This Purchase and Sale Agreement involves
Title: AIRCRAFT SALE AND PURCHASE AGREEMENT
Governing Law: New York Date: 3/10/2005
Industry: Retail (Specialty) Sector: Services
AIRCRAFT SALE AND PURCHASE AGREEMENT
THIS AIRCRAFT SALE AND PURCHASE AGREEMENT (“Agreement”), dated as of March 4, 2005, is by and between TAXI AEREO DE VERACRUZ, S.A. de C.V., a corporation organized under the laws of Mexico, located at Privada Antonio Chedraui Caram #248, Colonia Encinal, C.P. 91180, Xalapa, Veracruz, MEXICO, as seller (“Seller”), and Guitar Center, Inc., a corporation organized under the laws of the State of Delaware, located at 5795 Lindero Canyon Road, Westlake Village, CA, 91362, as buyer (“Buyer”). Buyer and Seller are collectively referred to herein as the “Parties”, or individually as a “Party,” as context requires.
A. Seller is the legal and beneficial owner of the Aircraft (as defined below), and
B. Buyer wishes to purchase the Aircraft from Seller, and Seller is willing to sell the Aircraft to Buyer, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties intending to be legally bound hereby agree as follows:
1. Definitions . The following terms, when capitalized, shall have the following meanings for all purposes of this Agreement:
“ Acceptance Certificate ” shall mean the document evidencing receipt and acceptance of the Aircraft by Buyer, in the form attached hereto as Exhibit A.
“ Aircraft ” shall mean the Airframe, Engines, Parts, and Records.
“ Aircraft Registry ” shall mean the Federal Aviation Administration of the United States.
“ Airframe ” shall mean one (1) Falcon 50 aircraft, excluding the Engines, and bearing manufacturer’s serial number 210 and bearing Mexican Registration XA-TXB.
“ Bills of Sale ” shall mean (a) a Federal Aviation Administration Bill of Sale; and (b) a Warranty Bill of Sale, in the form attached hereto as Exhibit B, conveying full legal and beneficial title of the Aircraft, free and clear of any and all liens, to Buyer.
“ Business Day ” shall mean a day other than a Saturday or a Sunday on which the banks in the State of Minnesota are open for business.
“ Closing ” shall mean the closing of the sale and purchase of the Aircraft hereunder on the
“ Closing Date ” shall mean a date on or before March 31, 2005, as agreed by the Parties, or otherwise as the Parties may mutually agree, at the time at which the transfer of title, possession, and risk of loss to the Aircraft takes place pursuant to this Agreement, which transfer shall occur when the Aircraft is located in Portland, Oregon and the Purchase Price, as defined herein, has been paid by Buyer to Seller. The transfer of title, possession, and risk of loss shall be evidenced by the delivery of the Bills of Sale by Seller to Buyer, and delivery of the Certificate of Acceptance by Buyer to Seller.
“ Delivery Conditions ” shall mean those conditions set forth in Exhibit C attached hereto.
“ Engines ” shall mean the three Garrett TPE-731-3-1C engines installed on the Airframe, with manufacturer’s serial numbers P76784, P76735, P76783, respectively.
“ Escrow Account ” shall mean the following bank account:
U.S. Bank, N.A.
ABA 091 000 022
Bnf Acct - 180121167365
Bnf Address: 60 Livingstone Avenue, St. Paul, MN 55107-2292
OBI: Aero Records & Title Co. Trust Account
Account No. 75-R064-009
“ Escrow Agent ” shall mean Aero Records & Title Company, 3300 South Lakeside Drive, Oklahoma City, OK 73179.
“ FAA ” shall mean the Federal Aviation Administration.
“ Parts ” shall mean any and all equipment, appliances, parts, instruments, appurtenances, accessories, furnishings, seats, and other property of whatever nature (other than Engines), relating to the Airframe and Engines, including (i) any such items that may be loose on the Airframe on Closing Date, and (ii) any such items that are incorporated or installed in or attached to the Airframe or any Engine installed on such Airframe on the Closing Date.
