (in which case such party shall pay the total aggregate adjustment
amount) or (ii) the aggregate adjustment amount for which such party is liable
is $500,000 or less, but the adjustment amount for any individual Aircraft
exceeds $100,000, (in which case such party shall pay the total adjustment
amount for each such individual Aircraft) and provided further that, the
determination of the aggregate and individual Aircraft adjustment amounts for
which Seller is liable shall be unaffected by any subsequent reimbursement of a
portion of such amounts from MSA V to Seller pursuant to Section 2.07(d) below.
If less than all of the Aircraft are transferred by the Portfolio Delivery
Deadline but the Minimum Transfer Condition is satisfied or waived in writing by
MSA V, then the $500,000 amounts referred to in the preceding sentence shall be
reduced to an amount equal to the product of $500,000 and a fraction, the
denominator of which is the aggregate Base Price of all the Aircraft listed on
Exhibit A-1 and the numerator of which is the aggregate Base Price of the
Aircraft transferred by the Portfolio Delivery Deadline.
(b) Seller shall pay to MSA IV or MSA IV shall pay to Seller, as an
adjustment of the Purchase Price for the B737-300 Aircraft MSN 24449, in the
manner and with interest as provided in Section 2.07(c), either (i) the
aggregate net amount resulting from MSA IV's Adjustment Report for such Aircraft
delivered pursuant to Section 2.06(a) if no notices of disagreement with respect
thereto are delivered pursuant to Section 2.06(b); or (ii) if a notice of
disagreement is delivered, (A) the adjustment amounts therefor ultimately agreed
by MSA IV and Seller pursuant to Section 2.06(c) or (B) in the absence of such
agreement, the adjustment amounts for such disputed Adjustment Report ultimately
reported in the Independent Referee's calculation delivered pursuant to Section
2.06(c); provided no party shall be obligated to pay any adjustment amount
unless the adjustment amount for such Aircraft exceeds $100,000 (in which case
such party shall pay the total adjustment amount for such Aircraft) and provided
further that, the determination of the adjustment amount for such Aircraft for
which Seller is liable shall be unaffected by any subsequent reimbursement of a
portion of such amount from MSA IV to Seller pursuant to Section 2.07(d) below.
(c) Any payment pursuant to Section 2.07(a) or (b) shall be made at
a mutually convenient time and place within 10 days after the aggregate adjusted
Purchase Price has been finally determined by delivery by the applicable Buyer
or
11
Seller, as the case may be, of a certified or official bank check payable in
immediately available funds to the other party or by causing such payments to be
credited or wire transferred to such account of such other party as may be
designated by such other party. The amount of any payment to be made pursuant to
this Section 2.07 shall bear interest from and including the relevant Delivery
Date to but excluding the date of payment at a rate equal to One Month LIBOR.
(d) If all or any portion of a downward adjustment amount paid
pursuant to Section 2.07(c) relates to any damage, destruction or other casualty
of an Aircraft or part thereof which is repaired or otherwise compensated for to
the applicable Buyer's reasonable satisfaction following final determination of
the aggregate adjustment amount pursuant to Section 2.06 but prior to the
redelivery of such Aircraft under the applicable Lease, then such Buyer shall
reimburse to Seller the amount, if positive, of the Damage Related Adjustment
less any expense or loss incurred by such Buyer in connection with such repair
or damage (with interest at a rate equal to One Month LIBOR from and including
the date of payment pursuant to Section 2.07(c) above to but excluding the date
of reimbursement).
SECTION 2.08. Buyer Deposit. Immediately following execution of this
Agreement, each Buyer shall deposit with Seller with respect to each Aircraft to
be purchased by such Buyer cash in an amount equal to the "Buyer Deposit" amount
specified opposite each Aircraft on Exhibits A-1 and A-2, respectively. If any
Aircraft listed on Exhibit A-1 shall not be delivered to MSA V by the Portfolio
Delivery Deadline as a direct or indirect result of MSA V's failure to perform
its obligations under this Agreement, MSA V shall forfeit the applicable Buyer
Deposit to Seller. If any Aircraft listed on Exhibit A-1 shall not be delivered
to MSA V by the Portfolio Delivery Deadline for any reason other than as a
direct or indirect result of MSA V's failure to perform its obligations under
this Agreement, Seller shall repay promptly the applicable Buyer Deposit to MSA
V plus interest accrued on such Buyer Deposit (at the rate of One Month LIBOR
(compounded daily) from and including the date hereof to but excluding the date
of repayment). If the B737-300 Aircraft MSN 24449 shall not be delivered to MSA
IV by April 30, 2000, Seller shall repay promptly the applicable Buyer Deposit
to MSA IV.
SECTION 2.09. Manufacturer's Payments. (a) MSA V shall be entitled to
receive amounts equal to the Manufacturer Payments set forth opposite certain of
the Aircraft on Exhibit A-1 on the relevant Delivery Date. Other than the
payments by the Manufacturers with respect to the Aircraft and
the Aircraft that are referred to in subsection (b) below, any
additional payments by Manufacturers in respect of any Aircraft in excess of
12
the amount set forth for such Aircraft on Exhibit A-1 shall be for the benefit
of Seller.
(b) (i) On August 10, 2000, Seller shall pay to MSA V or its designee
, in respect of payments by the Manufacturer for the Aircraft
(regardless of whether or not Seller has received payment from the
Manufacturer); provided, that MSA V has taken delivery of such Aircraft by such
date and (ii) on January 15, 2000, Seller shall pay to MSA V or its designee
, in respect of payments by the Manufacturer for the Aircraft
(regardless of whether or not Seller has received payment from the
Manufacturer).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to each Buyer as of the date hereof
and as of each Delivery Date (except that (i) the representation and warranties
made as of each Delivery Date with respect to Purchased Assets shall not apply
to Purchased Assets that have previously been delivered to and accepted by such
Buyer and (ii) the representation and warranties contained in Section 3.12(b),
(c), (d), (e), (f) and (g) shall apply only to the Purchased Assets to be
purchased on such Delivery Date) that:
SECTION 3.01. Corporate Existence and Power. Seller is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers and all governmental
licenses, authorizations, permits, consents and approvals required to carry on
its business as now conducted other than (i) such licenses, authorizations,
permits, consents and approvals, the absence of which would not have a material
adverse effect on any Aircraft and (ii) such matters as are set forth on
Schedule 3.01 hereto. Seller has heretofore delivered to each Buyer true and
complete copies of the certificate of incorporation and bylaws of Seller as
currently in effect.
SECTION 3.02. Corporate Authorization. The execution, delivery and
performance by Seller of this Agreement and the consummation of the transactions
contemplated hereby are within Seller's corporate powers and have been duly
authorized by all necessary corporate action on the part of Seller. This
Agreement constitutes a valid and binding agreement of Seller.
SECTION 3.03. Governmental Authorization. The execution, delivery and
performance by Seller of this Agreement and the consummation of the transactions
contemplated hereby do not require Seller to take any action by or in respect
of, or make any filing with, any governmental body, agency or official
13
other than actions or filings that have already been taken or made or will be
taken or made by Seller.
SECTION 3.04. Noncontravention. The execution, delivery and
performance by Seller of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) violate the certificate of
incorporation or bylaws of Seller, (ii) violate any applicable law, rule,
regulation, judgment, injunction, order or decree, (iii) assuming the obtaining
of all Required Consents, constitute a default under or give rise to any right
of termination, cancellation or acceleration of any right or obligation of
either Buyer or to a loss of any benefit relating to the Purchased Assets to
which Seller is entitled under any provision of any agreement or other
instrument binding upon Seller or by which any of the Purchased Assets is or may
be bound or (iv) result in the creation or imposition of any Lien on any
Purchased Asset, other than Permitted Liens.
SECTION 3.05. Required Consents. Schedule 3.05 sets forth each
Contract and Permit requiring a consent or other action by any Person as a
result of the execution, delivery and performance of this Agreement (the
"Required Consents").
SECTION 3.06. Data. The Data and related information heretofore
delivered to each Buyer is accurate and complete as of the date of this
Agreement and correctly describes the Purchased Assets as of the date of this
Agreement.
SECTION 3.07. Absence of Certain Changes. Since the date of this
Agreement, the management of the Purchased Assets has been conducted in the
ordinary course consistent with past practices and there has not been any event,
occurrence, development or state of circumstances or facts which has had or is
reasonably likely to have a material adverse effect on the physical condition of
the Aircraft, the terms of any Lease or other Lease Documents or the terms of
any Non-Cash Security Deposits and there are no developments affecting any of
the Aircraft or Lessees, individually or taken together, that are pending or, to
the knowledge of Seller threatened, which are reasonably likely to detract
materially from the value of the Aircraft, interfere materially with any present
or intended use of the Aircraft or affect materially and adversely the prospects
or marketability of such Aircraft.
SECTION 3.08. No Undisclosed Material Liabilities. There are no
liabilities related to a Purchased Asset of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, and there
is no existing condition, situation or set of circumstances which could
reasonably be expected to result in such a liability, other than:
14
(a) the Lease Documents and any liabilities and obligations
arising thereunder with respect to any period following the Delivery
Date;
(b) liabilities disclosed on Schedule 3.08; and
(c) other undisclosed liabilities which, individually or in the
aggregate, are not material.
SECTION 3.09. Contracts. (a) Except for the Contracts disclosed in
Schedule 3.09, and contracts or agreements relating to the transfer of each
Aircraft on the applicable Delivery Date which have been disclosed to and
approved by each Buyer, Seller is not a party to or bound by any oral or written
agreements or waivers relating to the Purchased Assets. Seller has delivered to
the applicable Buyer true and complete copies of (i) the portions of the
Contracts disclosed in Schedule 3.09 that relate to the Purchased Assets to be
purchased by such Buyer and (ii) the Contracts and agreements otherwise
disclosed to and approved by each Buyer to the extent they relate to the portion
of the Purchased Assets to be purchased by such Buyer.
(b) Each Contract disclosed in any Schedule to this Agreement or
required to be disclosed pursuant to this Section is a valid and binding
agreement of Seller (except as disclosed in such Schedule), and is in full force
and effect, and none of Seller or, to the knowledge of Seller, any other party
thereto is in default or breach in any material respect under the terms of any
such Contract, and, to the knowledge of Seller, no event or circumstance has
occurred that, with notice or lapse of time or both, would constitute any event
of default thereunder.
SECTION 3.10. Litigation. There is no action, suit, investigation or
proceeding pending, or, to the knowledge of Seller, threatened against or
affecting, any Purchased Asset before any court or arbitrator or any
governmental body, agency or official or which in any manner challenges or seeks
to prevent, enjoin, alter or materially delay the transactions contemplated by
this Agreement.
SECTION 3.11. Compliance with Laws and Court Orders. Seller is not in
violation of, has not violated, and has not been given notice of any violation
of, nor to the knowledge of Seller is under investigation with respect to, nor
to the knowledge of Seller has been threatened to be charged with any violation
of, any law, rule, regulation, judgment, injunction, order or decree applicable
to the Purchased Assets.
SECTION 3.12. Aircraft and Leases. (a) (i) Seller is the sole legal
and beneficial owner of the applicable Aircraft (except that (i) Seller does not
have legal title to the X000-000 Xxxxxxxx XXX 00000, (ii) on the date hereof,
Seller is
15
the sole beneficial owner of the B737-300 Aircraft MSN 24449 and (iii) on August
10, 1999, MSA IV shall be the sole beneficial owner of such Aircraft) and (ii)
Seller is the sole legal and beneficial owner of the lessor's interest under the
applicable Lease Documents (except that on August 10, 1999 MSA IV shall be the
sole beneficial owner of the lessor's interest under the applicable Lease
Documents), which Aircraft and which Lease Documents are free and clear of all
Liens other than (a) the rights conferred by the Lease Documents; (b) any Liens
for which the applicable Lessee is responsible or for which it is to indemnify
the lessor under the terms of the relevant Lease; (c) any Liens which are
"permitted liens" under the applicable Lease other than a Lien created by
Seller; or (d) Liens which do not materially detract from the value of such
Aircraft, or materially interfere with any present or intended use of such
Aircraft (collectively, the "Permitted Liens") and upon consummation of the
transactions contemplated hereby, MSA V will have directly or indirectly, as
applicable, acquired good and marketable title in and to each of the Aircraft
listed in Exhibit A-1 and MSA IV will have acquired good and marketable title in
and to the Aircraft listed in Exhibit A-2, in each case, free and clear of all
Liens, except for Permitted Liens;
(b) no Event of Default (as defined in the applicable Lease) has
occurred and is continuing under any Lease, provided that with respect to Events
of Default that are violations of "non-discrimination" or similar provisions of
any Lease that affect the average of three independently appraised "base values"
of the Aircraft, this representation shall only be made to the extent of
Seller's knowledge; no payment failure or failure to maintain insurance has
occurred which with the giving of notice or passage of time or both would become
an Event of Default (as so defined) under any Lease; and, to the knowledge of
Seller, no other event which with the giving of notice or passage of time or
both would become an Event of Default (as so defined) under such Lease has
occurred;
(c) there are no outstanding airworthiness directives or similar
demands from any governmental, semi-governmental or public authority or
instrumentality or any other Person having authority in respect of the
applicable Aircraft being delivered on the Delivery Date (not including
manufacturer's service bulletins or similar notices or demands) requiring any
mandatory work or other mandatory action to be taken or the mandatory
expenditure of any money in respect thereof (except those which the Manufacturer
or the Lessee have agreed in writing to perform entirely at such Person's
expense or those with respect to which Seller or Lessee have obtained waivers or
extensions or deferrals of the time by which the work is required to be
performed, the action is required to be taken or the expenditure is required to
be incurred) and that have not been complied with by Seller and, to the best of
Seller's knowledge, by the Lessee, as applicable;
16
(d) all liabilities for taxes and other governmental,
quasi-governmental and other charges with regard to the Aircraft which are due
for payment (whether or not indemnified by the applicable Lessee) have been paid
or will be paid prior to the applicable Delivery Date;
(e) (i) there are no claims known to Seller which can be asserted by
any Lessee against Seller, or the applicable Aircraft arising out of the
applicable Lease Documents, (ii) the Lease Documents are in full force and
effect in accordance with the terms thereof, (iii) from the date of this
Agreement there have been no waivers of Seller's rights in effect under such
Lease Documents except as contemplated by the applicable Lease Novation or
otherwise disclosed in writing to and agreed to by the applicable Buyer in
writing nor has Seller increased any of its obligations under such Lease
Documents without the written consent of the applicable Buyer and (iv) other
than as set forth in such Lease Novation, neither Seller nor the applicable
lessor has any continuing obligations to Lessee with respect to such Aircraft
and such Lessee has no continuing obligations to Seller or any Subsidiary
thereof or the applicable lessor with respect to such Aircraft;
(f) to Seller's knowledge, no unrepaired damage, destruction or
other casualty loss or, to the best of Seller's knowledge, an event which with
the passage of time would result in unrepaired damage, destruction or casualty
loss, has occurred in respect of any Aircraft; and
(g) there are no options to purchase any Aircraft, or extend or
terminate any Leases, which have been exercised by the relevant Lessee and not
notified in writing to the applicable Buyer.
SECTION 3.13. Insurance Coverage. There is no claim by Seller pending
under any of the insurance policies or bonds relating to the Aircraft as to
which coverage has been questioned, denied or disputed by the underwriters of
such policies or bonds or in respect of which such underwriters have reserved
their rights. All premiums due and payable under all such policies and bonds
have been paid and Seller has otherwise complied fully with the terms and
conditions of all such policies and bonds. Seller does not know of any
threatened termination of, premium increase with respect to, or material
alteration of coverage under, any of such policies or bonds.