“ Person ” shall mean any individual, firm, partnership, joint venture, trust, corporation, government entity, committee, department, authority, or any body, incorporated or unincorporated, whether having distinct legal personality or not.
“ Purchase Price ” is defined in Paragraph 3(a) hereof.
“ Records ” shall mean (i) all historical maintenance records of the Airframe, Engines and Parts; (ii) all logbooks and inspection, modification and overhaul records, if any, relating to the Airframe, Engines, and Parts; (iii) all required manuals that are in Seller’s possession for operation, maintenance and servicing of the Airframe, Engines, and Parts; and (iv) manufacturer service agreements or warranties relating to the Airframe, Engines, and Parts. “Records” do not include any proprietary information, trade secrets, or patents, copyrights, trademarks, or other intellectual property of Seller or of any third party.
“ Transaction Documents ” shall mean this Agreement, the Bills of Sale, the Acceptance Certificate, and any other document executed and delivered pursuant hereto by Buyer, on the one hand, and Seller, on the other hand, to each other on the Closing Date.
2. Sale of Aircraft . Pursuant to all of the terms and conditions specified herein, Seller hereby agrees to sell the Aircraft to Buyer, and Buyer hereby agrees to purchase the Aircraft from Seller, on the Closing Date. It is the express intent of the Parties that the conveyances contemplated hereby be, and be construed as, an absolute sale of the Aircraft. Upon execution and delivery of the Bills of Sale to Buyer hereunder, Seller shall have transferred to Buyer (a) full legal and beneficial title to the Aircraft, free and clear of any and all liens whatsoever, and (b) to the extent assignable, all rights of Seller to service and warranty rights with respect to the Aircraft. The sale of the Aircraft does not include any proprietary information, trade secrets, or patents, copyrights, trademarks, or any other intellectual property of Seller or of any third party.
3. Purchase Price .
(a) The purchase price (“Purchase Price”) for the Aircraft shall be Ten Million Five Hundred Thousand U.S. Dollars (US $10,500,000.00). The Purchase Price shall be paid in full to Seller, without any deduction or withholding whatsoever, whether in respect of set-off, counterclaim, duties, or taxes of any kind.
(b) Prior to the date of this Agreement, Buyer shall have deposited into the Escrow Account an initial payment in the amount of Fifty Thousand U.S. Dollars (US $50,000.00) in cash (“Initial Deposit”). The Initial Deposit shall be applied to the Purchase Price at Closing. Of the Initial Deposit, Twenty-One Thousand U.S. Dollars ($21,000.00) shall be non-refundable and was transferred to the Seller prior to the date of this Agreement. The remaining Twenty-Nine Thousand Dollars ($29,000.00) shall be refunded to Buyer if the Closing does not occur for any reason by March 31, 2005.
(c) Upon completion of the pre-purchase inspection pursuant to Paragraph 4(a) and compliance by Seller with Paragraph 4(b), Buyer shall make a further deposit of One Million U.S. Dollars (U.S. $1,000,000.00) into the Escrow Account (“Second Deposit”). The Second Deposit shall be fully refundable until applied to the Purchase Price at Closing.
(d) Buyer shall deposit the balance of the Purchase Price by wire transfer to the Escrow Account at least 48 hours prior to the Closing Date.
(e) Prior to the Closing Date, the Parties shall position with Escrow Agent fully executed copies of the Bills of Sale, Acceptance Certificate, and proof of Seller’s status as an additional insured on Buyer’s aviation liability insurance policy.
(f) Delivery and acceptance of the Aircraft, and transfer of title, risk of loss, and possession of the Aircraft shall occur in Portland, Oregon.
(g) Subject to the fulfillment of the Conditions to Closing set out in Paragraph 7, the following events shall occur in the following sequence at Closing:
(i) Buyer shall deliver to Seller the Acceptance Certificate.