SECTION 3.14. Licenses and Permits. Schedule 3.14 correctly describes
each license and certificate directly related to the ownership of the Purchased
Assets (the "Permits") together with the name of the government agency or entity
issuing such Permit. Except as set forth on Schedule 3.14, (i) the Permits are
valid and in full force and effect, (ii) Seller is not in default, and no
condition exists that with notice or lapse of time or both would constitute a
default, under
17
the Permits and (iii) none of the Permits will be terminated or impaired or
become terminable, in whole or in part, as a result of the transactions
contemplated hereby. Upon consummation of such transactions, each Buyer will,
assuming the related Required Consents have been obtained prior to the relevant
Delivery Date, have all of Seller's right, title and interest in all of the
Permits that relate to each Purchased Asset to be purchased by such Buyer and
are held by Seller except to the extent disclosed on Schedule 3.15 hereto, in
which case each such Buyer shall be entitled to the benefit of the Permits
disclosed on Schedule 3.15 hereto through the arrangements established by such
Buyer and Seller with respect thereto.
SECTION 3.15. Selling Documents. None of the documents or information
delivered to the Buyers in connection with the transactions contemplated by this
Agreement, including, without limitation, the Data, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained therein not misleading. The maintenance
projections relating to the Aircraft and the lease rental rate and term
projections for the re- lease and extension currently contemplated for each of
the B767-300ER Aircraft MSN 25132, the B757-200ER Aircraft MSN 24965 and the
A340-300 Aircraft MSN 94 provided to the Buyers are made in good faith and are
based upon reasonable assumptions, and Seller is not aware of any fact or set of
circumstances that would lead it to believe that such projections are incorrect
or misleading in any material respect on the date of this Agreement.
SECTION 3.16. Finders' Fees. There is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of Seller who might be entitled to any fee or commission in connection
with the transactions contemplated by this Agreement.
SECTION 3.17. True Sale. The transfer of the rights, title and
interest in and to the Purchased Assets pursuant to the terms hereof constitutes
a transaction in the ordinary course of business of Seller and Seller intends
that such transfer of such rights, title and interest shall constitute a true
sale thereof.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF EACH BUYER
Each Buyer, severally and not jointly, represents and warrants to
Seller as of the date hereof and as of each Delivery Date for each Aircraft to
be purchased by such Buyer that:
18
SECTION 4.01. Existence and Power. Each Buyer is a statutory trust
duly formed, validly existing and in good standing under the laws of Delaware
and has all necessary powers and all material governmental licenses,
authorizations, permits, consents and approvals required to carry on its
activities as now conducted.
SECTION 4.02. Authorization. The execution, delivery and performance
by each Buyer of this Agreement and the consummation of the transactions
contemplated hereby are within the powers of each Buyer and have been duly
authorized by all necessary action on the part of each Buyer. This Agreement
constitutes a valid and binding agreement of each Buyer.
SECTION 4.03. Governmental Authorization. The execution, delivery and
performance by each Buyer of this Agreement and the consummation of the
transactions contemplated hereby do not require either Buyer to take any
material action in respect of, or make any material filing with, any
governmental body, agency or official other than actions or filings that have
already been taken or made or will be taken or made by such Buyer.
SECTION 4.04. Noncontravention. The execution, delivery and
performance by each Buyer of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (i) violate the MSA V Trust
Agreement or the MSA IV Trust Agreement, as the case may be, or (ii) violate any
applicable material law, rule, regulation, judgment, injunction, order or
decree.
SECTION 4.05. Litigation. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of either Buyer threatened
against or affecting, either Buyer before any court or arbitrator or any
governmental body, agency or official which in any manner challenges or seeks to
prevent, enjoin, alter or materially delay the transactions contemplated by this
Agreement.
SECTION 4.06. Licenses and Permits. Except as set forth on Schedule
4.06 as of the Delivery Date of the applicable Aircraft, (i) each license or
certificate directly related to the ownership of the Purchased Assets (the
"Buyer Permits") is valid and in full force and effect and (ii) neither Buyer is
in default, and no condition exists that with notice or lapse of time or both
would constitute a default, under the Buyer Permits.
SECTION 4.07. Finders' Fees. There is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of either Buyer who might be entitled to any fee or commission from
Seller
19
or any of its Affiliates upon consummation of the transactions contemplated by
this Agreement.
SECTION 4.08. True Sale. The transfer of the rights, title and
interest in and to the Purchased Assets pursuant to the terms hereof constitutes
a transaction in the ordinary course of business of each Buyer, and each Buyer
intends that such transfer of such rights, title and interest shall constitute a
true sale thereof.
SECTION 4.09. Buyer Designees. Any entity that either Buyer shall
designate to purchase and take delivery of a Purchased Asset shall, as of the
applicable Delivery Date, be deemed to make representations and warranties to
Seller to the same effect as those made by each such Buyer pursuant to Sections
4.01-4.08 hereof relating to those matters applicable to such designated
purchaser.
ARTICLE 5
COVENANTS OF SELLER
Seller agrees that:
SECTION 5.01. Conduct of the Business. From the date hereof until the
respective Delivery Date, Seller shall manage the Purchased Assets in the
ordinary course of its business consistent with past practice. Without limiting
the generality of the foregoing, from the date hereof, Seller will not take or
agree or commit to take any action that would make any representation or
warranty of Seller hereunder inaccurate in any respect at, or as of any time
prior to, each Delivery Date or omit or agree or commit to omit to take any
action necessary to prevent any such representation or warranty from being
inaccurate in any respect at any such time.
SECTION 5.02. Access to and Provision of Information;
Confidentiality. (a) Seller will (i) give each Buyer, its counsel, financial
advisors, auditors and other authorized representatives full access to the
extent related to the Purchased Assets to be purchased by such Buyer to the
offices, properties, books and records of Seller relating to the Purchased
Assets to be purchased by such Buyer, (ii) furnish to each Buyer, its counsel,
financial advisors, auditors and other authorized representatives such financial
and operating data and other information relating to the Purchased Assets to be
purchased by such Buyer as such Persons may reasonably request, including
without limitation, such information as may be required by any relevant
regulatory authorities to be included in a public disclosure document relating
to the securitization of the Purchased Assets to be purchased by such Buyer (it
being understood that to the extent that commercially
20
sensitive financial or operating data or other information of Seller is
requested by such regulatory authorities, Seller may reasonably control (but
without unreasonable delay) the process of dealing with such regulatory
authorities with respect to such requests) and (iii) instruct the employees,
counsel, accountants and financial advisors of Seller to cooperate with each
Buyer in its investigation of the Purchased Assets to be purchased by such Buyer
and the securitization of the Purchased Assets to be purchased by such Buyer.
Any investigation pursuant to this Section shall be conducted in such manner as
not to interfere with the conduct of the business of Seller. Notwithstanding the
foregoing, neither Buyer shall have access to any confidential portions of any
agreement between Seller and a Manufacturer relating to the purchase by Seller
of any Purchased Assets, including, without limitation, the provisions which do
not continue with the Aircraft (including, without limitation, provisions
relating to purchase price or payment terms) No investigation by either Buyer or
other information received by either Buyer shall operate as a waiver or
otherwise affect any representation, warranty or agreement given or made by
Seller hereunder.
(b) After the respective Delivery Date, Seller and its Affiliates
will hold, and will use their best efforts to cause their respective officers,
directors, employees, accountants, counsel, consultants, advisors and agents to
hold, in confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of law, all confidential documents and
information concerning the Purchased Assets, except to the extent that such
information can be shown to have been (i) previously known on a nonconfidential
basis by Seller, (ii) in the public domain through no fault of Seller or its
Affiliates or (iii) later lawfully acquired by Seller from sources other than
those related to its prior ownership of the Purchased Assets provided that
Seller may disclose such information to its officers, directors, employees,
accountants, counsel, consultants, advisors and agents in connection with the
transactions contemplated by this Agreement and to the rating agencies in
connection with a securitization of the Aircraft so long as such Persons are
informed by Seller of the confidential nature of such information and are
directed by Seller to treat such information confidentially. The obligation of
Seller and its Affiliates to hold any such information in confidence shall be
satisfied if they exercise the same care with respect to such information as
they would take to preserve the confidentiality of their own similar
information.
SECTION 5.03. Notices of Certain Events. Seller shall promptly notify
each of the Buyers of:
(a) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection
with the transactions contemplated by this Agreement;
21
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement;
(c) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge threatened against, relating to or
involving or otherwise affecting Seller or the Purchased Assets that,
if pending on the date of this Agreement, would have been required to
have been disclosed pursuant to Section 3.10 or that relate to the
consummation of the transactions contemplated by this Agreement; and
(d) as soon as Seller has knowledge of, the damage, destruction or
other casualty of any Purchased Asset or part thereof or in the event
that any Purchased Asset or part thereof becomes the subject of any
proceeding or, to the knowledge of Seller, threatened proceeding for
the taking thereof or any part thereof or of any right relating
thereto by condemnation, eminent domain or other similar governmental
action.
SECTION 5.04. Taxes and Other Costs. Seller agrees to pay, and
indemnify and hold each Buyer and its Affiliates harmless from, (i) any Transfer
Taxes imposed, levied or assessed against or upon each such Buyer or any of its
Affiliates or any of the Purchased Assets resulting from the execution of this
Agreement or the sale, delivery, assignment, novation, transfer and conveyance
of the Purchased Assets to such Buyer, (ii) any Tax liability, whether owed or
accrued, relating to the period prior to the applicable Delivery Date the non-
payment of which would give rise to a Lien on any Purchased Asset, would
otherwise adversely affect the Purchased Assets, or would result in such Buyer
becoming liable therefor and, without prejudice to Seller's obligations under
Section 9.02(a) hereof, for which Seller is primarily liable, (iii) any and all
Property Taxes levied with respect to the Purchased Assets, whether owed or
accrued, relating to the period prior to the applicable Delivery Date and,
without prejudice to Seller's obligations under Section 9.02(a) hereof, for
which Seller is primarily liable and (iv) to the extent not paid by the Lessees,
all Lessee costs incurred in connection with the consummation of the
transactions contemplated hereby including, without limitation, costs related to
Lease Novations.
SECTION 5.05. Maintenance Reserves. Seller agrees to pay any amounts
due to any Person relating to maintenance work performed on any Aircraft, or
obligation to reimburse any amounts of Maintenance Reserves arising with respect
to any Aircraft, on or prior to the Delivery Date of such Aircraft.
22
SECTION 5.06. Certain Additional Aircraft and Rental Agreements.
Without limitation of any of Seller's representations and warranties or other
agreements hereunder, Seller makes the undertakings specified in a letter
agreement among Seller and each Buyer dated the date hereof.
ARTICLE 6
COVENANTS OF EACH BUYER
Each Buyer agrees that:
SECTION 6.01. Confidentiality. Each Buyer and its Affiliates will
hold, and will use their best efforts to cause their respective officers,
directors, employees, accountants, counsel, consultants, advisors and agents to
hold, in confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of law or disclosure requirements applicable to
a securitization of the Aircraft, all confidential documents and information
concerning the Purchased Assets or which Seller has furnished to such Buyer or
its Affiliates in connection with the transactions contemplated by this
Agreement, except to the extent that such information can be shown to have been
(i) previously known on a nonconfidential basis by such Buyer, (ii) in the
public domain through no fault of such Buyer or (iii) later lawfully acquired by
such Buyer from sources other than Seller; provided that each Buyer may disclose
such information to its officers, directors, employees, accountants, counsel,
consultants, advisors and agents in connection with the transactions
contemplated by this Agreement and to rating agencies in connection with a
securitization of the Aircraft so long as such Persons are informed by such
Buyer of the confidential nature of such information and are directed by such
Buyer to treat such information confidentially. The obligation of each Buyer and
its Affiliates to hold any such information in confidence shall be satisfied if
they exercise the same care with respect to such information as they would take
to preserve the confidentiality of their own similar information. If this
Agreement is terminated, each Buyer and its Affiliates will, and will use their
best efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to, destroy or deliver to
Seller, upon request, all documents and other materials, and all copies thereof,
obtained by such Buyer or its Affiliates or on their behalf from Seller in
connection with this Agreement that are subject to such confidence and any
reports, memoranda, data, information or other records prepared by such Buyer on
the basis of such documents and other materials.
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ARTICLE 7
COVENANTS OF EACH BUYER AND SELLER
Each Buyer and Seller agree that:
SECTION 7.01. Best Efforts; Further Assurances. (a) Subject to the
terms and conditions of this Agreement, each Buyer and Seller will use their
best efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary or desirable under applicable laws and regulations
to consummate the transactions contemplated by this Agreement. Seller and each
Buyer agree to execute and deliver such other documents, certificates,
agreements and other writings and to take such other actions as may be necessary
or desirable in order to consummate or implement expeditiously the transactions
contemplated by this Agreement and to vest in each Buyer good and marketable
title to each Purchased Asset to be purchased by such Buyer.
(b) Seller hereby constitutes and appoints, effective for the
applicable Aircraft as of each Delivery Date, the applicable Buyer and its
successors and assigns as the true and lawful attorney of Seller with full power
of substitution in the name of such Buyer, or in the name of Seller but for the
benefit of such Buyer, to institute and prosecute all proceedings which such
Buyer may in its sole discretion deem proper in order to assert or enforce any
right, title or interest in, to or under such Aircraft, and to defend or
compromise any and all actions, suits or proceedings in respect of such Aircraft
so long as such Buyer indemnifies and holds harmless Seller for any expenses,
costs, action or loss brought by any Person as a result of any action taken by
such Buyer in Seller's name or as Seller's true and lawful attorney. Such Buyer
shall be entitled to retain for its own account any amounts collected pursuant
to the foregoing powers, including any amounts payable as interest in respect
thereof; provided, however, that if any amount collected by such Buyer relates
to amounts owed by such Person with respect to the Purchased Assets for the
period prior to the Delivery Date, then such Buyer will promptly provide such
amount (including, without limitation, any interest on such amount) to Seller.
SECTION 7.02. Certain Filings. Seller and each Buyer shall cooperate
with one another (i) in determining whether any action by or in respect of, or
filing with, any governmental body, agency, official or authority is required,
or any actions, consents, approvals or waivers are required to be obtained from
parties to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and (ii) in taking such actions or
making any such filings, furnishing information required in connection therewith
and seeking timely to obtain any such actions, consents, approvals or waivers.
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SECTION 7.03. Public Announcements. The parties agree to consult with
each other before issuing any press release or making any public statement with
respect to this Agreement or the transactions contemplated hereby and, except as
may be required by applicable law, any listing agreement with any national
securities exchange or by any disclosure obligation in connection with a
securitization of the Aircraft, will not issue any such press release or make
any such public statement prior to such consultation.
SECTION 7.04. Substitute Aircraft. If before the applicable Delivery
Date any Aircraft suffers a material adverse change in its condition, or a Lease
Novation cannot be agreed with the applicable Lessee to the reasonable
satisfaction of either Seller or the applicable Buyer, such Buyer may reject
such Aircraft, such Aircraft shall no longer be an "Aircraft" hereunder (except
for purposes of Section 10.01(b)) and Seller and such Buyer will cooperate in
good faith to (i) select a substitute aircraft and related lease and enter into
a letter agreement in order to subject such aircraft to the terms and conditions
of this Agreement and (ii) make such other adjustments to the documentation and
deposits as agreed by such Buyer and Seller, provided, however, that such Buyer
shall be under no obligation to agree to any substitute aircraft and Seller
shall not be under any obligation to provide a substitute aircraft.
SECTION 7.05. Allocation of Purchase Price. Seller and each Buyer
agree with, and agree to act and Seller agrees to cause AIG to act in accordance
with, the allocation of the aggregate Purchase Price among the Purchased Assets
as set forth on Exhibit A-1 in connection with the filing of all tax returns and
in the course of any tax audit, review or litigation relating thereto and to
take no position inconsistent with such allocation for all tax purposes.