(ii) Buyer shall deliver to Seller proof of Seller’s status as an additional insured on Buyer’s aviation liability insurance policy as required by Paragraph 11.
(iii) Seller shall deliver to Buyer the Bills of Sale.
(iv) Buyer shall pay to Seller the Purchase Price for the Aircraft.
(v) Seller shall deliver and Buyer shall accept delivery of the Aircraft in Portland, Oregon.
Completion of the steps specified in this Paragraph 3(g) shall be deemed to have occurred simultaneously.
4. Buyer’s Inspection .
(a) Buyer has performed a preliminary visual inspection and a pre-purchase inspection of the Aircraft at an FAA certificated repair station to which Seller moved the Aircraft at its sole expense prior to the date of this Agreement.
(b) Seller shall cure at its expense prior to Closing (i) any discrepancy discovered
during the pre-purchase inspection that would render the Aircraft ineligible for a certificate of airworthiness, and (ii) any system determined during the pre-purchase inspection not to be within maintenance manual limits.
(c) Seller in its sole discretion may elect not to meet the requirement of the preceding Paragraph 4(b) and to terminate this Agreement. In the event of such termination, Seller shall return to Buyer all deposits in the Escrow Account, less the $21,000 non-refundable portion of the Initial Deposit, and neither Party shall have any further obligation to the other under this Agreement.
5. Condition of Aircraft .
(a) ON THE CLOSING DATE, THE AIRCRAFT SHALL BE SOLD TO BUYER “AS IS, WHERE IS,” EXCEPT TO THE EXTENT THIS AGREEMENT MAY SPECIFICALLY PROVIDE OTHERWISE.
SELLER HEREBY DISCLAIMS ANY AND ALL OBLIGATIONS AND LIABILITIES TO BUYER IN TORT WITH RESPECT TO THE AIRCRAFT, INCLUDING BUT NOT LIMITED TO NEGLIGENCE AND STRICT LIABILITY.
EXCEPT AS SET FORTH IN PARAGRAPH 6(a), SELLER ALSO DISCLAIMS ANY AND ALL REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING BUT NOT LIMITED TO
(A) ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR USE (INCLUDING THE ABILITY TO OPERATE OR REGISTER THE AIRCRAFT) OR ANY WARRANTY OF MERCHANTABILITY;
(B) ANY REPRESENTATION REGARDING THE ABSENCE OF ANY DEFECTS IN THE AIRCRAFT, REGARDLESS OF WHETHER ANY DEFECTS THAT MAY EXIST ARE DISCOVERABLE, ARE KNOWN OR UNKNOWN, OR ARE APPARENT OR CONCEALED;
(C) ANY REPRESENTATION REGARDING THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, OR COPYRIGHT OR OF ANY OTHER INTELLECTUAL PROPERTY;
(D) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR DEALING OR USAGE OF TRADE; AND
(E) ANY REPRESENTATION AS TO (i) THE CAPACITY, AGE, VALUE, QUALITY,
DESCRIPTION, WORKMANSHIP, MATERIALS, CONSTRUCTION, PERFORMANCE, AIRWORTHINESS, CONDITION, DESIGN, OR OPERATION OF THE AIRCRAFT OR OF ANY PART THEREOF, OR (ii) THE CONDITION OR THE COMPLETENESS OF AIRCRAFT RECORDS.
BUYER HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS EXPECTATION OF, OR RELIANCE UPON, ANY SUCH OBLIGATIONS, LIABILITIES, WARRANTIES, OR REPRESENTATIONS.
(b) In the event of a total loss or constructive total loss of the Aircraft prior to Closing, this Agreement shall terminate, Seller shall instruct the Escrow Agent to return to Buyer all deposits in the Escrow Account, less the $21,000 non-refundable portion of the Initial Deposit which has been transferred to Seller, and neither Buyer nor Seller shall have any further obligation to the other Party under this Agreement or the Term Sheet and Letter of Intent between Seller and Buyer dated January 12, 2005.