ARTICLE 8
CONDITIONS
SECTION 8.01. Conditions to Obligations of Each Buyer and Seller. On
each Delivery Date the obligations of Seller and MSA V to deliver and pay for
each Purchased Asset to be purchased by MSA V, and the obligations of MSA IV to
accept delivery of the B737-300 Aircraft MSN 24449 are subject to the
satisfaction of the following conditions:
(a) No provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation
of the delivery of and payment for such Purchased Asset.
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(b) All actions by or in respect of or filings with any
governmental body, agency, official or authority required to permit
the delivery of and payment for such Purchased Asset shall have been
taken, made or obtained.
SECTION 8.02. Conditions to Obligation of Buyer. The obligation of
MSA V to pay for any Purchased Asset and MSA IV to take delivery of the B737-
300 Aircraft MSN 24449 is subject to the satisfaction of the following further
conditions:
(a) On each Delivery Date (i) Seller shall have performed in all
material respects all of its obligations hereunder required to be
performed by it on or prior to the applicable Delivery Date and (ii)
the representations and warranties of Seller contained in this
Agreement and in any certificate or other writing delivered by Seller
pursuant hereto, shall be true, as if made at and as of such date. On
the first Delivery Date the applicable Buyer shall have received a
certificate signed by an executive officer of Seller and dated as of
the first Delivery Date to the foregoing effect. On each subsequent
Delivery Date, Seller shall be deemed to have delivered to the
applicable Buyer a certificate signed by the same executive officer of
Seller dated as of the subsequent Delivery Date and to identical
effect.
(b) On each Delivery Date there shall not be threatened,
instituted or pending any action or proceeding by any Person before
any court or governmental authority or agency, domestic or foreign,
(i) seeking to restrain, prohibit or otherwise interfere with the
ownership or operation by either Buyer or any of its Affiliates of any
Aircraft or to compel either Buyer or any of its Affiliates to dispose
of any Aircraft or (ii) seeking to require divestiture by either Buyer
or any of its Affiliates of any Aircraft.
(c) On each Delivery Date there shall not have been any action
taken, or any statute, rule, regulation, injunction, order or decree
proposed, enacted, enforced, promulgated, issued or deemed applicable
to the purchase of the Purchased Assets, by any court, government or
governmental authority or agency, domestic or foreign, that, in the
reasonable judgment of the applicable Buyer could, directly or
indirectly, result in any of the consequences referred to in clauses
8.02(b)(i) and 8.02(b)(ii) above.
(d) On the first Delivery Date with respect to an Aircraft listed
on Exhibit A-1, MSA V shall have received an opinion of a corporate or
the general counsel to Seller, dated the first Delivery Date,
substantially in the form attached hereto as Exhibit C. On each
subsequent Delivery Date,
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such counsel shall be deemed to have delivered a bring-down opinion
to MSA V dated as of the subsequent Delivery Date and to identical
effect. On the Delivery Date with respect to the B737-300 Aircraft
MSN 24449, MSA IV shall have received an opinion of a corporate or
the general counsel to Seller, dated such Delivery Date,
substantially in the form attached hereto as Exhibit C.
(e) Each Buyer and Seller shall have agreed upon the Initial
Approved Budgets (as defined in the Servicing Agreement) as soon as is
practicable but in any event no later than November 10, 1999.
(f) By the applicable Delivery Date Seller shall have received
all Required Consents and all consents, authorizations or approvals
from the governmental agencies referred to in Section 3.03 or 3.14 (in
regards to Section 3.14 only with respect to the Aircraft to be
delivered on such Delivery Date), in each case in form and substance
reasonably satisfactory to the applicable Buyer, and no such consent,
authorization or approval shall have been revoked.
(g) The applicable Buyer shall have received on the applicable
Delivery Date a certificate setting forth the determination of an
independent insurance advisor with respect to the applicable Aircraft
satisfactory to such Buyer in its sole discretion and to the effect
that the insurance policies or bonds relating to such Aircraft are of
the type customarily carried by owners of similar Aircraft.
(h) On or prior to the applicable Delivery Date, the applicable
Buyer shall have received a report on the physical inspection of the
relevant Aircraft in form and substance satisfactory to such Buyer.
(i) On each Delivery Date any non-cash Security Deposits shall
have been reissued in the name of the applicable Buyer or its designee
or, failing such reissue shall have been otherwise transferred to such
Buyer or its designee so as, in such Buyer's sole discretion, to
enable such Buyer or such designee to realize the benefits conferred
thereby.
(j) On each Delivery Date a Lease Novation shall have been
entered into with respect to the relevant Aircraft (other than the
B737-400 Aircraft MSN 26291 and X000-000 XX Xxxxxxxx XXX 00000 with
respect to each of which a Lease shall have been entered into between
MSA V or its designee and the applicable Lessee) by the applicable
Buyer or its designee, Seller and the applicable Lessee and such
agreement shall be in full force and effect and a fax thereof shall
have been delivered to such
27
Buyer along with copies of any other Lease Documents for the relevant
Aircraft.
(k) On each Delivery Date the applicable Aircraft shall have been
registered in the applicable state of registration reflecting, to the
extent permitted under the laws of such state of registration, the
applicable Buyer's or its designee's ownership thereof or such other
action shall have been taken with respect to such registration and
ownership as shall be satisfactory to such Buyer, provided, that such
registration or other action need not be effected prior to such
Delivery Date if such registration or other action may, upon the
written advice of counsel in the applicable state of registration, be
effected after such Delivery Date without any prejudice to any right
of Buyer as an owner or lessor of the Aircraft.
(l) On each Delivery Date there shall be delivered to the
applicable Buyer, (1) an opinion from counsel to such Buyer in the
applicable state of registration and, if different, from counsel in
the jurisdiction whose law is stated to govern in each of the
following documents (which will be counsel to Seller in the case of
California law), to the effect that the applicable Lease Documents and
Lease Novation are legal, valid and binding under the applicable laws
of such state of registration and jurisdiction; and (2) an opinion
from counsel to such Buyer in the applicable state of registration to
the effect that (i) such Buyer or its designee, as applicable shall be
recognized as the owner of the applicable Aircraft under the laws of
such jurisdiction; (ii) it is not necessary for such Buyer or its
designee, as applicable, to qualify to do business in such
jurisdiction as a result of ownership of such Aircraft to exercise
remedies under the applicable Lease or otherwise; (iii) payments due
under the applicable Lease are not subject to withholding or similar
tax or, in the case of Leases where withholding tax applies in any
relevant jurisdiction, the Lessee is obligated to pay and hold the
lessor harmless from such withholding tax under the Lease Documents
and the applicable Lease Novation; (iv) no filings or registrations
other than those which have already been made or are in the process of
being made and are referenced in such opinion are necessary to record
or perfect such Buyer's (or, if applicable, the lessor's) interest in
such Aircraft in such jurisdiction; and (v) upon the expiration or
other valid termination of the Lease, and subject to compliance with
the laws of such jurisdiction, the lessor would be entitled and able
under the laws of such jurisdiction to receive redelivery of such
Aircraft, repossess such Aircraft and export such Aircraft from such
jurisdiction. All of the opinions required by this clause shall be at
such Buyer's expense.
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(m) On each Delivery Date at a time as close as practicable to
the time of delivery of payment for such Aircraft by Buyer an executed
xxxx of sale from Seller to the applicable Buyer and certified copies
of each of the documents relating to Seller's title to the applicable
Aircraft evidencing the chain of title from the Manufacturer to Seller
shall have been received in a form reasonably satisfactory to such
Buyer.
(n) On each Delivery Date the applicable Buyer shall have
received originals or copies of certificates for the Aircraft being
sold on such Delivery Date evidencing the insurance required to be
maintained pursuant to the applicable Lease Documents and Lease
Novation (which insurance shall name the owner of the Aircraft and
each other Person required to be so named pursuant to the Lease
Documents and Lease Novation as additional insureds and shall name the
owner of the Aircraft as Loss Payee under the relevant policies),
together with a letter of undertaking in terms reasonably acceptable
to such Buyer issued by the brokers through whom the insurances of
such Aircraft shall have been placed if such a letter is required to
be provided to the lessor pursuant to the applicable Lease.
(o) On each Delivery Date, the applicable Buyer shall have
received a copy certified by Seller of the provisions of the original
manufacturer purchase agreement applicable to the relevant Aircraft
and available for the benefit of such Buyer or its designee after
delivery of the Aircraft pursuant to the applicable Assignment of
Warranties.
(p) On each Delivery Date the Servicing Agreement shall be or
remain a valid and binding obligation of Seller in full force and
effect.
(q) All representations, warranties, indemnities (except the
indemnity for Transfer Taxes provided in Section 5.04 hereof and the
indemnity with respect to "bulk sales," "bulk transfer" or similar
laws provided in Section 12.11 hereof) and undertakings of Seller
hereunder are capable of being assigned by either Buyer to a special
purpose securitization vehicle or vehicles.
(r) On each Delivery Date, MSA V shall have received, if
applicable, the "Manufacturer Payment" for the relevant Aircraft as
set forth opposite such Aircraft on Exhibit A-1.
(s) On each Delivery Date the applicable Buyer shall have
received all documents it may reasonably request relating to the
existence
29
of Seller and the authority of Seller for this Agreement, all in form
and substance reasonably satisfactory to such Buyer.
(t) On each of the first and the last Delivery Dates, the
applicable Buyer shall have received an opinion of Seller's New York
counsel, O'Melveny and Xxxxx LLP, dated the applicable Delivery Date,
substantially in the form attached hereto as Exhibit D.
SECTION 8.03. Conditions to Obligation of Seller. On the applicable
Delivery Date, the obligation of Seller to deliver each Purchased Asset is
subject to the satisfaction of the following further conditions:
(a) (i) The applicable Buyer shall have performed in all material
respects all of its obligations hereunder required to be performed by
it on or prior to such Delivery Date and (ii) the representations and
warranties of such Buyer contained in this Agreement and in any
certificate or other writing delivered by such Buyer pursuant hereto
shall be true in all material respects at and as of such Delivery Date
as if made at and as of such date. On the first Delivery Date for an
Aircraft listed on Exhibit A-1, Seller shall have received a
certificate signed by a controlling trustee of MSA V to the foregoing
effect. On each subsequent Delivery Date, MSA V shall be deemed to
have delivered a certificate signed by the same controlling trustee of
MSA V dated as of the subsequent Delivery Date and to the identical
effect. On the Delivery Date for the B737-300 Aircraft MSN 24449,
Seller shall have received a certificate signed by a controlling
trustee of MSA IV to the foregoing effect.
(b) Seller shall have received an opinion of Xxxxxxxx, Xxxxxx &
Finger, special Delaware counsel to MSA V and MSA IV, dated the first
Delivery Date for an Aircraft listed on Exhibit A-1 (and, if Seller
requests, dated as of any subsequent Delivery Date) and dated the
Delivery Date for the X000-000 Xxxxxxxx XXX 00000, to the effect
specified in Section 4.01 and the first sentence of Section 4.02.
Seller shall also have received an opinion of Xxxxx Xxxx & Xxxxxxxx,
counsel to MSA V and MSA IV, dated the first Delivery Date for an
aircraft listed on Exhibit A-1 (and, if Seller requests, dated as of
any subsequent Delivery Date) and dated the Delivery Date for the
B737-300 Aircraft MSN 24449 to the effect specified in the second
sentence of Section 4.02, and, with respect to matters of United
States federal and New York law, to the further effect specified in
Section 4.03. In rendering such opinions, such counsel may rely upon
certificates of public officers and, as to matters of fact, upon
certificates of officers of each Buyer, copies of which opinions and
certificates shall be contemporaneously delivered to Seller.
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(c) The applicable Buyer shall have received all consents,
authorizations or approvals from governmental agencies referred to in
Section 4.03, in each case in form and substance reasonably
satisfactory to Seller, and no such consent, authorization or approval
shall have been revoked.
(d) Seller shall have received all documents it may reasonably
request relating to the existence of the applicable Buyer and the
authority of such Buyer for this Agreement, all in form and substance
reasonably satisfactory to Seller.
(e) Any purchasing entity that either Buyer designates to take
delivery of any Aircraft shall, on the applicable Delivery Date, be
duly organized and validly existing and in good standing under its
jurisdiction of organization and shall have all necessary power and
authority to carry out such Buyer's obligations hereunder with respect
to such Aircraft and to consummate the transactions with respect to
such Aircraft contemplated hereby (and, if Seller requests, Seller
shall receive an opinion of counsel to such purchasing entity
designated by Buyer concerning the same matters set forth in Section
8.03 (b) above).
(f) On each Delivery Date, the Servicing Agreement shall be or
remain a valid and binding obligation of the applicable Buyer in full
force and effect.
ARTICLE 9
SURVIVAL; INDEMNIFICATION
SECTION 9.01. Survival. The representations and warranties of the
parties hereto contained in this Agreement or in any certificate or other
writing delivered pursuant hereto or in connection herewith shall survive until
the third anniversary of the last Delivery Date; provided that the covenants,
agreements, representations and warranties contained in Section 5.04(ii) and
(iii) shall survive until expiration of the statute of limitations applicable to
the matters covered thereby (giving effect to any waiver, mitigation or
extension thereof), if later. Notwithstanding the preceding sentence, any
representation or warranty in respect of which indemnity may be sought under
this Agreement shall survive the time at which it would otherwise terminate
pursuant to the preceding sentence, if notice of the inaccuracy thereof giving
rise to such right of indemnity shall have been given to the party against whom
such indemnity may be sought prior to such time.
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SECTION 9.02. Indemnification. (a) Seller hereby indemnifies each
Buyer and each of its Affiliates against and agrees to hold each of them
harmless from any and all damage, loss, liability and expense (including,
without limitation, reasonable expenses of investigation and reasonable
attorneys' fees and expenses in connection with any action, suit or proceeding)
("Damages") incurred or suffered by either Buyer or any of its Affiliates
arising out of:
(i) any misrepresentation or breach of warranty, covenant or
agreement made or to be performed by Seller pursuant to this
Agreement; or
(ii) the ownership, leasing, use or operation of the Aircraft on
or prior to the applicable Delivery Date including, without
limitation, liabilities in respect of maintenance work performed on
the Aircraft on or prior to the applicable Delivery Date;
provided that Seller shall not be liable under Section 9.02(a)(i)
unless the aggregate amount of Damages with respect to all matters referred to
in Section 9.02(a)(i) (determined without regard to any materiality
qualification contained in any representation, warranty or covenant giving rise
to the claim for indemnity hereunder) exceeds $ .
(b) Each Buyer, severally and not jointly, hereby indemnifies Seller
and its Affiliates against and agrees to hold each of them harmless from any and
all Damages incurred or suffered by Seller or any of its Affiliates arising out
of:
(i) any misrepresentation or breach of warranty, covenant or
agreement made or to be performed by such Buyer pursuant to this
Agreement; or
(ii) the ownership, leasing, use or operation of any Aircraft
delivered to such Buyer following the applicable Delivery Date unless
such Damages are attributable to an incident which occurred on or
prior to such Delivery Date (including, without limitation,
liabilities in respect of maintenance work performed on the Aircraft
after the Delivery Date) or such Damages arise as a result of the
wilful misconduct of Seller in its capacity as Servicer under the
Servicing Agreement or directly result from a breach by Seller, in its
capacity as Servicer, of the express terms and conditions of the
Servicing Agreement;
provided that (A) neither Buyer shall be liable under Section
9.02(b)(i) unless the aggregate amount of Damages with respect to all matters
referred to in Section 9.02(b)(i) with respect to such Buyer (determined without
regard to any
32
materiality qualification contained in any representation, warranty or covenant
giving rise to the claim for indemnity hereunder) exceeds $ .
SECTION 9.03. Procedures. The party seeking indemnification under
Section 9.02 (the "Indemnified Party") agrees to give prompt notice to the party
against whom indemnity is sought (the "Indemnifying Party") of the assertion of
any claim, or the commencement of any suit, action or proceeding in respect of
which indemnity may be sought under such Section. The Indemnifying Party may at
the request of the Indemnified Party participate in and control the defense of
any such suit, action or proceeding at its own expense. The Indemnifying Party
shall not be liable under Section 9.02 for any settlement effected without its
consent of any claim, litigation or proceeding in respect of which indemnity may
be sought hereunder.