(c) If Seller does not satisfy the Delivery Conditions listed in Exhibit C hereto, Buyer shall have the right to terminate this Agreement. In the event of such termination, Seller shall return to Buyer all deposits in the Escrow Account, less the $21,000 non-refundable portion of the Initial Deposit, and neither Buyer nor Seller shall have any further obligation to the other under this Agreement.
6. Representations and Warranties .
(a) Seller represents and warrants to Buyer as of the date hereof and on the Closing Date that:
(1) it is a corporation duly organized, validly existing, and in good standing under the laws of Mexico and has the power and authority to execute and deliver the Transaction Documents to which it is a party and to perform its obligations thereunder;
(2) Seller has duly authorized by all necessary action the execution, delivery, and performance of the Transaction Documents to which it is a party and the consummation of the transactions contemplated thereby;
(3) assuming the validity of execution and delivery by any other parties, the Transaction Documents executed and delivered by Seller constitute legal, valid and binding obligations of Seller enforceable in accordance with their respective terms, except to the extent that such enforceability may be limited by general principles of equity or by laws of bankruptcy or insolvency or similar laws respecting creditors’ rights generally;
(4) the execution and delivery of, the performance of its obligations under, and compliance by Seller with, the Transaction Documents to which it is a party will in no way exceed the powers granted to Seller by, or violate in any respect any provision of, or cause a breach or default of:
(i) any law or regulation or any order or decree of any governmental authority, agency, or court, or generally accepted interpretation thereof, or any judgment, decree or permit to which Seller is subject;
(ii) the constitutional documents of Seller; or
(iii) any existing agreement of Seller with any other party;
(5) Seller has full legal and beneficial title to and beneficial ownership of the Aircraft, free and clear of all liens, encumbrances and security interests; and the Aircraft is currently registered in the name of Seller by the Dirección General de Aeronautica Civil (“DGAC”) of Mexico;
(6) Seller has not received notice of, and is not aware of, any outstanding notices or demands from any governmental entity or from any other Person claiming authority in respect of such Aircraft that would require any work or other action to be taken in respect of the Aircraft or that would require the payment of any taxes or charges or the expenditure of any money in respect of the Aircraft;
(7) all of Seller’s liabilities for taxes and other governmental, quasi-governmental and other charges with regard to the Aircraft that are due for payment have been paid, or the same have been properly accrued for in accordance with generally accepted accounting principles and will, if due for payment, be paid prior to the Closing Date;
(8) Seller is not aware of any outstanding claims, whether or not asserted, related to the Aircraft;
(9) no warranty claims are pending against the manufacturers of the Aircraft or against any other Person in respect of the Aircraft, including the Engines;
(10) to the best of Seller’s knowledge, the Aircraft logbook and Aircraft modification and overhaul records are true, accurate, and complete;
(11) the Aircraft has a current valid certificate of airworthiness issued in the name of Seller by the DGAC;
(12) to the best of Seller’s knowledge, the Aircraft has never been registered in the United States;
(13) Since 1996 the Seller has held Mexican license No. 102.419-3356 from the Dirección General Aeronática de Civil of Mexico to conduct international charter transportation of passengers as an air taxi;
(14) Since 1997, Seller has held exemption authority from the U.S. Department of Transportation to conduct charter passenger operations between Mexico and the United States;
(15) Seller holds operations specifications from the U.S. Federal Aviation Administration under Part 129 of Title 14 of the Code of Federal Regulations; and
(16) Seller purchased the Aircraft in 2003 and exported the Aircraft from France to Mexico in 2003.
(b) Buyer represents and warrants to Seller as of the date hereof and on the Closing Date that:
(1) it is a corporation duly organized and validly existing under the laws of the governmental jurisdiction in which it is incorporated and has the power