ARTICLE 10
TERMINATION
SECTION 10.01. Grounds for Termination. This Agreement may be
terminated:
(a) with respect to the Aircraft to be acquired by MSA V or MSA IV,
at any time prior to the first Delivery Date by mutual written agreement of
Seller and MSA V or MSA IV, as the case may be;
(b) with respect to the Aircraft listed on Exhibit A-1 to be
acquired by MSA V, at any time after the Portfolio Delivery Deadline by MSA V if
at least 22 Aircraft (including any substitute aircraft that became designated
as an Aircraft pursuant to Section 7.04 hereof) representing 85% of the
aggregate Base Price of the Aircraft listed on Exhibit A-1 shall not have been
delivered by the Portfolio Delivery Deadline or such later date as may be agreed
to in writing by MSA V and Seller (clause (i) and (ii) together being, the
"Minimum Transfer Condition"), in which case MSA V and Seller agree to cooperate
in good faith to unwind all of the transactions between them contemplated by and
completed under this Agreement in order to put each such party in the place such
party would have been in had the transactions between them contemplated by this
Agreement never taken place and with as few consequences (financial, tax or
otherwise) to either party as reasonably possible; provided that each of MSA V
and Seller agree to cooperate in good faith at such time in apportioning
liability for the payment of any Transfer Taxes imposed, levied or assessed
against or upon Seller or any of the Purchased Assets resulting from the sale,
delivery, assignment, novation, transfer and conveyance of the Purchased Assets
back to Seller; provided further that Seller
33
shall pay to (or receive from) MSA V the amounts or enter into the arrangements
required under the terms of Section 10.03 hereof;
(c) with respect to the Aircraft listed on Exhibit A-1 to be
acquired by MSA V, at any time after the Portfolio Delivery Deadline by MSA V if
(i) the B757-200ER Aircraft MSN 23767 has not been delivered by the Portfolio
Delivery Deadline and (ii) Seller has not paid to MSA V on the Portfolio
Delivery Deadline $ for each of the Aircraft listed on Exhibit A-3 that
were delivered to MSA V on or prior to the Portfolio Delivery Deadline.
(d) with respect to the Aircraft listed on Exhibit A-1 to be
acquired by MSA V, at any time prior to the first Delivery Date by Seller or MSA
V if consummation of the transactions between them contemplated hereby would
violate any nonappealable final order, decree or judgment of any court or
governmental body having competent jurisdiction; or
(e) with respect to the Aircraft listed on Exhibit A-2 to be
acquired by MSA IV, at any time prior to the Delivery Date for such Aircraft by
Seller or MSA IV if consummation of the transactions between them contemplated
hereby would violate any nonappealable final order, decree or judgment of any
court or governmental body having competent jurisdiction.
The party desiring to terminate this Agreement pursuant to clause
10.01(d) or (e) shall give notice of such termination to the other party.
SECTION 10.02. Effect of Termination. If this Agreement is terminated
as permitted by Section 10.01, such termination shall, except for any payments,
forfeitures or arrangements required pursuant to the terms of Section 10.03, be
without liability of either party (or any stockholder, director, officer,
employee, agent, consultant or representative of such party) to the other party
to this Agreement; provided that if such termination shall result from the (i)
willful failure of either party to fulfill a condition to the performance of the
obligations of the other party, (ii) failure to perform a covenant of this
Agreement or (iii) breach by either party hereto of any representation or
warranty or agreement contained herein, such party shall be fully liable for any
and all Damages incurred or suffered by the other party as a result of such
failure or breach. The provisions of Sections 5.02(b), 5.04, 6.01, 7.03, 10.02,
10.03, 11.04, 11.05, 11.06, 11.07 and 11.08 shall survive any termination hereof
pursuant to Section 10.01.
SECTION 10.03. Breakage Costs Upon Termination or Failure to Transfer
Aircraft. (a) If less than all of the Aircraft listed on Exhibit A-1 are
transferred for any reason by the Portfolio Delivery Deadline, Seller shall (i)
pay to or receive from MSA V an amount (determined by MSA V in good faith) equal
to any loss
34
or cost incurred or gain realized by MSA V or any of MSA V's Affiliates as a
result of its terminating, liquidating, obtaining or re-establishing any
financial transaction or series of financial transactions entered into by MSA V
or any of MSA V's Affiliates to hedge its interest rate exposure arising in
connection with the funding of the aggregate Base Purchase Price for the
Aircraft (a "Hedging Transaction") or related trading position, (ii) enter into
one or a series of financial transactions with MSA V (or any Affiliate of MSA V
designated by MSA V) on terms identical in all material respects to the Hedging
Transactions sufficient to enable MSA V or any of MSA V's Affiliates to offset
its exposure under such Hedging Transactions or (iii) enter into such other
arrangement as the parties may agree.
(b) MSA V shall provide Seller with the basis of its calculation of
the amount (determined by MSA V in good faith) of any loss or cost incurred (or
gain realized) by MSA V or any of MSA V's Affiliates as a result of its
terminating, liquidating, obtaining or reestablishing the Hedging Transactions.
Seller will have fifteen (15) days to notify MSA V if Seller determines in good
faith that such amount has been calculated incorrectly. If Seller does contest
such amount and MSA V and Seller are unable to reach agreement within fifteen
(15) days after receipt of Seller's notification, then the Independent Referee
shall determine such amount, using such third party experts as is necessary, the
cost of which determination (and any experts) shall be borne equally by MSA V
and Seller. Interest shall accrue on any amount ultimately paid to or by MSA V
pursuant to this Section at One Month LIBOR from and including the date of MSA
V's initial calculation of the amount payable to but excluding the date of
payment of the amount ultimately agreed by the parties or determined by the
Independent Referee.
(c) To the extent that the Minimum Transfer Condition is satisfied or
waived in writing by MSA V but less than all the Aircraft are transferred,
Seller's obligations under this Section 10.03 shall be with respect to only such
portion of the Hedging Transactions as bears the same relationship to the value
of all Hedging Transactions as the Base Price for the Aircraft which failed to
transfer bears to the aggregate Base Price for all Aircraft listed on Exhibit
A-1.
SECTION 10.04. Repayment of Purchase Price and Hedging Breakage Costs
Upon Failure to Transfer the B737-300 Aircraft MSN 24449. If, for any reason
beyond the control of Seller, Seller does not deliver title to the B737-300
Aircraft MSN 24449 to MSA IV on or prior to April 30, 2000, Seller shall:
(a) repay $ to MSA IV on April 30, 2000; and
35
(b) (i) pay to or receive from MSA IV an amount (determined by MSA IV
in good faith) equal to any loss or cost incurred or gain realized by MSA IV or
any of MSA IV's Affiliates as a result of its terminating, liquidating,
obtaining or re- establishing any Hedging Transaction or related trading
position, (ii) enter into one or a series of financial transactions with MSA IV
(or any Affiliate of MSA IV designated by MSA IV) on terms identical in all
material respects to the Hedging Transactions sufficient to enable MSA IV or any
of MSA IV's Affiliates to offset its exposure under such Hedging Transactions or
(iii) enter into such other arrangement as the parties may agree. MSA IV and
Seller shall employ the procedures set forth in Section 10.03(b) to calculate
and agree any amounts (including any interest) due under this Section 10.04(b).
For the avoidance of doubt, any amounts (including without
limitation, any rent and additional rent, insurance premiums or other amounts
but excluding cash Maintenance Reserves) received by MSA IV in respect of such
Aircraft with respect to the period from and including August 10, 1999 to and
including April 30, 2000, shall be retained for MSA IV's account. Any cash
Maintenance Reserves received by Seller with respect to the period from and
including August 10, 1999 to and including April 30, 2000 shall be retained for
Seller's account.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Warranties and Disclaimers. THE AIRCRAFT SHALL BE SOLD
IN "AS IS, WHERE IS" CONDITION AT DELIVERY AND, EXCEPT AS PROVIDED IN SECTION
9.01 AND 11.01, SELLER MAKES NO WARRANTIES, GUARANTEES, OR REPRESENTATIONS OF
ANY KIND, EITHER EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, THAT SHALL SURVIVE
DELIVERY BY SELLER TO THE APPLICABLE BUYER HEREUNDER. EACH BUYER WAIVES,
RELEASES AND RENOUNCES ALL GUARANTEES, WARRANTIES, REPRESENTATIONS, OBLIGATIONS,
COVENANTS AND LIABILITIES OF SELLER, EXPRESS OR IMPLIED, ARISING BY LAW OR
OTHERWISE, WITH RESPECT TO ANY NON-CONFORMITY OR DEFECT IN ANY AIRCRAFT
PURCHASED BY AND DELIVERED TO SUCH BUYER, INCLUDING WITHOUT LIMITATION, ANY
IMPLIED WARRANTY OF FITNESS FOR USE OR MERCHANTABILITY OR USE FOR A PARTICULAR
PURPOSE, ANY LIABILITY ARISING FROM STRICT LIABILITY IN TORT, PRODUCTS
LIABILITY, IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF
DEALING OR USAGE OF TRADE, AIRWORTHINESS OR LOSS OF USE, PROFIT OR OTHER
CONSEQUENTIAL DAMAGES OR WITH RESPECT TO ANY LESSEE. Nothing in the foregoing is
intended to limit the specific provisions of this
36
Agreement or the rights and remedies of either Buyer specifically provided for
in this Agreement.
Seller shall extend to the applicable Buyer the rights and benefits,
to the extent that the same are not extinguished by the sale of the Aircraft, of
any warranties, service life policies and patent indemnities of any Manufacturer
and any maintenance and overhaul agencies of and for each of the Aircraft which
Seller may have. Seller also hereby grants to the applicable Buyer rights of
subrogation relating to any claim which Seller may have under such warranties
concerning each of the Aircraft. Seller shall take such action as the Buyers may
reasonably request and as may be reasonably necessary to secure such rights and
protection for the Buyers.
SECTION 11.02. Notices. Any notice, request or information required
or permissible under this Agreement will be in writing and in English. Notices
will be delivered in person or sent by fax, letter (mailed airmail, certified
and return receipt requested), or by expedited delivery addressed to the parties
as set forth below in this Section. In the case of a fax, notice will be deemed
received upon the date set forth on the confirmation of receipt produced by the
sender's fax machine immediately after the fax is sent. In the case of a mailed
letter, notice will be deemed received on the tenth (10th) day after mailing. In
the case of a notice sent by expedited delivery, notice will be deemed received
on the date of delivery set forth in the records of the person which
accomplished the delivery. If any notice is sent by more than one of the above
listed methods, notice will be deemed received on the earliest possible date in
accordance with the above provisions. Notices will be addressed as follows:
if to MSA V, to:
MSA V
c/o Cabot Aircraft Services Limited
Xxxxx Xxxxx
Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxx
Xxxxxx 0
Xxxxxxx
Attention: Xx. Xxxxxx X'Xxxxx
Fax: 000-0-000-0000
37
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
0 Xxxxxxxxx'x Xxxxx
Xxxxxx XX0X 0XX
Attention: Mr. Xxx Xxxx
Fax: 00-000-000-0000
and
Xxxxxx Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
Attention: Mr. Xxxxx Xxxxxxxx
Fax: 00-000-000-0000
if to MSA IV, to:
MSA IV
c/o Cabot Aircraft Services Limited
Xxxxx Xxxxx
Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxx
Xxxxxx 0
Xxxxxxx
Attention: Xx. Xxxxxx X'Xxxxx
Fax: 000-0-000-0000
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
0 Xxxxxxxxx'x Xxxxx
Xxxxxx XX0X 0XX
Attention: Mr. Xxx Xxxx
Fax: 00-000-000-0000
and
Xxxxxx Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
00
Xxxxxx X00 0XX
Attention: Mr. Xxxxx Xxxxxxxx
Fax: 00-000-000-0000
if to Seller, to:
International Lease Finance Corporation
1999 Avenue of the Stars
00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Legal Department
Fax: 0-000-000-0000
or to such other address as the parties hereto shall from time to time designate
in writing to the other party.
SECTION 11.03. Amendments and Waivers. (a) Any provision of this
Agreement may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed, in the case of an amendment, by each party to this
Agreement, or in the case of a waiver, by the party against whom the waiver is
to be effective.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 11.04. Expenses. Except as otherwise provided herein, all
costs and expenses incurred in connection with this Agreement shall be paid by
the party incurring such cost or expense.
SECTION 11.05. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of each other party hereto, except that (i) each
Buyer may transfer or assign, in whole or from time to time in part, to one or
more of its Affiliates, such Buyer's right to purchase any Purchased Asset, but
no such transfer or assignment will relieve such Buyer of its obligations
hereunder or be contrary to any of the terms of the applicable Lease and (ii)
each Buyer may transfer or assign the benefit of Seller's representations,
warranties, covenants and
39
indemnity obligations (except the indemnities for Transfer Taxes provided in
Section 5.04 hereof, the indemnity in Section 5.04(iv) may be transferred but it
will only cover the sale of the Aircraft by Seller to the applicable Buyer and
not the subsequent securitization and any transfers or requirements in
connection therewith and for compliance with "bulk sales," "bulk transfer" or
similar laws provided in Section 12.11 hereof) to a special purpose entity or
entities established by it or by Xxxxxx Xxxxxxx Xxxx Xxxxxx & Co. ("MSDW") or by
any entity controlled by MSDW in connection with a securitization of the
Aircraft.
SECTION 11.06. Governing Law. This agreement shall be governed by
and construed in accordance with the law of the State of New York.
SECTION 11.07. Jurisdiction. Except as otherwise expressly provided
in this Agreement, the parties hereto agree that any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby may be
brought in the United States District Court for the Southern District of New
York or any other New York State court sitting in New York City, and each of the
parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 11.02 shall be deemed
effective service of process on such party.
SECTION 11.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 11.09. Counterparts; Third Party Beneficiaries. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement shall become effective when each party
hereto shall have received a counterpart hereof signed by the other party
hereto. No provision of this Agreement is intended to confer upon any Person
other than the parties hereto any rights or remedies hereunder.
40
SECTION 11.10. Entire Agreement. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter of this
Agreement.
SECTION 11.11. Bulk Sales Laws. Each of the Buyers and Seller hereby
waive compliance by Seller with the provisions of the "bulk sales", "bulk
transfer" or similar laws of any state. Seller agrees to indemnify and hold each
Buyer harmless against any and all claims, losses, damages, liabilities, costs
and expenses incurred by each such Buyer or any of its Affiliates as a result of
any failure to comply with any such "bulk sales", "bulk transfer" or similar
laws.
SECTION 11.12. Non Solicitation. In consideration of the considerable
expense to be incurred by each Buyer in connection with the transactions
contemplated by this Agreement, neither Seller nor any of its officers,
directors, agents or representatives will (i) engage in any negotiation with
another person regarding the sale or transfer of any Purchased Assets or similar
transaction; or (ii) provide any non public information relating to the
Purchased Assets to any person that may be interested in any transaction of the
nature contemplated by this Agreement, in each case from the date hereof until
the termination of this Agreement pursuant to Section 10.01.
SECTION 11.13. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
41
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
MSA IV
By: /s/ Xxxxx Xxxxxxxx
--------------------------
Name: Xxxxx Xxxxxxxx
Title: Controlling Trustee
MSA V
By: /s/ Xxxxx Xxxxxxxx
--------------------------
Name: Xxxxx Xxxxxxxx
Title: Controlling Trustee
INTERNATIONAL LEASE
FINANCE CORPORATION
By: /s/ Xxxxxx X. Udvar-Hazy
--------------------------
Name: Xxxxxx X. Udvar-Hazy
Title: President and CEO
